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total annual compensation payable at the Office of the
Comptroller of the Currency.
‘‘§ 9503. Streamlined critical pay authority
‘‘Notwithstanding section 9502 of this title, and with-
out regard to the provisions of this title governing appoint-
ments in the competitive service or the Senior Executive
Service and the provisions of chapters 51 and 53 of this
title (relating to classification and pay rates), the Sec-
retary of the Treasury may, for a period of ten years from
the date of enactment of this section, establish, fix the
compensation of, and appoint individuals to, designated
critical technical and professional positions needed to
carry out the functions of the Internal Revenue Service,
provided that—
‘‘(1) the positions—
‘‘(A) require expertise of an extremely high
level in a technical or professional field; and
‘‘(B) are critical to the Internal Revenue
Service’s successful accomplishment of an im-
portant mission;
‘‘(2) exercise of the authority is necessary to re-
cruit or retain an individual exceptionally well quali-
fied for the position;
‘‘(3) the number of such positions does not ex-
ceed at the time of any new appointment the number
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equal to 5 percent of the total number of employees
holding positions in the Internal Revenue Service the
rate of basic pay for which is not less than the mini-
mum rate for grade GS–15 of the General Schedule;
‘‘(4) designation of such positions shall be ap-
proved by the Secretary of the Treasury upon the
recommendation of the Internal Revenue Service
Management Board (established in section 7801(b)
of the Internal Revenue Code of 1986);
‘‘(5) the terms of such appointments are limited
to no more than four years;
‘‘(6) appointees to such positions were not In-
ternal Revenue Service employees immediately prior
to such appointment;
‘‘(7) total annual compensation for any ap-
pointee to such position does not exceed the highest
total annual compensation payable at the Office of
the Comptroller of the Currency;
‘‘(8) all such positions shall be excluded from
the collective bargaining unit; and
‘‘(9) individuals appointed pursuant to this sub-
section shall not be considered to be employees for
purposes of subchapter II of chapter 75 of this title.
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§ 9504. Recruitment, retention, and relocation incen-
tives
‘‘For a period of ten years from the date of enact-
ment of this section and subject to approval by the Office
of Personnel Management, the Secretary of the Treasury
may provide for variations from the provisions of sections
5753 and 5754 governing payment of recruitment, reloca-
tion, and retention incentives.
§ 9595. Performance awards for senior executives
‘‘(a) For a period of ten years from the date of enact-
ment of this section, Internal Revenue Service senior ex-
ecutives who have program management responsibility
over significant functions of the Internal Revenue Service
may be paid a performance bonus without regard to the
limitation in section 5384(b)(2) of this title if the Sec-
retary of the Treasury finds such award warranted based
upon the executive’s performance.
‘‘(b) In evaluating an executive’s performance for
purposes of an award under this section, the Secretary of
the Treasury shall take into account the executive’s con-
tributions toward the successful accomplishment of goals
and objectives established under the Government Perform-
ance and Results Act of 1993 and other performance
metrics or plans established in consultation with the Inter-
nal Revenue Service Management Board.
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‘‘(c) Any award in excess of 20 percent of an execu-
tive’s rate of basic pay must be approved by the Secretary
of the Treasury in consultation with the Internal Revenue
Service Management Board.
‘‘(d) Notwithstanding section 5384(b)(3) of this title,
the Secretary of the Treasury shall determine the aggre-
gate amount of performance awards available to be paid
during any fiscal year under this section and section 5384
to career senior executives in the Internal Revenue Service
provided that such amount does not exceed an amount
equal to five percent of the aggregate amount of basic pay
paid to career senior executives in the Internal Revenue
Service during the preceding fiscal year. The Internal Rev-
enue Service shall not be included in the determination
under section 5384(b)(3) of the aggregate amount of per-
formance awards payable to career senior executives in the
Department of the Treasury outside of the Internal Reve-
nue Service.
‘‘(e) Notwithstanding section 5307 of this title, a per-
formance bonus award may not be paid to an executive
in a calendar year if, or to the extent that, the executive’s
total annual compensation will exceed the maximum
amount of total annual compensation payable in the Office
of the Comptroller of the Currency.
