IRS may pay $70 million in employee bonuses

The Internal Revenue Service is in talks with its employees union regarding $70 million in bonuses despite a directive from the White House budget office telling agencies not to issue such awards, according to a Republican senator.

Sen. Charles E. Grassley (R-Iowa) sent a letter to acting IRS commissioner Daniel Werfel on Tuesday that asked why the agency plans to pay the bonuses and what steps it took to avoid such a move.

The Office of Management and Budget handed out guidance on the issue after the government’s automatic spending cuts took effect in March, saying that “discretionary monetary awards should not be issued while sequestration is in place, unless issuance of such awards is legally required.”

The National Treasury Employees Union, which represents IRS workers, has said the IRS is contractually obligated to pay the bonuses.

“It is NTEU’s position that the awards are legally required as part of the collective bargaining agreement between NTEU and the IRS,” said union president Colleen M. Kelley. “NTEU is currently in discussions with the IRS on this matter and other matters resulting from budget cutbacks.”

An IRS statement suggested the agency had not concluded its negotiations over the matter as of Wednesday afternoon. “Because bargaining has not been completed, there has been no final determination made on the payment of performance awards for the bargaining unit employee population,” the agency said.

Grassley contends that the bonuses are not legally required. In his letter to Werfel, he said “the original agreement allows for the re-appropriation of such award funding in the event of budgetary shortfall.”

“The IRS has to answer to the taxpayers,” Grassley added in an e-mail to The Washington Post. “Is it conceding to the union on almost all of the bonus money in question? If so, what, if anything, did the IRS get in return?”

If the IRS agrees to the awards, its payments would stand in stark contrast with some of the agency’s austerity measures, including at least five days of unpaid leave the agency has required of its 90,000 employees under the sequester.

Discretionary monetary awards can include annual performance awards, group awards, and special act cash awards, according to the White House budget office directive.

The IRS has been on the defensive since last month, when officials acknowledged that the agency had targeted conservative groups for extra scrutiny when they applied for tax-exempt status during the 2010 and 2012 election cycles. An inspector general’s report this month also revealed that the agency had spent lavishly on a conference in Anaheim, Calif.

Josh Hicks covers Maryland politics and government. He previously anchored the Post’s Federal Eye blog, focusing on federal accountability and workforce issues.

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