This IRM must be read and interpreted in accordance with pertinent law (Title 5, United States Code (USC)), governmentwide regulations (Title 5, Code of Federal Regulations (CFR)), Treasury Human Capital Issuance System (HCIS) directives, Office of Personnel Management (OPM) decisions and IRS guidance. As required, this guidance may be supplemented periodically by interim policy guidance from the IRS Human Capital Office. This IRM should be used in conjunction with the 3Rs and EAI operational guides, found on IRS Source. These guides outline detailed operational processing information.

The 3Rs are compensation flexibilities available to help federal agencies recruit and retain a world-class workforce. The 3Rs are administered under 5 USC 5753, 5 USC 5754 and 5 CFR 575 , subparts A, B and C.

EAIs are a separate compensation flexibility available to assist agencies in retaining experienced, well-trained employees serving in duty stations located in a territory or possession of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands for a longer period than the employee’s initial tour of duty. The EAIs are administered under 5 USC 5757 and 5 CFR 575, subpart E.

Laws: Title 5, United States Code (USC)

Regulations: Title 5, Code of Federal Regulations (CFR), Part 575 - Recruitment, Relocation, and Retention Incentives; Supervisory Differentials; and Extended Assignment Incentives

Delegation of Authority: Delegation Order 6-23, Delegations of Authority to Accomplish Pay Administration, at IRM 1.2.2.7.13

Other:

The Treasury Assistant Secretary for Management is the approving official for payment of an incentive to (1) a member of the SES, other than one for whom appointing authority is reserved to the Deputy Secretary; (2) a non-SES selected for an SES position; and (3) an individual appointed to a position under the streamlined critical pay authority at 5 U.S.C. 9503.

The Commissioner, or authorized delegated authority (Chief Tax Compliance Officer, Chief Operating Officer, Chief Taxpayer Services and Chief Information Officer) is the approving official for payment of an incentive to a non-SES employee within their organization. Refer to Delegation Order 6-23, Delegations of Authority to Accomplish Pay Administration, at IRM 1.2.2.7.13. Approval must be by an official who is at least one level higher than the employee's supervisor.

The IRS Human Capital Officer is the executive responsible for this IRM, overall IRS policy for the 3Rs and EAIs and certification that all statutory and regulatory requirements have been met for non-SES incentive requests.

The HCO, Office of Human Resource Strategy and Transformation, Policy Office (PO) is responsible for developing and publishing IRM content, and supporting business based human resource (BBHR) point of contact (POC) with policy related questions on non-SES incentives.

The HCO, Office of Executive Services is responsible for developing SES incentive content for this IRM, acting as the POC for SES incentives, forwarding SES incentive requests to the Treasury Assistant Secretary for Management for approval, and maintaining related suspense files.

The HCO, Office of HR Operations (OHRO), Talent Acquisition Division is responsible for recruitment and hiring partnering with business units to pursue recruitment incentives before a prospective employee enters on duty.

The HCO, OHRO, Labor/Employee Relations and Negotiations Office provides guidance on grievances, performance cases, disciplinary and adverse actions, misconduct and federal tax compliance screening per the Consolidated Appropriations Act, as well as contractual obligations with the National Treasury Employees Union (NTEU).

The HCO, OHRO, Human Resources Shared Services is responsible for processing Personnel Action Requests (PARs) for all approved incentive requests, reductions, and terminations.

The Business Based Human Resource (BBHR) POC within the business unit is responsible for verifying, coordinating and facilitating approval of incentive requests, as well as updating, and maintaining records for all incentive requests in compliance with applicable policies and procedures.

A manager is responsible for recommending, administering, documenting, monitoring, updating incentive actions, ensuring compliance with laws and policies, maintaining accurate records to support effective and accountable use of government resources and counseling employees on incentive rules, regulations and procedures.

Employees are responsible for following IRS incentive policies and promptly reporting any discrepancies on their earnings and leave statement or Standard Form (SF)-50, Notification of Personnel Action, as corrections may result in a debt.

