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April 23, 2014

At Lake Wobegone the IRS, Everyone Is Above Average

And they all deserve performance awards. Even the ones who break the rules:

"More than 2,800 Internal Revenue Service employees who recently had been disciplined received performance bonuses totaling more than $2.8 million between Oct. 1, 2010 and Dec. 31, 2012," reports the Journal.

No, the group that targeted conservatives didn't receive bonuses after the scandal broke last year. But the IRS sets a pretty low bar for employees to receive awards. About two-thirds of the agency's 98,000 workers received bonuses for fiscal 2012.

As for those who broke IRS rules and still got paid, the Journal reports: "The misconduct ranged from failure to pay taxes to misuse of government travel cards, violation of official-conduct standards and fraud, according to the report by the Treasury Inspector General for Tax Administration. The discipline included written reprimands, suspensions and even removal. The oversight agency said some of the conduct issues might have occurred after an employee earned a bonus."

The internal auditor's report notes with wry understatement that "providing awards to employees with conduct issues, especially the failure to pay taxes owed to the federal government, appears to be in conflict with the IRS's charge of ensuring the integrity of the system of tax administration."

Adds the Journal: "The report identified nearly 1,200 employees with tax issues or official-conduct violations during the period who received a total of $1.1 million in monetary bonuses, and about 11,000 hours of time off. One employee who was suspended for 10 days in September 2011 received a $1,300 performance award in August 2012, the report said."

Some people might be tempted to observe that what you reward, you get more of. We're guessing such observations would not be rewarded at the branch of government charged with making sure the rest of us follow the rules.

Update: the Washington Post chimes in:

A report from the Treasury Inspector General for Tax Administration shows that between Oct. 1, 2010, and Dec. 31, 2012, the IRS paid $2.8 million in bonuses to employees cited in the past year for such things as drug use, making violent threats, fraudulently claiming unemployment benefits, misusing government credit cards and — get this — failing to pay their taxes.

The report said more than 1,100 employees who failed to pay their taxes received discretionary awards of more than $1 million in cash bonuses and more than 10,000 hours in extra paid vacation.

At least five employees received performance awards after being disciplined for intentionally under-reporting their tax liabilities for multiples [sic] years, paying taxes late and under-reporting income.

Like many companies and government agencies, the IRS sweetens the deal for its employees by giving bonuses based on performance. But at the IRS, breaking the federal tax laws you were hired to enforce and running afoul of other agency rules aren’t considered relevant to performance-based awards.

You have to do something really bad before the IRS will take conduct into account, bad enough to be suspended for 14 days or more. Even then, conduct is only deemed relevant to awards of permanent pay increases, not for bonuses or extra vacation time.

None of this apparently violated federal guidelines or any internal policies related to rewarding employees.

In fact, the agency cut performance-based payments beyond what was required by a 2011 federal policy instructing agencies to limit incentive payments to 2010 levels. Everyone who got an award received a performance rating of “fully successful” as required by federal guidelines.

The IRS’s contract with the National Treasury Employees Union bars the agency from considering bad conduct when making performance-based awards. As for non-union employees, federal guidelines are silent on the subject.

Public unions are bleeding the country dry. Even FDR didn't think they were a good idea.

Posted by Cassandra at April 23, 2014 06:49 AM

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Comments

Uh... I was trying to order some gummi-bear adult vitamins? Do they come in grape? I only like grape ones.

Posted by: spd rdr at April 23, 2014 11:08 AM

Bonuses are weird. Sometimes "Bonuses" truly are Bonuses and othertimes "Bonuses" are variable compensation.

My previous employer did the former and current does the latter.

Bonus: Employee earns a salary of 100k/year with a bonus of up to 10k. If the employee's performance is average he gets nothing. If it's slightly above average he gets 5k. If it's way above average he gets all 10k.

"Bonus": Employee earns a salary of 80k/year with a "bonus" target of 20k. If he performs average he gets 20k. If it's slightly above average he gets 25k. If it's way above average he gets 30k. But if it's slightly below average he only gets 15k.

People who are used to seeing bonuses look at the second employee and see that a below average employee got a 15k bonus.

People who are used to seeing "bonuses" look at the second employee and see that a below average employee took a 5k pay cut.

