The acting head of the Internal Revenue Service said he wants to stop an estimated $70 million in bonuses this year for employees at all levels within the embattled agency.

In an internal memo on Wednesday, IRS Principal Deputy Commissioner Daniel Werfel said he has directed senior staff to come up with options for eliminating the performance awards despite collective bargaining agreements that guarantee the bonuses under certain conditions.

Werfel said the move could help the agency cancel its last two furlough days, which are scheduled to take place on July 22 and Aug. 30.

The union that represents IRS employees pushed back against the plan on Wednesday, saying the agency should not have to forgo bonuses to eliminate the last furlough days.

“The IRS should examine all parts of its budget and operations before eliminating incentive awards for high-performing frontline employees,” said National Treasury Employees Union president Colleen M. Kelley.

The NTEU is still negotiating with the IRS over bonuses this year and “intends to fully pursue the bargaining process to the end,” Kelley said.

Sen. Chuck Grassley (R-Iowa) has questioned why the IRS would consider bonuses in a year when the agency is embroiled in multiple controversies due to actions by managers and frontline employees alike. A pair of inspector general audits this year showed that the IRS had taken inappropriate actions toward conservative groups and spent lavishly on a 2010 conference in Anaheim.

The Office of Management and Budget handed out guidance on the issue of bonuses after the government’s automatic spending cuts — known as the sequester — took effect in March. In a memo to federal agencies, the office said that “discretionary monetary awards should not be issued while sequestration is in place, unless issuance of such awards is legally required.”

Grassley has argued that the IRS can legally forgo bonuses this year, since its contract with union employees allows for the re-appropriation of performance-award funding in the event of a budgetary shortfall.

The NTEU contends that IRS employees have earned the bonuses and that they should receive them. “The awards that are due are based on employee performance evaluations for work already performed beginning in 2012,” Kelley said.

To connect with Josh Hicks, follow his Twitter feed, friend his Facebook page or e-mail josh.hicks@washpost.comFor more federal news, visit The Federal Eye, The Fed Page and Post Politics. E-mail with news tips and other suggestions.