[ v15 p626 ]
15:0626(133)CA
The decision of the Authority follows:
15 FLRA No. 133
INTERNAL REVENUE SERVICE
LOS ANGELES DISTRICT OFFICE
Respondent
and
NATIONAL TREASURY EMPLOYEES UNION
Charging Party
Case No. 8-CA-415
DECISION AND ORDER
The Administrative Law Judge issued the attached Decision in the
above-entitled proceeding finding that the Respondent had engaged in the
unfair labor practices alleged in the complaint and recommending that it
be ordered to cease and desist therefrom and take certain affirmative
action. The Respondent filed exceptions with respect to the Judge's
Decision. /1/
Pursuant to section 2423.29 of the Authority's Rules and Regulations
and section 7118 of the Federal Service Labor-Management Relations
Statute (the Statute), the Authority has reviewed the rulings of the
Judge made at the hearing and finds that no prejudicial error was
committed. The rulings are hereby affirmed. Upon consideration of the
Judge's Decision and the entire record, the Authority hereby adopts the
Judge's findings, conclusions, and Recommended Order as modified below.
In finding that the Respondent violated section 7116(a)(1) and (8) of
the Statute by failing to comply with the provisions of section
7114(a)(2)(B) of the Statute, the Authority agrees with the Judge's
conclusions that the tax audit examination, under the factual
circumstances presented herein, was but an "extension of the
investigation" of the employee; that it constituted an examination of a
unit employee by an agency representative in connection with an
investigation; that the employee reasonably believed that disciplinary
action might result from the examination; and that the employee
requested union representation, which request was denied. /2/
However, the Authority disagrees with the Judge's finding that the
Respondent's statement to the union steward in the February 25
memorandum that "we must also advise you that your appearance as these
employees' representative could constitute a felony" was a threat in
violation of 7116(a)(1) of the Statute. In finding that such a
statement did not interfere with, restrain or coerce the union steward
in the exercise of her rights under the Statute, the Authority notes
that such a statement, presented as advice, merely reflected
Respondent's reasonable and consistently held position, supported by a
March 19, 1981 letter from the Office of Government Ethics, that
employees of the IRS are prohibited by 18 USC 205 from appearing as a
representative on behalf of any taxpayer (including fellow employees)
before any governmental agency. Nothing in the record indicates that
the statement at issue herein was anything other than a good faith
expression of that position to the union steward. Further, at no time
did the Respondent threaten to prosecute the union steward, but merely
informed her that her attendance "could" constitute a felony under its
interpretation of applicable law. Viewed in this context, a reasonable
interpretation of this statement would not have engendered a belief that
a threat was implied. Accordingly, the Authority concludes that the
Respondent's advice to the union steward did not independently violate
section 7116(a)(1) of the Statute, and shall order that this allegation
of the complaint be dismissed.
ORDER
Pursuant to section 2423.29 of the Federal Labor Relations
Authority's Rules and Regulations and section 7118 of the Statute, it is
hereby ordered that the Internal Revenue Service, Los Angeles District,
shall:
1. Cease and desist from:
(a) Refusing or failing to afford an opportunity to the National
Treasury Employees Union, or any other exclusive representative of its
employees, to be represented at a tax audit examination of James Ashley,
or any other bargaining unit employee in connection with any
investigation which could reasonably result in disciplinary action, when
such representation is requested by the employee.
(b) In any like or related manner interfering with, restraining, or
coercing its employees in the exercise of their rights assured by the
Federal Service Labor-Management Relations Statute.
2. Take the following affirmative action in order to effectuate the
purposes and policies of the Statute:
(a) Afford the National Treasury Employees Union, or any other
exclusive representative of its employees, the opportunity to be fully
represented at any tax audit examination of an employee in the unit by a
representative of the agency in connection with an investigation, if the
employee reasonably believes that the tax audit examination may result
in disciplinary action against the employee, and the employee requests
such representation.
(b) Expunge from James Ashley's official personnel folder, and any
other documents or reports, any reference to the February 1980 tax audit
examination.
(c) Refrain from using, in any future disciplinary action against
James Ashley, any information obtained or derived from the February 1980
tax audit examination of James Ashley.
(d) Post at its facilities in the Internal Revenue Service, Los
Angeles District, copies of the attached Notice on forms to be furnished
by the Federal Labor Relations Authority. Upon receipt of such forms,
they shall be signed by the District Director, Internal Revenue Service,
Los Angeles District, or his designee, and they shall be posted and
maintained by him for 60 consecutive days thereafter, in conspicuous
places, including all bulletin boards and other places where notices to
employees in the District are customarily posted. Reasonable steps
shall be taken to ensure that such Notices are not altered, defaced, or
covered by any other material.
(e) Pursuant to section 2423.30 of the Authority's Rules and
Regulations, notify the Regional Director, Region VIII, Federal Labor
Relations Authority, in writing, within 30 days from the date of this
Order, as to what steps have been taken to comply herewith.
IT IS HEREBY FURTHER ORDERED that the alleged violation in the
complaint pertaining to the statement in the February 25, 1980
memorandum be, and it hereby is, dismissed.
Issued, Washington, D.C., August 28, 1984
Barbara J. Mahone, Chairman
Ronald W. Haughton, Member
Henry B. Frazier III, Member
FEDERAL LABOR RELATIONS AUTHORITY
NOTICE TO ALL EMPLOYEES
PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
RELATIONS
AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
OF TITLE
5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
RELATIONS
WE HEREBY NOTIFY OUR EMPLOYEES THAT:
WE WILL NOT refuse or fail to afford an opportunity to the National
Treasury Employees Union, or any other exclusive representative of our
employees, to be represented at a tax audit examination of James Ashley,
or any other bargaining unit employee, in connection with any
investigation which could reasonably result in disciplinary action, when
such representation is requested by the employee.
WE WILL afford the National Treasury Employees Union, or any other
exclusive representative of our employees, the opportunity to be fully
represented at any tax audit examination of an employee in the unit by a
representative of the agency in connection with an investigation, if the
employee reasonably believes that the tax audit examination may result
in disciplinary action against the employee, and the employee requests
such representation.
WE WILL expunge from James Ashley's official personnel folder and any
other documents or reports any reference to the February 1980 tax audit
examination.
WE WILL refrain from using, in any future disciplinary action against
James Ashley, any information obtained or derived from the February 1980
tax audit examination of James Ashley.
WE WILL NOT in any like or related manner interfere with, restrain or
coerce any employee in the exercise of any right under the Statute.
(Activity)
By: (Signature) (Title)
Dated: . . .
This Notice must remain posted for 60 consecutive days from the date
of posting, and must not be altered, defaced, or covered by any other
material.
If employees have any questions concerning this Notice or compliance
with its provisions, they may communicate directly with the Regional
Director, Region VIII, Federal Labor Relations Authority, whose address
is: 350 South Figueroa Street, 10th Floor, Los Angeles, CA 90071, and
whose telephone number is: (213) 688-3805.
-------------------- ALJ$ DECISION FOLLOWS --------------------
Robert J. Wilson,
Attorney for Respondent
David Handsher,
For the Charging Party
E. A. Jones,
Attorney for the General Counsel,
Federal Labor Relations Authority
Before: Isabelle R. Cappello
Administrative Law Judge
DECISION
This is a proceeding under the Federal-Service Labor Management
Relations Statute, 92 Stat. 1191, Chapter 71 of Title 5 of the U.S. Code
(hereinafter referred to as the "Statute"), and the Rules and
Regulations issued thereunder and published in 45 Fed.Reg. 3482-3524
(1/17/80), 5 C.F.R. 2421 et seq.
