Within the IRS, the aggregate limitation will be administered in accordance with the provisions at 5 CFR 530.203. No employee of the IRS may receive any allowance, differential, bonus, award, or other similar cash payment under 5 U.S.C., in any calendar year to the extent such pay, in combination with basic pay, would cause the aggregate compensation of the employee to exceed the rate for Level I of the Executive Schedule at the end of the calendar year.

However, notwithstanding the above provision and 5 U.S.C. 5307, under 5 U.S.C. chapter 95 until July 22, 2008, the Secretary of the Treasury may:

The aggregate limitation on pay does not include the annuity of a re-employed annuitant.

Amounts, in excess of limitations described above, shall be paid to the employee in a lump-sum at the beginning of the following calendar year as provided at 5 CFR 530.204.

IRS shall maintain records to facilitate the administration of the aggregate limitation on pay and, should an employee to whom this limitation applies transfer to another bureau or agency, the records applicable to the employee shall be made available to the new Employer.

As provided under 5 U.S.C. 5305, the OPM may establish, and the IRS must pay, special salary rates established under this authority, Executive Order 12748, and 5 CFR part 530 subpart C.

These rates may be established for any occupation, series, class of positions or geographic area for, or within, which OPM determines there is significant difficulty in recruiting or retaining well-qualified employees because salary rates paid by the non-Federal private and public sectors for similar occupations in the same area(s) or working conditions are substantially higher.

The IRS may request a special salary rate be established or adjusted, through the Department of Treasury, as provided under 5 CFR 530.303.

Before adjusting the scheduled rates of pay for which a special salary rate is authorized, but at least annually, OPM must review special salary rate schedules to determine whether the factors considered when the rates were authorized or adjusted still continue, and whether the authorized rates should be continued, adjusted, or discontinued.

To conduct the annual review, OPM shall designate lead agencies to assist in coordinating the collection of significant data. The IRS must comply with these data requests from OPM or the lead agency.

When special salary rates are adjusted as the result of an annual review, IRS must fix the pay of those employees covered by the adjusted rates as provided under 5 CFR 530.307

When it is determined that a special salary rate schedule is no longer needed or no longer needed at the existing level, OPM and IRS must act to discontinue or revise the schedule. No employee's pay may be reduced because of a discontinuation or revision of a special salary rate. (See 6.500.1.3.5(2).)

Initial establishment and increases. As provided by 5 CFR 530.306(a):

Decreased and discontinued rates. When the special salary rate for a position is discontinued or decreased, pay is set as follows:

Initial appointments.

Reassignments and transfers. When an employee is reassigned or transferred to a position covered by a special schedule or a higher special schedule, pay will be set to provide the employee the full value of the special schedule or higher special schedule. This does not apply when the employee requests the reassignment or transfer.

Promotions. When an employee is promoted from a position covered by the General Schedule to a position covered by a special salary rate, the employee's step in the higher grade is determined on the General Schedule, without regard to the special schedule, and pay is set on the corresponding step of the special schedule covering the new position.

Reductions in grade. When an employee not entitled to grade or pay retention is reduced in grade to a position covered by a special salary rate, the employee's step in the lower grade is determined on the General Schedule without regard to the special schedule and pay is set on the corresponding step of the special schedule covering the new lower-graded position.

When there is an adjustment to the schedules of a special salary rate, an employee's rate of basic pay shall be adjusted as provided by 5 CFR 530.307.

The definitions used here-in are the same as the definitions at 5 CFR 531.202 Definitions.

Except as provided by 5 U.S.C. 5333(a), 5 CFR 531.202(b) and (2), below, the pay of a newly-appointed employee will be set at the minimum rate of the grade for the position to which the employee is appointed.

The pay of an appointed or reappointed employee may be set above the minimum rate of the grade under the provisions and in considerations described at 5 U.S.C. 5333(a), and 5 CFR 531.202(b). In addition, superior qualifications appointment authority is intended to improve IRS' ability to compete with non-Federal employees for top-quality candidates and is not intended solely to match selected candidates existing rates of pay. Selectees whose pay is set using this authority must satisfy one of the requirements below:

The decision to offer a superior qualifications appointment must be made and approved before the employee enters on duty.

