Former IRS Attorney Seeks Unemployment Benefits After Discharge For Tax Filing Issues

A remand has been ordered by the District of Columbia Court of Appeals in a case involving an attorney’s entitlement to unemployment benefits

Until her termination, Petitioner worked as an attorney with the Internal Revenue Service (“IRS”). She represented the government before the United States Tax Court, including in cases involving penalties for failure to pay taxes and failure to file tax returns. In 2011 her supervisors became aware that Petitioner had filed her 2006 and 2008 tax returns late, and it appeared that she had not filed her 2009 tax return at all.

The IRS considered removing Petitioner, but it ultimately entered into a Last Chance Agreement with her on November 4, 2011. Petitioner agreed to acknowledge her past wrongdoing and agreed to a ten-day suspension. She also agreed to continue her employment on a “trial basis” until the IRS “receive[d] affirmative proof that her 2013 federal personal tax return period [sic] ha[d] been timely filed.” The Agreement also required Petitioner to timely pay her taxes for each tax year from 2010 to 2013 and to notify her supervisors that she had filed those returns within five days of each filing. Petitioner agreed that a breach of either requirement would justify her removal. 

In 2014 the IRS discovered that Petitioner had not paid all of the taxes she owed for 2013. Moreover, she had not notified her supervisors within five days that she had successfully filed the 2013 return—Petitioner notified her supervisors one day late. The IRS found that each violation breached her Last Chance Agreement, and it terminated Petitioner’s employment. The IRS noted that either violation by itself would have constituted sufficient grounds for termination.

The remand deals with the timeliness of the appeal from the denial of unemployment benefits and whether the attorney’s dismissal was for “gross misconduct”

 We have repeatedly held that we cannot affirm a determination of gross misconduct unless the ALJ makes explicit findings that the former employee acted deliberately or willfully…

If the OAH determines on remand that it does have jurisdiction of Petitioner’s appeal, it should more fully address the gross misconduct issue, making explicit findings regarding whether Petitioner acted deliberately or willfully when she failed to pay all of her taxes in 2013 and when she failed to timely notify her employer that she had filed her 2013 return. We note that the ALJ may consider only these two alleged instances of misconduct—and not Petitioner’s allegedly late or missing filings in 2006, 2008, and 2009—because the failures to pay all of her taxes in 2013 and to timely notify her employer of the 2013 filing were the two reasons that the IRS gave for discharging Petitioner.

The opinion is authored by Associate Judge Fisher. (Mike Frisch)