Taxing Definitions

Definitions — Bad apples and rotten behavior

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In 1998, the US congress passed the Internal Revenue Restructuring and Reform Act in response to Internal Revenue Service abuses in the administration and enforcement of tax laws. The Act required the IRS to change its organizational culture, as well as restructure, modernize, and improve taxpayer protections and rights.

In the aftermath of the Act, the IRS Office of Chief Counsel established a Professionalism Program to deal with allegations of employee misconduct. The Office of Chief Counsel is the home of the legal staff of the service. From interpreting the internal revenue code to representing the commissioner in tax court, the Office of Chief Counsel acts as the “law firm” for the IRS.

How does the Office of Chief Counsel discipline its own bad apples? Allegations or evidence of serious misconduct on the part of an employee must be referred to the Office of Treasury Inspector General for Tax Administration, who conducts an investigation. Other allegations of misconduct are referred to the Deputy Chief Counsel of Operations.

Disciplinary actions that apply to all allegations or evidence of misconduct by an employee received from any source include (in order of severity) written counseling, admonishment, reprimand, suspension, demotion, and removal.

In the following examples, what disciplinary action do you think was taken?

1. A clerical employee tried to use an attorney’s name (without the attorney’s permission) in connection with an outside personal dispute. The clerical employee tried to make it appear as if the attorney was giving advice or representing the clerical employee.

WHAT WOULD YOU DECIDE?

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2. An employee was given an official government credit card for travel in connection with her job. All government credit cards are to be used for official government purposes only. Despite these rules, the employee repeatedly used the card for personal purposes such as buying groceries and gas. The employee’s excuses for these actions were that she was facing financial difficulties and only used the card when necessary (such as gas to get to work).

WHAT WOULD YOU DECIDE?

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3. An employee was assessed less than $1,000 in additional taxes. The employee promptly paid the additional tax. The employee had not faced this tax issue before and it was unlikely to recur.

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4. An employee lost a government laptop. The laptop was accidentally lost while the employee was traveling. The laptop had the appropriate security to safeguard the material on the laptop and the employee had not stored password information with the laptop that would compromise security.

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5. An employee had access to the IRS system of internal databases and programs used to work active tax cases as a part of their official duties in the office. The employee misused the system for personal reasons by seeking address information about the ex-spouse of the employee’s child.

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6. An employee failed to file a proper tax return. The employee had accidentally overlooked interest income from a particular account when filing the return. The oversight was discovered through an IRS audit and the employee promptly paid the additional tax.

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7. The tax court ordered an attorney to take various actions on a pending case by a set deadline. The attorney failed to do so and also did not provide an excuse to the court for this failure. The attorney provided misleading information to the manager. The tax court judge sanctioned the government and, after an investigation into the facts, the attorney was suspended for this failure to comply with the tax court’s order. What do you think happened to the manager?

WHAT WOULD YOU DECIDE?

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8. An employee used a government computer to send emails in a private, non-work related matter that created a false impression that the employee was acting in an official role in the matters discussed. Sending several emails from a government computer gave the appearance that the employee’s position was being used to influence the outcome of the private matters contained in the emails.

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9. A Chief Counsel attorney allowed other nonemployees into the building and damage occurred. The employee who gave the individuals access into the building, thereby making the damage possible, claimed to be unaware that the nonemployees were causing damage.

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10. Two employees had a verbal altercation in an open office area. The employees used racial terms to refer to each other during the incident and used profanity.

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11. An employee used official Office of Chief Counsel letterhead (including an official work title) to write a letter to a court. The letter was written on behalf of the employee’s personal friend who had pleaded guilty to tax-related criminal charges. The letter asked for leniency in sentencing and raised questions about why the friend was criminally prosecuted.

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12. A supervisory-level employee forwarded an email through the work email system concerning a partisan political matter. The email raised issues about a particular political candidate and said people should not vote for the candidate. The supervisory-level employee forwarded the email on to at least one person who was a subordinate.

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13. An employee neglected to report income on their personal income tax return from an account related to a relative’s estate. The IRS contacted the employee through an audit and the employee was assessed approximately $3,000 in additional taxes which the employee promptly paid. The employee notified management about the problem when it occurred.

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14. An attorney got into an argument with a doctor’s office about the charge for a particular service. In the course of the argument, the employee mentioned their job as an IRS attorney. The doctor’s office complained about this matter alleging that the employee was trying to misuse their position to intimidate the doctor’s office.

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15. An employee could not timely pay the full amount of taxes due when they filed their tax return in April. The employee had previously received minor tax discipline. The employee timely filed the tax return, requested an installment agreement, and paid off the full amount due over several months.

WHAT WOULD YOU DECIDE?

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16. A manager frequently failed to follow their manager’s direction to seek approval on personnel matters and to accurately record absences from work.

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17. An attorney who reviewed the work of others failed to follow management direction to interact professionally with others. The attorney said that another attorney’s work was “worthless and stupid.”

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18. A secretary said that they would not do a particular task and that a manager could “shove” the work.

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19. A secretary told the manager “don’t go there, don’t go there” when the manager tried to get the employee to get off the phone to handle an important work matter.

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Source of above examples: Office of Chief Counsel Report on Professionalism

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This information should not be considered legal, investment or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment or tax advice. Always consult your legal, investment and/or tax advisor regarding your personal situation.

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Right answer! Because these statements were lies and the clerical employee was attempting to misuse her position and relationship to the attorney, the clerical employee was given a choice to either resign or face a proposed removal. The employee chose to resign.
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Right answer! Because there is no good excuse for misusing a government credit card, the employee received a 14-day suspension and was prohibited from using a government credit card in the future.
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Right answer! Because the dollar error in filing the tax return was a relatively small amount and involved a tax issue the employee had not faced before and was unlikely to recur, the employee received written counseling in lieu of more serious discipline.
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Right answer! Even though the laptop was lost by accident and the employee took responsible steps to recover it, the employee was still responsible for the loss of government equipment and was, therefore, reprimanded.
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Right answer! This constitutes serious unauthorized access misconduct because the system cannot be used for any personal reasons. The employee received a 45-day suspension.
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Right answer! The employee received written counseling. Even though this was not intentional misconduct, the employee was counseled because of the failure to file a proper tax return (including all income).
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Right answer! The manager of the attorney was also disciplined. Even though the attorney provided misleading information to the manager, the manager failed to exercise appropriate oversight and was therefore admonished.
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Right answer! The employee received an admonishment.
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Right answer! The employee received a suspension for conduct unbecoming a Chief Counsel attorney.
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Right answer! Both employees received written counseling.
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Right answer! Because this was a misuse of the employee’s official position and because this matter caused embarrassment to the IRS, the employee was suspended.
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Right answer! Even though this was an isolated one-time occurrence, this matter was investigated by the Office of Special Counsel and the employee was found to have violated the Hatch Act by sending a political email to a subordinate. The employee was suspended for 30 calendar days for this violation of the Hatch Act.
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Right answer! Because the failure to report income was negligent vs. intentional and because the employee acted promptly to resolve the matter, the employee received a written counseling vs. more serious discipline.
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Right answer! The employee was wrong to mention their job as a part of this personal dispute. Because this was a misuse of the employee’s official position, the employee was reprimanded.
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Right answer! Even though the employee had previous personal tax issues, this issue was resolved through written counseling because the employee acted responsibly.
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Right answer! This manager resigned in lieu of termination.
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Right answer! The attorney received an admonishment.
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Right answer! The secretary received an admonishment.
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Right answer! The secretary received written counseling.
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