Your Tax Preparer May Even Work for the Criminal Investigation Unit of the IRS
The Treasury Inspector General for Tax Administration (TIGTA) found that as many as 2,200 IRS employees hold unapproved jobs outside the agency that put them at a higher risk of real or perceived conflicts of interest, and that 167 may have been doing work that is specifically prohibited — such as tax preparation. Of those 167, 51 IRS employees were working in accounting, 45 in legal services and 22 in tax, including five employees who worked with the tax prep chain H&R Block.
IRS Criminal Investigation Employees
IRS Criminal Investigation (CI) employees are special agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code. If an IRS CI employee knowing violates the IRS’s rules regarding employment outside of the IRS, what other unethical behavior is being conducted?
TIGTA reported that IRS criminal investigators were the most likely to have outside employment, with 15 percent holding second jobs, and two-thirds of those were unapproved, also the most of any IRS position. Revenue agents came in second, with 7 percent holding unapproved jobs, and a total of 13 percent holding outside jobs.
How Is This Type of Misbehavior Possible?
Perhaps more important, according to the TIGTA report, is the fact that the IRS lacks adequate processes for tracking its employees’ other jobs and gauging their potential for conflicts of interest and has no way to identify employees whose outside work is unapproved or prohibited.
Government employees are not necessarily forbidden from having outside employment, but those jobs must not present conflicts of interest with their government positions, and the employees must report them and get authorization to hold them through the Outside Employment System (OES).
Why Did TIGTA Conduct this Investigation?
TIGTA conducted the audit that led to the current report because an earlier OES investigation revealed that as much as half of full-time IRS employees who had outside jobs did not have approval for them, or the jobs were not documented in the OES. In other words, TIGTA wanted to verify if the IRS had corrected its previously reported shortcomings.
The OES alone does not guarantee that employees comply with the requirements around outside work, TIGTA noted; among other things, it found that two-thirds of the 14,155 employee requests in the OES in a sample period were not reviewed by managers on a timely basis — or were not reviewed at all.
Who Has Side Jobs at the IRS?
TIGTA recommended that the director of the Workforce Relations Division review all the identified employees and address any conflicts; work with the Office of Chief Counsel to see if they need legislation to use tax data to identify potential conflicts; and better manage the OES, both in terms of requiring employee compliance and management review.
IRS management agreed or partially agreed with most of the recommendations, noting that it couldn’t commit to requiring some employees to using the OES without negotiating a change in work agreements.
What Else Is Happening at the IRS?
In a separate report, TIGTA found that the IRS has improved its processes and procedures for rehiring former employees who had substantiated conduct or performance issues (which included abusive behavior towards taxpayers), but that the updated processes weren’t always followed.
Of 33 former IRS employees rehired during the sample period, the problem for 29 was one of failing to document the reasons for rehiring them, despite their previous issues. For the remaining four, the new guidelines were inappropriately applied. That’s zero compliance for the 33 new hires used as a test sample.
TIGTA recommended that the IRS update its manual and tools to increase compliance with the new procedures and processes, train the appropriate officials in their use, and it conduct periodic quality reviews of hiring decisions.
As it usually does, IRS management agreed with all the TIGTA recommendations. The bigger issue is when will management ensure that such recommendations are implemented.
Tax Planning Tip #1:
Tax professionals are not fungible goods. Some are very experienced, act professionally and ethically, and thoroughly understand the tax law and how best to reduce your tax liabilities. When you price shop to have a tax return prepared, you need to carefully consider the experience and training of those low-ball prices. Don’t forget the adage “you get what you pay for”.
While cost of tax preparation is very important when choosing a tax professional, it is more important to ensure that you are dealing with an ethical and experienced tax professional.
If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
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About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.
A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.