Pursuant to a Charge filed on March 19, 1980 by the National Treasury
Employees Union (hereinafter, "NTEU" or the "Union"), and an amended
charge filed on August 29, 1980, a Complaint and Notice of Hearing was
issued on August 29, 1980, and an amended Complaint was issued on
November 21, 1980, by the Regional Director, Region VIII, of the Federal
Labor Relations Authority (hereinafter, the "Authority"). /3/
The amended Complaint alleges a violation by Respondent (also
referred to as "IRS") of Section 7116(a)(1) and (8) of the Statute by
denying the request of IRS employee James Ashley to be represented by
his unit's exclusive representative in an income tax audit examination
of his personal Federal income tax returns. The amended Complaint also
alleges a violation by Respondent of Section 7116(a)(1) by providing a
memorandum to the exclusive representative in which IRS threatened
possible felony prosecution if the representative were to represent the
employee at the examination. Respondent denies the facts, as alleged,
and that any violations have occurred.
Statutory Provisions Involved
Section 7116(a) of the Statute provides, in pertinent part:
(a) For the purpose of this chapter, it shall be an unfair
labor practice for an agency--
(1) to interfere with, restrain, or coerce any employee in the
exercise by the employee of any right under this chapter;
* * * *
(8) to otherwise fail or refuse to comply with any provision of
this chapter.
Section 7114(a) of the Statute provides, in pertinent part:
(2) An exclusive representative of an appropriate unit in an
agency shall be given the opportunity to be represented at--
* * * *
(B) any examination of an employee in the unit by a
representative of the agency in connection with an investigation
if--
(i) the employee reasonably believes that the examination may
result in disciplinary action against the employee; and
(ii) the employee requests representation.
Section 7102 of the Statute provides, in pertinent part:
Each employee shall have the right to form, join, or assist any
labor organization . . . freely and without fear of penalty or
reprisal, and each employee shall be protected in the exercise of
such right.
A hearing was held on February 9 and 10, 1981, in Los Angeles, CA.
All parties were afforded a full opportunity to be heard and introduce
evidence. Briefs were filed by the parties on May 13, 1981. Based upon
the record made at the hearing, my observation of the witnesses and
their demeanor, and the briefs, the following findings and conclusions
are made and order recommended.
Findings of Fact /4/
1. NTEU is the exclusive representative of certain IRS employees,
including auditors and revenue agents. Revenue agents are employed in
IRS's Examination Division. They conduct field examinations of Federal
tax returns. Auditors are also employed in the Examination Division, to
conduct less complicated examinations, in IRS offices. (References in
this decision to "examiners" refer to both revenue agents and auditors.)
Because of the confidentiality of tax information, an employee may not,
ordinarily, disclose such information to anyone other than a Treasury
Department employee or official.
2. James Ashley is a GS 13 revenue agent employed in IRS's
International Tax Section. His duty post is in the Los Angeles District
Office, but most of his cases are outside Los Angeles. He has been an
IRS employee for 17 years. There are some 3500 employees in the Los
Angeles District Office.
3. Beginning on or about May 15, 1978, Mr. Ashley was the subject of
a so-called Special Inquiry Investigation by IRS's Inspection Division.
This Division is largely responsible for investigating breaches of
employee integrity, e.g. IRS's Code of Conduct violations. A Special
Inquiry Investigation is begun where circumstances indicate a
possibility of a Code of Conduct violation. Initially, the basis of the
Ashley investigation was an allegation that Mr. Ashley may not have
complied with tax laws in possibly trying to secure for his wife an
erroneous refund of taxes paid. The investigation was subsequently
expanded to look into other allegations, including possibly impending
IRS operations with respect to examination of the tax returns of Mr.
Ashley and his wife. Impeding IRS operations constitutes a possible
basis for finding an IRS Code of Conduct violation, and discipline.
4. During the period of the Ashley Special Inquiry, Mr. Ashley's
1976, 1977, and 1978 Federal tax returns were being subjected to the
scrutiny of IRS's Examination Division. The investigators conducting
the Special Inquiry on Mr. Ashley made six or eight contacts with the
examiners of these returns during the period of the Special Inquiry. It
was one of the examiners who furnished the information upon which the
Special Inquiry was expanded to include an allegation of possibly
impeding IRS operations. One of the audit reports generated by one of
the examiners was "killed" by a supervisor, who because "very irate"
over Mr. Ashley, as an IRS employee, challenging a mere $59 deficiency
found on one of the returns, and threatened to open up additional areas
of his tax returns. The last of the examiners to handle these tax
returns of Mr. Ashley was Jacqueline Flynn, in February. She was
contacted by an investigator to inquire into the status of the ongoing
Ashley examination, in an "attempt to determine, if in fact, there were
any activities ongoing on the part of any party to impede the audit."
(TR 437-438). Ms. Flynn told him that Mr. Ashley "might do anything to
delay or lengthen the Procedures and to forestall any resolution." (TR
381). After Ms. Flynn completed her audit report, and before the last
investigator completed his final report on the Special Inquiry, the
investigator reviewed Ms. Flynn's audit report on Mr. Ashley.
5. Ms. Flynn, a GS 11 revenue agent, contacted Mr. Ashley about her
audit of his 1976, 1977, and 1978 tax returns by letter dated August 3,
1979. She indicated that Mr. Ashley's 1976 return was assigned to her
for "completion of the examination" initiated by another examiner. She
indicated that she wished to discuss certain items with him
"personally," although there would be "no objection" if he wished to
have a representative or witness present. (GC 31) She indicated what
items needed "verification." (GC 31)
6. Earlier, while Mr. Ashley was overseas on official business, Ms.
Flynn had contacted Mr. Ashley's tax representative, Martin Stoger. Mr.
Stoger was handling technical aspects of the proper allocation of
retirement-income contributions between the separately-filed returns of
Mr. Ashley and his wife. This was the issue which had been the focus of
the 1976 and 1977 examinations. Mr. Stoger had Mr. Ashley's tax
records. Mr. Stoger, whose business is in Houston, TX, declined to come
to Los Angeles, where IRS insisted on holding the examinations. Upon
Mr. Ashley's return to this country, in January, Mr. Stoger informed Mr.
Ashley that he, Mr. Ashley, was being accused by IRS of delaying the
examination.
7. After Mr. Ashley returned from overseas, in January, Ms. Flynn
set February 26 for the audit, and advised that the examination could
continue on February 27 and/or 28 and/or 29. The national average time
for the examination of a simple salary tax return is two hours. Mr.
Ashley was disturbed that so much time was being set aside for the
February examination.
8. Mr. Ashley was also disturbed because he viewed the Flynn audit
of his 1976 and 1977 returns as a reopening. There is a dispute as to
whether, technically, the Flynn audit was a reopening. It has some
indication of a reopening, in that appeal rights had been granted.
Reopenings must go through a series of supervisory reviews, and signal
that there may be evidence of fraud, malfeasance, collusion,
concealment, or misrepresentation of a material fact-- any of which
constitutes a Code of Conduct violation which can result in discipline.
9. Mr. Ashley was also concerned over the fact that Ms. Flynn was to
examine his 1978 return. His 1978 return would not yet have become
available for an ordinary examination unless requested by the Inspection
Division.
10. At the time of his scheduled February examination, Mr. Ashley
was also disturbed over horror stories he had heard of IRS using
employee tax returns to check on employee integrity.
11. On February 21, Mr. Ashley wrote a memo to IRS's District
Director, at Los Angeles, in which he stated that he had reason to
believe that the examination of his tax returns for 1976, 1977, and 1978
could result in disciplinary action and, therefore, requested that he be
given an opportunity to have his Union steward present. He designated
Sylvia Kellison as his Union representative, but "only in employment
related matters," and not as his Circular 230 tax representative. (GC
3) Circular 230 contains IRS regulations governing the practice of tax
representatives before IRS. See GC 4. Mr. Ashley expected Ms. Kellison
to advise him on what repercussions he could expect from certain steps
and statements he might make, "as an employee versus a normal taxpayer."
