Recruitment, relocation, and retention incentives (3Rs) are compensation flexibilities available to help Federal agencies recruit and retain a world-class workforce. The 3Rs are administered under Title 5 of the United States Code (USC), Chapter 57, Sections 5753 and 5754 and 5 CFR part 575, subparts A, B and C. EAIs are also a compensation flexibility available to assist agencies in retaining experienced, well-trained employees in locations 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. EAIs are administered under Title 5 of the USC, Chapter 57, Section 5757 and 5 CFR part 575, subpart E.

Laws: USC at http://uscode.house.gov/

Regulations: Title 5, CFR at https://www.ecfr.gov/cgi-bin/ECFR?SID=48e607ea83e9e1153545d6fbe5a3c168&page=browse

Delegation of Authority: Delegation Order 6-23, Delegation of Authority to Accomplish Pay Administration, at IRM 1.2.45.20

Other:

The IRS Human Capital Officer is the executive responsible for:

HCO, WBP, ACLP is responsible for:

HCO, OES is responsible for:

HCO, Employment, Talent and Security (ETS) Division is responsible for recruitment and hiring. They partner with business units who are interested in pursuing a recruitment incentive before a prospective employee enters on board.

HCO, Workforce Relations (WRD) Division, Labor Relations/Employee Relations (LR/ER) Operations Office provides guidance in areas such as discipline, adverse and performance cases, and misconduct and Federal Tax compliance.

HCO, P&PS Division is responsible for:

The BBHR POC is responsible for:

A manager is responsible for:

An employee is responsible for being aware of incentive rules, regulations, and procedures, in accordance with applicable laws, regulations, and established policies.

Program Reports and Effectiveness: This IRM provides policy guidance on the 3Rs and EAIs for IRS. HCO, WBP gauges effectiveness of the incentive policies based on feedback from customers and program owners about subjects contained in this IRM, and sections may be revised, added, or deleted based in part on this process. HCO, WBP plays an integral role in program management, review, and effectiveness by:

HCO, WBP develops and deploys policies, materials, and programs to increase Service-wide awareness and understanding of incentive programs, and collaborates with other HCO organizations and Service-wide stakeholders to support education and outreach activities as they relate to incentive programs.

The following activities help ensure program success:

Before receiving an incentive, employees will be subject to misconduct and Federal tax compliance screenings in accordance with the Appropriations Act and IRS procedures, which prohibits using appropriated funds to pay employee incentives without considering the employee’s conduct and Federal tax compliance. Details can be found in IRM 6.451.1.23, Employee Performance and Utilization, Misconduct Screening and Tax Compliance athttp://irm.web.irs.gov/Part6/Chapter451/Section1/IRM6.451.1.aspx#6.451.1.23.

The definitions used in this chapter are consistent with those contained in 5 CFR 575.

Additional definitions are found in each subsection, as relevant.

Competencies are the knowledge, skills, abilities, behaviors, and other characteristics an individual needs to perform the duties of the position.

Rate of basic pay is defined under 5 CFR 575. It means the rate of basic pay fixed by law or administrative action for the position to which an employee is or will be appointed, relocated, or retained before deductions and including any special rate under 5 CFR part 530, subpart C, or similar payment under other legal authority, and any locality-based comparability payment under 5 CFR part 531, subpart F, or similar payment under other legal authority, but excludes additional payments of any other kind.

Service Agreement is defined as a written agreement between IRS and an employee under which the employee agrees to a specified period of employment of not less than six months or more than four years with IRS in return for payment of an incentive.

Additional guidance regarding IRS incentive programs is available on the HCO website at: http://hco.web.irs.gov/CompBenefits/compleave/3RIncentives.asp. The information supplements this chapter. To provide more detailed references, hyperlinks are included to supporting documents and additional information.

OPM Fact Sheets:

The definitions used in this subsection are in addition to those listed in IRM 6.575.1.1.6, and are consistent with those contained in 5 CFR 575.102 and Treasury Human Capital Issuance, HCIS Chapter 575.1 TN-15-001.

Likely to be difficult to fill means IRS is likely to have difficulty recruiting qualified candidates with the competencies required for a position or group of positions in the absence of a recruitment incentive. IRS must consider the factors in 5 CFR 575.106(b), as applicable to the case at hand, to determine whether a position is likely to be difficult to fill.

