Treasury asks Congress to make IRS ‘Ten Deadly Sins’ less deadly

The Treasury Department this week asked Congress to take some teeth out of a law that has led to the firing of several hundred IRS employees for committing 10 offenses ranging from assaulting taxpayers and co-workers to filing tax returns late. The law's 10 offenses-nicknamed the "Ten Deadly Sins" by IRS employees-have hurt morale at the tax agency as thousands of employees have been embroiled in investigations over the past four years, according to IRS officials. "The administration's proposal would enhance the IRS' effectiveness by more carefully tailoring the types of conduct by IRS employees that are subject to sanctions … and by allowing the imposition of penalties that are commensurate with specific violations," Treasury's proposal to Congress said. Congress created the 10 sins in Section 1203 of the 1998 IRS Restructuring and Reform Act. The law forces the IRS to fire employees for 10 infractions unless the commissioner personally steps in to mitigate the penalty. The infractions are: threatening to audit someone for personal gain; conducting a seizure without approval; assaulting, harassing or violating the civil rights of a taxpayer or a coworker; lying under oath; falsifying or destroying records; concealing information from Congress; underreporting income; and failing to file a tax return on time. Even employees who file their returns late but are due refunds can be fired, even though there is no penalty for taxpayers who file refund returns late. From July 1998 to March 2001, the IRS received 2,753 allegations of deadly sin violations. Only 243 complaints were substantiated-213 of those were for filing tax returns late. The commissioner mitigated the penalty for 55 late return filers, so 188 people were fired or resigned for violations of the list of sins. The IRS wants Congress to remove two offenses from the list: late filing of a return when a refund is owed, and allegations of employee wrongdoing against co-workers. Disputes among IRS employees can be handled through existing administrative channels, IRS officials said. The agency also wants to make an addition to the list: the unauthorized inspection of returns or return information. But the agency doesn't want to fire everybody who violates one of the rules. Instead, IRS Commissioner Charles Rossotti would create a hierarchy of penalties depending on the seriousness of the employee's action. "This change would improve IRS employee morale and enhance the fundamental fairness of the statute," the Treasury proposal said. IRS revenue agents have complained that some recalcitrant taxpayers have used the Ten Deadly Sins to stall IRS action against them. Agents have also said that the list has made them more hesitant to pursue tax violators. IRS enforcement activity has fallen in recent years. National Treasury Employees Union President Colleen Kelley said Congress should enact the proposed modifications to the law. "NTEU has held all along that it is unfair to hold IRS employees to a higher standard than the general population, a higher standard than other federal employees, and a higher standard than those who wrote these provisions into law in the first place," Kelley said. The IRS Oversight Board, an independent board of private citizens who approve the IRS budget, has also endorsed the changes to the list of sins But a Republican Senate Finance Committee staffer said there isn't really a need to lessen the penalty for committing one of the sins, since the commissioner already has the authority to mitigate penalties. IRS employees should be fired if they lie under oath, hit a taxpayer or fail to file their tax returns when they owe money, the staffer said. At the same time, the staffer said the committee supports the Treasury Department's proposed additions and deletions to the list.