IRS Bonus Scandal: Are Bonuses For the IRS a "Payoff to Union Workers"?


After claiming that the targeting of conservative groups was a result of "lack of sufficient resources," the Internal Revenue Service is set to dole out $70 million in employee bonuses.

Sen. Chuck Grassley (R-Iowa) said his office has learned that the IRS is executing an agreement with the employees' union on Wednesday, despite a directive from the Obama administration to cancel discretionary monetary awards under the sequester "unless legally required."

"The IRS always claims to be short on resources," Grassley said. "But it appears to have $70 million for union bonuses. And it appears to be making an extra effort to give the bonuses despite opportunities to renegotiate with the union and federal instruction to cease discretionary bonuses during sequestration.”"

The GOP senator says the bonuses should be canceled under the April directive from the White House budget office and fired off a letter on Tuesday to the IRS's acting commissioner Daniel Werfel to explain the agency's reasoning for the bonuses.

The directive was written by Danny Werfel, a former budget official who has since been appointed acting IRS commissioner.

Sequestration, or spending cuts, are resulting in "at least five unpaid furlough days this year for the IRS's 90,000 employees. On these days, the agency is closed and taxpayers cannot access many of the agency’s assistance programs," according to the Washington Post.

This IRS directive comes at the heels of last month's scandal when IRS officials acknowledged that agents has been improperly targeting conservative groups for additional scrutiny when they applied for tax-exempt status during the 2010 and 2012 elections. The agency's inspector general also issued a report shortly after documenting lavish employee conferences during the same time period.

Rep. Trey Gowdy (R-S.C.) said the bonuses highlight a "staggering level of disconnection."

"The IRS fails to meet anyone's expectations because we do not expect to be targeted by our own government or subject to disparate treatment because of political ideology," he said in a statement to POLITICO. "Our fellow citizens remain mired in an economic malaise that undercuts their personal aspirations all the while whatever small remnant of trust that could have been left in the institutions of government has dissipated."

The IRS, however, said that it is negotiating with the union over the matter but did not comment on whether it is contractually obligated to pay the bonuses. 

"IRS is under a legal obligation to comply with its collective bargaining agreement, which specifies the terms by which awards are paid to bargaining-unit employees," IRS spokeswoman Michelle Eldridge said in a statement.

Sen. Chuck Grassley, R-Iowa, announced the bonuses, with his office citing "a person with knowledge of IRS budgetary procedures."

"[The IRS] appears to be making an extra effort to give the bonuses despite opportunities to renegotiate with the union and federal instruction to cease discretionary bonuses during sequestration," Grassley said.

Whether or not the IRS's claim that it is legally and contractually bound to pay the bonuses rings true, there is still little clarity and transparency on this ill-timed move. While Republicans are sounding the alarms on the latest of IRS scandals, this is certainly an issue that requires further scrutiny from both parties.  

"It's like robbing Peter to pay Paul," said Sen. Orrin Hatch, a Republican on the Senate Finance Committee. "On the one hand the IRS claims it's short on resources but on the other hand it appears they're ready to dole out $70 million in bonuses. That looks like a payoff to union workers at a time when we're drowning in a sea of red ink."