Senators Want to Make Sure Federal 'Tax Cheats' Don't Get Bonuses

A bipartisan group of senators is resurrecting an effort to ensure that federal employees who are delinquent on their taxes or engaged in other types of misconduct do not get bonuses.

The No Bonuses for Tax Cheats Act requires the Treasury secretary to withhold bonuses from Internal Revenue Service employees who are “seriously delinquent” on their taxes and have not made plans to pay them back. The bill also would prohibit bonuses for employees with evidence of misconduct including time and attendance or other fraud, misuse of government travel cards, possession or use of controlled substances, and threats of violence.

“This bill is about as common sense as they come,” said Sen. John Thune, R-S.D., a cosponsor of the bill. “At its core, it’s about accountability. This bill says to hard-working Americans that the federal bureaucrats who collect their taxes have the same responsibility they do in fulfilling tax obligations.”

Sens. Richard Burr, R-N.C., and Joe Manchin, D-W.Va., originally introduced a version of the bill in April 2014, following a Treasury Inspector General for Tax Administration report that showed about 2,800 IRS employees who were involved in misconduct that resulted in disciplinary action received a total of $2.8 million in bonuses between October 2010 and December 2012. An April 2015 follow-up to that report showed the problem persists, Burr noted in a statement on the new bill.

House lawmakers have also targeted federal employees who fail to pay their taxes. Rep. Jason Chaffetz, R-Utah, chairman of the House Oversight and Government Reform Committee, last spring reintroduced a bill (H.R. 1563) allowing federal agencies to fire tax delinquent employees who haven’t entered into an agreement to repay the debt. That bill was brought up for a House vote in April, but failed to get the two-thirds majority necessary to pass under suspension of the rules.  

The IRS is the only agency that already has the authority to fire tax delinquent employees, though it does not appear to be using that authority fully. The agency over one decade tolerated “willful tax noncompliance” from 1,589 employees without consistent or clear procedures for addressing individual cases, according to a May TIGTA report. In 60 percent of the cases, the watchdog found, the tax agency mitigated proposed terminations of employees found to have committed, as defined by regulation, a “voluntary intentional violation of a known legal duty (timely filing of a tax return or accurate reporting of a tax obligation) for which there is no reasonable cause.” Instead of being fired, the employees received lesser penalties such as suspensions, reprimands, or counseling.

Still, employees of the Treasury Department – which includes the IRS – have one of the lowest overall tax delinquency rates within the federal government. In 2014 just 1.19 percent of Treasury employees were behind on their taxes, compared to 3.99 percent of all civilian employees.

Eric Katz contributed to this report.