IRS Gave Bonuses To Employees Who Cheated On Taxes

IRS

The US Internal Revenue Service is known to punish taxpayers who are delinquent paying their taxes. That is, unless you are an IRS employee.

An audit revealed that the agency showered bonuses and paid time-off on employees who had been recently disciplined or had tax problems themselves.

Rewarding tax cheats

Nearly $1 million in bonuses was given to IRS employees who were themselves in tax trouble with the IRS.  The tax issues included willful understatement of tax liabilities, late payments and under-reporting of income, according to the report issued by the Treasury Inspector General for Tax Administration.  Current federal regulations do not require the IRS to consider tax compliance of IRS employees when issuing bonuses. The IRS, however, says it will follow the audit’s suggestion and change the policy.

The policy of rewarding IRS employees who cheat the IRS “appears to create a conflict with the IRS’s charge of ensuring the integrity of the system of tax administration,” the report said.

But it gets better.

Disciplined IRS employees receive bonuses despite misconduct

More than $2.8 million and thousands of hours of paid time-off was awarded to a variety of employees who were formally disciplined for misconduct at the agency.  Over the past four years, the IRS says it has not issued awards to any executives who were subject to disciplinary action, according to a report.  The tax collector is now considering extending that policy to all employees.

“We strive to protect the integrity of the tax system, and we recognize the need for proper personnel policies,” the agency said in a statement.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com