Newly appointed refers to:

A recruitment incentive may be authorized on a case-by-case basis to a newly appointed employee when the employee’s position is likely to be difficult to fill in the absence of the incentive. The approving official must make the determination to pay a recruitment incentive before the prospective employee enters on duty in the position for which recruited.

The regulations contained in 5 CFR part 575, subpart A, provide for approval of recruitment incentives for a group or category of employees if the IRS determines that a position or group of positions have been difficult to fill in the past or may be difficult to fill in the future.

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 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)).

IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to determine when a position is likely to be difficult to fill (e.g., the IRS is likely to have difficulty recruiting candidates with the competencies required for the position or group of positions in the absence of a recruitment incentive). The following factors must be considered, as applicable to the case at hand, in determining whether a position or group of positions is likely to be difficult to fill in the absence of the incentive and in documenting this determination (5 CFR 575.106):

IRS may determine that a position or group of positions is likely to be difficult to fill if OPM has approved the use of a direct-hire authority applicable to the position or group of positions under 5 CFR 337, subpart B.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to approve a recruitment incentive.

The Treasury Assistant Secretary for Management is the approving official for payment of a recruitment incentive to a member of the SES, or non-SES employees selected for an SES position, other than one for whom appointing authority is reserved to the Treasury Deputy Secretary.

The Commissioner, the Deputy Commissioner for Services and Enforcement, and the Deputy Commissioner for Operations Support are the approving officials for the payment of a recruitment incentive for employees within his or her respective organization. This authority may not be redelegated. (See Delegation Order 6-23, Delegation of Authority to Accomplish Pay Administration, at IRM 1.2.45.13(62))

The recommending official must be at least one level higher than the employee's supervisor unless there is no higher official within the IRS.

The approving official must review and approve the recruitment incentive request in writing before the new employee enters on duty.

The recruiting manager recommends payment of a recruitment incentive through the second-level manager after determining a position is likely to be difficult to fill.

The requesting office completes and signs the Recruitment Incentive Request Form 14118-I for non-SES employees, or the Recruitment Incentive Template for SES employees or non-SES employees selected for an SES position. Requests for non-SES employees are routed to the BBHR POC, and requests for SES employees are routed to the functional POC.

The BBHR POC or functional POC:

HCO, WBP, ACLP will conduct a technical review on non-SES requests and HCO, OES will conduct a technical review on SES requests. The IRS Human Capital Officer will certify that all statutory and regulatory requirements have been met. The requests for non-SES will be forwarded to the Commissioner or appropriate Deputy Commissioner for approval, and the requests for SES will be forwarded to the Treasury Assistant Secretary for Management for approval.

HCO, P&PS creates and processes the PAR and sends a copy of the documentation to the OPF Consolidated Site to be filed in the employee’s OPF.

HCO, P&PS will generate periodic reports on recruitment incentives at the request of HCO, WBP, ACLP.

HCO, WBP, ACLP is responsible for overall program administration, policy guidance, and reporting requirements.

For each determination to pay a recruitment incentive, the following must be documented in writing on the Recruitment Incentive Request Form 14118-I for non-SES employees, or the Recruitment Incentive Template for SES employees or non-SES employees selected for an SES position:

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the amount of a 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 parameters established in the IRS Non-SES Corporate Incentives Strategy at http://hco.web.irs.gov/compbenefits/pdf/IRSNon-SESCorporateIncentivesStrategy.ppt must be referenced and utilized.

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

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. The requesting office must determine that the competencies required for the position(s) are critical to the successful accomplishment of an important agency mission, project, or initiative (e.g., programs or projects related to a national emergency or implementing a new law or critical management initiative). With an approved waiver, the total amount of recruitment incentive payments paid to a non-SES or SES employee in a service period may not exceed 50 percent of the employee’s annual rate of basic pay at the beginning of the service period multiplied by the number of years in the service period. However, in no event may a waiver provide total recruitment incentive payments exceeding 100 percent of the employee’s annual rate of basic pay at the beginning of the service period. A written waiver request must include all of the information required in 5 CFR 575.109(c)(2).

A recruitment incentive may be paid:

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

Payment of a recruitment incentive is subject to the aggregate limitation on pay under 5 USC 5307 and 5 CFR part 530, subpart B.

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

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the length of a service period.