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‘‘9506. Limited appointments to career reserved Sen-
ior Executive Service positions
‘‘Notwithstanding any other provision of law, in ap-
plying section 3132 of this title, a ‘career reserved posi-
tion’ in the Internal Revenue Service means a position des-
ignated under section 3132(b) which may be filled only
by—
‘‘(1) a career appointee, or
‘‘(2) a limited emergency appointee or a limited
term appointee who, immediately upon entering the
career-reserved position, was serving under a career
or career-conditional appointment outside the Senior
Executive Service or whose limited emergency or
limited term appointment is approved in advance by
the Office of Personnel Management.
‘‘§ 9507. Streamlined demonstration project authority
‘‘(a) The exercise of any of the flexibilities under sec-
tions 9502 through 9510 does not affect the authority of
the Secretary of the Treasury to implement for the Inter-
nal Revenue Service a demonstration project subject to
chapter 47 of this title, as provided in subsection (b).
‘‘(b) In applying section 4703 of this title to a dem-
onstration project described in section 4701(a)(4) of this
title which involves the Internal Revenue Service—
‘‘(1) section 4703(b)(1) shall be deemed to read
as follows:
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‘‘ ‘(1) develop a plan for such project which de-
scribes its purpose, the employees to be covered, the
project itself, its anticipated outcomes, and the
method of evaluating the project,’;
‘‘(2) section 4703(b)(3) shall apply;
‘‘(3) the 180-day notification period in section
4703(b)(4) shall be deemed to be a notification pe-
riod of 30 days;
‘‘(4) section 4703(b)(6) shall be deemed to read
as follows:
‘‘ ‘(6) provides each House of Congress with the
final version of the plan.’;
‘‘(5) section 4703(c)(1) shall be deemed to read
as follows:
‘‘ ‘(1) subchapter V of chapter 63 or subpart G
of part III of this title,’;
‘‘(6) the requirements of sections 4703(d)(1)(A)
and (d)(2) shall not apply; and
‘‘(7) notwithstanding section 4703(d)(1)(B),
based on an evaluation as provided in section
4703(h), the Office of Personnel Management and
the Secretary of the Treasury, except as otherwise
provided by this subsection, may waive the termi-
nation date of a demonstration project under section
4703(d). At least 90 days before waiving the termi-
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nation date, the Office of Personnel Management
shall publish in the Federal Register a notice of its
intention to waive the termination date and shall in-
form in writing both Houses of Congress of its in-
tention.
‘‘§ 9508. General workforce performance management
system
‘‘(a) In lieu of a performance appraisal system estab-
lished under section 4302 of this title, the Secretary of
the Treasury may establish for all or part of the Internal
Revenue Service a performance management system
which—
‘‘(1) maintains individual accountability by—
‘‘(A) establishing one or more retention
standards for each employee related to the work
of the employee and expressed in terms of indi-
vidual performance, and communicating such
retention standards to employees;
‘‘(B) making periodic determinations of
whether each employee meets or does not meet
the employee’s established retention standards;
and
‘‘(C) taking actions, in accordance with ap-
plicable laws and regulations, with respect to
any employee whose performance does not meet
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established retention standards, including deny-
ing any increases in basic pay, promotions, and
credit for performance under section 3502 of
this title, and taking one or more of the follow-
ing actions:
‘‘(i) reassignment;
‘‘(ii) an action under chapter 43 or
chapter 75 of this title; or
‘‘(iii) any other appropriate action to
resolve the performance problem; and
‘‘(2) strengthens its effectiveness by—
‘‘(A) establishing goals or objectives for in-
dividual, group, or organizational performance
(or any combination thereof), consistent with
the Internal Revenue Service’s performance
planning procedures, including those established
under the Government Performance and Re-
sults Act of 1993, and communicating such
goals or objectives to employees;
‘‘(B) using such goals and objectives to
make performance distinctions among employ-
ees or groups of employees; and
‘‘(C) using performance assessments as a
basis for granting employee awards, adjusting
an employee’s rate of basic pay, and other ap-
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‘‘(2) A cash award under subchapter I of chapter 45
may be granted to an employee of the Internal Revenue
Service without the need for any approval under section
4502(b).
