WASHINGTON — Already reeling from a pair of scandals, the Internal Revenue Service is drawing new criticism over plans to hand out millions of dollars in employee bonuses.
The Obama administration has ordered agencies to cancel discretionary bonuses because of automatic spending cuts, but the IRS says it's merely following legal obligations under a union contract.
The agency is about to pay $70 million in employee bonuses, said Sen. Chuck Grassley of Iowa, a senior Republican on the Senate Finance Committee, which has jurisdiction over the IRS.
Grassley says his office has learned the IRS was to execute an agreement with the employees' union Wednesday to pay the bonuses. Grassley says the bonuses should be canceled under an April directive from the White House budget office.
The directive was written by Danny Werfel, a former budget official who has since been appointed acting IRS commissioner.
“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 IRS said it is negotiating with the union over the matter but did not dispute Grassley's claim that the bonuses are imminent. Under the union contract, employees can get individual performance bonuses of up to $3,500 a year.
Office of Management and Budget “guidance directs that agencies should not pay discretionary monetary awards at this time, unless legally required,” IRS spokeswoman Michelle Eldridge said in a statement. “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.”
Eldridge, however, would not say whether the IRS believes it is contractually obligated to pay the bonuses.
“In accordance with OMB guidance, the IRS is actively engaged with NTEU on these matters in recognition of our current budgetary constraints,” Eldridge said.