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February 15, 2018

Karen Kraushaar, Director of Communications
(202) 622-6500

The Internal Revenue Service Has Implemented Some Screening Procedures, But Employees with Recent Tax and Conduct Issues Continue to Receive Awards

WASHINGTON – Some Internal Revenue Service (IRS) employees received performance awards within 12 months of being disciplined for conduct or tax compliance issues, according to an audit report that the Treasury Inspector General for Tax Administration (TIGTA) issued today.

From October 1, 2015 through December 31, 2016, the IRS issued more than $141 million in cash and time-off awards to its employees for their performance. Oversight of the awards program is important to ensure proper stewardship of Government funds and the integrity of the IRS.

During this same time frame, the IRS prevented 1,048 employees with conduct and tax issues from receiving awards. Increased screening procedures for awards resulted in the IRS denying almost 80 percent of awards to screened employees with identified conduct and tax issues such as willful tax violations, criminal misconduct, substance abuse, and unauthorized access to tax return information. However, the improved processes did not ensure that all employees with conduct and tax compliance issues were screened as required by Department of the Treasury policy and Federal law. Specifically, 26 employees with Section 1203(b) violations including willful tax noncompliance, whose employment was not terminated, received awards.

In addition, TIGTA found that from October 1, 2015 through December 31, 2016, the IRS issued more than $1.7 million in awards to 1,962 employees who had a disciplinary or adverse action during the 12 months prior to receiving their award. Some of these employees had serious misconduct, such as unauthorized access to tax return information, substance abuse, and sexual misconduct. TIGTA also found that IRS screening processes do not look for or identify employees with tax compliance issues unless those issues have resulted in disciplinary action.

"Providing awards to employees with conduct issues, especially those who fail to pay Federal taxes, conflicts with the Internal Revenue Service charge of ensuring the integrity of the system of tax administration," said J. Russell George, the Treasury Inspector General for Tax Administration.

TIGTA recommended that the IRS Human Capital Officer expand misconduct screening to consider employees with any level of disciplinary action prior to issuing awards, examine the Federal tax compliance status of all employees before issuing awards, and comply with Treasury reporting requirements for awards. IRS management agreed with all three recommendations, stating that it would expand its screening procedures to include employees with any level of discipline and Federal tax noncompliance prior to issuing awards and would comply with Treasury reporting requirements.

Read the report.