"In this unprecedented budget situation, I do not believe the IRS should pay performance awards this year to employees, managers or executives," acting Commissioner Danny Werfel told employees in an e-mail. He said the elimination of bonuses was not a reflection on the quality of work done by the agency, and that eliminating the bonuses could allow the IRS to avoid two furlough days this summer.
The IRS' largest bonus program gave performance-based awards to 55,643 employees in fiscal year 2011, according to data from the Office of Personnel Management. The average award was $1,557, for a total of $86.6 million.
The nation's tax collection agency has been under increasing scrutiny amid a number of scandals involving the treatment of conservative non-profit groups, lavish spending at conferences and improper contracts.
The bonuses, too, have come under congressional scrutiny, in part because some of the officials responsible for targeting Tea Party groups continued to receive bonuses.
"While efforts to block the bonuses are welcome news, actions speak louder than words," said Sen. Orrin Hatch, R-Utah, the top Republican on the Senate Finance Committee. "In my view, the IRS should not be paying out bonuses especially now when it's under multiple congressional investigations for targeting conservative groups."
Werfel said he has already canceled bonuses for managers and is looking to eliminate them for senior officials as well. He said the agency is in talks with the National Treasury Employees Union to eliminate bonuses for unionized employees as well.
"IRS employees are dedicated and hard-working professionals who perform important and difficult work for our country," union President Colleen Kelley said in a statement. "Employees have already earned these awards. The awards that are due are based on employee performance evaluations for work already performed beginning in 2012."
The IRS is scheduled to be closed July 22 and Aug. 30 because of automatic government-wide spending cuts — commonly known as "sequestration" — enacted in 2011. "If the IRS cancels the remaining furlough days, all employees would be paid on those days," wrote Werfel, whom President Obama tapped to head the agency in May after the resignation of the previous acting commissioner. "Even more importantly, it would mean the IRS would remain open on those days to serve taxpayers and meet the needs of the nation's tax system."