IRS chief moves to cancel $70M in bonuses

Citing budget cuts, the Internal Revenue Service is canceling this year's employee bonuses for managers and is working to cancel bonuses for union workers, the agency announced Tuesday.

Acting IRS Commissioner Danny Werfel told workers in an email that he is canceling the bonuses because of automatic spending cuts enacted this year. The union's collective bargaining agreement calls for about $70 million in performance bonuses this year, but there is a clause that could enable the IRS to renegotiate.

"It is my intention to continue to pursue eliminating award payouts this year to bargaining unit employees," Werfel said in the email. "This approach is consistent with government-wide policy, which requires suspension of awards during sequestration to the extent appropriate legal procedures are complied with."

The National Treasury Employees Union has said it believes the bonuses are legally required under the agreement.

The IRS has been under intense scrutiny since the agency revealed in May that agents had improperly targeted conservative political groups when they applied for tax-exempt status. The agency has also been criticized for lavish spending on employee conference and the potential employee bonuses, which were made public in June.

A House Republican spending bill would prohibit funding for employee bonuses and awards until the bonus program is reviewed.

Werfel did not mention the scandal in his message to employees.

"This is not a reflection of the quality or performance of the work done by the IRS workforce, but rather an unfortunate byproduct of the difficult budgetary situation we find ourselves in," Werfel said in a statement.

If the IRS is successful in canceling union bonuses, the agency will also cancel two scheduled furlough days for workers, Werfel said.

Earlier this year, the agency announced five furlough days in which the entire agency shuts down because of budget cuts. The agency has already imposed three furlough days.