While the overwhelming majority of IRS and contractor employees were tax compliant, tax delinquencies or prior conduct and performance issues remained, the Treasury Inspector General for Tax Administration (TIGTA) reported, based on an audit.
Overall, 95 percent of IRS and contractor employees were tax complaint, meaning that they filed and paid their taxes. Of the 85,359 IRS
employees on the rolls as
of May 6, 2023, more than 99 percent were compliant with their tax filing obligations, and 96 percent were compliant with their tax payment obligations. And of the 25,732 contractor employees on
board as of March 13, 2023, more than 99 percent, were compliant with their tax filing obligations and 90 percent were compliant with their tax payment obligations.
The audit found that 2 percent of IRS employees on board as of May 2023. had cases with tax noncompliance issues that were either closed or transferred to Labor Relations (LR) in the IRS’s Automated Labor and Employee Relations Tracking System (ALERTS) between Oct. 1, 2021, and April 1, 2023. These 2,090 IRS employee cases were substantiated, indicating that they had been researched and validated by the Employee Tax Compliance (ETC) branch.
The 2,090 IRS employees had a total of 3,030 tax noncompliance cases in ALERTS, the report said, noting that an employee can have more than one tax noncompliance issue.
The audit was initiated based on a congressional request asking TIGTA to conduct an updated review of the IRS’s employment practices. This included determining how many agency employees are not currently fully compliant on their tax debts and how many rehires on the IRS payroll were previously separated for performance issues, including failure to fully pay their taxes, and what actions the agency is taking, if any, to remedy these compliance issues.
“Hiring employees of high integrity is essential to safeguarding taxpayer information,” the report states. “IRS and contractor employees who are not tax compliant could negatively affect public trust in tax administration and the perception that the IRS is being honest in its dealings with taxpayers.”
There were an additional 397 rehired IRS employees, and 115 former IRS employees who are current contractor employees, with previously substantiated conduct/performance or tax noncompliance issues during calendar years 2005 to 2022. Of these 397 employees, 212 had more than one conduct/performance issue.
TIGTA recommended that the IRS ensure that any unfiled tax returns have been secured or the instances of unpaid balances due for IRS and contractor employees identified in the report have been resolved and include in the Internal Revenue Manual the policies, procedures, and standards for the Section1203 Review Board.
Although the IRS disagreed with the first recommendation, it verified that the identified instances of tax noncompliance were being addressed according to IRS policies and procedures. To support consistency in the Section 1203 Review Board review process, the IRS agreed to consolidate documentation of the Section 1203 Review Board policies and procedures.