Treasury Inspector General for Tax Administration
October 26, 2011
TIGTA - 2011-72
Contact: Karen Kraushaar
WASHINGTON – The Internal Revenue Service (IRS) has improved its use of recruitment and retention incentives, but it needs better controls to ensure compliance with all legal requirements and guidelines, according to a new study by the Treasury Inspector General for Tax Administration (TIGTA).
Like other Federal agencies, the IRS has the flexibility to use payment compensation in the form of recruitment and retention incentives to attract and retain a high-quality workforce. Specifically, the IRS can offer recruitment incentives to attract new employees for positions that are difficult to fill, and retention incentives to retain employees with unusually high or unique qualifications.
TIGTA’s audit reviewed whether the IRS properly administers recruitment and retention incentives. TIGTA found that IRS management improved its administration of the use of recruitment and retention incentives; however, procedures were not adequate to ensure that all Federal and internal guidelines were met. Because IRS management relied on manual controls and did not always review incentives to ensure compliance with legal requirements until after the incentives were approved, TIGTA found that some controls were bypassed or not followed.
This resulted in some recruitment and retention incentives not being processed in accordance with IRS guidelines between January 2006 and February 2010. For example, seven (25.9 percent) of the 27 retention incentives reviewed did not contain adequate documentation to support that employees would likely leave the IRS in the absence of the incentive, which presents a risk that the incentives may not have been justified. In addition, the IRS has not fully incorporated the use of recruitment and retention incentives into the IRS’s strategic workforce planning because IRS management does not assess the impact of the use of incentives on their planning goals.
“IRS management must identify a method to assess the impact of the use of incentives on overall workforce planning goals,” said J. Russell George, Treasury Inspector General for Tax Administration. “Without this information, it is impossible to ensure that incentives are used to help the IRS achieve its workforce planning goals of having the right people in the right place and at the right time.”
TIGTA recommended that IRS officials strengthen manual controls to ensure that Federal and internal guidelines are met, and that they develop a methodology to assess the impact of the use of recruitment and retention incentives in helping IRS management meet longterm workforce planning goals.
The IRS agreed with TIGTA’s recommendations.
Read the report.
Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA’s internal review process to ensure that public release is in compliance with Federal confidentiality laws.
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