(TR 307)
12. On February 21, Ms. Kellison, Chief Steward of the Union,
forwarded the February 21 memo of Mr. Ashley to the District Director
and, in her transmittal memo, stated: "I believe that my representation
of the employee in the employment-related matters is not violative of MT
0735.1-10, 237.2(c)(2) and that the Civil Service Reform Act, 5 USC
7114(a)(1) requires me to represent this member of the bargaining unit
in this examination." (GC 3 A) MT 0735 is a reference to IRS's Handbook
of Employee Responsibilities and Conduct (hereinafter, the "Handbook").
13. On February 25, Respondent's Chief of Employee-Labor Relations
Section, Michael Spies, sent a memo to Ms. Kellison confirming his
verbal notification that she would not be permitted to represent Mr.
Ashley and another employee, during the examination of their tax
returns. The reason given was that "because the examination of these
tax returns is outside the employer/employee relationship, the
examinations do not fall within the definition of 'investigation' under
Section 7114(a)(2)(B)" of the Statute. (GC 28)
14. In the February 25 memo, Mr. Spies also stated that: "We must
also advise you that your appearance as these employees' representative
could constitute a felony." The memo than stated: "Title 18 USC 205,
provides that an employee of the United States who acts as agent for
anyone before any department in any proceeding in which the United
States is a party or has a substantial interest shall be fined or
imprisoned or both." /5/ In addition, the memo warned that IRS's
Handbook specifically prohibits employees of the Service from appearing
as a representative on behalf of any tax payer before any government
agency involving a tax matter."
15. IRS has apparently not interpreted 18 U.S.C. 205, or its
Handbook, as preventing Mr. Ashley from acting as his wife's
representative, at her tax audits before IRS. Such consent was given by
IRS in June.
16. Ms. Kellison did not attend the tax audit of Mr. Ashley because
she "felt (she) would be subject to prosecution, and that (she) also
might receive a notice of proposed termination based on the Code of
Conduct violation that (Mr. Spies) referenced in (his) letter." (TR 111)
17. The February audit of Mr. Ashley's tax returns took place over a
two-day period. It took place at an attorney's office in Alhambra, CA,
and also involved the returns of Mr. Ashley's wife. Mr. Ashley attended
on his own time. He again requested Union representation. Ms. Flynn
stated that she lacked the power to act on the request. At the time Ms.
Flynn received the Ashley file for audit, in August 1979, she was told
that Mr. Ashley was an IRS employee, but she did not receive any
instructions to conduct Mr. Ashley's audit differently from that of any
other taxpayer. Mr. Ashley and Ms. Flynn were the only persons present
at the audit. Mr. Ashley declined to produce records for the 1976 and
1977 returns because he felt that proper reopening procedures were not
followed. Mr. Ashley asked Ms. Flynn to sign statements on records he
produced and a letter from his wife explaining her nonappearance. Ms.
Flynn refused. See TR 358. Mr. Ashley asked Ms. Flynn to provide him
with IRS documentation on reopening returns. She replied: "And so I
asked him, you know, if you know all these procedures and you know the
numbers and you can get them as easily as I can, why don't you just get
them, and he said, because I want you to provide them so I can use them
in my defense." (TR 361) At the audit examination, Ms. Flynn questioned
Mr. Ashley about his 1978 tax returns and examined documents he
furnished to verify the return. Mr. Ashley later came to Ms. Flynn's
office to request technical advice. He also filed technical appeals.
As a result of Mr. Ashley's behavior during the audit, and after, Ms.
Flynn formed the conclusion that Mr. Ashley was "uncooperative and
difficult." (Tr 382, 381) Ms. Flynn concedes that she may have told the
investigator handling the Special Inquiry on Mr. Ashley that Mr. Ashley
was being "uncooperative and difficult," when the investigator contacted
her about "the status" of her examination of Mr. Ashley's returns. (TR
382-383, 363) Ms. Flynn's testimony on this point appeared to be
evasive; and I find that she did, in fact, report Mr. Ashley to the
investigator as being uncooperative and difficult. Ms. Flynn did not,
on her own initiative, refer any matter concerning Mr. Ashley's audit to
the Inspection Division.
18. The Special Inquiry investigative report on Mr. Ashley contained
information, inter alia, that Mr. Ashley had "purposefully impeded
examination activity." (GC 40) In January 1981, the report was reviewed
by Mr. Ashley's supervisor, group manager, and branch manager "for among
other things, Rules of Conduct violations." See Stipulation of Facts, #2
(GC 2). They concluded that there was no basis in the report for
discipline of Mr. Ashley, and forwarded their recommendations to the
Chief of the Examination Division. The Chief, in a referral-back memo
raised several questions, including a question as to just what Mr.
Ashley had done which could be construed as impeding IRS operations with
respect to the examination of his and his wife's tax returns. Further
investigation action is still "possible." (TR 428) IRS claims that an
"administrative error" occurred in sending the report to Mr. Ashley's
supervisors. (RBr 26)
The last investigator to work on the Ashley Special Inquiry is not
"entirely" aware of why his report was referred to Mr. Ashley's
supervisors "except for the fact . . . that t(he) Special Inquiry
investigation regarding Mr. Ashley was ongoing for a period of time
during which there were also lengthy examination procedures ongoing."
(TR 405-406)
The general treatment by IRS of employees' tax returns
19. IRS conducts examinations of employees' tax returns under
several different programs or procedures.
(a) One is the normal computer screening process known as "DIF,"
which is applicable to all taxpayers. Treatment of employees under the
normal screening process varies, somewhat, from that of other taxpayers,
however. Employee returns are specially marked and secured to insure
employee privacy. Each IRS District maintains a list of all employees
currently under audit in the District. However, IRS does not know if
all employees being audited are on the list, since employee status is
determined only if information on the tax return is sufficient to
indicate IRS employment. The purpose of keeping the list is to control
the employee examinations only while they are in process; and it is
destroyed after audit processes are completed. Employee returns may not
be returned by the agent assigned to the audit, for lack of adequate
potential to justify an examination, as in the case of other taxpayers,
without special permission from higher authority.
(b) Another program under which IRS examines employees' tax returns
is the New Employee Audit Program. It is applicable to employees going
into sensitive positions.
(c) Another program is the Employee Under Reporter Program (EURP), in
which there is a matching of information documents to returns of IRS
employees. Employees do not have to respond to questions by their
supervisors under this program.
(d) Another program is the Employee Federal Tax Delinquency Program
(EFTDP) a non-file, late-file, non-pay program. It is based on an
annual computer run to insure employee returns are filed and timely
paid, if tax is due. For the period January 1, 1975 through September
30, 1980, 250 cases were referred, under this program. Fourteen
reprimands and fifteen oral admonishments resulted.
(e) Another program is the National Coordinated Inspection Program
(NCIP). The NCIP program was in effect in IRS's Western and Midwest
Regions around the time of Mr. Ashley's February audit. The object of
this program was to identify and initiate investigation of individual
cases of alleged breakdowns in employee integrity. The Western Region
includes the Los Angeles District, where Mr. Ashley's February audit
took place. The program included review of the 1975-1977 tax returns of
technical employees, including revenue agents such as Mr. Ashley.
Employees using their "inside knowledge to take advantage of the
processing system" were the target. (GC 19.3) Where the Inspection
Division had an interest in any matter pending with the Examination
Division involving an employee tax matter, the "NCIP coordinator" was to
be advised. (GC 20.2) NCIP was underway in April 1979, during which
month 78 current or former employees in the Western Region were under
audit. By January 12, NCIP had resulted in discipline of three
employees. One employee came under suspicion when he became "aggressive
with the office auditor" during an examination of his 1976 tax return.
