6.576.1 Use of Direct Buyouts (VSIP) and Job Swaps

Circumstances for Use

  1. The Service will use direct buyouts and job swaps, when deemed appropriate, to reduce the adverse effects on employees resulting from organizational change actions. Employees may be offered voluntary early retirement at the same time they are offered buyouts. The offer of voluntary retirement may increase the number of employees who are willing to accept buyouts.


  1. Direct Buyouts. Direct buyouts are incentives used to encourage voluntary separation by employees who occupy positions impacted by organizational change. The incentive is paid in a lump sum after separation and is equivalent to the employee’s severance pay entitlement up to a maximum of $25,000. Employees who accept any employment for compensation with the Federal Government within 5 years after their separation (including personal services or other direct contracts) are required to repay the entire gross amount of the buyout they received before their first day of employment. Direct buyouts can be used for either of two purposes:

    1. To offer employees an incentive to voluntarily separate to lessen the impact of staff reductions, restructuring, or organizational closures. In such situations, the organization offering the buyouts should not fill behind buyout recipients.

    2. To correct a skills imbalance within an organization by offering employees having unnecessary or obsolete skills the opportunity to leave the workforce voluntarily so that new employees with more mission-related skills can be appointed.

  2. Job Swap. Section 3522 of Title 5, United States Code, requires that buyout plans submitted to OPM for approval identify the specific positions and functions to be reduced or eliminated under buyout authority. This requires that only individuals who occupy the specified positions are eligible to be separated with a buyout. However, through IRS’s job swap procedure, a non-impacted employee whose position does not appear on the buyout plan approved by OPM but who is qualified for an impacted employee’s position is permitted to volunteer for official reassignment into an impacted position for which he or she qualifies. He or she is then separated with a buyout. This allows the non-impacted employee to officially occupy a position that was on the list of positions sent to OPM for buyout authority approval. The impacted employee must also qualify for the non-impacted employee’s former position in order to be officially reassigned into it. Both job swap candidates must occupy positions at the same grade/band. Job swaps allow impacted employees to be retained when they can locate or are contacted by non-impacted positions who are willing to voluntarily separate in their place.

  3. Just cause (used in conjunction with qualifications determinations during job swaps). Just cause is the only valid basis for management to deny an employee a job swap opportunity. Job swap denials based on just cause must stand up to third party scrutiny. They must be valid, factually supportable, and understandable to parties called upon to review a denial if it is contested.

Required Approval

  1. Business Divisions must receive approval from the Executive Level Reviewing Body before submitting a formal request for buyout authority through the IRS Human Capital Officer (HCO) and the Department of Treasury for OPM approval.

Managerial Responsibility

  1. Commissioners and Deputy Commissioners of the Business Divisions with approval to offer buyouts will be responsible for determining the circumstances and extent to which they plan to offer buyouts within their organizations.

Procedures for Offering Buyouts

  1. Direct Buyout Offers.

    1. Business Divisions will offer buyouts to eligible employees through general solicitations. These notices will provide the names of the organizations soliciting VSIP volunteers, the series and grade(s)/band(s) and any special skills, knowledge, or other factors related to position(s) that are covered by the solicitation, the organizational unit(s) and geographic locations to be covered, the opening and closing dates of the buyout window period(s), and the off-the-rolls date(s).

    2. If more employees apply than the number of buyouts available, the most senior employees in bargaining unit positions will have priority based on IRS entrance on duty (EOD) date and in non-bargaining unit positions by service computation date (SCD).

    3. The designated Employment Office Buyout Coordinator/Team will review the buyout applications, verify eligibility and the other information provided, and coordinate approvals with the HCO service providers, the AWSS Payroll Centers, BeST, etc.

  2. Job Swaps.

    1. Job Swaps match impacted employees who want to remain with the Service with non-impacted employees who are interested in leaving the Service with a buyout.

    2. Under the job swap procedure, non-impacted employees may volunteer to be officially reassigned into positions which were listed on the buyout plan approved by OPM. These volunteers will then be separated with buyouts, and impacted employees will be placed in the continuing positions vacated by the volunteers. Each employee involved must meet the qualification requirements for the other’s position.

    3. Employees from both groups must apply for consideration when a job swap notice is issued.

    4. The designated Employment Office will review the job swap participants’ applications, verify the information provided, determine the qualifications of the non-impacted VSIP volunteers and the impacted employees for the positions into which they will be reassigned, and manage their placement in the positions.

    5. Impacted employees must be in the same grade/band as the continuing positions, have fully successful or higher ratings, and be able to perform the positions without formal training. Note: Some negotiated agreements may require that impacted employees be qualified and in the same series (as well as grade/band) as the positions being vacated by buyout volunteers.

