IRS workers who didn't pay taxes got bonuses

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Credit: AFP/Getty Images

The Internal Revenue Service (IRS) building is viewed in Washington, DC, February 19, 2014. AFP PHOTO / Jim WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)

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by GREGORY KORTE

USA TODAY

Posted on April 22, 2014 at 4:26 PM

WASHINGTON — The Internal Revenue Service handed out $2.8 million in bonuses to employees with disciplinary issues — including more than $1 million to employees who didn't pay their federal taxes, a watchdog report says.

The report by the Treasury Inspector General for Tax Administration said 1,146 IRS employees received bonuses within a year of substantiated federal tax compliance problems.

The bonuses weren't just monetary. Employees with tax problems received a total of 10,582 hours of paid time off — valued at about $250,000 — and 69 received permanent raises through a step increase, the report said. The report looked at bonuses in 2011 and 2012.

Employees' tax problems included "willful understatement of tax liabilities over multiple tax years, late payment of tax liabilities, and underreporting of income," the report said.

The IRS said it has instituted a policy to take conduct into account when handing out bonuses to senior executives. Making that policy apply to all of the agency's workers would require negotiations with the National Treasury Employees Union. The union did not respond to a request for comment.

"We take seriously our unique role as this nation's tax administrator, and we will strive to implement a policy that protects the integrity of the tax administration system and the reputation of the service," IRS chief Human Capital Officer David Krieg said in a written response to the audit.

In fiscal year 2012, the agency awarded bonuses of $86.3 million in cash and almost 490,000 hours of time off. About 69% of the agency's 98,000 employees received some kind of bonus.

The IRS suspended most bonuses last year in a cost-savings move to avoid furloughs but restored them in fiscal year 2014.

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