IRS awarded bonuses to 1,100 who owe back taxes

WASHINGTON - The IRS has paid more than $2.8 million in bonuses to employees with recent disciplinary problems, including $1 million to workers who owed back taxes, a government investigator said Tuesday.

More than 2,800 workers got bonuses despite facing a disciplinary action in the previous year, including 1,150 who owed back taxes, said a report by J. Russell George, the Treasury inspector general for tax administration. The bonuses were awarded from October 2010 through December 2012.

George's report said the bonus program did not violate federal rules but was inconsistent with the IRS mission to enforce tax laws.

"While not prohibited, providing awards to employees who have been disciplined for failing to pay federal taxes appears to create a conflict with the IRS's charge of ensuring the integrity of the system of tax administration," George said.

Other examples of misconduct by workers getting bonuses included misusing government credit cards for travel, drug use, violent threats and fraudulently claiming unemployment benefits.

The IRS said it has developed a new policy linking conduct and performance bonuses for executives and senior-level employees.

"Even without a formal policy in place over the past four years, the IRS has not issued awards to any executives that were subject to a disciplinary action," the IRS said. "We are also considering a similar policy for the entire IRS workforce, which would be subject to negotiations with the National Treasury Employees Union."

The IRS had about 100,000 workers in the period under review.

In the 2011 budget year, more than 70,000 IRS workers got cash bonuses totaling $92 million, the report said. In the 2012 budget year, nearly 68,000 workers got cash bonuses totaling $86 million.

Tax compliance at the IRS is generally better than at other federal agencies.

In 2011, 3.2 percent of federal workers owed back taxes, according to IRS statistics. The Treasury Department, which includes the IRS, had the lowest delinquency rate, at 1.1 percent.

The delinquency rate for the general public was 8.2 percent.