IRS only removed 20 out of 70 employees with 'substantiated willful' tax violations since Oct. 2021

The Internal Revenue Service (IRS) only removed 20 out of 50 employees with "substantiated willful" tax violations despite a law that allow the IRS commissioner to fire any employee over willful misconduct including tax noncompliance, according to a new Inspector General report.

"Between October 1, 2021, and April 1, 2023, the IRS closed 1,175 cases with disciplinary actions, for 1,068 current employees, with confirmed tax noncompliance issues. During that same time period, 70 employees were identified with substantiated willful

§ 1203(b)(8) or (b)(9) violations and 20 were removed as a result," read a report from the Treasury Inspector General for Tax Administration. 

"Although the law requires an employee who has either willfully not filed or willfully understated their taxes due to be removed, subject only to the IRS Commissioner’s mitigation, this disciplinary action is not always enforced. The Internal Revenue Manual does not describe the facts and circumstances considered by the § 1203 Review Board when making recommendations to the IRS Commissioner for mitigation or termination of IRS employees," read the report.

The IG report also found that 397 IRS employees with were rehired, and 115 "former IRS employees" with "previously substantiated conduct/performance or tax noncompliance issues during Calendar Years 2005 to 2022" are now contractors. 

There is a law on the books requiring removal of IRS employees with willful tax compliance problems but it's only enforced at the IRS commissioners discretion.

"In Section (§) 1203(b) of the IRS Restructuring and Reform Act of 1998, Congress made mandatory the removal of any IRS employees who were found to have willfully committed certain acts of misconduct, including tax noncompliance, subject only to the IRS Commissioner’s discretion," the report noted.

"Hiring employees of high integrity is essential to safeguarding taxpayer information. IRS and contractor employees who are not tax compliant could negatively affect public trust in tax administration and the perception that the IRS is being honest in its dealings with taxpayers," read the IG report.

Past efforts to pass legislation that would require the firing of federal employees with unpaid taxes have failed to pass in Congress.