Posted by: Yu-Ain Gonnano at April 23, 2014 11:17 AM

Model #2 doesn't seem appropriate for government employees to me, but I freely acknowledge that I haven't been paying close attention.

It seems odd to me that 2/3 of employees would get performance awards.

I'll have to ask my husband - he's civil service now (I'm guessing that's what most IRS employees are) and his pay and bonuses don't conform to either of those models. There are special rules for SES but even those appear to be rewards to top performers only - and they are one-time awards that have been suspended by executive order. They don't apply to the rank and file.

From the OPM web site:

http://www.opm.gov/policy-data-oversight/performance-management/faqs/?cid=dace9bc8-d109-4db5-8c41-5aa163fa438b


Awards - Rating Based
What is a performance-based cash award?


A performance-based cash award, also commonly known as a rating-based award, is a lump-sum cash payment and requires only the most recent rating of record as the sole justification for the award. Rating-based cash awards must be based on a rating of record at the "fully successful" level (or equivalent) or higher, and rating-based awards programs, as designed and applied, must make meaningful distinctions based on levels of performance.

Can an employee receiving a "minimally satisfactory" or "unacceptable" rating of record receive a rating-based cash award?


No. An employee must have a "fully successful" or equivalent rating of record or higher to be eligible to receive a rating-based cash award.

Not sure what "fully successful" means, though.

Posted by: Cassandra at April 23, 2014 11:52 AM

I worked at Onlsow Beach during the hurricane and storm years in the 90's. I could *begin* to describe the damage and destruction that beach, the cabanas, the trailers, houses and general public buildings took with each successive hurricane, tropical storm and nor'easter that rolled through, but that would be a post unto itself. Each time it was tasked to yours truly to put it all back together - bigger and better than before! In all that time, I received exactly one bonus. It was $300 and the IRS promptly took 33% of it, followed by FICA, So-So Security, Medicare, and state taxes. When the .gov was done, I was left with less than $100.
Some bonus, eh?

Posted by: DL Sly at April 23, 2014 12:13 PM

The Unit is civil service and they are doing a lot of time off awards (which is a joke as he doesn't even use the leave he HAS) in lieu of cash awards.

So again, I'm surprised to see the IRS (unlike DoD and several other agencies) is apparently flush with cash :p

I'm shocked... SHOCKED I TELL YOU to see that the fedgov is wracked with unequal outcomes and (apparently) unequal income distribution in the form of bonuses.

Posted by: Cassandra at April 23, 2014 12:19 PM

"I'm shocked..."

You keep using that word.....

Posted by: The Wyzzyrd uv Izz at April 23, 2014 12:29 PM

I'm shocked... SHOCKED I TELL YOU to see that the fedgov is wracked with unequal outcomes and (apparently) unequal income distribution in the form of bonuses.

I love Louis. Claude Renault was the best!

Not sure what "fully successful" means, though.

I can't say with 100% certainty but it sounds like it's the "meets expectations" level of a performance review. I.e. you have to score average on all fields or better. Which is a point of interest I'd like to comment on.

We just had a performance review here at work. I'd like to brag (just a little) that mine was outstanding. My customer satisfaction rating (based solely upon anonymous feedback from the customers) was at 99% for the past year, and my boss was thoroughly pleased with my performance. I received an 8/10. Because she doesn't believe in giving people 10/10 as there's always room for improvement. And on the whole, that's fine. The question I want answered is "how many other reviewers have the same philosophy?"

Because my 8/10 is probably the highest score in my department. But if every other department is throwing around 10's like candy, boy don't I look like a slacker? Performance reviews are completely up to the particular chain of command you answer to. The rating system is (and I'm not sure how you'd fix this) completely subjective. So how is senior management to take it when they have departments with wildly different average scores? My guess is, they don't. As in, they don't think about it at all. They reward departments with high ratings, and do not reward departments with lower ratings. Because that's a lot easier to work out than trying to figure out why there's a discrepancy in metrics.

So, in the case of the IRS, it sounds like the supervisors are throwing around "you performed to standard" to most of their people, thus providing 2/3rds of employees with bonuses.

