Business: IRS gave bonuses to employees who didn’t pay their taxes

IRS Building, Washington, DC

By Djesattler

The IRS 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.

These 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 since instituted a policy to take conduct into account when handing out bonuses to senior executives. But making that policy apply to all of the agency’s workers would require negotiations with the National Treasury Employees Union.

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