Each business unit approving a superior qualifications appointment must establish adequate documentation and recordkeeping procedures to reconstruct each approval. This documentation must be filed on the permanent side of the Official Personnel Folder and include:

Records supporting the higher rate must include (as applicable): data showing the non-Federal sector typically pays higher rates than provided by the minimum rate of the grade, verification of a higher current salary or a copy of a competing job offer letter, the appointment authority (certificate or direct hire authority), and certification from General Legal Services that no conflict of interest exists under 18 U.S.C. 208, if the selectee (or spouse) currently or formerly performed contract work for the Federal Government.

The rules and calculations at 5 CFR 531.203(c) may be used to determine an employee's rate of basic pay upon reemployment, transfer, reassignment, promotion, demotion, or change in type of appointment; unless the employee is entitled to a higher rate under the promotion provisions at 5 U.S.C. 5334(b) and 5 CFR 531.204(a) or the grade and pay retention provisions of 5 U.S.C. 5362 and 5363 and 5 CFR part 536.

Except when the use of the maximum payable rate rule is barred by law, regulation or the provision at (4), below, it will be used to set pay for a current IRS employee to the extent that it provides the employee the greatest possible benefit.

When an employee is reinstated or reemployed, pay will be set considering the employee's experience and qualifications. An employee may be afforded the benefits of the maximum payable rate rule if the prior experience and qualifications are applicable to the position in which the employee is reinstated or reemployed.

The maximum payable rate rule, considering an employee's highest previous rate, will not be used to set the pay of an employee who is changed to lower grade as the result of the termination or expiration of a temporary promotion when the employee is likely to be promoted within 6 months of the date of the change to lower grade. (This use of the highest previous rate is prohibited because it circumvents the provision at 5 U.S.C. 5335, which defines the waiting period for movement through the steps of a grade.)

A highest previous rate is any rate of pay based on a regular tour of duty earned while serving under an appointment not limited to 90 days or less, or for a continuous period of not less than 90 days without a break in service. However, a highest previous rate may not be based on any of the rates received under the circumstances described at 5 CFR(536.203(a)(2).

When an employee has been temporarily promoted for less than 1 year (365 days) and the promotion is made permanent at the same grade, pay will be set in the permanent promotion to provide the greater benefit to the employee using one of the following provisions:

When an employee previously held a temporary promotion for less than 1 year and is promoted permanently to the same or higher grade the rate of pay earned under the previous temporary promotion may be considered the employee's highest previous rate and used to set the initial rate of pay in the higher grade, if it will provide a greater benefit than the application of the two-step promotion rule. When an employee is promoted temporarily to a position with further temporary promotion potential for which only one competition is held, the promotion, for the purposes of applying 531.203(c), shall be considered to be one temporary promotion, not two. The rate earned by the employee attributable to the lower grade of the temporary promotions may be considered as the employee's highest previous rate, unless the employee earned a rate at a higher grade for 1 year or more.

When pay is set in situations involving an agency classification action, simultaneous actions, or the status as a GM employee the rules at 5 CFR 536.203(e), (f), and (g), respectively, apply.

As provided by 5 U.S.C. 5334(b), upon promotion the pay of a General Schedule employee will be set at the lowest step of the higher grade that exceeds the employee's existing rate of basic pay by the value of two steps of the grade held immediately before the promotion.

When an employee has earned a higher previous rate and the employee will receive a greater benefit on promotion if the highest previous rate is considered, pay should be set using the higher rate as provided by 5 CFR 531.203(c).

When an employee is promoted while retaining a rate under 5 U.S.C. 5363 and 5 CFR part 536, the employee is entitled to the greatest of:

As provided by 5 CFR 531.204:

When a classification decision under 5 CFR part 511 is made retroactively, the employee's entitlement to retroactive pay is provided by the terms of the corrective action and the Back Pay Act under 5 U.S.C. 5596. This provision only applies when the decision in response to the classification appeal states that it is to be effected retroactively. In most cases, the Service will be given a limited period of time in which to effect the classification decision.

When a temporary promotion expires or is terminated and the employee is returned to the permanent position, the rate of basic pay in the lower grade must be recomputed as if the employee had not been temporarily promoted.

If an employee held a temporary promotion for more than 1 year, and it is unlikely that the employee will be repromoted within 6 months either temporarily or permanently, the rate earned under temporary promotion may be considered highest previous rate and used to set pay upon return to the permanent position.

