We've made the point many times in this blog that the U.S. tax system is largely based on a commitment by the general public to voluntary compliance.
To be sure, the IRS has an important enforcement role to play, such as through audits and investigations. But ultimately, a lot depends on taxpayers having enough trust in the system to pay taxes without being motivated by the fear of adverse IRS action.
This is why the recent controversy about the IRS hiring former employees with questionable backgrounds touches such a sensitive cord. In this post, we will update you on this controversy.
In February of this year, the Treasury Inspector General for Tax Administration (TIGTA) released a report on IRS hiring practices for former employees.
The report found that the IRS had rehired many former employees who had committed misconduct or had performance issues in their previous IRS employment. This wasn't a matter of merely a few bad eggs, either. The number of former employees involved numbered in the hundreds.
One of the conduct or performance issues that the report documented was IRS employees getting access to taxpayers' personal information in an unauthorized manner. TIGTA also found rehiring despite poor performance, failure to pay taxes, off-duty misconduct and other issues.
TIGTA further found that nearly 20 percent of the rehired employees with conduct or performance issues went on to run into additional conduct or performance issues.
Naturally, a report like this has political implications.
Last month, Senate Finance Committee Chairman Orin Hatch weighed in. He sent a letter to the IRS asking for information about how the agency handled employees who may have violated IRS rules in reviewing the status of tax-exempt organizations.
And now, two members of the U.S. House of Representatives have introduced a bill called the Ensuring Integrity in the IRS Workforce Act. The bill would prohibit the IRS from rehiring an employee who had been terminated from previous IRS employment for certain types of misconduct.