TREASURY INSPEcTOR GENERAL

TREASURY INSPEcTOR GENERAL
FOR TAX ADMINISTRATION

IRS EMPLOYEE OUTSIDE
EMPLOYMENT REQUESTS

January 1999

Reference No. 091804

Executive Summary
Results and Recommendations

This report presents control findings noted during separate integrity reviews in the Northeast and Southeast Regions. During the course of these reviews we noted that portions of the Service’s controls over outside employment of Service employees should be updated and automated. Although there have been government–wide changes, Internal Revenue Manual guidelines on outside employment have not been updated since 1986. A summary of our observations, and accompanying recommendations, follow:

Interviews with 207 managers in two regions indicated that there were mixed levels of understanding regarding their role in the Internal Revenue Service process for reviewing and approving requests for outside employment. For example, Labor Relations is responsible for assisting management in their decisions on approving or disapproving outside employment requests. However, we interviewed first-line managers who believed that Labor Relations made the final decision on whether to approve these requests. (See page 5)

Recommendation 1: Update and clarify national guidelines on the processing, approval, and annual review of applications for outside employment. clearly define the role and authority of both management and Labor Relations. In one major office, the person providing assistance to management by reviewing outside employment requests for appropriateness was a Labor Relations secretary.

Neither management nor Labor Relations had complete information about employees’ outside employment. A cross check of information return records against Labor Relations’ records in one region showed that Labor Relations did not have approved requests on file for 42 percent of employees with actual outside income. Tests in another region indicated parallel results. Similarly, a cross check with first-line managers in both regions showed that Labor Relations possessed only 50 percent of the approved outside employment requests held by first-line managers. (See page 5)

While TAPS (Totally Automated Personnel System) was available nationally, use of the system for recording and controlling outside employment information was not widespread or consistent in the two regions reviewed. For example, at the time of our inquiry in 1997, some Labor Relations sites had not input any outside employment information into the system, while others had only recently begun entering data from their paper records.

Recommendation 2: Fully implement an efficient, accurate, and automated system in each Labor Relations office, using the TAPS Outside Employment System (OES) module for recording and controlling outside employment information on IRS employees.

Full implementation would also provide the additional benefit of automated information for performing the required annual reviews of approved outside requests. Of the nine Labor Relations offices we visited, only one had performed a recent annual review of approved outside employment requests. Another office had no record of ever conducting this required review.

Properly conducted annual verifications of outside employment ensure consistency and compliance with Service regulations, and can reduce the chance for improper outside employment activities. For example, we identified an instance where a manager of an IRS employee did not know that the employee was preparing tax returns for compensation. After we shared this information with the manager, the employee was instructed to cease this outside employment activity.

Existing Labor Relations’ outside employment files were outdated and incomplete. For example, a limited sample of outside employment requests on file at Labor Relations offices in one Region identified employees listed in outside employment records who were no longer employed by the Service. In addition, many of the approved requests on file were pre-1993 versions of the outside employment request (Form 7995), which did not provide for the employee’s social security number. This increased the difficulty of entering the data on TAPS, and even positively identifying the actual employee. (See page 4)

Recommendation 3: Require a one-time resubmission of all outside employment requests (using Forms 7995 revised 1993 or after, which provide for the SSNs), to enable a national clean-up of Labor Relations’ and managers’ records.

While individual instances of potential violations of outside employment guidelines are still being followed up, we found no pattern of abuse of outside employment authorizations. However, in the two regions reviewed, Internal Audit referred 56 employees to Internal Security for investigation as possible browsers of the computerized tax records of their outside employers, or their spouses’ employers. ****1,3d****. This portion of our review will be extended nationwide. (See Page 7)

Recommendation 4: Emphasize to employees that unauthorized research of the tax records of their outside employers, or the tax records of their spouses’ employers, will subject them to disciplinary action.

We are also recommending to the chief Inspector’s centralized case Development center operation that its UNAX program incorporate an employer browsing analysis on a regular basis.

The chief Management and Finance has agreed with the facts and recommendations in the report.

Redaction Legend:

1 = Tax return/Return information
3d = Identifying Information - Other Identifying Information of an Individual or Individuals