When a temporary promotion is terminated for personal cause, inefficiency, or at the employee's request, pay will be set as provided in 6.500.1.4.10, below, as applicable.

For pay administration purposes, change to lower grade occurs-

Change to lower grade involving seasonal career employees:

A rate of basic pay for a GM employee upon loss of GM status, or under certain other special exceptions shall be set as provided at 5 CFR 531.204(d), (e), and (f), respectively and 6.500.1.4.12 below.

At the time of an annual pay adjustment, rules for set the pay of employees who are "off step," but whose rates fall within the rate range of their grades are provided under 5 U.S.C. 5303; see also 5 CFR 531.205.

To set pay for employees upon movement to a General Schedule positions from a position covered by non-appropriated fund instrumentalities see 5 CFR 531.206.

Special pay adjustments for law enforcement offices are administered as provided at 5 CFR 531 subpart C.

This guidance applies to IRS employees who occupy permanent positions classified and paid under the General Schedule and who are paid less than the maximum rate of their grades. This subsection does not apply to:

The definitions used with reference to within-grade increases are the same as the definitions at 5 CFR 531.403 Definitions. In addition, the term pay action means any increase in basic pay received by an employee after his or her initial conversion, promotion, or non-competitive movement into a pay system covered by 5 U.S.C. 9509, that is not the sole result of an increase under 5 U.S.C. 5303 or 5304.

An employee paid at less than the maximum step or rate of the grade of the position shall advance in pay to the next higher step or rate upon meeting the following three statutory requirements:

For an employee with a scheduled tour of duty the employee must possess:

For an employee without a scheduled tour of duty the employee must possess:

A waiting period begins:

A waiting period is not interrupted by non-workdays intervening between the last scheduled workday in one position and the first scheduled workday in another position.

Creditable service will be granted as provided in 5 CFR 531.406.

Multiple increases. When an employee receives more than one increase in a rate of basic pay during a waiting period, no one of which is an equivalent increase; the increases, beginning with the first, are added together successively until they equal an equivalent increase, at which time the employee is deemed to have received an equivalent increase.

Position change. When an employee changes positions and does not receive an equivalent increase or moves from a position not covered by 5 U.S.C. 5335 to a position so covered, without receiving an equivalent increase, the employee will be deemed to have received his or her last equivalent increase:

Increases in pay not considered an equivalent increase. An increase in a rate of basic pay is not an equivalent increase when it results from:

Merit increases. All or any portion of a merit increase, or a zero merit increase, or a pay action (as defined in paragraph 6.500.1.5.2, above) for an individual covered by a pay system under 5 U.S.C. 9509 is deemed an equivalent increase.

The supervisor shall make determinations regarding acceptable level of competence in accordance with 5 CFR 430, Subpart B and 5 CFR 531 Subpart D. If the current rating of record is less than Fully Successful, consideration must be given to denying the within-grade increase. Employees should be informed as soon as management becomes aware that the within-grade increase may be denied, but at least 60 days prior to the date an employee is eligible for a within-grade increase. The employee will be given a written notice that will include the following. (Refer toExhibit 6.500.1-1.):

When the 60-day notice to a bargaining unit employee is issued with less than 60 days until the date of eligibility, the acceptable level of competence determination and the annual rating will be postponed until the full 60 days have passed. At that time, if the evaluation is Fully Successful, the effective date of the within-grade increase will be the original due date. The employee must be notified in writing. (Refer to Exhibit 6.500.1-2).

A negative determination should always be made as close to the end of the waiting period as possible. The determination will be reviewed and approved by a person at a higher level in the organization than the official delegated to make the initial determination. This review will be completed before the employee is notified of the determination.

The supervisor, after consultation with Labor Relations, shall notify the employee in writing that the within-grade increase is being withheld as close to the end of the waiting period as possible. The notice will include the following. (Refer to Exhibit 6.500.1-3.):

The denial of the within-grade increase must be supported by substantial evidence. Substantial evidence is that degree of relevant evidence that a reasonable mind, considering the record as a whole, might accept as adequate to support a conclusion that the matter asserted is true.

The decision to grant or deny a within-grade increase to an employee must be supported by the employee's most recent rating of record made pursuant to 5 CFR 430, Subpart A. If the most recent rating of record does not support the decision, a new rating must be prepared.