A service agreement is a written agreement between IRS and an employee under which the employee agrees to a specified period of employment in return for the payment of a recruitment incentive.

Before the IRS may pay a recruitment incentive, an employee must sign a written service agreement to complete a specified period of employment with IRS. The minimum service agreement may not be for less than six months; the maximum service agreement may not be for more than four years.

The service agreement must:

If service does not begin on the first day of a pay period, the approving official must delay the service period commencement date so that the required service period begins on the first day of the first pay period beginning on or after the commencement of service with IRS.

The approving official may delay a service agreement commencement date until after the employee completes an initial period of formal training or required probationary period when continued employment in the position is contingent on successful completion of the formal training or probationary period. The service agreement must specify that if the employee does not successfully complete the training or probationary period before the service period commences, the IRS is not obligated to pay any portion of the recruitment incentive.

A service agreement form is provided as part of Form 14118-I Request for Recruitment Incentive for non-SES employees and as part of the Recruitment Incentive Template Requests for SES employees or non-SES employees selected for an SES position.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for terminating a service agreement.

The officials authorized to approve the payment of a recruitment incentive are also authorized to terminate the recruitment incentive service agreement.

IRS may unilaterally terminate a recruitment incentive service agreement based solely on management needs (5 CFR 575.111(a)). If the decision is made to unilaterally terminate a recruitment incentive service agreement, the employee is entitled to all the recruitment incentive payments for completed service and to retain any portion of the recruitment incentive payment he or she received that is attributable to uncompleted service.

IRS must terminate a recruitment incentive service agreement as prescribed under 5 CFR 575.111(b) if the employee:

If IRS terminates a recruitment incentive service agreement based on these reasons, the following rules apply:

If an employee fails to fulfill his or her obligations for repayment, IRS must recover any outstanding incentive repayment amount from the employee consistent with IRS's policies and procedures for collection by offset from an indebted Government employee under 5 U.S.C. 5514 and 5 CFR Part 550, subpart K, or the appropriate provisions governing Federal debt collection if the individual is no longer a Federal employee (5 CFR 575.111(g)).

Authorized officials may waive the requirement to repay the full amount owed under IRM 6.575.1.2.11.54(b) when, in the judgment of the official, collection of the excess amount would be against equity and good conscience and not in the best interest of the United States (5 CFR 575.111(h)). Any waivers must be consistent and in accordance with the provisions of Treasury Directive 34-01, Waiving Claims Against Treasury Employees for Erroneous Payments, and IRM 1.2.40.14, Delegation Order 1-15, Waiving Claims Against Current or Former Employees for Erroneous Payments.

IRS may not begin paying a recruitment incentive to an eligible employee who is receiving or fulfilling the requirements of a service agreement for the payment of a relocation incentive under 5 CFR 575.206, or for a retention incentive under 5 CFR 575.306, or to an eligible employee who is receiving a retention incentive without a service agreement (5 CFR 575.105(c)).

IRS may not begin paying an extended assignment incentive to an eligible employee who is receiving or fulfilling the requirements of a recruitment incentive (5 CFR 575, 506).

HCO, WBP, ACLP will:

Aggregate Limitation: Payment of a recruitment incentive is subject to the aggregate limitation on pay under 5 USC 5307, 5 CFR Part 530, subpart B and IRM 6.530.1.2, Aggregate Limitation on Pay, as follows:

Before receiving a recruitment incentive, employees will be subject to misconduct and Federal tax compliance screening, in accordance with the Appropriations Act and IRS procedures, which prohibit using appropriated funds to pay employee incentives without considering the employee’s conduct and Federal tax compliance. Details can be found in IRM 6.451.1.23, Employee Performance and Utilization, Misconduct Screening and Tax Compliance at http://irm.web.irs.gov/Part6/Chapter451/Section1/IRM6.451.1.aspx#6.451.1.23.

The definitions used in this subsection are in addition to those listed in IRM 6.575.1.1.6, and are consistent with those contained in 5 CFR 575.202 and Treasury Human Capital Issuance, HCIS Chapter 575.2 TN-15-002.

Likely to be difficult to fill means the IRS is likely to have difficulty recruiting employees with the competencies required for the position or group of positions in the absence of a relocation incentive. IRS must consider the factors in 5 CFR 575.206(b), as applicable to the case at hand, to determine whether a position is likely to be difficult to fill.

