The Internal Revenue Service is doing a better job of attracting and retaining qualified personnel, but it still needs to do a better job of complying with legal requirements.

A new report by the Treasury Inspector General for Tax Administration found that the IRS has improved its use of recruitment and retention incentives, but it needs better controls to ensure compliance with all legal requirements and guidelines.

Like other agencies in the federal government, the IRS has the flexibility to use payment compensation such as recruitment and retention incentives to attract and retain a high-quality workforce. 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 administers these recruitment and retention incentives properly. The report found that the agency has improved its administration of the use of such incentives, but the procedures fell short of ensuring that all federal and internal guidelines were met. Because IRS management relied on manual controls and did not always review the recruitment and retention 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 of the 27 retention incentives reviewed by TIGTA did not have adequate documentation to show that the employees who received the incentives otherwise would have left the agency. In addition, the IRS has not fully incorporated the use of recruitment and retention incentives into its strategic workforce planning because IRS management does not assess the impact of the use of incentives on the agency’s planning goals.

“IRS management must identify a method to assess the impact of the use of incentives on overall workforce planning goals,” said TIGTA Inspector General J. Russell George in a statement. “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 long-term workforce planning goals. The IRS agreed with TIGTA’s recommendations.

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