This was used as an example, in IRS's April 23, 1979 "NCIP Status
Report," of a case turned up independent of NCIP, but which would have
been included in the project sample. (GC 21.50) In the Los Angeles
District, 78 employees tax returns were referred for examination under
NCIP. Throughout the Western and Midwest Regions, 818 returns were
referred to the Inspection Division, 231 were referred for audit, and
168 were actually audited. NCIP has ended. No Los Angeles District
employees have been disciplined as a result of NCIP. However, there is
still a possibility of such discipline, as all investigations generated
under NCIP have not been completed.
20. IRS examined all Code of Conduct cases relating to taxes for the
period January 1, 1975 through September 30, 1980. In addition to those
found under EFTDP and NCIP programs (see findings 19(d) and (3),
above.), there were cases where a tax matter was only part of the
charge. In one case a tax examiner was removed, in part, for two
specifications of failure to file. There was a 10-day suspension of a
revenue agent, in part for three specifications for failure to timely
file and pay. A contact representative was given a five-day suspension,
in part for failure to timely pay and two specifications of failure to
report all income. There was a 10-day suspension of a revenue agent, in
part for failure to timely pay. There was a removal of a clerk, in part
for three specifications of failure to timely file. A probationary
employee was terminated for failure to report all income and failure to
timely file. One employee retired while a proposed removal was in
effect, for claiming false exemptions and appearing on behalf of a
taxpayer without approval. There was one case of a removal of a
taxpayer service representative for failure to timely file and pay. A
tax examiner was removed for, in part, failure to pay and claiming false
exemptions. A tax examiner resigned while a proposed removal letter was
in effect for making false entries on a return.
21. IRS has another special procedure for examining employee tax
returns. Specific and general allegations of employee misconduct are
referred to the Inspection Division, which can request that an audit be
conducted of the employee's returns by the Examination Division. The
case inspector briefs the examiner on pertinent aspects of the pending
investigation and maintains liaison with the examiner, who makes status
reports to the case inspector "on a timely basis, including any
significant information that may develop." (GC 16) Upon completion of
the requested audit, "the cooperative examiner" submits a copy of the
audit report to the Investigations Branch which requested it. (GC 16) A
summary of the audit, and its effect upon the case are reported to the
case inspector and made a part of the investigative file.
22. A witness for IRS testified that Mr. Ashley's February audit was
not generated under NCIP, EFTDP or EUPP. See TR 321-323. This witness
did not identify the program or procedure under which the audit at issue
did take place. It is not clear from the record just how or if an
employee would know the program under which he was being called in for
an audit of his tax returns. Auditors and reviewers know, in part, from
the "charge out card." (TR 175).
23. The IRS has a Rule of Conduct dealing with tax matters. It
states:
(1) The mission of the Service is to encourage and achieve the
highest possible degree of voluntary compliance with the tax laws
and regulations and to maintain the highest degree of public
confidence in the integrity and efficiency of the Service. In
light of this mission, it is imperative that our employees comply
fully with all applicable requirements of governmental taxing
authorities at all levels-- Federal, State and local.
(2) It is expected, therefore, that employees will:
(a) file timely and properly all tax returns in keeping with
the requirements of law, regulation, or ordinance;
(b) pay timely any valid tax due.
(3) A "valid tax due" as used in this subsection includes:
(a) a balance due on an original return as filed with a
governmental agency;
(b) an uncontested tax assessment of a governmental agency;
(c) a tax otherwise due a governmental agency which is
acknowledged by the employee;
(d) absent (a), (b), or (c) a final administrative
determination confirmed by notice of a tax lien issued by a
government agency.
(4) A "governmental agency" as used in this subsection includes
Federal, State, or local agencies.
(5) Employees who fail to adhere to this subsection are subject
to removal from the Service.
See GC 6.1 (Sec. 223.6). Employees are reminded annually of the
requirement to file timely and proper tax returns and that they are
"subject to disciplinary action, including removal" for failure to do
so. (GC 8)
24. Examiners are required to refer Code of Conduct violations to
the Inspection Division. Reviewers of the audit report are instructed
to "be alert for indications of activity in violation of the Rules of
Conduct." (GC 12) If violations are found, reviewers are instructed to
send a copy of the report to the Inspection Division.
25. All employees are subject to dismissal and criminal prosecution
for failure to report to their supervisors any knowledge or information
of the violation of any revenue law by any person, including employees.
26. The Inspection Division ordinarily initiates a Conduct
Investigation concerning any Code of Conduct violation referral from the
Examination Division. It may initiate a Special Inquiry where
circumstances merely indicate a possibility, rather than a probability,
of an employee violation of the Code of Conduct, and where there is
reason to believe the matter may be resolved favorably to the employee
by reviewing the income tax returns in question or interviewing the
examiner. Where the examination report of the examiner clearly shows
intent to evade taxes, gross negligence or other derogatory information,
an investigation may be dispensed with and the information transmitted
for appropriate administrative action such as discipline. The results
of any Inspection investigation are referred for appropriate
administrative action, which can include discipline. All Inspection
Conduct cases are routed through IRS's Labor Relations Office. That
office gives advice on whether employees should be disciplined because
of Code of Conduct violations; and reliance is placed on the tax audit
report.
27. There is a dispute as to whether IRS expects its employees to
attend their own tax audits. IRS has no written rule on the subject.
The Union has not sought advice on the subject and has found no case
where an employee was disciplined simply for failure to attend his or
her tax audit. In March, an IRS revenue agent, Margarete LeQuesne,
requested IRS to give her an interpretation of the Code of Conduct as it
applied to an employee audit, namely: "What types of situations would
generate disciplinary actions because of an employee audit." (R 15 B).
IRS's reply was: "A violation of the Code of Conduct constitutes cause
for disciplinary action." (R 15 A) Another IRS employee, David Branson,
wrote to IRS on March 26, asking whether he was being "ordered" to
attend an audit of his tax return. (GC 26 C) IRS replied: "There is no
order to attend the audit." (GC 26 D) At a national negotiation session
with the Union, management officials, including the Assistant
Commissioner for Coliance, three District Directors, and three Service
Center Directors, strongly argued that "it was an employees duty to
answer questions in tax audits and to attend their audits, if they were
to be a 'good citizen,' they would go to the audit and how could we ask
for compliance from other tax-payers if we didn't attend our own
audits." (TR 198) IRS eventually conceded, at this session, to allow
official time to employees attending a tax audit examination requested
by the Inspection Division. The Union has apparently not asked for
official time for employees attending other audit examinations.
28. IRS witnesses testified to their belief that IRS did not require
employee attendance at their tax audit examinations and to being unaware
of any discipline imposed for failure to attend. However, Ms. Flynn
expressed her opinion that an employee failing to show up, without prior
notice, would be regarded as "uncooperative," and she "suppose(d)" she
would characterize such conduct as impeding an audit. (TR 391-392).
29. In view of the strong views expressed by high-ranking, national
and field IRS officials, in negotiations with the Union, and the
importance attached by IRS to employee integrity in regard to their tax
returns, I find that IRS does expect its employees to attend their own
tax audit examinations, absent special circumstances, such as being
absent from the area on official business.
30. IRS Rule of Conduct Sec. 217.1 (GC 7) provides as follows:
Responding to Questions in Matters of Official Interest
When directed to do so by inspection or other competent
Treasury or Revenue Service authority, employees must testify or
respond to questions in matters of official interest. Employees
must give such testimony, or respond to questions under oath when
required or requested to do so.
Tax returns are "matters of official interest." See GC 24. However,
an IRS labor relations specialist testified that a revenue agent or tax
auditor is not a "competent authority," under Rule 217.1. (TR 453-454)
When asked how a violation of this Rule comes about, he testified,
somewhat unsurely, that: "I believe that competent authority would have
to cite the Rule of Conduct, or something of that nature, and tell the
employee that if they did not respond charges would be taken against
them, or be made against them." (TR 454) Whether this interpretation has
been explained to employees is not a matter of record. Statements made
at tax audit examinations are not taken under oath.