‘‘(c)(1) In applying sections 4303(b)(1)(A) and
7513(b)(1) of this title to employees of the Internal Reve-
nue Service, ‘30 days’ may be deemed to be ‘15 days’.
‘‘(2) Notwithstanding the second sentence of section
5335(c) of this title, an employee of the Internal Revenue
Service shall not have a right to appeal the denial of a
periodic step increase under section 5335 to the Merit Sys-
tems Protection Board.
‘‘§ 9509. General workforce classification and pay
‘‘(a)(1) The Secretary of the Treasury may, subject
to criteria to be prescribed by the Office of Personnel
Management, establish one or more broad-banned systems
covering all or any portion of the Internal Revenue Service
workforce.
‘‘(2)(A) Except as provided subparagraph (B), for
purposes of this section, ‘board-banded system’ means a
system for grouping positions for pay, job evaluation, and
other purposes that is different from the system estab-
lished under chapter 51 and subchapter III of chapter 53
of this title as a result of combining grades and related
ranges of rates of pay in one or more occupational series.
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‘‘(B) With the approval of the Office of Personnel
Management, a broad-banded system established under
this section may either include or consist of positions that
otherwise would be subject to subchapter IV of chapter
53 or section 5376 of this title.
‘‘(3) The Office of Personnel Management may re-
quire the Secretary of the Treasury to submit information
relating to broad-banded systems at the Internal Revenue
Service.
‘‘(4) Except as otherwise provided under this section,
employees under a broad-banded system shall continue to
be subject to the laws and regulations covering employees
under the pay system that otherwise would apply to them.
‘‘(5) The criteria to be prescribed by the Office of
Personnel Management shall, at a minimum—
‘‘(A) ensure that the structure of any broad-
banded system maintains the principle of equal pay
for substantially equal work;
‘‘(B) establish the minimum and maximum
number of grades that may be combined into pay
bands;
‘‘(C) establish requirements for setting mini-
mum and maximum rates of pay in a pay band;
‘‘(D) establish requirements for adjusting the
pay of an employee within a pay band;
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‘‘(E) establish requirements for setting the pay
of a supervisory employee whose position is in a pay
band or who supervises employees whose positions
are in pay bands; and
‘‘(F) establish requirements and methodologies
for setting the pay of an employee upon conversion
to a broad-banded system, initial appointment,
change of position or type of appointment (including
promotion, demotion, transfer, reassignment, rein-
statement, placement in another pay band, or move-
ment to a different geographic location), and move-
ment between a broad-banded system and another
pay system.
‘‘(b) With the approval of the Office of Personnel
Management and in accordance with a plan for implemen-
tation submitted by the Secretary of the Treasury, the
Secretary may, with respect to Internal Revenue Service
employees who are covered by a broad-banded system es-
tablished under subsection (a), provide for variations from
the provisions of subchapter VI of chapter 53 of this title.
‘‘§ 9510. General workforce staffing
‘‘(a)(1) Except as otherwise provided by this section,
an employee of the Internal Revenue Service may be se-
lected for a permanent appointment in the competitive
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service in the Internal Revenue Service through internal
competitive promotion procedures if:
‘‘(A) the employee has completed, in the com-
petitive service, two years of current continuous
service under a term appointment or any combina-
tion of term appointments;
‘‘(B) such term appointment or appointments
were made under competitive procedures prescribed
for permanent appointments;
‘‘(C) the employee’s performance under such
term appointment or appointments met established
retention standards, or, if not covered by a perform-
ance management system established under section
9508, was rated at the fully successful level or high-
er (or equivalent thereof); and
‘‘(D) the vacancy announcement for the term
appointment from which the conversion is made
stated that there was a potential for subsequent con-
version to a permanent appointment.