The employee or the employee's representative may request in writing, reconsideration of the negative determination within 15 calendar days after the receipt of the negative determination.

When a reconsideration request is made, a Reconsideration File will be established. The file will not contain any document that has not been made available to the employee or the employee's representative and will include the following material:

An employee in duty status will be given a reasonable amount of official time to review the material relied upon and to present the response for reconsideration.

If the employee personnally presents a response for reconsideration, a written summary or verbatim transcript must be completed. The employee or the employee's representative should be given a copy to corroborate on the content and accuracy. A due date should be established for the return of the verified or corrected summary or transcript with the reminder that if it is not received by that date, it will be considered as it stands.

The reconsideration decision will be issued promptly after receipt of any oral and/or written replies.

If the reconsideration decision sustains the denial of the within-grade increase, the notice should include the following (Refer to Exhibit 6.500.1-5for bargaining unit employees, and Exhibit 6.500.1-6for non-bargaining unit employees.):

An employee shall be entitled to choose a representative, provided the representative is not an individual whose activities as a representative would cause conflict of interest or position, whose release from his/her official position for representation duties would give rise to unreasonable cost to the Service, or when priority work assignments would preclude such release from official duties. (Refer toExhibit 6.500.1-7.)

When it is determined that a request for a particular representative must be disallowed, the servicing Personnel Office will be consulted. A notice for disallowance of a representative will be issued within 5 workdays after receipt of the designation of a representative. It will specify the basis for the disallowance. If the disallowance is made for reasons of conflict of interest or position, the letter must explain how the conflict exists. It is insufficient to state: "your representative is being disallowed because of conflict of interest."

The servicing Labor Relations Office will send a copy of the disallowance to the Strategic Human Resources, Workforce Relations Division (Attn: N:ADC:H:R), within 5 workdays of the date of the decision to disallow the representative.

Should the grievant wish to appeal the disallowance of the representative determination, the appeal must be submitted in writing within 7 workdays after the receipt of the disallowance decision, to the Director, Workforce Relations Division (Attn: N:ADC:H:R), 1111 Constitution Avenue, NW, Washington, DC 20224. The decision denying the selected representative must be attached to the appeal. The Director will make a final decision regarding the disallowance within 15 workdays of the date of receipt of the grievant's appeal.

After the withholding of a within-grade increase and at such time the employee's performance reaches an acceptable level of competence, the within-grade increase will be granted. The effective date of the increase will be the first day of the first pay period following the date of the decision. At a minimum, an acceptable level of competence determination must be made after each 52 calendar weeks following the original due date for the within-grade increase.

A negative subsequent determination after the 52 calendar weeks does not require a 60-day warning notice for the bargaining unit employee. In effect, a negative subsequent determination is a reaffirmation of the initial negative determination, and is subject to the same reconsideration rights as the original determination.

An employee will not be retained indefinitely in a position in which performance is unacceptable. Therefore, if the employee's performance has not reached an acceptable level of competence within 52 calendar weeks, consideration should be given to reassignment, demotion, or removal of the employee.

The definitions used in this subsection are the same as the definitions at 5 CFR 531.502 Definitions.

Quality step increases (QSI) provide appropriate incentives and recognition for on-going excellence in performance in the employee's position of record by granting faster than normal step increases.

As provided by 5 CFR 430 subpart B, a QSI shall not be required, but may be granted only to an employee who receives an "Outstanding " or equivalent rating.

It is the IRS policy to grant no more than one QSI within a 104-week period. Repeated QSI's should be very rare because of the continuing, extended, and pyramiding benefits provided by the award.

Management will make a bona fide effort to meet the targets and goals for awarding QSI's established under appropriate national or local labor agreements. However, QSI's will not be awarded solely to meet such targets and goals. They will be awarded based only on merit.

In general, a QSI may not be awarded to an employee under a temporary promotion. However, if the promotion may be made permanent without further competition and the employee is expected to be promoted permanently in the position, a QSI may be awarded.

A QSI should be effective as soon as practicable after it is approved. A QSI will not be effected retroactively unless there was a bona fide administrative error, resulting in a delay so that the increase was not granted timely as it was intended to be.

A QSI will be documented and awarded under the procedures established by Agency-Wide Shared Services Transactional Processing Operations.

A QSI will be documented and reported to the Central Personnel Data File in compliance with the OPM Operating Manual, FEDERAL WORKFORCE REPORTING SYSTEMS.