This IRM provides policy guidance on the 3Rs and EAIs for IRS. During review and publishing of this IRM, sections are revised, added, or deleted based on feedback from customers and program owners.

The PO develops policies, materials, and programs to increase Servicewide awareness and knowledge of incentive programs. Additionally, PO collaborates with other HCO organizations and Servicewide stakeholders to support education and outreach activities related to 3Rs and EAIs.

The definitions used in this chapter are consistent with those contained in 5 CFR 575, Recruitment, Relocation, and Retention Incentives; Supervisory Differentials; and Extended Assignment Incentives.

The table below lists commonly used acronyms and their definitions.

The Incentives page on IRS Source under the Employee Resources tab provides information that supplements this chapter.

The OPM Fact Sheets provide further information on how OPM administers these payments.

3Rs and EAI operational guides, found on IRS Source, provide detailed information for creating incentive requests, completing required documents, maintenance of required documentation, and terminating incentive service agreements.

If an employee received recruitment, relocation or extended assignment incentive payments in excess of the amount that would be attributable to the completed portion of the service period, they must repay the excess amount. Refer to 5 CFR 575.111(f), 5 CFR 575.211(f) and 5 CFR 575.513(c).

In accordance with 5 CFR 575, the IRS may not pay multiple incentives simultaneously. For example, the IRS may not begin paying an EAI to an eligible employee who is receiving or fulfilling the requirements of a recruitment, relocation, or retention incentive (5 CFR 575.506).

The business unit will complete and maintain:

The 3Rs and EAIs operational guides provide expansive information on various operational components such as:

A service agreement is a written agreement between the IRS and an employee under which the employee agrees to a specified period of employment in return for the payment of a recruitment, relocation or retention incentive. For EAI the agreement is for employment in a particular territory or possession of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands in return for payment.

Before the IRS may pay a 3Rs incentive, the employee must sign a written service agreement to complete a specified period of employment with the agency in accordance with 5 CFR 575.110, 5 CFR 575.210, and 5 CFR 575.310. Before the IRS may pay an EAI, an employee must sign a written service agreement to complete a specified period of additional employment located in a territory or possession of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands, in accordance with 5 CFR 575.510.

The required service period must begin on the first day of a pay period and end on the last day of a pay period.

A service agreement is not required (5 CFR 575.310(f)) for a retention incentive when the IRS:

For each retention incentive that is subject to a service agreement, an authorized IRS official must conduct a review of the determination to pay a retention incentive at least annually to determine whether the original determination still applies or whether payment is still warranted, as required by 5 CFR 575.311(a)(1) and must certify this determination in writing.

Refer to the 3Rs and EAIs operational guide for specific service agreement requirements

The officials authorized to approve the payment of a recruitment, relocation, retention, or extended assignment incentive are also authorized to terminate the service agreement.

The IRS may unilaterally terminate an incentive service agreement based solely on management needs (5 CFR 575.111(a), 5 CFR 575.211(a), 5 CFR 575.311(a) and 5 CFR 575.512(a)).

The IRS must notify an employee in writing when it terminates an incentive agreement and provide the reason(s) for the termination.

The termination of a recruitment, relocation or retention service agreement is not grievable or appealable as prescribed in 5 CFR 575.111(c), 5 CFR 575.211(c) and 5 CFR 575.311(g).

Refer to the 3Rs and EAIs operational guides for additional information.

A recruitment incentive may be paid:

A recruitment incentive is not part of an employee’s rate of basic pay for any purpose.

A recruitment incentive will not be included in the calculation of a lump-sum payment for annual leave.

To be eligible to receive a recruitment incentive, an employee must:

A recruitment incentive may not be paid to ineligible employees as defined in 5 CFR 575.104 , which include, but are not limited to, individuals appointed by the President, by and with the advice and consent of the Senate, or a position in the SES as a non-career appointee (as defined in 5 USC 3132(a)(7)).

For each determination to pay a recruitment incentive, the following must be documented in writing on the appropriate request form:

Required Forms:

The following factors must be considered when determining the amount of the recruitment incentive:

For SES, the maximum amount authorized for a recruitment incentive is 25 percent of an employee’s annual rate of basic pay at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed four years).