31. Returns selected for audit usually indicate a likelihood that
IRS may recover unpaid taxes. The presence of a deficiency, in an
employee's return, may suggest an improperly-filed return, under the IRS
Code of Conduct. If an employee, or his representative does not attend
an audit, IRS can disallow claims and find deficiencies, based on what
documentation it has available. See TR 386. In some instances
deficiencies found have resulted in referrals to the Inspection
Division. (TR 460)
32. The Inspection Division, after receiving information developed
during the tax audit process, conducts an independent investigation of
the underlying facts. During an Inspection Division examination, IRS
concedes that a Union representative has the right to be present. (RBr
18)
33. In March, the Chief of IRS's Examination Division, Los Angeles
District, sent out a memo to 14 auditors on the subject matter of
examining employee tax returns. This was after the Ashley examination
here at issue, which occurred in February. The March letter stated that
the examinations were "outside the realm of the employer/employee
relationship" and that they were "to treat the employee examined as
(they) would any other taxpayer." (R 1) The memo also stated: "Under no
circumstances are you to invoke regulations pertinent only to Service
employees such as those in MT 0735.1-10, Handbook of Employee
Responsibility and Conduct, when conducting these examinations." (R 1)
The instructions in the March letter do not supersede general
instructions that auditors are to report" facts (which) are disclosed
upon examination which indicate that an official or employee is, or has
been engaged in violation of the Rules of Conduct of the Service." See
GC 9 and TR 329-330.
34. The auditors record the taxpayer's position on a particular
issue, but not all of the conversation that transpires. An alleged
false statement made to an auditor during an examination of an employee
tax return can be a basis for a proposed adverse action against an IRS
employee. See GC 23.
35. The Inspection Division investigates allegations regarding the
filing of proper returns by employees. Inspectors in this Division are
not in the same bargaining unit as revenue agents. "Most normally," the
examiner of the return is interviewed. (TR 410) "Almost invariably,"
the employee being investigated is interviewed. (TR 411) At such
investigations, IRS recognizes the right of the employee to Union
representation. See TR 411.
36. An employee can be disciplined for what comes out of a tax audit
examination. Even an uncooperative attitude, such as delaying an audit,
can trigger the investigative process leading to discipline. In the
Joyce King case involving her proposed removal or disciple, the Chief of
the Los Angeles Examination Division cited to her the following language
from the IRS Handbook: "An employee may be subjected to severe
disciplinary action and prosecution for intentionally making false or
misleading verbal or written statements in matters of official interest.
Some of these matters of official interest are transactions with . . .
fellow employees . . . entries on tax returns . . . and affidavits,
transcripts of testimony, or statements to Inspection, whether or not
under oath." See GC 23.2. One specification supporting the proposed
action was a statement given by Ms. King to a revenue agent in the
course of an audit.
37. Between 1975 and 1979, IRS officials imposed upon, or proposed
discipline for 37 employees in the Los Angeles District for tax-related
violations of the Code of Conduct. Some resulted, in part, from
statements made to an IRS agent during the examination of personal tax
returns.
38. All Inspection Division cases on employee conduct are routed
through IRS's Labor Relations Office which advises on whether the
employees should be disciplined because of Code of Conduct violations.
In making such determinations, reliance can be placed on the examiner's
work papers, report, and testimony.
Additional facts relating to IRS's "threat of criminal prosecution"
In addition to findings 11 through 16, the following facts relate to
this issue.
39. A witness for IRS, who has been the Labor Relations Specialist
for the Los Angeles District for about one and a half years, testified
that it was the opinion of his Section that it was impossible to
differentiate between personnel and tax representation at a tax audit.
He reached this opinion after reviewing a memorandum prepared by the
Director, General Legal Services Division and which reached the Los
Angeles District on January 11, 1979. This memorandum on "Union
Representation Rights at Employee Tax Audits under 5 U.S.C. 7114" cites
Section 7114(a)(2)(B) of the Statute and concludes that it 'would appear
on its face to apply to employee tax audits conducted by the Internal
Revenue Service." (R 13.1) It then proceeds to reach a contrary
conclusion, by reasoning that the tax audit was not an "investigation
within the meaning of 5 U.S.C. 7114(a)(2)(B)" (R 2), and that, even if
entitled to union representation, a union representative may not be a
fellow employee because "possibly violative of 18 U.S.C. 205," and also
"could possibly constitute a conflict of interest." (R 13.9) The
memorandum reached the same conclusions "even if Inspection referred an
employee for audit." (R 13.10)
40. IRS now concedes that its employees are entitled to Union
representation at Inspection-referred audits. Ms. Kellison was allowed
to represent an employee at such an audit in late February or early
March 1979. At this audit Ms. Kellison advised Bernice Johnson whether
or not certain of her answers could lead to discipline and pointed out
that statements made in a matter of official interest, such as an audit,
result in discipline.
41. In a one-page, three-paragraph letter dated March 19, 1981, the
Director of the U.S. Office of Government Ethics, Office of Personnel
Management, responded to a letter dated March 13, 1981, from IRS's
Acting Director, General Legal Services Division. See attachment to
Respondent's brief. The March 19 letter states to the Acting Director:
"(Y)ou raise the issue under 18 U.S.C. 205 of whether an employee of
(IRS) may represent another IRS employee during a tax audit." The March
19 refers to Section 7114 of the Statute and states that the exception
in 18 U.S.C. 205, which allows one agency employee to represent another
agency employee in "disciplinary . . . or other personal administration
proceeding . . . does not apply to permit employee representation in
connection with a tax audit." The March 19 letter states that a tax
audit is a "proceeding with a taxpayer (who happens to be an employee);"
that it "is distinct from a proceeding with an employee (who happens to
be a taxpayer);" and that it is not "characterizable as a
labor-management issue." IRS does not reveal whether it shared with the
Office of Government Ethics the findings made in this case as to its
practice of using employee tax returns as a source for establishing
employee misconduct and discipline.
Discussion and Conclusions
A. Respondent violated Section 7114(a)(2)(B)(i)(ii) of the
Statute by denying James Ashley's request for Union representation
at the February 1980 tax audit examination of his income tax
returns.
The principal issue presented here entails the application of the
Weingarten right embodied in Section 7114(a)(2)(B)(i)(ii) of the
Statute. /6/ That Section expressly provides that the Union shall be
given the opportunity to be present at any examination of a
bargaining-unit employee by a representative of the agency, in
connection with an investigation, if the employee reasonably believes
that the examination may result in disciplinary action against the
employee, and the employee requests representation. U.S. Department of
the Navy, U.S. Marine Corps, Marine Corps Logistics Base, Albany,
Georgia, 4 FLRA No. 54 (1980); Internal Revenue Service, Washington,
D.C., and Internal Revenue Service, Hartford District Office, 4 FLRA No.
37 (1980). In this case there is no dispute that James Ashley is a
bargaining-unit employee, that he requested Union representation at the
tax audit examination of his income tax returns, that an investigation
into his conduct was ongoing, at the time of the examination, that the
request for Union representation was denied, and that Mr. Ashley
thereafter attended the examination and was questioned by an IRS revenue
agent.
Respondent breaks down Section 7114(a)(2)(B) into six component
parts, and argues that the General Counsel proved none but the sixth.
The six elements are:
(1) Any examination;
(2) Of an employee in the unit;
(3) By a representative of the Agency;
(4) In connection with an investigation; if
(5) The employee reasonably believes that the examination may result
in disciplinary action against the employee; and
(6) The employee requests representation.
As will be discussed, element by element, IRS is able to sustain its
arguments only by taking a myopic view of its employment practices. In
particular, it seems to wink at its practice of using employee Federal
tax audit examinations as an easily available source of information on
employee misconduct, and of allowing its investigators free access to
its examiners and their reports.
