Did the IRS Reward Tax Cheats Within Agency?

Published: May 11, 2015 13:12pm EDT
By Lance Rinker, Managing Editor for Konsume Politics

Please Note: This article was updated May 11, 2015 @ 01:24pm EDT


According to a report by the agency’s inspector general, nearly 1,600 IRS employees intentionally evaded taxes in the past ten years– some of these officials were responsible for enforcing tax laws nationwide.  

The report looked at IRS officials from 2004 through 2013, before IRS Commissioner John Koskinen started.

The offenses by these employees include improperly claiming dependents, repeated failure to file timely tax returns, and claiming a tax credit for first-time homebuyers when no home was even purchased.

While it is a small percentage of the tax agency’s employee base, roughly 160 workers per year out of a workforce of 85,000, it does raise some serious concerns.

First and foremost, why weren’t these employees fired outright?

According to the report, some employees found to have violated the law were given promotions, raises and bonuses. This was after being caught willfully not paying their taxes.

“The key here is the word ‘willfully’,” said John Pollock, Tax and IRS expert with Financial Gravity. “Regardless of the training, regardless of their resources, willfully assumes they did it on purpose. They knew what they were doing and they did it anyways.”

The IRS uses a screening process to identify employees who may owe back taxes twice a year. The report stated over the 10-year period the IRS found 18,300 cases in which employees owed back taxes but the delinquency was not willful.

“I think it’s a pretty big issue,” Pollock said. “We [citizens] usually get fined for doing things we didn’t even know we did wrong, because the IRS code is so complicated. But these guys did something they knew was wrong and still didn’t get fired.”

Among the small percentage of those that willfully violated the law, and evaded paying taxes, the IRS fired 25 percent of them and another 14 percent either voluntarily retired or resigned. However, at issue is the fact that 61 percent received a lesser penalty and there are those who even received promotions, bonuses, and raises.

“The tax compliance rate of IRS employees is over 99 percent, by far the highest compliance rate of any government agency,” IRS Commissioner John A. Koskinen said recently.

When you compare that to the federal government as a whole it looks pretty good, as roughly 96 percent of fed employees comply with paying taxes owed and nearly 92 percent of the general public does. Historical data shows that about 8 percent of the general public owes back taxes.

Last year, the agency started denying performance bonuses to employees who willfully fail to pay their taxes.

"The IRS is committed to ensuring that employees meet their tax compliance responsibilities," the IRS said in a statement. "Nonetheless, the IRS agrees that we can improve this process."

The agency said it will become more transparent about why the commissioner chooses not to terminate certain employees who willfully don't pay their taxes.

"It is crucial that IRS employees are held to the same standards as the hardworking taxpayers that pay their salaries. That means filing their taxes and paying the taxes they owe to the government," said Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee.

The IRS continues to be enveloped in controversy, dating back to May 2013 when the organization admitted to subjecting conservative political groups to closer scrutiny in their applications for tax-exempt status based on particular keywords in their names.

Whether these controversies are minor or not is difficult to tell, as conservatives and conservative groups paint the IRS as another example of Feds gone bad and the overreach of government. Though, any evidence of wrongdoing, and then rewarding that bad behavior, shows signs of corruption and back scratching within one of the Federal Government’s largest and overly complicated institutions at the very least. 


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