For non-SES, the IRS established the Non-SES Corporate Incentives Strategy, which sets the maximum incentive amount allowed, per year for non-SES employees. The Non-SES Corporate Incentive Strategy must be referenced and utilized.

The IRS may, through Treasury’s Office of the Deputy Assistant Secretary for Human Resources/Chief Human Capital Officer (DASHR/CHCO), request OPM approval to waive the 25 percent limitation for non-SES and SES employees based on a critical agency need. For information on these types of requests, please reference 5 CFR 575.109(c), and the Recruitment Incentive Operational Guide.

The approving official must review and approve the recruitment incentive request in writing by completing and signing the required forms.

Recruitment incentives must be approved before the new employee enters on duty and before the incentive can be paid to the employee.

Approval must be by an official who is at least one level higher than the employee's supervisor.

See expanded information on the approval process in the Recruitment Incentive Operational Guide.

A relocation incentive may be paid:

In all cases, an employee must establish residence in the new geographic area before the IRS may pay a relocation incentive to the employee.

A relocation incentive may be paid only if the employee maintains residency in the new geographic area for the duration of the service agreement.

For employees who do not maintain a residence in the new geographic location throughout the service agreement, the relocation incentive will be terminated. Refer to IRM 6.575.1.2.6, Termination of a Service Agreement for more information.

A relocation incentive will not be considered part of the employee's rate of basic pay for any purpose.

A relocation incentive will not be included in the calculation of a lump-sum payment for annual leave.

To be eligible to receive a relocation incentive, an employee must:

Employees in positions listed in 5 CFR 575.204are not eligible for relocation incentives.

For each determination to pay a relocation incentive, the following must be documented in writing on the appropriate request form:

Required Forms

For SES, the maximum amount authorized for a relocation incentive is 25 percent of an employee’s annual rate of basic pay at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed four years).

For non-SES, the IRS established the Non-SES Corporate Incentives Strategy, which sets the maximum incentive amount allowed for non-SES employees. The Non-SES Corporate Incentives Strategy must be referenced and utilized.

The IRS may, through the DASHR/CHCO office, request OPM approval to waive the 25 percent relocation incentive payment limitation for non-SES and SES employees based on a critical agency need. For information on these types of requests, please reference 5 CFR 575.209(c) and the Relocation Incentive Operational Guide.

The approving official must review and approve the relocation incentive request in writing by completing and signing the required forms.

Relocation incentives must be approved before the employee enters on duty in the new position to which relocated and before the incentive can be paid to the employee.

Approval must be by an official who is at least one level higher than the employee's supervisor.

See expanded information on the approval process in the Relocation Incentive Operational Guide.

A retention incentive may be paid:

The IRS may not pay a retention incentive as an initial lump-sum payment at the start of a service period or in advance of fulfilling the service period for which the retention incentive is being paid.

Payment of a retention incentive cannot exceed 12 months. However, if management determines that the retention incentive should continue beyond the original 12-month period, then a completely new retention incentive request must be completed and submitted for approval to include, but not limited to, written justification, basis for the amount and timing of the incentive and the length of the service agreement.

An eligible employee who is receiving a retained rate of pay may also receive a retention incentive. However, the incentive payment must be based on the maximum rate for the employee’s position of record/grade and not on the retained rate of pay (5 CFR 536.307(b)).

A retention incentive will not be considered part of the individual’s rate of basic pay for any purpose.

A retention incentive will not be included in the calculation of a lump-sum payment for annual leave.

To be eligible to receive a retention incentive, an employee must:

Employees in positions listed in 5 CFR 575.304are not eligible for a retention incentive.

For each determination to pay a retention incentive, the following must be documented in writing on the appropriate request form:

Required forms

For SES, the maximum amount authorized for a retention incentive is 25 percent of an employee’s annual rate of basic pay at the beginning of the service period.

An incentive authorized for a group or category of employees may not exceed 10 percent of each employee’s rate of basic pay.

