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No bonuses for IRS employees, says mediator

In 11 days lots of federal employees could be living on less. Political posturing on Capitol Hill could lead to a shutdown of government offices when the new fiscal year begins on Oct. 1.

Some Internal Revenue Service employees, however, already are adjusting their budgets.

A mediator has decided that acting IRS head Daniel Werfel's decision to cancel $70 million in scheduled bonus payouts is OK.



It's a good thing for Werfel that the third-party mediator agreed with the temporary tax agency chief since the bonus money already has been spent. It was used to offset the cancellation of furlough days that had been scheduled for July 22 and Aug. 30.

Five furlough closings had originally been planned, but IRS employees were forced to take only three days -- May 24, June 14 and July 5 -- of forced unpaid leave.

Unwelcome email: Werfel delivered the bad news earlier this week in an email to IRS staff.

"After pursuing our collective bargaining obligations and receiving a recommended resolution from a third-party fact finder, we will not pay bargaining unit performance awards this fiscal year," Werfel wrote.

Werfel also said the agency is pursing "options" under federal personnel employment regulations regarding senior executive service leadership bonuses. Basically, Werfel said that all IRS employees regardless of rank should be treated equally when it comes to bonuses "during this difficult budget period."

That would mean no added money this year for anyone. The IRS decided earlier not to award bonuses to non-union employees.

The bonus cancellation is no doubt welcomed by Congressional Republicans, particularly those on the House Ways and Means Committee, who bring up the bonuses at every hearing on IRS operations and missteps.

Not so fast: But it's not quite a done deal.

The National Treasury Employees Union (NTEU), which represents IRS workers, is appealing the mediator's decision.

NTEU has filed a national grievance with the IRS to require the bonuses, which would reward employees for work done in 2012. The union's position is that is the IRS is obligated by a collective bargaining agreement to pay the bonuses. An arbitrator is expected to resolve the issue in the spring.

The third-party mediator did not issue a ruling on IRS’ legal obligation to award bonuses, NTEU President Colleen M. Kelley said.

"NTEU rejects IRS management's argument that the IRS cannot pay awards due to budget cuts," said Kelley. "The IRS makes funding decisions based on its priorities every day, such as paying contractors rather than its own employees. IRS leadership had the opportunity to make frontline employees a priority and chose not to."

The Federal Services Impasses Panel (FSIP) also is involved. FSIP won't rule on the bonus payment issue, but instead will address "the impact and implementation" of the IRS decision to stop paying awards in the future.

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