It's a clash over college credits and a contract.

In a case involving the Internal Revenue Service and the National Treasury Employees Union, an arbitrator has sided with the union, ruling that IRS educational requirements for revenue agents "are inconsistent with the collective bargaining agreement" between the agency and the union.

The IRS yesterday announced plans to appeal the July 9 ruling, contending that taxpayers are entitled to have IRS audits conducted by agents who have the equivalent of a college degree.

"We value our employees. They do a great job. But what we are talking about is setting a standard going forward," IRS Commissioner Mark Everson said in a telephone interview.

Everson said appropriate educational standards are critical to the future of the agency, which is under pressure to step up investigation and prosecution of tax cheats and abusive tax shelters. The agency is asking Congress to finance increased enforcement, and "it is important to us as we bring in thousands of new personnel to hire them at the right standard," Everson said.

The issue of setting minimum educational requirements for revenue agents, who audit tax returns, arose in 1994, and the IRS and NTEU began negotiations on what credentials were needed for the job.

In keeping with the findings of an Office of Personnel Management study, the IRS proposed to increase the number of college-level credits in accounting required of agents from 24 hours to 30. It also set out five areas of course work needed by job applicants.

The IRS began implementing the 30-hour standard in 1995. It also agreed to grandfather in the existing workforce. At the time, the IRS said, about 70 percent of the revenue agents met the higher standard.

The union, however, disputed whether the extra hours were needed in order for employees to succeed in such jobs.

In August 2000, Hazel Gilchrist, an IRS examination aide, filed a grievance when her application to become a revenue agent was turned down. According to the arbitrator's ruling, she was three hours short of the required 30 credit hours in accounting.

The union filed a second grievance in April 2001, challenging the requirement that applicants for a revenue agent position needed to show knowledge in five specific areas of accounting. The union argued that the new standard was arbitrary and only served to block some employees from applying and moving up in the IRS ranks.

The two grievances were consolidated for arbitration.

Arbitrator Carlton J. Snow, in a 44-page decision, sided with the union. He said the IRS standards violated the law on minimum educational requirements and the union's contract.

To some extent, the IRS lost because it had grandfathered in agents already on the job.

The grandfather decision produced "clear and convincing evidence . . . that duties of a revenue agent can be and are being performed by individuals who have not completed the prescribed 30 hours of accounting and related courses," Snow wrote.

In addition, Snow said, thousands of current revenue agents have not taken one or more of the five required courses. If the courses were essential to successful performance of the job, "it is logical to conclude that management would have required all current revenue agents to demonstrate such knowledge, either through education or experience."

Colleen M. Kelley, president of NTEU, said the union was not trying to stop the IRS from hiring applicants who have more than 24 hours of accounting credits but does not want the requirement for extra hours used to stop in-house applicants from being considered.

"These standards are arbitrary and have no correlation as to whether you are successful in the job," said Kelley, an accountant and former revenue agent. "It is working as a revenue agent and working the cases -- that is where the expertise is developed."

IRS officials noted that the agency supports professional development and pays for employees to take accounting and related courses so they can become revenue agents. In fiscal 2004, about 1,000 IRS employees received funding, officials said.

Retirement

Wanda B. Johnson, a civil rights analyst, is retiring from the U.S. Commission on Civil Rights on Monday after 33 years of federal service.

E-mail: barrs@washpost.com