IRS Agrees to Pay Employees Bonuses

John Koskinen became IRS commissioner in December. John Koskinen became IRS commissioner in December. J. Scott Applewhite/AP

The Internal Revenue Service will partially reinstate its bonus program to union employees, agreeing to provide reduced awards to avoid litigation.

The National Treasury Employees Union fought for the bonuses, which they said IRS workers already earned and were legally required to receive because of the union’s collective bargaining agreement. NTEU and the IRS agreed to create a bonus pool of 1 percent of bargaining unit salaries, a 39 percent reduction from the original total.

“While this settlement provides an awards pool that is less than the amount called for under the parties’ negotiated agreement, the settlement avoids protracted litigation over the matter,” said NTEU President Colleen M. Kelley.

The bonuses, which the IRS will pay out in the spring, will be based on performance evaluations conducted in 2013 on work beginning in 2012. The 1 percent of salaries’ cap, which the IRS said was the most it could offer based on guidance from the Office of Management and Budget, will create a bonus pool of $43 million. That figure is down from the original total of $70 million.

Kelley said the reduction was tough to swallow, but smaller bonuses now were preferable to waiting for the outcome of the legal proceedings, despite the union’s confidence in its case.

“Payment of these earned awards to employees is in important step in recognizing their valuable contributions to the IRS and the nation,” Kelley said. “The awards are a relatively small amount of money, but they go a long way toward acknowledging the hard work of employees who exceed their performance expectations for the year.”

In September, a third-party mediator upheld then-Principal Deputy Commissioner and the agency’s effective chief Danny Werfel’s decision to cancel the bonuses. John Koskinen became IRS commissioner in December, and Werfel left government shortly thereafter.

The IRS was one of the few agencies to retain a majority of its sequestration cuts in the fiscal 2014 appropriations bill.

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