IRS Still Giving Bonuses to Employees with Tax Compliance and Conduct Problems

A new IG report finds that despite some improvements, the IRS is still paying bonuses to employees with tax compliance and workplace conduct issues.

A new report from the Treasury Inspector General for Tax Administration (TIGTA) found that despite some improvements, the Internal Revenue Service is still giving out bonuses to employees that have workplace conduct and tax compliance problems.

The report 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.

The good news, however, is that the majority of IRS employees that were given bonuses do not have these problems. The TIGTA report said that in FY 2017, the IRS prevented 1,048 employees with conduct and tax issues from receiving awards. Overall, the IRS’ increased screening procedures led to denying 80% of awards to employees with problems such as willful tax violations, criminal misconduct, or substance abuse.

TIGTA found in a previous audit report that between Oct. 1, 2010, and Dec. 31, 2012, more than 2,800 IRS employees with recent substantiated conduct issues received $2.8 million in monetary awards.


TIGTA recommended in its latest report 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.

Response from Lawmakers

House Ways and Means Committee Chairman Kevin Brady (R-TX) and Senate Finance Committee Chairman Orrin Hatch (R-UT) asked IRS Acting Commissioner David Kautter to immediately implement screening procedures to ensure employees with serious conduct issues are not receiving bonuses.

The lawmakers sent a letter to Kautter outlining the urgency of the problem. In their letter, they wrote:

Awards are intended to reward the best among the Federal workforce, not the worst. And yet, we see example after example of awards given to IRS employees engaging in clear misconduct, including unauthorized access of tax return information, possession of illegal drugs, and sexual harassment in the workplace. Given the importance of the IRS’s mission, the IRS must seek to eliminate to the degree possible misconduct and tax non-compliance within its own workforce; and when it does occur, the IRS must do everything within its power to ensure employees are not rewarded for it. Therefore, we again want to reiterate that Congress has been very clear on this issue. The requirements to consider all employee misconduct and tax non-compliance when making awards are not optional and we strongly urge the IRS to implement TIGTA’s recommendations immediately.

TIGTA Report: IRS Employees With Tax/Conduct Issues Continue to Receive Awards

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.