A recent internal audit of the Internal Revenue Service revealed that over the course of two years, the agency tasks with maintaining tax compliance paid bonuses to about 2,800 employees who had recently been disciplined for failing to pay their own taxes. In addition to cash bonuses, employees were also given raises and extra paid time off.

In total the IRS gave out $2.8 million in bonuses over the course of two years. Out of that total sum, $1.1 million was awarded to employees who were not up to date on their taxes. An IRS spokesperson says that it is not illegal to pay bonuses to employees who have outstanding taxes owed to the government, but that awarding these bonuses is clearly counter-intuitive for the tax compliance agency.

Setting aside the irony of the situation, it is interesting to hear that so many IRS employees are not up to date on their own taxes. As employees of the agency they certainly have the resources to figure out and resolve their tax issues. At the same time, most people who run into problems with tax underpayment are those who work as independent contractors or are self-employed and must manage their own tax payments rather than rely on employer withholdings. These types of situations can often be remedied through the creation of a payment plan or through a compromise with the IRS about the amount of taxes that are truly owed. Each situation is different, however, so the advice of an experienced tax professional is helpful when one comes into conflict with the IRS. 

Source: Los Angeles Times, “IRS workers got $1.1 million in bonuses despite owing back taxes,” Jim Puzzagnhera, April 23, 2014.