Position in a different geographic area is a position that is considered to be in a different geographic area if the worksite of the new position is 50 or more miles from the worksite of the position held immediately before the move. If the worksite of the new position is less than 50 miles from the worksite of the position held immediately before the move, but the employee must relocate (i.e., establish a new residence) to accept the position, the approving official may waive the 50-mile requirement and pay the employee a relocation incentive.

Establish a residence in the new geographic location includes, but is not limited to, purchasing or renting of a home, apartment, or condominium; residing at a residence of a friend or family member; or temporarily residing at a hotel.

IRS may pay a relocation incentive to an employee who:

A relocation incentive may be paid only when the employee’s rating of record for the position held immediately before the move is at least ‘‘Fully Successful’’ or equivalent or higher. To continue to receive a relocation incentive, an eligible employee must continue to have a rating of at least “Fully Successful” or equivalent or higher during the service period.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to determine when a position is likely to be difficult to fill.

The following factors must be considered, as applicable to the case at hand, in determining whether a position or group of positions is likely to be difficult to fill in the absence of a relocation incentive:

IRS may determine that a position or group of positions is likely to be difficult to fill if OPM has approved the use of a direct-hire authority applicable to the position or group of positions under 5 CFR part 337, subpart B.

The regulations provide for approval of a group relocation incentive. IRS may waive the required case-by-case authorization of a relocation incentive when:

The BBHR POC must initiate contact with the HCO, WBP, ACLP Branch for technical advice prior to finalizing a formal request for group relocation incentives.

The written determination of the basis to pay a relocation incentive must specify the group of employees covered by the case-by-case waiver, the conditions under which the waiver is approved, and the period of time the waiver is applied.

The category or group of positions must be narrowly defined to include: occupational series, grade level, distinctive job duties, unique competencies required for the position, special project, function or activity, minimum service requirements, organization or team geographic location.

HCO, WBP, ACLP will notify the DASHR/CHCO of approved group relocation incentives. The notification must include information on the positions covered, service period, amount of payment, and effective date of the incentive.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to approve a relocation incentive for an employee.

The Treasury Assistant Secretary for Management is the approving official for payment of a relocation incentive to a member of the SES, or non-SES employees selected for an SES position, other than one for whom appointing authority is reserved to the Treasury Deputy Secretary.

The Commissioner, the Deputy Commissioner for Services and Enforcement, and the Deputy Commissioner for Operations Support are the approving officials for the payment of a relocation incentive for employees within his or her respective organization. This authority may not be redelegated. (See Delegation Order 6-23, Delegation of Authority to Accomplish Pay Administration, at IRM 1.2.45.13(66))

The recommending official must be at least one level higher than the employee's supervisor, unless there is no higher official within the IRS.

The approving official must review and approve the relocation incentive request in writing before the employee enters on duty in the new position to which relocated and before the incentive can be paid to the employee.

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

Employees in positions listed in 5 CFR 575.204, which include Presidential appointees, non-career SES appointees, and employees in positions excepted from the competitive service by reason of their confidential, policy-determining, policy-making, and policy-advocating character (Schedule C), are not eligible for a relocation incentive.

The requesting manager recommends payment of a relocation incentive through the second-level manager.

The requesting office completes and signs the Relocation Incentive Request Form 14064-B for non-SES employees, or the Relocation Incentive Template for SES employees or non-SES employees selected for an SES position. Requests for non-SES employees are routed to the BBHR POC and requests for SES employees are routed to the functional POC.

The BBHR POC or functional POC:

HCO, WBP, ACLP will conduct a technical review on non-SES requests and HCO, OES will conduct a technical review on SES requests. The IRS Human Capital Officer will certify that all statutory and regulatory requirements have been met. The requests for non-SES will be forwarded to the Commissioner or appropriate Deputy Commissioner for approval, and the requests for SES will be forwarded to the Treasury Assistant Secretary for Management.

The HCO, P&PS creates and processes the PAR and sends a copy of the documentation to the OPF Consolidated Site to be filed in the employee’s OPF.

HCO, P&PS will generate periodic reports on relocation incentives at the request of HCO, WBP, ACLP.

HCO, WBP, ACLP is responsible for overall program administration, policy guidance, and reporting requirements.

For each determination to pay a relocation incentive, the following must be documented in writing on the Relocation Incentive Request Form 14064-B for non-SES employees, or the Relocation Incentive Template for SES employees or non-SES employees selected for an SES position:

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the amount of a relocation incentive.

