A recent Treasury Department inspector general audit discovered that employees and contractors of the Internal Revenue Service collectively owe $50 million in back taxes. Among the 3,800+ IRS workers in debt, 2,000 haven’t set up a payment plan. Over 50 of these workers have stayed in their positions for over five years despite their debt, contributing to nearly 150,000 federal employees owing a total of $1.5 billion in unpaid taxes.
The audit, requested by Senator Joni Ernst (R-IA), highlights a stark irony given the recent $80 billion funding increase to the IRS under the Inflation Reduction Act for audit expansion. “It’s ironic and hypocritical that taxpayers are funding billions to increase IRS audits, yet the agency isn’t collecting owed taxes from its own employees,” Ernst remarked.
The audit examined 1,068 instances where IRS management took disciplinary action for tax-related offenses but often issued lenient penalties. For example, out of 76 employees suspended, most were for willful tax issues resulting in suspensions under 14 days. In instances from October 2021 to April 2023, of 70 employees found to have willfully violated tax laws, only 20 were terminated, although legislation mandates firing such employees unless the IRS Commissioner intervenes.
The IRS’s stance, as stated in response to the audit, is that employees committing certain offenses, like willfully failing to file a tax return or understating tax liabilities, should be fired unless the Commissioner mitigates the termination. The agency cited its authority to exercise leniency in some cases due to factors like longevity of service or positive evaluations.
Moreover, the IRS faced criticism for rehiring over 500 individuals previously terminated or resigned due to tax, misconduct, or performance issues. The inspector general’s report spotlighted this recurring problem despite laws against rehiring personnel fired for such reasons. Since 2007, 10 workers have been rehired post-law enactment banning such practices.
Senator Ernst is pushing IRS Commissioner Daniel Werfel to dismiss those in violation and consider criminal charges where necessary. Additionally, Ernst plans to introduce the Audit the IRS Act, mandating regular tax audits of IRS employees and firing those with significant delinquent tax debt.
Source: Treasury Audit Uncovers 50 Million in Back Taxes Owed by IRS Employees and Contractors