Taxpayer Bill of Rights  

IRS Restructuring Discussion Draft

Section 4: Prohibition on Executive Branch Influence
Over Audits and Personnel Flexibilities

IV. Prohibition on Executive Branch Influence over Audits and Personnel Flexibilities

A. Prohibition on Executive Branch Influence Over Taxpayer Audits (House bill)

Prohibit high level Executive Branch Officials (subject to certain exceptions) from requesting the IRS to conduct or terminate an audit or investigation of any particular taxpayer.

B. IRS Personnel Flexibilities

Provide personnel tools that will enable the Commissioner to reorganize the IRS.

1. Flexibilities for Senior Management, Professional and Technical Positions

In order to give the IRS commissioner the ability to bring the type of executives to the IRS that he feels is necessary to effect the change in the organization, there would need to be changes in the current personnel programs. Currently, the number of employees the Commissioner can appoint and the pay and other remuneration that can be given to these employees is limited. For example, the Commissioner can only appoint three individuals to senior positions who are not IRS career service employees. These changes would be as follows:

a. Give the IRS Commissioner the authority to fill senior executive service positions which were reserved for IRS career service employees with limited or temporary appointments of individuals who have not had a career with the IRS. These individuals would have time limits on their employment of up to three years (which could be extended). It is anticipated that these type of employees would be brought into the IRS to perform specific functions and then return to the private sector.

b. Provide that the Treasury Secretary may appoint up to 40 senior executives with technical, professional and management expertise at pay levels not in excess of the compensation of the Vice President without approval of the OPM and OMB. In addition, the Treasury Secretary may appoint individuals to critical positions other than those established under the streamlined authority for senior executives at pay levels not in excess of the compensation of the Vice President, with the approval of OMB. The recruitment, retention, and relocation incentives that the IRS can provide for these type of senior executives would be expanded, subject to the approval of the OPM.

c. As part of the return to a service-oriented culture and to reward these new critical executives for attaining specified performance results, the IRS will be given the authority to provide for variable compensation (i.e., bonuses) in excess of amounts currently allowed for up to 25 senior IRS executives. Any variable compensation award in excess of 20% of basic pay would have to be approved by the Treasury Secretary. In addition, the amount of the award when combined with other compensation of an individual cannot exceed the compensation of the Vice President

2. Flexibilities for the General Workforce

a. Extend the voluntary separation incentive pay program that ended December 31, 1997 to December 31, 2002.

b. Establish streamlined demonstration authority to establish new human resource programs within a specified time period. The streamlining eliminates or shortens some of the waiting periods and comment periods that are usually applicable with demonstration projects. The demonstration project will be subject to the review of the OPM.

c. As the IRS decreases the levels of management in its organization, the traditional ways of rewarding superior performers by giving them higher management authority (along with commensurate pay increases) will not be as available as before. The Treasury Secretary is given the authority (subject to criteria established by the OPM) to restructure employee pay rates in connection with implementing a broad banded employee pay system which will provide for increases in pay based on increases in job competencies, but without the need for moving to a higher level of management. This will be different from the current government pay and grading system.

d. The Treasury Secretary may establish a new performance management system, developing individual accountability for performance reviews. In conjunction with this new performance review system, the Treasury Secretary may also establish a new incentive awards program which awards up to $25,000 without OPM approval.

3. Any of the personnel flexibilities that affect employees represented by a union must be agreed to between the IRS and the union. If the union and the IRS cannot agree, then the matter will be brought before the Federal Impasse Panel for resolution.

4. Tentative Government Affairs Committee Recommendations

The Government Affairs Committee generally approves the personnel flexibility changes discussed above. However, they suggest a number of changes:

a. All the personnel flexibility changes that are discussed above should be included in a demonstration project. This would mean that prior to implementing these changes, there would be notification of the each House of Congress and to the employees likely to be affected by the change.

A demonstration project would normally last 5 years and a decision would be made at that point whether to make the demonstration project official or whether to cancel these changes. It is also possible for the Treasury and the OPM to terminate the demonstration project during its term.

b. They propose limitations on extensions of the voluntary incentive pay program so that payments are made only if actual employee headcount reductions are made.

c. With regard to broad banding pay policies discussed above, they recommend that cost controls be established in the implementation plan.

d. Finally, they believe that the personnel flexibility measures concerning incentive awards and recruitment, retention and relocation bonuses should be instituted government wide. Streamlined demonstration authority should also be available government wide.

5. Require the IRS to develop employee performance measures that favor taxpayer service.

6. Require the IRS to terminate an employee if any of the following conduct is proven in a disciplinary or other proceeding:

a. Failure to obtain the required approval signatures on documents authorizing the seizure of a taxpayer's home, personal belongings, or business assets.

b. Perjury (e.g., false testimony in a taxpayer's case, failure to provide truthful information in the course of a criminal investigation, or false information in a deposition or affidavit)

c. Falsifying or destroying documents concerning a particular taxpayer to cover-up employee mistakes.

d. Assault or battery on a taxpayer or other IRS employee.

e. Violation of the civil rights of a taxpayer or other IRS employee.

f. Violation of the Internal Revenue Code, Treasury Regulations, or policies of the IRS (including the Internal Revenue Manual) for the purpose of retaliating or harassing a taxpayer or other IRS employee.

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