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 agreement.

For non-SES, the parameters established in the IRS Non-SES Corporate Incentives Strategy at http://hco.web.irs.gov/compbenefits/pdf/IRSNon-SESCorporateIncentivesStrategy.ppt must be referenced and utilized.

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 IRS’s critical need for a higher incentive payment amount consistent with the requirements in 5 CFR 575.209(c)(1). The total amount of the higher payment may not exceed 50 percent of the employee’s annual rate of basic pay at the beginning of a service period multiplied by the number of years (including fractions of a year) in the service period. The total relocation incentive payment may not in any event exceed 100 percent of the employee’s annual rate of basic pay at the beginning of the service period. A written waiver request must include all of the information required in 5 CFR 575.209(c)(2).

A relocation incentive may be paid:

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

Payment of a relocation incentive is subject to the aggregate limitation on pay under 5 USC 5307 and 5 CFR part 530, subpart B.

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

In all cases, an employee must establish residence in the new geographic area before 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.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the length of a service period.

A service agreement is a written agreement between IRS and an employee under which the employee agrees to a specified period of employment with IRS at the new duty station to which the employee relocated in return for payment of a relocation incentive.

Before the IRS may pay a relocation incentive, an employee must sign a written service agreement to complete a specified period of employment at the new duty station to which relocated. The minimum service agreement may not be for less than six months and the maximum service agreement may not be more than four years at the new duty station to which relocated.

The service agreement must:

The approving official may delay a service agreement commencement date until after the employee completes an initial period of formal training when continued employment in the position is contingent on successful completion of the formal training. The approving official must make the determination to pay a relocation incentive before the employee enters on duty in the position. The approving official must make the determination to pay a relocation incentive before the employee enters on duty in the position. However, the service agreement must specify that if an employee does not successfully complete the training before the service period commences, the agency is not obligated to pay any portion of the relocation incentive to the employee.

The requesting office must define the limits of the new geographic area in the service agreement for the purpose of determining whether an employee maintains residency in that geographic area for the duration of the service agreement.

A service agreement form (Form 14065-B for non-SES or Service Agreement Template for SES) is required.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for terminating a service agreement.

The officials authorized to approve the payment of a relocation incentive are also authorized to terminate the relocation incentive service agreement.

IRS may unilaterally terminate a relocation incentive service agreement based solely on management needs (5 CFR 575.211(a)). If the decision is made to unilaterally terminate the relocation incentive service agreement, the employee is entitled to all the relocation incentive payments for completed service and to retain any portion of the relocation incentive payment he or she received that is attributable to uncompleted service.

IRS must terminate a relocation incentive service agreement as prescribed under 5 CFR 575.211(b) if the employee:

If IRS terminates a relocation incentive service agreement based on the reasons in IRM 6.575.1.3.11(4), the following rules apply:

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

The relevant business unit must initiate a timely PAR to terminate a relocation incentive.

The termination of a service agreement and payment of the incentive is not grievable or appealable as prescribed under 5 CFR 575.211(c).

If an employee fails to fulfill his or her obligations for repayment, IRS must recover any outstanding incentive repayment amount from the employee consistent with IRS’s policies and procedures for collection by offset from an indebted Government employee under 5 USC 5514 and 5 CFR Part 550, subpart K, or the appropriate provisions governing Federal debt collection if the individual is no longer a Federal employee (5 CFR 575.211(g)).

Authorized officials may waive the requirement to repay the excess amount when, in the judgment of the official, collection of the excess amount would be against equity and good conscience and not in the best interest of the United States (5 CFR 575.211(h)). Any waivers must be consistent and in accordance with the provisions of Treasury Directive 34-01, Waiving Claims Against Treasury Employees for Erroneous Payments, and IRM 1.2.40.14, Delegation Order 1-15, Waiving Claims Against Current or Former Employees for Erroneous Payments.

The IRS may not begin paying a relocation incentive to an eligible employee who is receiving or fulfilling the requirements of a service agreement for the payment of a recruitment incentive under 5 CFR 575.106, or for the payment of a relocation incentive previously authorized under 5 CFR 575.206 (5 CFR 575.205(d)).

