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Grassley Criticizes Potential $70 Million in IRS Bonuses

June 19 (Bloomberg) -- The Internal Revenue Service may be nearing an agreement to pay unionized employees $70 million in bonuses that aren’t legally required, said Republican Senator Charles Grassley.

A government-wide directive says such bonuses shouldn’t be paid while automatic federal spending cuts are in effect, Grassley of Iowa wrote in a letter to Daniel Werfel, the interim chief of the IRS.

“While the IRS may claim that these bonuses are legally required under the original bargaining unit agreement, that claim would allegedly be inaccurate,” Grassley wrote in a letter dated yesterday. “In fact, the original agreement allows for the re-appropriation of such award funding in the event of budgetary shortfall.”

The IRS said in a statement that it 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.” About 80,000 of the agency’s roughly 90,000 workers are unionized.

The IRS is “actively engaged” with the National Treasury Employees Union on the matter, the agency said in its statement. The IRS statement didn’t say whether it was reaching an agreement with the union or whether it would pay the bonuses.

To make up for the shortfall caused by federal spending cuts this year, the IRS is requiring employees to take five furlough days. During that time, the agency is closed and taxpayers’ calls aren’t answered.

Grassley’s letter said the IRS plans to reach an agreement with the union today.

Talks Continuing

In a statement, the union president said discussions are continuing.

“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,” the union president, Colleen Kelley, said today in a statement.

She said the union’s position is that the awards are legally required as part of the collective bargaining agreement with the IRS.

To contact the reporter on this story: Richard Rubin in Washington at

To contact the editor responsible for this story: Jodi Schneider at

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