A recent audit by the Treasury Department’s inspector general has exposed a staggering $50 million in unpaid taxes owed by Internal Revenue Service employees and contractors. Yes, you read that right—the very people tasked with enforcing tax laws are falling significantly short themselves.
Of the over 3,800 IRS employees who are behind on their taxes, a whopping 2,000 haven’t even bothered to set up a payment plan. To make matters worse, more than 50 of these tax-delinquent employees have been comfortably employed at the IRS for over five years. If this isn’t the pot calling the kettle black, I don’t know what is. Altogether, nearly 150,000 federal employees are in arrears, owing a collective $1.5 billion.
Sen. Joni Ernst (R-IA), who called for the audit, expressed her frustration at the hypocrisy, especially given the $80 billion boost the IRS received to expand its audit capabilities via the Inflation Reduction Act. “The irony here is almost too rich: Americans are footing the bill for an expanded IRS to scrutinize their taxes while the agency itself is sitting on millions in unpaid taxes by its own employees,” Ernst pointed out.
The Treasury Inspector General for Tax Administration (TIGTA) scrutinized 1,068 instances where IRS management took disciplinary action against employees for tax issues. It turns out, the management’s version of discipline is more of a light slap on the wrist. According to the inspector general’s report, “76 employees were suspended, mostly for less than 14 days, despite willful tax misconduct.”
From October 2021 to April 2023, there were 70 cases where the IRS determined an employee had “willfully” engaged in tax misconduct. Despite the law mandating termination for such offenses (barring intervention from the IRS commissioner), only 20 were actually fired. So much for holding themselves to the same standards they expect from taxpayers.
The IRS’s unapologetic response to the audit was nothing short of defiant. They stated, “For certain offenses, including the willful failure to file a tax return and willful understatement of a Federal tax liability, IRS employees shall be terminated unless the IRS Commissioner decides to mitigate the penalty of termination… The Commissioner exercised this authority.” Translation: We’ll fire them when we feel like it.
Additionally, there were 69 other willful violations that were conveniently “mitigated” due to the employees’ long tenure or positive evaluations. Apparently, good performance reviews can get you a pass on tax evasion at the IRS.
But wait, there’s more. The IRS also rehired over 500 individuals who had previously left due to tax, performance, or misconduct issues. This includes over 300 employees with a history of “unacceptable performance,” 100 with tax issues, 15 guilty of fraud/theft, and 24 who had committed willful tax violations.
Despite previous promises to address these re-hiring practices, the IRS seems to have continued with business as usual. Even a law that prohibits rehiring employees fired for misconduct hasn’t stopped them, as 10 employees who were fired between 2007 and 2022 have been rehired since the law’s enactment.
Sen. Ernst isn’t taking this lying down. On Monday, she demanded that IRS Commissioner Daniel Werfel fire these delinquent employees and pursue criminal prosecution where necessary. She also announced plans to introduce the Audit the IRS Act, which would mandate regular tax audits of IRS employees and enforce the termination of those with “seriously delinquent tax debt.”
It seems the watchdogs might finally need a watchdog of their own.