A relocation incentive service agreement may commence during a period of employment established under a service agreement for a previously authorized retention incentive or for which an employee is receiving previously authorized retention incentive payments without a service agreement under 5 CFR 575, subpart C. The service periods for the relocation and retention incentive service agreements must be fulfilled concurrently (5 CFR 575.205(e)).

IRS may not begin paying a relocation incentive to an eligible employee who is receiving or fulfilling the requirements of a service agreement for the payment of an extended assignment incentive under 5 CFR 575, subpart E.

HCO, WBP, ACLP will:

Aggregate Limitation: Payment of a relocation incentive is subject to the aggregate limitation on pay under 5 USC 5307, 5 CFR Part 530, subpart B, and IRM 6.530.1.2, Aggregate Limitation on Pay, as follows:

Before receiving a relocation incentive, employees will be subject to misconduct and Federal tax compliance screening in accordance with the Appropriations Act and IRS procedures, which prohibit using appropriated funds to pay employee incentives without considering the employee’s conduct and Federal tax compliance. Details can be found in IRM 6.451.1.23, Employee Performance and Utilization, Misconduct Screening and Tax Compliance at http://irm.web.irs.gov/Part6/Chapter451/Section1/IRM6.451.1.aspx#6.451.1.23.

The definitions used in this subsection are in addition to those listed in IRM 6.575.1.1.6 and are consistent with those contained in 5 CFR 575.302 and Treasury Human Capital Issuance, HCIS Chapter 575.3 TN-15-003.

Annual Review refers to the review conducted at the end of each calendar year in which the retention incentive payment began to determine whether the original determination still applies or whether payment is still warranted as provided in 5 CFR 575.311 (a)(1).

Likely to leave Federal service means IRS has determined that, in the absence of a retention incentive, an employee or group of employees is likely to leave the Federal Service or an employee has notified the IRS that he or she will leave the Federal service.

Position Changes refers to when IRS assigns an employee to a different position, either a permanent change or a temporary change of more than 120 days. When this occurs, IRS must terminate the retention incentive, unless the different position is within the terms of the service agreement.

An employee may be considered for a retention incentive if:

The statute and regulations provide for approval of retention incentives for a group or category of employees if the agency determines that:

IRS may not offer or authorize a retention incentive prior to an employee’s employment with IRS.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to:

The following factors must be considered, as applicable to the case in hand, before authorizing a retention incentive for an individual employee in determining whether the unusually high or unique qualifications of an employee or a special need of IRS for an employee’s services makes it essential to retain the employee, and that the employee would be likely to leave the Federal service in the absence of a retention incentive:

The regulations provide for approval of group retention incentives. The BBHR POC must initiate contact with HCO, WBP, ACLP for technical advice prior to finalizing a formal request for a group incentive.

Before a group incentive may be approved, the requesting organization must determine, based upon the factors outlined above, whether a group or category of employees:

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to approve a retention incentive for an employee.

The Treasury Assistant Secretary for Management is the approving official for payment of a retention incentive to:

The Commissioner, the Deputy Commissioner for Services and Enforcement, and the Deputy Commissioner for Operations Support are the approving officials for the payment of a retention incentive for employees within his or her respective organization. This authority may not be redelegated. (See Delegation Order 6-23, Delegation of Authority to Accomplish Pay Administration, at IRM 1.2.45.13(70)).

The recommending official must be at least one level higher than the employee's supervisor, unless there is no higher official within the IRS.

The approving official must review and approve the retention incentive request in writing before it can be made effective and paid to the employee.

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

Employees in positions listed in 5 CFR 575.304, which include Presidential appointees, non-career SES appointees, and employees in positions excepted from the competitive service by reason of their confidential, policy-determining, policy-making, and policy-advocating character (Schedule C), are not eligible for a retention incentive.

The requesting manager recommends payment of a retention incentive through the second-level manager.

The requesting office completes and signs the Retention Incentive Request Form 14063-B for non-SES employees or the Retention Incentive Template for SES employees. Requests for non-SES employees are routed to the BBHR POC and requests for SES employees are routed to the functional POC.

The BBHR POC or functional POC:

HCO, WBP, ACLP will conduct a technical review on non-SES requests and the OES will conduct a technical review on SES requests. The IRS Human Capital Officer will certify that all statutory and regulatory requirements have been met. The requests for non-SES will be forwarded to the Commissioner or appropriate Deputy Commissioner for approval, and the requests for SES will be forwarded to the Treasury Assistant Secretary for Management.

