Dozens of IRS employees who “willfully” cheated on their taxes remain working for the agency, and some were even hired back after their tax evasion, an inspector general reported Monday.

All told, 5% of the IRS’ workforce has failed to pay their taxes in full and on time at some point while working for the agency, according to the audit. Most of those were deemed mistakes.

But 70 current employees were found to have intentionally cheated. Of those, only 20 were ousted. Most of the rest remain on the job with only a short suspension. Under the law, they should all have been fired, unless they got a special exemption from the commissioner himself.

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The IRS also rehired nearly 400 former employees despite red flags in their files. That included 85 people who failed to pay their taxes in full and on time, and 34 employees who were deemed to have peeked at taxpayers’ secret information.

Hundreds more former employees were hired back as contractors despite red flags that included avoiding taxes, falsifying documents or theft.

Sen. Joni Ernst, the Iowa Republican who requested the audit, said the agency needs to do some significant self-cleaning if it wants to make Americans pay their taxes.

“While the IRS warns, ’tax evasion is a serious crime punishable by imprisonment, fines, and the imposition of civil penalties,’ the agency is rewarding its own tax dodgers with paychecks and lavish benefits made possible, ironically, with the taxes paid by you, me, and other hardworking Americans,” Ms. Ernst said.

She has written legislation to ban the IRS from employing anyone who has “seriously delinquent tax debts,” and to require an annual report from the agency to review how its workers are doing.

Of the 70 willful tax cheats the IRS flagged within its workforce over an 18-month period from 2021 to 2023, 20 were “removed” from the agency.

Another 47 were suspended. The fate of the other three was redacted from the public version of the audit, though based on past work by the inspector it’s likely they either retired or resigned.

“Although the law requires an employee who has either willfully not filed or willfully understated their taxes due to be removed, subject only to the IRS Commissioner’s mitigation, this disciplinary action is not always enforced,” the inspector general said.

The IRS, in its official response, said the commissioner exercised that discretion in each of those cases, after getting a recommendation from a review board.

Traci M. DiMartini, the IRS human capital officer, said they reviewed more than 2,000 employees the inspector general flagged as having outstanding taxes as of May 6, 2023. As of this June, 58% of them had resolved their issues to the agency’s satisfaction.

The IRS official said the report gave the IRS a generally clean bill of health, finding that it “has policies and procedures in place to detect and remedy employee and contractor tax non-compliance.”

The IRS also subscribes to what’s known as “progressive discipline,” meaning employees are given the “least serious” punishment possible at first, with stiffer penalties for later offenses.

In addition to the tax cheats, the inspector general found that the IRS had a habit of rehiring former employees even after they’d earned black marks in agency employment files. That included 13 willful tax cheats and 34 cases where someone was deemed to have accessed taxpayer information that was required to be kept secret.

The inspector general made two recommendations in the audit, including requiring the IRS’ Human Capital Officer to follow up on the employees flagged and make sure their taxes were filed and their balances paid off.

Ms. DiMartini disagreed, saying her office doesn’t have the power to collect or enforce tax laws, even when they are agency employees.

But she said they did review all the people flagged and made sure someone in the agency is addressing the problems.

The inspector general said it “appears” that addresses the issue.

This year’s report follows one from 2015 that looked at a 10-year period and found 1,580 employees who willfully evaded their taxes. Of those, 61% were allowed to remain at the IRS.

That means the agency has gotten more lenient, with 67% of the current crop of tax evaders allowed to remain on the job.

After that earlier report, the IRS said it would adopt new rules to require documentation when the agency kept someone on the job despite willful tax evasion.