Remember those pesky IRS bonuses?
Last month, despite a directive from the Obama administration for agencies to cancel discretionary bonuses because of automatic spending cuts, the Internal Revenue Service appeared to be moving ahead with plans to distribute $70 million in employee bonuses.
Now, that’s changing. Danny Werfel, who is now serving as the Acting Commissioner of the IRS after the last Acting Commissioner, Steven Miller, was forced to step down in the midst of the tax-exempt organization scandal – and the guy who helped pen the directive in the first place – has advised that bonuses for managers would be canceled this year. Also on the chopping block? Bonuses for senior executives.
The IRS has paid out more than $92 million in bonuses over the past five years including big dollars to key figures like Lois Lerner, who received $42,000 in bonus money and is currently on administrative leave after refusing to testify in front of Congressional officials for her part in the tax-exempt organization scandal, and former Acting Commissioner Steven Miller, who received $100,000 before stepping down this summer as part of the same scandal.
Werfel was careful to clarify that the bonus issue was not a comment on performance, writing:
This is not a reflection of the quality or performance of the work done by you and your colleagues, but rather an unfortunate byproduct of the difficult budgetary situation we find ourselves in.
Werfel hasn’t been able to cancel all bonuses, noting that there is a question about whether bonuses promised to IRS employees covered by union contracts could be pulled at this late date. The National Treasury Employees Union (NTEU) says no, pointing out that the bonuses are for work which was performed last year. Colleen Kelley, NTEU President, has been extremely critical of efforts to cut the IRS budget, noting in a letter to Congress (downloads as a pdf) that “the IRS workforce is already facing a dramatically increased workload with staffing levels down by more than 20 percent below what they were just 15 years ago.” Specifically, Kelley noted that “[i]n 1995, the IRS had a staff of 114,064 to administer tax laws and process 205 million tax returns. By 2012, staffing had fallen to 90,711 to administer a more complicated tax code and process 236 million much more complex tax returns.”
That said, both Werfel and Kelley have acknowledged that discussions about those bonuses are ongoing.
As Werfel tries to appeal to an angry Congress – including Sen. Charles Grassley (R-IA), who sits on the Senate Finance Committee and publicly criticized the bonuses last month – by pulling the bonuses, he did ask for some concessions. Specifically, Werfel hopes to be able to cancel the remaining furlough days, currently scheduled for July 22 and August 30. The furlough days were implemented as a result of budget concerns, including the sequester.
Furlough days are unpaid days for all IRS employees and follow on the heels of three prior unpaid furlough days. Canceling the furlough would allow IRS employees to be paid. That would, Werfel also noted, not only ease employee tensions at the agency but – more notably – allow IRS to remain open to serve taxpayers.
