The tax problems include willful understatement of tax liabilities, late payments and under-reporting of income.
NEW YORK, NY (NBC) - The IRS handed out $2.8 million in bonuses to employees with disciplinary issues, including giving more than $1 million to workers who didn't pay their federal taxes.
The report by the Treasury Inspector General for Tax Administration looked at bonuses in 2011 and 2012.
It found that more than 1,100 IRS employees received bonuses within a year of substantiated federal tax compliance problems, and these employees didn't just receive bonuses.
Employees with tax problems received more than 10,000 hours of paid time off, valued at $250,000. Some also received permanent raises.
The employees' tax problems included "willful understatement of tax liabilities over multiple years, late payment of tax liabilities, and under-reporting of income," the report says.
In a response, the IRS Chief Human Capital Officer said the agency takes its role as the nation's tax administrator seriously, and will strive to implement a policy that protects the integrity of the system.
The IRS said it has instituted a policy to take conduct into account when giving bonuses to senior executives, but for the agency to make the policy apply to all workers, it said it would require negotiations with the National Treasury Employees Union.