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Recently, Senator Chuck Grassley posed this question to IRS commissioner John Koskinen. It was prompted by a recent report from the Treasury Inspector General for Tax Administration.

Sen. Grassley, a senior member of the Finance Committee with jurisdiction over the IRS, questioned when and why the agency has uses its discretion to avoid firing employees who violate tax laws.

The agency must terminate employees who commit willful tax law violations under the Restructuring and Reform Act of 1998 (RRA). This law did allow the IRS some discretion.

The Senator, however, pointed out the RRA lists willful tax law violations as two of ten instances creating “a clear and direct path” to terminate an employee. Because of the serious nature of the offense, a presumption generally supports termination.

Only 25 percent lost their jobs

The TIGTA report found the agency was not properly disciplining employees. It fired only 25 percent of those who willfully violated tax laws. About 60 percent received some lesser discipline and kept their jobs. Surprisingly, some employees received permanent pay increases or promotions after their noncompliance case closed.

Because average citizens rarely receive discretionary sentences after violating tax law, Grassley expressed concerns in his letter that, “There might be a double standard for the IRS’ own employees.”

Loss of employment can be a consequence for anyone charged with federal tax fraud. The IRS vigorously prosecutes these offenses and seeks serious punishments. If facing the full press of a zealous prosecutor, you need an experienced attorney to defend you.

Source: News Release, “Grassley Presses IRS on Lack of Penalties for Employee Violations of Tax Law,” May 20, 2015