For non-SES, the IRS established the Non-SES Corporate Incentives Strategy, which sets the maximum incentive amount for non-SES employees. The Non-SES Corporate Incentives Strategy must be referenced and utilized.

The IRS may, through the DASHR/CHCO office, request OPM approval to waive the 25 percent retention incentive rate limitation for non-SES and SES employees based on the Service’s critical need for a higher incentive payment amount consistent with the requirements in 5 CFR 575.309(e). For more information on these types of requests, please reference the Retention Incentive Operational Guide.

The approving official must review and approve the retention incentive request in writing by completing and signing the required forms.

Retention incentives must be approved before they can be made effective and paid to the employee.

Approval must be by an official who is at least one level higher than the employee's supervisor.

The DASHR/CHCO is the approving official for payment of retention incentives that exceed two years for any individual or group.

See expanded information on the approval process in the Retention Incentive Operational Guide.

At least annually, the IRS must review each determination to pay a retention incentive, when no service agreement is required, subject to the provisions in 5 CFR 575.311(f), to make determinations on the continuation, reduction, or termination of a retention incentive. The determination must be certified in writing.

The IRS may continue paying a retention incentive to an employee (when no service agreement is required) as long as the conditions giving rise to the original determination to pay the incentive still exist.

The IRS may unilaterally terminate a retention incentive (when no service agreement is required) based solely on the management needs of the agency, even if the conditions giving rise to the original determination to pay the incentive still exist. For example, the IRS may terminate a retention incentive when there are insufficient funds to continue the planned retention incentive payments (5 CFR 575.311(f)(4)).

The IRS must notify the employee in writing if a retention incentive is reduced or terminated and provide the reason(s) for the reduction or termination.

An employee is entitled to receive any scheduled incentive payments through the end of the pay period in which written notification of termination was given or until the date of separation (if sooner).

The termination or reduction of a retention incentive is not grievable or appealable as prescribed under 5 CFR 575.311(g).

Refer to the Retention Incentive Operational Guide for expansive information on reducing or terminating a retention incentive, when no service agreement is required.

To ensure compliance with Treasury directives, the IRS must annually review all determinations to pay a retention incentive to ascertain whether the original determination, in other words, the circumstances that supported the initial request and approval still applies or whether payment is still warranted.

Refer to the Retention Incentive Operational Guide for expansive information on the requirements for the annual review.

Except as provided in this section, all other requirements in this IRM pertaining to retention incentives apply to the approval of a retention incentive for an employee or group or category of employees who would be likely to leave the federal service. (5 CFR 575.314).

An authorized official, as defined in IRM 6.575.1.5.5 , Approval of Retention Incentives, may approve a retention incentive as follows:

Refer to the Retention Incentive Operational Guide for expansive information on the requirements for retention incentives for an employee or group or category of employees who would be likely to leave for a different position in the federal service.

The incentive payment may be paid:

The incentive payment will not be considered part of the individual’s rate of basic pay for any purpose.

An EAI will not be included in the calculation of a lump-sum payment for annual leave.

The recipient of an EAI is not required to meet the standard of possessing unusually high, unique, or one-of-a-kind qualifications.

The determination to pay an EAI must be on a case-by-case basis.

The employee must have completed at least two years of continuous service in one or more civil service positions located in one of the approved covered locations for payment of an EAI.

An employee must sign a service agreement to remain in the authorized location for a specified additional period;

An EAI may not be paid to an otherwise eligible employee who is receiving or fulfilling the requirements of a recruitment, relocation, or retention incentive service agreement.

For each determination to pay an EAI, the following must be documented in writing on the appropriate request form:

Required Forms

The amount of the EAI payment will be determined on a case-by-case basis. The amount will align with the IRS’s need for the employee’s qualifications and experience and the mission and objectives of the organization. The amount of the payment cannot exceed the greater of:

The approving official must review and approve the extended assignment incentive request in writing by completing and signing the required forms.

The approving official must be at least one level higher than the employee’s supervisor.

EAIs must be approved before they can be made effective and paid to the employee.

See expanded information on the approval process in the EAI Operational Guide.