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 Chuck Grassley of Iowa, a senior Republican on the Senate Finance Committee, which has jurisdiction over the IRS.
Grassley said his office has learned that the IRS was to execute an agreement with the employees union Wednesday to pay the bonuses. Grassley said 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."
On Wednesday, the IRS said it was still negotiating with the union over the matter. Under the union contract, employees can get individual performance bonuses of up to $3,500 a year.
"Because bargaining has not been completed, there has been no final determination made on the payment of performance awards for the bargaining-unit employee population," 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 said. However, she wouldn't say whether the IRS believes it is contractually obligated to pay the bonuses.
The National Treasury Employees Union says the bonuses are legally required as part of the collective bargaining agreement.
"NTEU has had a negotiated performance-awards program at the IRS for decades, pursuant to the law and regulations which specifically authorize agencies to implement such merit-based incentive programs," NTEU President Colleen M. Kelley said in a statement. "NTEU is currently in discussions with the IRS on this matter and other matters resulting from budget cutbacks."