‘‘(2) An appointment under this section may be made
only to a position in the same line of work as a position
to which the employee received a term appointment under
competitive procedures.
‘‘(b)(1) Notwithstanding subchapter I of chapter 33
of this title, the Secretary of the Treasury may establish
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category rating systems for evaluating job applicants for
Internal Revenue Service positions in the competitive serv-
ice under which qualified candidates are divided into two
or more quality categories on the basis of relative degrees
of merit, rather than assigned individual numerical rat-
ings.
‘‘(2) Each applicant who meets the minimum quali-
fication requirements for the position to be filled shall be
assigned to an appropriate category based on an evalua-
tion of the applicant’s knowledge, skills, and abilities rel-
ative to those needed for successful performance in the
job to be filled.
‘‘(3) Within each quality category established under
paragraph (1), preference eligibles shall be listed ahead
of individuals who are not preference eligibles. For other
than scientific and professional positions at or higher than
GS–9 (or equivalent), preference eligibles who have a com-
pensable service-connected disability of 10 percent or
more, and who meet the minimum qualification standards,
shall be listed in the highest quality category.
‘‘(4) An appointing authority may select any appli-
cant from the highest quality category or, if fewer than
three candidates have been assigned to the highest quality
category, from a merged category consisting of the highest
and second highest quality categories.
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‘‘(5) Notwithstanding paragraph (4), the appointing
authority may not pass over a preference eligible in the
same or higher category from which selection is made un-
less the requirements of section 3317(b) or 3318(b) of this
title, as applicable, are satisfied.
‘‘(c) The Secretary of the Treasury may detail em-
ployees among the offices of the Internal Revenue Service
without regard to the 120-day limitation in section
3341(b) of this title.
‘‘(d) Notwithstanding any other provision of law or
regulation, the Secretary of the Treasury may establish
a probationary period under section 3321 of this title of
up to three years for Internal Revenue Service positions
where the Secretary of the Treasury determines that the
nature of the work is such that a shorter period is insuffi-
cient to demonstrate complete proficiency in the position.
‘‘(e) Nothing in this section exempts the Secretary
of the Treasury from—
‘‘(1) any employment priority established under
direction of the President for the placement of sur-
plus or displaced employees; or
‘‘(2) any obligation under a court order or de-
cree relating to the employment practices of the In-
ternal Revenue Service or the Department of the
Treasury.’’.
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(b) CLERICAL AMENDMENT.—The table of sections
for Part III of title 5, United States Code, is amended
by adding at the end the following:
‘‘Subpart I—Miscellaneous
‘‘95. Personnel flexibilities relating to the Internal Revenue Service ....... 9501’’.
SEC. 302. AUTHORIZATION FOR APPROPRIATIONS.
There are authorized to be appropriated from time
to time such sums as may be necessary to carry out the
purposes of this Act.
SEC. 303. INTERNAL REVENUE SERVICE FUNDING.
(a) FINDINGS.—The Congress finds that:
(1) The need of the Internal Revenue Service to
resolve any issues regarding their computer systems
and the century date change is the highest tech-
nology priority of the agency.
(2) Without stable and predictable funding, the
Internal Revenue Service is unable effectively and ef-
ficiently to plan and execute key programs for tax
law enforcement, tax processing, taxpayer assistance
and management.
(3) A lack of multi-year budgets for Internal
Revenue Service technology and capital investment
programs deters some contractors from working with
the agency and raises the costs of the changes nec-
essary to make technology an enabler of Internal
Revenue Service strategic objectives.
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(b) SENSE OF CONGRESS.—Based on these findings,
it is the sense of the Congress that:
(1) Internal Revenue Service efforts to resolve
any century date change computer issues should be
funded fully to provide for certain resolution of those
issues.
(2) The Internal Revenue Service budget for
tax law enforcement, tax processing, taxpayer assist-
ance and management should be maintained at no
less than current levels for the next three years.
(3) Multi-year budgets should be adopted for
Internal Revenue Service technology and capital in-
vestment programs in order to ensure stability in the
implementation of those programs.
Æ