Separate IG reports have raised concerns about IRS workforce issues that have drawn the attention of Congress in recent years, the potential for conflicts of interest by employees who perform other work on the side and the rehiring of former employees with previous performance or conduct issues.

Regarding the former issue, the IG said that the agency “does not have processes to identify employees with unapproved prohibited outside employment.” The audit identified 167 employees “who potentially engaged in prohibited activities such as tax preparation,” and 2,196 “who hold positions that, depending on the nature of the outside employment activity, have a higher risk for a real or perceived conflict of interest.”


Managers did not timely review nearly two-thirds of employees employee requests for permission to do other work, and the agency’s “outside employment system,” or OES, database to track such arrangements “does not ensure that employees comply with outside employment requirements” because officials don’t perform regular quality reviews.

Regarding rehiring employees, the other audit found that the IRS does have procedures in place for detecting prior problems but did not always follow them. It said that in a nine-month period over 2017-2018, nearly a quarter of the agency’s 6,400 new hires had previously worked there and of those 2 percent had substantiated prior conduct or performance issues—down from the 10 percent rate from an earlier audit.

Management documented that it was aware of the issues in each case but in all but four did not document why it hired those individuals anyway. Although the number is small, the IG said, “rehiring employees who have known conduct or performance issues presents increased risk that the employees will repeat the same or other unwanted behavior. Hiring employees of high integrity is essential to maintaining public trust in tax administration and safeguarding taxpayer information.”