 But nearly two-thirds of IRS employees who were willfully tax noncompliant
between 2004 and 2013 and were supposed to have lost their jobs received a
reprieve from the IRS commissioner, according to a newly released report from
the IRS’ auditor.
Some of those employees received performance awards and promotions within a year
after being disciplined, the report notes.
The Treasury Inspector General for Tax Administration’s review found 1,580
employees willfully tax noncompliant. Their infractions involved a range of
violations.
AP file photo
AP file photo
TAX ADVANTAGE: A new audit shows 61 percent of IRS employees who violated tax
laws had their terminations reduced to lesser disciplinary actions by the IRS
commissioner.
IRS employees who commit certain acts of misconduct, including willful
violations of tax law, are supposed to be fired, according to the IRS
Restructuring and Reform Act of 1998.
“As the agency primarily responsible for administering Federal tax law, the IRS
must ensure that its employees comply with the tax law in order to maintain the
public’s confidence,” TIGTA notes in its audit.
The IRS commissioner may intervene and reduce the disciplinary action.
Doug Shulman and Mark W. Everson served as commissioners much of that time, with
two interim commissioners named for a short term between their terms.
Over the 10-year period, 61 percent of IRS employees who willfully violated tax
law had their terminations “mitigated to lesser penalties such as suspensions,
reprimands, or counseling,” the audit found.
The remaining 620 employees, or 39 percent, were fired, resigned or retired.
TIGTA’s further review of 34 cases of willful tax violations found that
employees with similar violations received different discipline.
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 “In cases that were mitigated, files included mitigating factors
as well as evidence that violations of tax law were willful;
however, the basis for the Commissioner’s decision to mitigate was
not clearly identified in the case files,” the report states. “Some
employees had significant and sometimes repeated tax noncompliance
issues, and a history of other conduct issues.”
“Moreover, management had concluded that the employees were not
credible. Nonetheless, the proposed terminations were mitigated by
the IRS Commissioner. These cases included willful overstatement of
expenses, claiming the First-Time Homebuyer Tax Credit without
buying a home, and repeated failure to file required Federal tax
returns timely.”
TIGTA’s audit was drawn from the IRS Employee Tax Compliance
Branch’s twice-yearly screening to identify potential employee tax
noncompliance. More than 1,000 cases of potential violators are
forwarded for further examination each year.
Granted, the numbers of violators are a fraction of about 90,000
employees.
“The IRS is committed to ensuring that employees meet their tax
compliance responsibilities. It’s important to note that the IRS has
a more than 99 percent tax compliance rate, the highest of any major
federal agency,” the IRS said in a statement to Watchdog.
But the number of commissioner dispensations raises questions.
The IRS’ auditor recommends the IRS commissioner change how cases
are handled and document the basis for any decision to mitigate
employment termination.
The IRS agreed with the recommendation, according to TIGTA.
“The IRS also put in place new internal procedures to ensure that
employees who have willfully failed to pay their taxes are now
ineligible for performance awards,” the agency said.
“Nonetheless, the IRS agrees that we can improve this process. The
changes will include a more proactive approach to ensure timeliness
and consistency and provide more transparency in the mitigation
process while preserving the Commissioner’s authority provided by
federal law.”
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