HCO, P&PS creates and processes the PAR and sends a copy of the documentation to the OPF Consolidated Site to be filed in the employee’s OPF.

HCO, P&PS will generate periodic reports on retention incentives at the request of HCO, WBP, ACLP.

HCO, WBP, ACLP is responsible for overall program administration, policy guidance, and reporting requirements.

For each determination to pay a retention incentive, the following must be documented in writing on the Retention Incentive Request Form 14063-B for non-SES employees or the Retention Incentive Template for SES:

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the amount of a retention incentive.

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 ten percent of each employee’s rate of basic pay.

For non-SES, the parameters established in the IRS Non-SES Corporate Incentives Strategy at http://hco.web.irs.gov/compbenefits/pdf/IRSNon-SESCorporateIncentivesStrategy.ppt must be referenced and utilized.

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). The total amount of the higher payment may not exceed 50 percent of the employee’s annual rate of basic pay. The written waiver request must include all of the information required in 5 CFR 575.309(e)(2). A written service agreement is required for any employee who may receive a higher retention incentive due to a waiver of the limitation, regardless of whether biweekly payments are authorized.

A retention incentive may be paid:

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)).

Payment of a retention incentive cannot exceed 12 months unless the retention incentive is extended through the annual recertification process.

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

Payment of a retention incentive is subject to the aggregate limitation on pay under 5 USC 5307 and 5 CFR 530, subpart B.

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

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the length of a service period.

A service agreement is a written agreement between IRS and an employee in which the employee agrees to a specified period of employment in return for payment of a retention incentive.

A service agreement is not required when payments are made:

Before the IRS may pay a retention incentive as a final lump-sum payment or for an amount above the 25 percent cap, an employee must sign a written service agreement to complete a specified period of employment. The minimum service agreement may not be for less than six months and the maximum service agreement may not be more than four years.

The service agreement must meet:

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for terminating a service agreement.

The officials authorized to approve the payment of a retention incentive are also authorized to terminate the retention incentive service agreement.

IRS may unilaterally terminate a retention incentive service agreement based solely on management needs (5 CFR 575.311(a)(3)). If the decision is made to unilaterally terminate the retention incentive service agreement, the employee is entitled to any retention incentive payments for completed service and to receive any portion of the retention incentive payment owed for completed service.

IRS must terminate a retention incentive service agreement as prescribed under 5 CFR 575.311(a) and (b) for an employee if:

If IRS terminates a retention incentive service agreement based on the reasons outlined in IRM 6.575.1.4.11 (4), the following rules apply:

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

The relevant business unit must initiate a timely PAR to terminate the amount of a retention incentive.

The termination of a service agreement and payment of the incentive is not grievable or appealable as prescribed under 5 CFR 575.311(g).

IRS must review each determination to pay a retention incentive annually to determine whether payment is still warranted. The determination must be certified in writing.

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.

IRS must reduce or terminate a retention incentive authorization (when no service agreement is required) whenever conditions change such that the original determination to pay the retention incentive no longer applies (e.g., the business unit assigns the employee to a different position that is not within the terms of the original determination) or when payment is no longer warranted at the level originally approved or at all after considering factors, such as:

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 (e.g., IRS may terminate a retention incentive when there are insufficient funds to continue the planned retention incentive payments).

IRS must terminate a retention incentive (when no service agreement is required) when:

IRS must notify an 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 relevant business unit must initiate a timely PAR to terminate the amount of a retention incentive.

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

IRS may not begin payment of a retention incentive to an eligible employee who is receiving or fulfilling the requirements of a service agreement for the payment of a recruitment or relocation incentive (5 CFR 575.309(g)(1)).

IRS may not begin paying a retention incentive to an eligible employee who is receiving or fulfilling the requirements of a service agreement for the payment of an extended assignment incentive under 5 CFR 575, subpart E.

IRS must annually review all determinations to pay a retention incentive to ascertain whether the original determination, the circumstances that supported the initial request and approval, still applies or whether payment is still warranted.

During the annual recertification process, the Division Commissioner or equivalent must request and receive approval from the authority who approved the original request, if the retention incentive is to continue.

Instructions for the annual recertification process will be issued by the HCO, WBP, ACLP Branch in December of each year.