Evaluation of QSI authority: The OPM may evaluate IRS' use of this authority and shall require IRS to take corrective action if appropriate.

Job grading reviews and appeals will follow the procedures provided at 5 CFR part 532 subpart G.

The definitions used in this subsection are the same as the definitions at 5 CFR 536.102 Definitions.

Grade retention applies to an employee who is moved to a position in a covered pay schedule which is lower graded than the position held immediately before the demotion as the result of:

The authority to grant grade retention to an employee who is offered a lower-graded position because he or she may be adversely affected by a reduction in force or reclassification action that has been announced in writing is delegated to the Directors of Human Resources in the business units.

When a reorganization that may result in a reduction in force or reclassification is announced in writing by management, the head of the agency, or his or her designee, may offer grade retention to eligible employees who are, or who might be, reduced in grade. When under these circumstances a lower-graded position is offered with grade retention, the employee must be informed in writing that acceptance of the position is not required. Declination of the offer will have no effect on the employee's entitlement to grade retention under (1), above, if he or she is actually moved to a lower-graded position as a direct result of the reorganization or reclassification.

In situations other than those covered in (3), above, an employee is eligible for grade retention if he or she, immediately prior to being placed in the lower grade, has served in a position in any pay schedule for 52 consecutive weeks or more, provided the service was in an agency as defined in 5 U.S.C. 5102 at a grade(s) higher than the position in which the employee is placed.

Pay retention shall apply to any employee whose rate of basic pay would otherwise be reduced as a result of:

Pay retention shall also apply as the result of:

The IRS may provide pay retention to eligible employees whose rates of basic pay would be reduced as the result of a management action, but not under circumstances which specifically exclude pay retention, e.g., a voluntary movement (a movement at the employee's request), or a movement " for cause," under 5 CFR 536.105, Exclusions, and paragraph 6.500.1.9.4, below.

The authority to provide pay retention in circumstance described in (3), above, and not specifically excluded by 6.500.1.9.4 below, is delegated to Directors of Human Resources in the business units.

As provided by 5 CFR 536.105, grade and pay retention shall not apply to an employee who-

As provided by 5 U.S.C. 5363, an employee who elects in writing to terminate the benefits of grade retention is not entitled to the benefits of pay retention.

An employee's entitlement to grade or pay retention is not affected by a temporary promotion or temporary reassignment. However, an employee may not retain a grade or rate of basic pay held during the temporary promotion or temporary reassignment.

When there is no other method to compare grades specified by the covered pay schedule or system and an employee is moved between pay schedules or pay systems, representative rates of the positions will be compared to determine whether the employee is moving to a higher or to a lower grade. Representative rates mean:

When an employee is moved from an IRS paybanded position under 5 U.S.C. 9509 to a GS position, the "conversion out rules" at 65 FR 79433 (See Exhibit 6.500.1-7) will be used to determine the employee's grade under the General Schedule. If the employee is moving to yet another pay schedule or system, the GS grade determined under the conversion rules will be considered the employee's representative rate for the purpose of determining entitlement to grade retention.

An employee entitled to grade retention shall retain that grade for 2 years beginning on the date the employee is placed in the lower-graded position.

If, during a 2-year period of grade retention, an employee's grade is further reduced under circumstances again entitling the employee to grade retention, the employee retains the previous retained grade for the remainder of the previous 2-year retention period. At the end of that period, the employee is entitled to retain the grade of the position from which further reduced, until 2 years have passed from the date of the further reduction.

Notwithstanding 5 CFR 536.207(a)(1) and 6.500.1.9.12, below, grade retention shall continue when an employee serves under an interim appointment, under 5 CFR 732.102, for the initial 2-year period if the employee's entitlement to grade retention was based on the appointment immediately preceding the interim appointment.

An employee in a covered position who is entitled to grade retention shall retain the grade held immediately before being reduced in grade.

An employee who is not in a covered position shall retain the grade identified by provision of 5 CFR 536.203; or

An employee, if reduced from a position covered by an IRS payband under 5 U.S.C. 9509, shall retain coverage under the rules of that system.

The provisions at 5 CFR 536.204 identifies the applicable rate schedule for an employee entitled to grade retention.

The rate of basic pay for an employee entitled to grade or pay retention is determined as provided at 5 CFR 536.205.