(1) An "examination" took place. IRS argues that the tax audit here
involved is not an "examination" because Mr. Ashley did not have to
attend it. (RBr 5-9). While stopping short of ordering its employees
to attend their own tax audits, high management officials of IRS made it
clear to the Union, during bargaining sessions, that employees should
attend and cooperate at their own tax audit examinations. Unless
special circumstances exist, such as the employee being out of the
country on official business, IRS clearly expects such attendance and
cooperation by its employees. The revenue agent wrote to Mr. Ashley
that she wished to discuss some items on his returns with him
"personally," indicated what items needed verification, scheduled the
examination, queried him at the examination, and examined documents he
furnished. This constitutes a statutory "examination."
(2) Mr. Ashley remained an "employee" during the examination. IRS
argues that Mr. Ashley was not an "employee" at the time of the audit
examination here involved because: the audit was not held at an IRS
office and Mr. Ashley attended on his own time as he would with any
other "personal task," such as "seeing his barber," or "buying a used
car." (RBR 10). Since neither Mr. Ashley's barber nor his car salesman
is likely to be questioned by an IRS investigator as to whether Mr.
Ashley was impeding IRS operations, on an audit examination of his tax
returns, as happened here, the barber/used-car-salesman comparison is
not persuasive. Nor are the two cases cited. One, Polson Industries,
242 NLRB 185, 101 LRRM 1344, involves an ex-employee. The other, Mt.
Vernon Tanker Co. v. NLRB, 549 F.2d 571 (CA 9, 1977) involves the
special relationship that exists during the course of a voyage between
the crew and the captain of a vessel, when the normal employer-employee
relationship is suspended, and acts normally protected by Federal labor
statutes, such as a strike, can be punishable, under maritime law, as a
mutiny. The fact that the meeting was not at an IRS offices does not
sever the employment bond. IRS has control over where the examination
will take place, as is evidenced by the fact that it refused to hold it
at the office of Mr. Ashley's tax representative. The fact that Mr.
Ashley attended the audit, on his own time, is also insufficient to
sever the employment relationship. Presumably, he had to apply to IRS
for leave to attend-- something not required of the ordinary taxpayer.
(3) The examiner was a "representative" of IRS. IRS argues that no
representative of the agency conducted the tax audit examination because
the examiner and Mr. Ashley are in the same bargaining unit; the
examiner was not authorized to recommend discipline; the examiner was
told not to go beyond audit duties in conducting the examination; and
the auditor was not a supervisor, management official, confidential
employee, or personnel employee. (RBr 11-12). As to the last argument,
Ms. Flynn was certainly a "confidential employee" to the extent that she
was given free access to confidential information, namely the personal
tax returns of an IRS employee. Furthermore, IRS does not disavow any
action taken by her. It invested her with authority to audit a fellow
employee's tax returns, to schedule appointments with him, to question
him, and to examine documents furnished by him. IRS required her to
cooperate with the inspector conducting the Ashley Special Inquiry into
possible Code of Conduct violations; and she did so. Under these
circumstances, IRS disavowal of agency is not persuasive.
IRS cites several cases, two involving Facility Review Boards of FAA
looking into system errors (FAA Las Vegas), 4 A/SLMR 569, #429
(9/30/74) and FAA Cleveland, 4 A/SLMR 580, #430 (9/30/74) and one
involving an agency doctor giving a fitness-for-duty examination (U.S.
Postal Service, 252 NLRB 14, 105 LRRM 1200 (1980). The FAA cases were
decided before the Supreme Court decided Weingarten and appear to
reflect a more restrictive view of the right to union representation
than that case, and the Statute now require. The Postal Service case is
a post-Weingarten one in which the National Labor Relations Board (NLRB)
did hold a union representative was not entitled to be present at the
physical examination, as there was no atmosphere of confrontation such
as Weingarten envisions; and the doctor was not the supervisor of the
employee examined. While Ms. Flynn was not the supervisor of Mr.
Ashley, she was required to report conduct and statements made by him to
the IRS inspector conducting the Ashley Special Inquiry; and a
confrontational situation did exist between Ms. Flynn and Mr. Ashley,
leading her to report to the investigator of the Ashley Special Inquiry
that Mr. Ashley was difficult and uncooperative.
4. The examination was "in connection with an investigation." IRS
argues that the examination here was not in connection with an
"investigation," but merely "to determine tax liability." (RBR 13). In
making this particular argument, IRS makes no reference, whatsoever, to
the Ashley Special Inquiry investigation that was underway at the time
the audit was being conducted on Mr. Ashley. Nor does IRS refer to the
fact that one allegation being investigated was based on information
given to the inspectors by an examiner of Mr. Ashley's tax returns. Nor
does IRS refer to the fact that the inspectors working on the Ashley
Special Inquiry made continual checks on the status of the Ashley tax
audit examinations to determine the validity of the allegation. See RBr
13-15.
IRS cites the FAA and Postal Service cases referenced above, and also
Alfred H. Lewis, Inc. v. NLRB, 587 F.2d 403, 99 LRRM 2841 (CA 9, 1978).
In Lewis, the Ninth Circuit interpreted Weingarten to hold that "the
right to representation arises when a significant purpose of the
interview is to obtain facts to support disciplinary action that is
probable or that is being seriously considered." Id. at 409. In Lewis,
union representation was held to be necessary at employee counseling
sessions or disciplinary sessions involving production quotas. The
Eighth Circuit has used similar language in a case involving a chance
encounter in a parking lot when the employee asked for a union steward
before the employer had even stated what he wished to discuss. See AAA
Equipment Service Co. v. NLRB, 598 F.2d 1142, 101 LRRM 2383 (1979). In
view of the continual liaison between the Ashley investigators and
examiners, it would appear that discipline of Mr. Ashley was being
"seriously considered," under the Lewis and AAA rationale.
Subsequent to the Lewis and AAA cases, the Fifth Circuit has taken a
more expansive view of Weingarten and ruled: "For the Weingarten
rationale to be effectively achieved, courts must not narrow the scope
of the doctrine enunciated by the Supreme Court: It is whenever the
risk of discipline reasonably inheres in an investigatory interview that
a union representation is required, and not merely when disciplinary
action is 'probable' or 'seriously considered.'" See Lennox Industries,
Inc. v. N.L.R.B., 637 F.2d 340, 344 (1981). In Lennox, an interview of
a production-line employee in the office of a second-line supervisor,
who made no threats, but merely told the employee to improve
productivity, was held to be an investigation. The Fifth Circuit
concluded that: "Such questioning is investigatory in that it is
designed to elicit responses which might well result in discipline
against the employee." Id. at 344.
Here, IRS uses examination of employees at tax audits as a method of
uncovering misconduct, and requires its examiners to report facts
concerning misconduct to its Investigation Division. Therefore, "the
risk of discipline reasonably inheres" in any tax-audit examination of
an employee's tax returns, under the Lennox interpretation of Weingarten
and, ergo, under Section 7114(a) which is fashioned after Weingarten. I
believe that this Authority should adopt the Lennox interpretation of
Weingarten, as being the correct one.
I find distinguishable the Authority case, Internal Revenue Service,
Detroit, 5 FLRA No. 53 (1981), relied upon by IRS. In the Detroit case,
the Authority found no right to union representation at a meeting
between an employee and his supervisor, where the employee's work was
being reviewed to see if he had improved, following notification that he
was doing substandard work and would be removed if he did not improve.
Apparently no response from the employee was sought. Here, responses
were sought from Mr. Ashley regarding documents he had submitted to IRS
in a matter of official importance, and as to which IRS expected its
employees to be as pure as Caesar's wife.
