IRS Wins Appeal to Enforce Education Requirement

By Stephen Barr
Monday, July 24, 2006

A long-running clash over college credits may be at an end.

In a case involving the Internal Revenue Service and the National Treasury Employees Union, a federal labor board has ruled that the IRS can raise the educational requirements for revenue agents.

IRS officials contended that taxpayers are entitled to audits of their tax returns by agents who have the equivalent of a college degree. NTEU representatives argued that the new standards served only to block experienced employees from applying and climbing the IRS ranks.

An initial ruling, by an arbitrator, had gone against the IRS. But the agency won on appeal at the Federal Labor Relations Authority, the independent agency that handles disputes between agencies and unions, in a unanimous decision on July 13 by Dale Cabaniss and Carol Waller Pope . In general, FLRA decisions reviewing arbitration awards cannot be appealed to a federal court.

An IRS spokeswoman said the agency had no comment on the case. Colleen M. Kelley , the NTEU president, said the union is considering its options for obtaining further administrative review.

The issue of changing minimum educational requirements goes back to the mid-1990s, when the IRS proposed to increase the number of college-level credits required of agents from 24 hours to 30 hours. It also stipulated five areas of course work for study by job applicants.

The IRS implemented the standards in 1995, but because of budget cuts and staffing reductions, did not begin hiring revenue agents under the new standards until 2002.

When it announced the new standards, the IRS said it would "grandfather in" the existing workforce and estimated that 70 percent of its revenue agents met the higher standard.

The NTEU objected, contending that the standards were arbitrary and violated the union's contract. The arbitrator agreed with the union, suggesting that the new educational requirements were not essential if the IRS was willing to grandfather in agents already on the job.

The FLRA, however, decided that the arbitrator erred in his interpretation of the law and his finding of a contract violation.

Kelley said a number of colleges do not require 30 hours of accounting when granting degrees and "we continue to believe that this five-course requirement has nothing to do with being a good revenue agent." She said the IRS had adopted the new standards as a way to block employees from promotions and to do more hiring from the outside.

The IRS has maintained that raising educational requirements will improve the quality and skills of revenue agents and enhance the agency's efforts to crack down on tax cheats and improper tax avoidance activities.

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