Senate Finance Committee Chairman Orrin Hatch (R-Utah) today highlighted a new report from the Treasury Inspector General for Tax Administration (TIGTA) that found the Internal Revenue Service (IRS) handled misconduct by employees with serious tax violations in an irregular manner over a period of 10 years, and in some cases, failed to take action against employees with serious tax violations altogether.

“It is crucial that IRS employees are held to the same standards as the hardworking taxpayers that pay their salaries.  That means filing their taxes and paying the taxes they owe to the government,” Hatch said.  “Unfortunately, as today’s report shows, the IRS has often failed to maintain that standard, and has instead allowed employees with serious tax violations to go about their business as usual.  Even worse, the agency appears to have rewarded some of them with cash bonuses, promotions, and paid time off. This is unacceptable - American taxpayers deserve better.”

Under Section 1203 of the IRS Restructuring and Reform Act of 1998 (RRA 98), the agency is required to terminate any IRS employee if that employee has committed certain acts of misconduct, including willful violations of the tax law, unless the IRS Commissioner mitigates the penalty. 

TIGTA identified more than 1,500 cases of willful tax violations between fiscal years (FY) 2004-13. Of those, 960 employees had their discipline mitigated to penalties lower than termination, 400 cases resulted in termination, and 220 employees resigned or retired. The remaining 108 cases were closed without action or adjudication, the cases were withdrawn or suspended, or the employee received counseling.

TIGTA examined a sample of 34 willful tax noncompliance cases closed between FY2009-13 and found employees with “significant willful tax violations and repeated tax noncompliance cases were not necessarily terminated.”

Some IRS employees who had willful violations received promotions, performance awards, and permanent pay increases within one year of their case being closed.