The importance of the examiner, as an "investigator" for the
Inspection Division, is underscored by the fact that the examiner is the
tax expert and is relied upon by the investigators as such. Thus, the
tax audit examination is, in essence, but an extension of the
investigation. As such, the value of representation is diminished, if
the employee is denied it at the very stage where IRS experts are
deciding whether he or she has filed an improper return, thereby
subjecting the employee to possible discipline. The fact that, at a
later investigation, the employer is entitled to representation, is of
little consolation. Compare U.S. Customs Service Region VII, Los
Angeles, California, 5 FLRA No. 41 (1981), where this Authority rejected
compartmentalizing investigations and allowing representation at only a
part. In the Customs case, the Authority noted that the section of the
Statute here involved "reflects the holding and the ratio decidendi
expressed in the Weingarten case, supra, by the Supreme Court in 1975."
The Supreme Court in Weingarten, supra, specifically rejected the
argument that employee rights could be protected by later
representation, and that a decision as to employee culpability or
disciplinary action can be readily corrected after the decision to
impose discipline has become final. The Supreme Court stated, at 88
LRRM 2693:
At that point, however, it becomes increasingly difficult for
the employee to vindicate himself, and the value of representation
is correspondingly diminished. The employer may then be more
concerned with justifying his actions than re-examining them.
It is clear, here, that information developed by the examiners
immediately became part of the investigation file on Mr. Ashley. To
deny him union representation at the part of the process from which IRS
derives evidence regarding the employee's attitude, and the properness
of his return, is to make a mockery of the statutory right to
representation.
5. There was a "reasonable belie(f)" that the February tax audit
examination might result in disciplinary action against Mr. Ashley.
The preponderance of the objective facts of record refutes IRS's
argument that Mr. Ashley had no reasonable grounds for believing that
his February tax audit examination might lead to disciplinary action.
At the time of the February examination, Mr. Ashley was the subject of a
Special Inquiry into an allegation, inter alia, that he was impeding IRS
operations, an allegation which grew out of a prior tax audit
examination. Impeding IRS operations is a possible basis for a Code
Conduct violation. IRS appears to view, as significant, the fact that
the last investigator to handle the Ashley Special Inquiry views it as
being closed. See RBr 26. Insofar as this case is concerned, the
significant fact is that the Ashley Special Inquiry was active at the
time Mr. Ashley sought union representation. Investigators handling the
Ashley special Inquiry were in continual touch with the examiners
handling Mr. Ashley's tax returns, in the course of investigating the
allegations of impeding IRS operations. One supervisor had threatened
Mr. Ashley with opening up additional areas of Mr. Ashley's 1976 tax
return, which was to be one subject of the February examination. An
examiner had been assigned, for the third time, to examine several of
his returns and, in addition, was looking into his 1978 return in an
unusually short time after filing, unless at the request of the
Investigation Division which investigates employee misconduct.
In addition, it was known to employees that IRS had an ongoing
program, at the time of February examination, under which it was using
the tax returns of employees to ferret out instances of employee
improprieties. Employees also knew that examiners of their tax returns
were under orders to report any possible violations of IRS's Code of
Conduct. Conduct and statements made at a tax audit examination can
result in specifications being filed against an employee which, if
proved, can lead to discipline. Since the examiners are the IRS experts
on tax returns, investigators tend to accept their findings on technical
matters. IRS expects it employees to attend and cooperate in the
conduct of their tax audit examinations.
The totality of these objective facts substantiates Mr. Ashley's
fears that his February tax audit examination might lead to discipline.
B. Respondent violated Section 7116(a)(1) and (8) of the
Statute by threatening a Union steward, attempting to exercise the
right granted by Section 7114(a)(2)(B), with a Code of Conduct
violation and possible criminal prosecution.
Ms. Kellison, Chief Steward of the Union, did not attend the tax
audit of Mr. Ashley out of fear of possible criminal prosecution and
possible loss of her job under IRS's Code of Conduct. This fear
undoubtedly continued to chill her participation in the right granted to
her Union in Section 7114(a)(2)(B) to be represented at tax audit
examinations of the type here involved.
Since this is a statutory right, IRS's Code of Conduct must yield to
it. And surely Congress did not grant this right only to subject the
exercise of it to possible criminal prosecution, under 28 U.S.C. 205.
IRS is only able to justify its action in scaring Ms. Kellison with the
specter of criminal prosecution, by closing its eyes to its use of
employee tax audit examinations in connection with disciplinary
proceedings. (Even IRS does not argue that investigations into employee
integrity are not "disciplinary . . . proceedings," which 28 U.S.C. 205
specifically excludes from its mandate.) IRS employees subjected to
examination of their Federal tax returns have a dual exposure-- to the
penalties of any taxpayer; and also to the threat of disciplinary
action because of their employee status.
The cases cited by IRS to support its position do not deal with any
situation such as the one here involved. One case held that Federal
employees could not represent indigents in criminal proceedings because
of a basic conflict of interest regarding their duty to their clients
and the Government prosecuting their clients. See RBr 28, citing U.S.
v. Bailey, 498 F.2d 677 (CA DC, 1974). Here, Congress has passed a
statute which obliges Federal employees to represent fellow employees in
actions involving their agency and, when appropriate, take positions
adverse to those of their agencies.
IRS cites another case where a court rejected an opinion by the
Attorney General that a Federal employee did not violate 18 U.S.C. 205
by representing fellow employees in an action under Title VII of the
Civil Rights Act of 1974. See RBr 29, citing Bachman v. Pertechuk 437
F.Supp. 973 (DDC, 1977). Of course, it is the Attorney General, and not
a Federal judge who determines whether prosecution will be brought under
a criminal statute-- which is what is of concern here. But, in any
event, the focus of the Bachman case was entirely different, involving a
question of whether a Federal employee could represent fellow employees
in a class action, when he was a member of the class himself and might
have adverse interests to other members of the class.
Another case cited by IRS, U.S. v. Bynoe, 562 F.2d 126 (CA 1, 1977),
at page 29 of its brief, also involved 18 U.S.C. 205, in a situation
where a Federal employee represented persons who were not employees of
the agency at which he was employed, and for which he was paid a fee.
Clearly, this is not like the situation here involved.
IRS professes to fear that Ms. Kellison would use "inside"
information in regard to tax matters in representing Mr. Ashley. See
page 29 of its brief. The fact is that Mr. Ashley is himself an
"insider," and very knowledgeable about the workings of IRS in regard to
tax matters. The illogic of IRS's position is illustrated by the fact
that IRS is allowing Mr. Ashley to represent an outsider (his wife) in
her tax audit examination.
Finally, IRS relies on a March 19, 1981, letter which it received
from the Director of the Office of Government Ethics (OGE) following the
hearing in this case, in February 1981. See appendix 1 to IRS's brief.
The letter states that is in response to a March 13 letter from IRS
raising "the issue under 18 U.S.C. 205 of whether an employee of the
Internal Service (hereinafter "IRS") may represent another IRS employee
during a tax audit." The Director concludes that it may not be done.
The Director does not state, in the letter, what facts IRS revealed
to it about its practices in conducting employee tax audit examinations;
and IRS did not see fit to attach a copy of its March 13 letter to OGE.
If IRS stated, as it argues here, that the sole purpose of an employee
tax audit is to ascertain tax liability, and that the employee is
treated just like any other taxpayer, then the OGE letter does not
address the factual situation presented in this case.
Furthermore, the OGE letter is not a "formal advisory opinion" under
CFR Part 738.303 (46 F.R. 2585) January 19, 1981, as claimed by IRS in
footnote 3 of its brief. See RBr 32. Such opinions bear a number. See
Part 738.305(a)(1). This one does not. Copies of such opinions are
made available for public inspection within 10 working days after
issuance by OGE. See Part 738.310(b). The March 19 letter was not so
available when I checked at OGE in June. The March 19 letter appears to
have no status other than "informational assistance," as explained at 5
Cfr part 738.312(b)(1). Accordingly, no reliance is being placed on the
OGE letter, in this decision.
