IRS Tax ProblemsIRS News

Senator Chuck Grassley of Iowa says that he has learned that the Internal Revenue Service is entering into an agreement with the employees’ union to pay out bonuses of approximately $70 million to its employees. This is a violation of the Obama Administration directive to cancel discretionary bonuses because of the automatic spending cuts which were put into place this year.

Not only has the IRS been through some recent scandals which have had much notoriety in the press, they have also enacted sequestration days where they have closed their offices in order to trim their expenses.

The Senator was clearly upset that in light of recent events the Service is going forward with $70 million in bonuses. Senator Grassley says the bonuses should be canceled because of an April order from the White House Budget Office. The Senator is especially upset because it appears the IRS is giving bonuses at time when it has the opportunity to renegotiate with the union in order to stop making these discretionary bonuses during sequestration.

The IRS admits it is negotiating with the union and did not deny the Senator’s claims that the bonuses are about to be paid. IRS spokeswoman, Michelle Eldridge, said that, “The IRS is under a legal obligation to comply with the Collective Bargaining Agreement, which specifies the terms by which awards are paid to bargaining unit employees.” Ms. Eldridge would not say whether the IRS believes it is legally obligated to pay the bonuses. The union, the National Treasury Employees Union, did not respond to the allegations.

This comes at a time when the IRS is already on the hot seat because of improperly targeting conservative groups for heightened security when they applied for tax exempt status and after the Inspector General’s report documenting excessive amounts of money spent on employee conferences. Keep in mind this is all happening at a time when the Service is going to expand its role into helping to implement the new health care law.

Apparently, the IRS notified the employees’ union in a letter of March 25 that they intended to reclaim about $75 million that had been set aside for discretionary bonuses. However, Senator Grassley states that the IRS never followed up on that notice. Instead, they do, in fact, claim to issue $70 million in bonuses. The Senator’s argument is that the original agreement for bonuses is not legally mandated because it allowed for a change in those bonuses in the event of a budget shortfall which is, in fact, the current situation. As mentioned above, the IRS spending cuts which are commonly known as “sequestration” have resulted in unpaid furlough days this year for the IRS’ 90-plus thousand employees.