    6. First consideration for filling vacated positions will go to impacted employees in the same commuting area as the vacated positions, unless a negotiated agreement specifies otherwise.

    7. An impacted employee may be placed in a position vacated by a job swap volunteer at a grade/band that is no higher than and which has no higher promotion potential than the impacted employee’s current permanent position.

    8. Impacted employees who qualify for job swaps are expected to be placed, absent "just cause" for excluding them from the reassignment.

    9. Managers involved in employee job swaps must have concluded qualifications determinations with their servicing labor relations and/or employment office(s) and must have made qualifications decisions that will withstand third party scrutiny prior to the off rolls date specified for an advertised VERA/VSIP window.

    10. Incumbents of positions classified as "incumbency only" may not offer their positions to impacted employees and accept a buyout. Such positions are abolished when they are vacated.

Irrevocable Buyouts

  1. Irrevocable buyouts are offered to employees with the understanding that they must separate on the agreed upon date and that they cannot rescind their approved buyout after acceptance.

  2. As a general rule, buyouts will not be offered on an irrevocable basis. An exception would be to offer irrevocable buyouts to non-impacted employees so that impacted employees who are willing to pay their moving expenses to areas outside their commuting areas can be placed through relocation.

Buyout Authority Numbers

  1. Once Treasury notifies the IRS Mitigation Strategies Coordinator, an employee within the Workforce Restructuring and Operations Branch (WROB), Workforce Progression and Management (WPM) Division, that OPM has approved a Business Division’s request for VERA and/or VSIP authority, he or she will provide a copy of the approval letter to the appropriate embedded Human Resources Staff member(s) (or Business Division Human Resources representatives), BeST, and the appropriate AWSS Payroll Center. Included in the approval letter will be the OPM-assigned authority numbers for the VSIP and VERA authorities that have been issued.

  2. Those who advertise VERA and/or VSIP opportunities will ensure that they use the correct, OPM-assigned VERA and/or VSIP authority numbers. If they are unsure of the correct numbers, they should contact the IRS Mitigation Strategies Coordinator to obtain the correct numbers. VERA and/or VSIP applicants should be required to place the VERA and VSIP authority numbers on their VSIP applications in a location to be specified by those who are advertising the VERA and/or VSIP opportunities. If an applicant fails to provide the authority number on the VSIP application, the persons advertising the VERA and/or VSIP opportunity must place the correct authority numbers on the application.

  3. Payroll Center staff who are processing VERA and/or VSIP-related separations should use the correct, OPM-assigned VERA and/or VSIP authority numbers for their separation actions. If they are unsure of the correct VERA and/or VSIP authority numbers, they should contact the IRS Mitigation Strategies Coordinator to obtain the correct numbers. OPM’s instructions for using VSIP authorities specify that the separating employee’s Standard Form 50 (SF 50), Notification of Personnel Action , is to be annotated with the VSIP authority number under which the VSIP is being paid. OPM’s VERA instructions indicate that the VERA authority number is to be placed in Block 5F of the retiring employee’s SF 50. These instructions are attached to each VERA and/or VSIP approval letter issued by OPM.

Buyout Reporting Requirements

  1. The Service must provide periodic buyout reports.

  2. Quarterly reports required by OPM. These reports involve direct and job swap buyouts for each IRS buyout authority. WPM is responsible for providing these buyout reports 30 calendar days after the end of each quarter. The final report will be due 60 days after the authority has expired. Data required for each authority:

    • buyout authority number,

    • number of buyouts for each authority,

    • geographic location for each buyout recipient,

    • organizational unit for each buyout recipient,

    • series and grade/band for each buyout recipient, and

    • average buyout amount for each buyout authority.

  3. Ad hoc reports. WROB may occasionally ask the IRS Human Resources Reporting Center, Human Resources Reporting Section, to provide ad hoc reports capturing data on employees voluntarily separating with buyouts and the impacted employees reassigned into the buyout recipients’ positions. WROB may also request data to respond to requests for IRS VERA/VSIP information from outside parties. The quarterly reports submitted to the Office of Personnel Management and information provided in response to inquiries from the Treasury Inspector General for Tax Administration would be examples of this. The data required may be as follows:

    • buyout recipient’s name,

    • buyout recipient’s organizational unit,

    • buyout recipient’s geographic location/commuting area,

    • buyout recipient’s series,

    • buyout recipient’s grade/band,

    • buyout recipient’s buyout amount,

    • buyout recipient’s BU/NBU identifier,

    • matching impacted employee’s name,

    • matching impacted employee’s organizational unit,

    • matching impacted employee’s location/commuting area,

    • matching employee’s series,

    • matching employee’s grade/band, and/or

    • matching employee’s BU/NBU identifier.