The Internal Revenue Service rehired more than 200 employees with previous conduct and performance issues, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found that 10 percent of the more than 2,000 former employees rehired by the IRS between January 2015 and March 2016 had been previously fired while under investigation for a substantiated conduct or performance issue.

Of the more than 200 rehired employees, 86 had been “separated” from the IRS while they under investigation for absences and leave, workplace disruption, or failure to follow instructions. Four had been terminated or resigned for willful failure to properly file their federal tax returns; while another four employees had been separated from their jobs while under investigation for unauthorized accesses to taxpayer information. On top of that, 27 former employees didn’t disclose a previous termination or conviction on their application, as required, but were nonetheless rehired by the IRS.

Treasury Inspector General J. Russell George addressing a House subcommittee
Treasury Inspector General J. Russell George addressing a House subcommittee Bloomberg News

“Rehiring hundreds of employees with a track record of substantiated conduct and performance issues, including willful tax noncompliance and unauthorized access to tax records, is not prudent and unnecessarily increases the risk of internal fraud and abuse,” said TIGTA Inspector General J. Russell George in a statement. “Given the threat of identity theft and the amount of sensitive information that the IRS manages, job offers should only be extended to applicants of great integrity.”

The report found the IRS hasn’t done a good job of updating its hiring policies to consider past IRS conduct and performance issues before making a tentative decision to hire former employees. That includes former employees who were terminated or separated during an investigation of a substantiated conduct or performance issue. The IRS has a specific set of criteria it uses to disqualify applicants for employment, but information about a job candidate’s past employment history with the IRS isn’t given to the selecting official for consideration during the hiring process.

IRS officials told TIGTA it would be cost prohibitive to review previous issues before a hiring decision and tentative offer have been made. However, the IRS couldn’t give TIGTA any documented support for this position. TIGTA also couldn’t verify the IRS considers previous issues because its reviews aren’t always documented.

TIGTA recommended the IRS’s Human Capital Officer give officials who select employees access to information about conduct and performance issues of former employees. The IRS should also require the basis for rehiring employees who have previous employment issues to be clearly documented, TIGTA suggested. The IRS agreed with all of TIGTA’s recommendations and intends to fix the problems.

“The Internal Revenue Service agrees in principle with the recommendations, and will update current practices and policies to ensure ALERTS data reflecting prior performance and misconduct of a former employee is generated and utilized in the hiring process, and that any decision to hire former employees identified as having misconduct and performance issues is documented, articulating the basis for re-hire,” wrote acting IRS human capital officer E. Faith Bell in response to the report. “To the extent permissible by law, IRS will take all steps allowable to prevent the rehiring of former employees with conduct and performance issues.”

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.