Posted by: MikeD at April 23, 2014 12:41 PM

This is symptomatic of the larger problem, yet tinkering with or eliminating bonuses for IRS employees is *entirely* beside the point;

the IRS needs a thorough, and brutal housecleaning. Due to civil service laws it would require special legislative action, and probably isn't possible until this POTUS leaves office. The only obvious practical solution is to literally fire *every* IRS manager, and most of the rest, then rehire private contractor CPA's to perform this function.


Best Regards,

Posted by: CAPT Mike at April 23, 2014 04:34 PM

Regarding bonuses:

My current employer does give bonuses. They are based on your performance review. It is a 4-point scale. When I got my first one, I was told "I don't give 4s". A 3 is "meets expectations". I have always gotten a 3.something. Just because you perform well doesn't mean you get a bonus. The company has to meet a certain earnings target, and if the target is met, the Board must vote to approve. For me, it has been roughly equivalent to one extra paycheck.

However, my employer is in the process of being acquired. So, if I continue to have a job with the new owner, I don't have a clue as to how they might work things.

Posted by: Miss Ladybug at April 23, 2014 05:04 PM

Long ago, as a law firm associate, I was paid according to a standard payscale that included about 60% base pay and 40% discretionary bonus. In most years, most of us were awarded the full bonus. An award of anything less was a warning that one was off the partnership track; if it happened two years in a row, it was a signal to polish up the resume before the unofficial grace period terminated.

A somewhat similar system was used to communicate with us when we became partners. There the pay was 100% discretionary in theory, but in practice there was a published scale of "points" (fractions of a percentage of profit) depending on how many years you had been a partner. Your points could drift a little below the standard for a brief period if you had a bad year, but a long-term below-average trend meant "time to find opportunities elsewhere."

It makes less sense to use this kind of system in a government job from which it would be hard to be fired for anything less than major theft, or contributing to a Republican candidate.

Posted by: Texan99 at April 25, 2014 10:14 AM

It makes less sense to use this kind of system in a government job from which it would be hard to be fired for anything less than major theft, or contributing to a Republican candidate.

I think this is the salient point. My pay structure is very much the same at my current firm, but that's not appropriate for government positions.

My husband did have an interesting take on this when I asked him. He said, "So... if I'm working for a private firm and don't pay my taxes, would this normally affect my bonus?"

And I had to concede, "Nope, unless perhaps your employer knew of it, and even then I'm guessing it would have no bearing."

He agreed that employees who had been disciplined for on the job infractions absolutely should not get a bonus, but I thought his other point was actually well taken.

Posted by: Cassandra at April 25, 2014 11:02 AM

My husband did have an interesting take on this when I asked him. He said, "So... if I'm working for a private firm and don't pay my taxes, would this normally affect my bonus?"

And I had to concede, "Nope, unless perhaps your employer knew of it, and even then I'm guessing it would have no bearing."

I'd like to draw a distinction. Let's say you have a job where it is your duty to catch and arrest drivers for DUI. And to keep things simple, let's just assume for a moment this is in a fictional land where that's your only duty. You're not a police officer, you're a DUI Warden. Other people have other police responsibilities. You get not one, but multiple infractions of the DUI law. Should that affect your bonus at work?

I posit you should be fired. And in fact, many cops lose their jobs if they're arrested for DUI. So why is it even debatable if it should affect bonuses for employees of the government whose job is to find and catch tax cheats? They should absolutely be fired for it, and to worry about "should they get a bonus" is just ludicrous!

Posted by: MikeD at April 25, 2014 11:53 AM

I'd like to draw a distinction. Let's say you have a job where it is your duty to catch and arrest drivers for DUI. And to keep things simple, let's just assume for a moment this is in a fictional land where that's your only duty. You're not a police officer, you're a DUI Warden. Other people have other police responsibilities. You get not one, but multiple infractions of the DUI law. Should that affect your bonus at work?

Yes, I think it should. His point was more practical than anything else (and I think he's right) - in practice it would add another layer to a performance review (managers would have to conduct a check to make sure there weren't any infractions not directly related to work, but logically related to it).

I agree with you (it creates the appearance of impropriety) but I also think he was highlighting the fact that in general, government workers are held to a lot of standards civilian workers aren't. I don't think that's necessarily a bad thing (and I suspect neither does he) but it does raise the cost to the taxpayer considerably.

Posted by: Cassandra at April 25, 2014 12:08 PM

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