How People and the Tax System Impact Individual Cases

In tax, we spend a lot of time focusing on tax rules. But tax rules only go so far.

The results in tax cases are impacted by the people who work tax cases as much as they are by the tax rules. Our system of tax administration also plays a role. This is hard to explain to taxpayers who are trying to resolve their individual cases.

The facts in Noisette v. Lew, Civil Action No. 11-1594 (D.D.C. 2016) highlight a few issues that IRS employees contend with while they are still tasked with overseeing the IRS processes or actively working on taxpayer cases.

Facts & Procedural History 

Noisette worked as a law enforcement officer in the Criminal Investigation Division (“CI” or “CID”) of the IRS. In the fall of 2006, Noisette applied for a position as the Supervisory Special Agent (“SSA”) for CID’s St. Petersburg/Tampa office.

He was selected for the position and was initially told that he qualified for a 10% pay raise.

An IRS Human Resources (“HR”) Specialist, informed Noisette by email that “interviews are not required to be entitled to the 10% increase.”
Noisette received authorization to incur relocation expenses for his move to St. Petersburg/Tampa.

Two days later, however, Noisette’s supervisor in Baltimore, called Noisette and told him to hold off on incurring moving expenses.

Noisette was told that the information he had been given about his eligibility for the raise was mistaken.

Instead, he would need to choose between two options: He could accept the position without the increase in pay, or he could reapply for the position through a competitive hiring process, and, if selected, he would be eligible for the raise.

He chose to reapply and participated in the interview. He assessed his own performance positively, but the interviewers testified that they were not all that impressed with Noisette at the interview.

They selected another candidate for the job.

Later that same year, Noisette applied for the SSA position in CID’s Miami office. He was the only candidate for the job and was hired in December 2006.

He assumed his duties in Miami in July 2007.

Noisette brought suit alleging that both his “deselection” and subsequent “non-selection” for the St. Petersburg/Tampa SSA position were the product of discrimination on the basis of his race and retaliation for his involvement in the resolution of an Equal Employment Opportunity (“EEO”) dispute that arose in CID’s Chicago office earlier in 2006.

The case also goes on to detail the EEO dispute. Noisette was asked to look into an EEO claim filed by IRS Special Agent Peebles. The court describes the facts for the EEO dispute as follows:

• Noisette reviewed Peebles’s training record and noted that it was blank.
• Noisette concluded indicated that “she was not given the chance to attend necessary new agent training sessions” and that “she was not given the same opportunities as other trainees to perform basic duties, such as conducting an interview.”
• Noisette, accordingly, reported to his supervisor that “it appeared that Ms. Peebles had not been given an opportunity to succeed and that her allegations of discrimination and retaliation were well-founded.”
• Noisette called a meeting with his supervisor and other IRS personnel, including three managers who were the subject of Peebles’s complaint.
• Noisette’s supervisor then entered into a settlement agreement with Peebles on behalf of CID, under the terms of which:
  • Peebles would be relocated to another office with all expenses paid;
  • she would not be under the direct supervision of the three managers that were the subject of her complaint for the duration of her three-year initial training period;
  • all negative information would be removed from her official personnel file;
  • the three managers would be required to undergo diversity training;
  • and Peebles would withdraw her pre-complaint.

The three managers did not agree with the terms of the settlement the IRS had entered into. They were particularly concerned about the discrimination training requirement. They sent several internal emails to IRS upper management about this. They then filed a formal EEO grievance.

This in turn lead to Noisette’s supervisor filing a lawsuit against the IRS. The court summarized the facts leading to this lawsuit by Noisette’s supervisor as follows:

• Two weeks later, Noisette’s supervisor’s authority over the Chicago field office was revoked as the IRS employee in charge felt that “she could not trust [Noisette’s supervisor’s] objectivity in dealing with the Chicago Field Office management team” in light of his handling of the Peebles issue.
• Noisette’s supervisor was then removed from the Mid-Atlantic DFO position altogether. He was involuntarily reassiged to a “much less desirable, unclassified, temporary, and previously non-existent non-supervisory position as a `project leader’ in Lanham, MD.”
• The same day, she proposed to suspend Noisette’s supervisor for thirty days without pay, again specifically citing his handling of the Peebles issue. Noisette’s supervisor then received a “minimally satisfactory” rating on several categories in his annual performance appraisal.
• The IRS then issued the appraisal and informed Noisette’s supervisor that the ratings were due to his handling of the Peebles complaint. After exhausting his administrative remedies, Noisette’s supervisor filed suit in federal court alleging discrimination and retaliation. That case settled before the start of discovery in Noisette’s lawsuit.

The court ended up concluding that the facts did not show discrimination as to Noisette. While they may not show discrimination, the facts do help explain how there can be more to tax than just the tax rules themselves.