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Q&A on Status of IRS Bonuses

July 26, 2013
Senator Chuck Grassley , Dysart Reporter

Q: What prompted you to write a letter to the IRS about executive bonuses?

A: In March, $85 billion in automatic, across-the-board spending reductions started taking effect throughout the federal government. Triggered by the Budget Control Act of 2011, the sequester was the option of last resort after the White House and Congress locked horns over taxes and spending. The sequester kicked in when lawmakers couldn't see eye to eye on how to find $1 trillion in savings over 10 years, to be split evenly between military and domestic spending. Federal agencies were tasked with tightening their belts to comply with the sequester savings. However, Congress took steps to prevent those who work on the front lines of public safety from being affected by unpaid leave known as furloughs, including meat inspectors, air traffic controllers and prison corrections officers. The White House budget office issued a directive in April to federal agencies, stipulating "discretionary monetary awards should not be issued while sequestration is in place, unless issuance of such awards is legally required." So I was incredulous to learn from a whistleblower that the IRS was moving forward with plans to spend $70 million on employee bonuses despite having the legal authority to eliminate them. I wrote to the Acting IRS Commissioner to ask him to explain how the IRS appears to have $70 million to spend on bonus payments. After facing a bruising public relations disaster earlier this summer, the IRS appears either tone-deaf or arrogant when it comes to misspending taxpayer dollars.

Q: Were you able to prevent the bonuses from being handed out?

A: The good news is the IRS has agreed that all bonuses may be an inappropriate expense during the sequester. It seems ridiculous that it took a media firestorm and congressional outrage to light a fire underneath the IRS leadership team to make this tepid acknowledgement. Considering its battered reputation of poor fiscal stewardship and apparent targeting of certain taxpayer groups, the IRS ought to be in full good governance mode. The bad news is, the IRS left the door open to proceed with bonuses to union members and senior executives. This comes after recent revelations the IRS has paid out more than $92 million in bonuses during the Obama administration. The IRS routinely claims to be short on resources. And yet, it seems to go out of its way to carve out resources for employee bonuses. The American public deserves a full explanation. In my book, giving bonuses does not qualify as belt-tightening. As far as I can tell, the IRS union members and senior executives are not working on the front lines of public safety. Again, the White House budget office agrees that discretionary bonuses should not be awarded. In the meantime, I will continue working to hold the IRS accountable.



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