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Keeping your friends close: IRS employees with tax issues got bonuses

The trials and tribulations of our nation's foremost tax collector are naturally an important focus of this blog.

After all, in the words of an often-quoted saying, "Keep your friends close and your enemies closer." (The saying may go all the way back to Sun Tzu, but a more immediate source is "The Godfather II.")

Not that the IRS is always an adversary. As we wrote in our January 10 post, however, it often seems like an underfunded Goliath, unable to do as much as it should to help taxpayers with tax compliance.

In today's post, we will take note of another area in which the IRS has fallen short. More specifically, we will discuss a recent report that the IRS had paid out bonuses to numerous employees who had various compliance issues on their own taxes.

The report followed an audit by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA found that the IRS paid out about $1 million in bonuses during the last two years to employees with various tax issues. About 1,100 employees were involved.

The issues included:
• Late tax payments
• Under-reporting of income
• Understatement of taxes owed

TIGTA's report commented that the award of bonuses to employees who are supposed to uphold the integrity of the tax system is obviously at odds with the IRS's tax compliance mission.

The IRS, for its part, responded that the bonuses that were paid out were not contrary to federal regulations.

In terms of promoting tax compliance, that is hardly a very inspiring statement. But at least the IRS has said that it will change its policy on bonuses in response to TIGTA's report.

Source: CNN Money, "Delinquent IRS employees paid bonuses by the agency," Katie Lobosco, April 22, 2014

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