OGE regulations do provide a means whereby IRS may obtain a
definitive opinion on the subject, however. The regulations provide for
revealing "all material facts necessary for the Director to render a
complete and correct opinion." See 5 Cfr part 738.304(b)(1). OGE may
then seek information from other sources as well. See Part 738.305(b).
OGE may provide the Union an opportunity to submit written comments.
See Part 738.307. And the Department of Justice is consulted before
issuance of the opinion. See Parts 738.305(d) and .308(a)(2). Until
such time as IRS has such a formal advisory opinion, stating that a
Union steward may not represent an employee at a tax audit examination
of the type here involved, it may not render the gratuitous advice here
at issue without committing an unfair labor practice.
Ultimate Findings and Recommended Order
It is found that Respondent has committed the alleged unfair labor
practices, in violation of Sections 7116(a)(1), by interfering with,
restraining, and coercing Mr. Ashley and Ms. Kellison in the exercise of
protected rights and of Section 7116(a)(8), by failing to comply with
the provisions of Section 7114(a)(2)(B), of the Federal Service
Labor-Management Relations Statute.
Pursuant to Section 7118(a)(7) of the Statute and Section 2423.29 of
the Rules and Regulations of the Federal Labor Relations Authority, it
is therefore, ORDERED, that Internal Revenue Service, Los Angeles
District, shall:
1. Cease and desist from:
(a) Refusing or failing to afford an opportunity to the
National Treasury Employees Union, or any other exclusive
representative of its employees, to be represented at a tax audit
examination of James Ashley, or any other bargaining unit
employee, in connection with a subsequent investigation herein, or
any other investigation which could reasonably result in
disciplinary action against him or such employee when such
representation is requested by the employee.
(b) Interfering with, or discouraging, by implied threat of
felony prosecution, or otherwise, Chief Steward Sylvia Kellison,
or any other employee, from exercising the right as a union
representative to be present at the tax audit examination in
connection with an investigation, where the employee reasonably
believes discipline may result and representation has been
requested.
(c) In any like or related manner interfering with,
restraining, or coercing its employees in the exercise of their
rights assured by the Federal Service Labor-Management Relations
Statute.
2. Take the following affirmative action in order to effectuate the
purposes and policies of the Statute:
(a) Afford the National Treasury Employees Union, or any other
exclusive representative of its employees, the opportunity to be
fully represented at any tax audit examination of an employee in
the unit by a representative of the agency in connection with an
investigation, if the employee reasonably believes that the tax
audit examination may result in disciplinary action against the
employee, and the employee requests such representation.
(b) Withdraw and rescind the February 25, 1980, memo from
Michael Spies to Chief Steward Sylvia Kellison and inform the
National Treasury Employees Union in writing of such withdrawal
and rescission.
(c) Expunge from James Ashley's official personnel folder, and
any other documents or reports, any reference to the February 1980
tax audit examination of James Ashley.
(d) Refrain from using, in any future disciplinary action, any
information obtained or derived from the February 1980 tax audit
examination of James Ashley.
(e) Post at its facilities in the Internal Revenue Service, Los
Angeles District, copies of the notice marked "Appendix," on forms
to be furnished by the Federal Labor Relations Authority. Upon
receipt of such forms, they shall be signed by the District
Director, Internal Revenue Service, Los Angeles District and they
shall be posted and maintained by him for 60 consecutive days
thereafter in conspicuous places, including all bulletin boards
and other places where notices to employees in the District are
customarily posted. The District Director shall take reasonable
steps to ensure that such notices are not altered, defaced, or
covered by any other material.
(f) Pursuant to Section 2423.30 of the Authority's Rules and
Regulations, notify the Regional Director, Region VIII, Federal
Labor Relations Authority in writing, within 30 days from the date
of this Order, as to what steps have been taken to comply
herewith.
ISABELLE R. CAPPELLO
Administrative Law Judge
Dated: July 7, 1981
Washington, D.C.
APPENDIX
NOTICE TO ALL EMPLOYEES
PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
RELATIONS
AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
OF TITLE
5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
RELATIONS
WE HEREBY NOTIFY OUR EMPLOYEES THAT:
WE WILL NOT refuse or fail to afford an opportunity to the National
Treasury Employees Union, or any other exclusive representative of our
employees, to be represented at a tax audit examination of James Ashley,
or any other bargaining unit employee, in connection with a subsequent
investigation herein, or any other investigation which could reasonably
result in disciplinary action against him or such employee, when such
representation is requested by the employee.
WE WILL NOT interfere with, or discourage, by implied or express
threats of felony prosecution, or otherwise, Chief Steward Sylvia
Kellison, or any other employee, from exercising the right as a union
representative to be present at the tax audit examination of James
Ashley, or any other tax audit examination in connection with an
investigation, where the employee reasonably believes discipline may
result, and representation has been requested.
WE WILL afford the National Treasury Employees Union, or any other
exclusive representative of our employees, the opportunity to be fully
represented at any tax audit examination of an employee in the unit by a
representative of the agency in connection with an investigation, if the
employee reasonably believes that the tax audit examination may result
in disciplinary action against the employee, and the employee requests
such representation.
WE WILL expunge from James Ashley's official personnel folder and any
other documents or reports any reference to the February 1980 tax audit
examination of James Ashley.
WE WILL refrain from using, in any future disciplinary action against
James Ashley, any information obtained or derived from the February 1980
tax audit examination of James Ashley.
WE WILL NOT in any like or related manner interfere with, restrain,
or coerce any employee in the exercise of any right under the Statute.
(Agency or Activity)
By: (Signature)
Dated: . . .
This Notice must remain posted for 60 consecutive days from the date
of posting and must not be altered, defaced, or covered by any other
material.
If employees have any questions concerning this Notice or compliance
with any of its provisions, they may communicate directly with the
Regional Director of the Federal Labor Relations Authority, Region VIII,
whose address is 350 South Figueroa Street, 10th Floor, Los Angeles, CA
90971, and whose telephone number is (213) 688-3805.
--------------- FOOTNOTES$ ---------------
/1/ The General Counsel filed untimely exceptions which have not been
considered.
/2/ Our decision herein is limited by the factual circumstances
presented, i.e., that the audit was but an "extension of the
investigation" of the employee; it should not be construed as allowing
union representation at all tax audits of Internal Revenue Service's
employees.
/3/ The amended Complaint consolidated two other cases against the
Respondent and the Internal Revenue Service, Washington, D.C., (8-CA-553
and 8-CA-715). At the hearing, the Complaints in those two cases were
severed from this proceeding; and the Complaint and amended Complaint
were so amended.
/4/ References to the record will be as follows: "TR" refers to the
transcript; "R" Refers to Respondent's exhibits; "GC" refers to the
General Counsel's exhibits; "RBr" refers to the Respondent's brief;
and "GCBr" refers to the General Counsel's brief. Multipage exhibits
will be referenced by the exhibit number followed by the page numbers.
All dates referenced are in 1980, unless otherwise specified.
/5/ Not quoted was the proviso of 18 U.S.C. 205 that:
Nothing herein prevents an officer or employee, if not
inconsistent with the faithful performance of his duties, from
acting without compensation as agent or attorney for any person
who is the subject of disciplinary, loyalty or other personnel
administration proceedings in connection with those proceedings.
/6/ The name is derived from N.L.R.B. v. J. Weingarten, Inc., 420
U.S. 251, 88 LRRM 2689 (1975) in which the United States Supreme Court
upheld the holding of the National Labor Relations Board that the
employer's denial of an employee's request that her union representative
be present at an investigatory interview, which the employee reasonably
believed might result in disciplinary action, constituted an unfair
labor practice in violation of Sec. 8(a)(1) of the National Labor
Relations Act (29 USC 158(a)(1)).