IRS fires supervisor over her own tax problems, court agrees

The employee flagged the threat to her manager, who told her to get ahead of it and contact the Treasury Inspector General for Tax Administration. That disclosure triggered an investigation, which turned up more than the original complaint. 

Investigators found she had improperly claimed her goddaughter and her goddaughter’s son as dependents across several tax years, and had placed both on her federal employee health insurance plan. She acknowledged to investigators that “she knew that her actions were technically illegal,” according to the decision. An IRS audit found she owed back taxes, interest, and penalties, plus a separate sum the agency tied to “the health insurance fraud.” 

She challenged the tax bill in US Tax Court and settled in 2020 for roughly half of what the IRS first assessed. Two travel-card incidents – a disputed hotel charge and two bounced payments – added prior discipline to her file. 

In March 2021, the IRS proposed removing her, citing understated tax liability, unpaid taxes she owed, and improper dependent claims on her health insurance. The agency said the misconduct showed “a severe lack of integrity,” a quality it called essential to her position and to keeping taxpayers’ trust. She was removed that August. 

Her appeal split the Merit Systems Protection Board. An administrative judge first reversed the firing. The full Board then reversed that ruling and sustained the removal, faulting the judge for discounting her Tax Court records.