Failure to respond to HCO, WBP, ACLP by January 15 of the following year with the recertification form from the BBHR POC will result in a termination of the retention incentive by HCO, WBP.

All recertifications must be finalized by February 15 to ensure IRS compliance with Treasury’s deadline for receipt of a completed annual report to the DASHR/CHCO no later than February 28 of every year.

HCO, WBP, ACLP will:

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

An authorized official, as defined above in IRM 6.575.1.4.4, may approve a retention incentive as follows:

For each determination to pay a retention incentive under this section, the requesting office must document in writing:

For an individual employee, the requesting office must address each of the factors listed in 5 CFR 575.314(d)(2) when documenting the determinations. For a group or category of employees, the requesting office must address each of the factors listed in 5 CFR 575.314(d)(3) when documenting the determinations.

Unless the retention incentive is paid in biweekly payments, the authorized IRS official must require an employee who would be likely to leave for a different position in the Federal service to sign a service agreement:

An authorized IRS official may not pay retention incentive payments in biweekly installments at the full retention incentive percentage rate. The impacted office will need to consider options to pay all or a significant portion of the retention incentive at the end of the full period of service required by the service agreement to maximize the effectiveness of the retention incentive to retain the employee (5 CFR 575.314(e)).

Each determination to pay a retention incentive under this section must be reviewed at least annually to determine whether payment is still warranted. The authorized approving official must certify this determination in writing (see IRM 6.575.1.4.14, Annual Recertification).

In addition to the conditions for terminating a service agreement, an authorized IRS official must terminate a retention incentive service agreement if:

If an authorized IRS official terminates a service agreement, the employee is entitled to retain retention incentive payments previously paid that are attributable to the completed portion of the service. If the retention incentive payments received are less than the amount that would be attributable to the completed portion of the service period, the business unit must follow the requirements in 5 CFR 575.314(g)(4) to determine the Service’s obligations for additional payment.

In addition to the records and reports required in 5 CFR 575.313, IRS must submit a written report to OPM by March 31 of each year on the use of retention incentives under this section. Each report must include:

Aggregate Limitation: Payment of a retention incentive is subject to the aggregate limitation on pay under 5 USC 5307, 5 CFR Part 530, subpart B, and IRM 6.530.1.2, Aggregate Limitation on Pay, as follows:

Before receiving a retention incentive, employees will be subject to misconduct and Federal tax compliance screening in accordance with the Appropriations Act and IRS procedures, which prohibit using appropriated funds to pay employee incentives without considering the employee’s conduct and Federal tax compliance. Details can be found in IRM 6.451.1.23, Employee Performance and Utilization, Misconduct Screening and Tax Compliance at http://irm.web.irs.gov/Part6/Chapter451/Section1/IRM6.451.1.aspx#6.451.1.23.

The definitions used in this subchapter are in addition to those listed above and are consistent with those contained in 5 CFR 575.502 and Treasury Human Capital Issuance, HCIS Chapter 575.5 TN-05-002.

Service Agreement means a written agreement between the IRS and an employee under which the employee agrees to a specified period of employment with IRS in a particular territory, possession, or commonwealth in return for payment of an extended assignment incentive.

Territory, Possession, or Commonwealth means a territory or a possession of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands.

This incentive may be authorized on a case-by-case basis to eligible Federal employees assigned to positions located in a territory or possession of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands who agree to a specified additional period of employment with IRS in that location.

This policy applies to all employees of IRS except for those who are fulfilling the requirements of a service agreement for a recruitment, relocation, or retention incentive.

This incentive is similar to retention and relocation incentives, however, there are significant differences. The recipient of an EAI is not required to meet the standard of possessing unusually high, unique, or one-of-a-kind qualifications.

The EAI provides management with a financial tool to retain experienced, well-trained employees (assigned to positions 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, when replacing that employee would be difficult and payment of the EAI would be in the interest of IRS.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to approve an EAI for an employee.

The Treasury Assistant Secretary for Management is the approving official for payment of an EAI to a member of the SES, or non-SES employees selected for an SES position, other than one for whom appointing authority is reserved to the Treasury Deputy Secretary.

The Commissioner, the Deputy Commissioner for Services and Enforcement, and the Deputy Commissioner for Operations Support are the approving officials for the payment of an EAI for employees within his or her respective organization. This authority may not be redelegated.

The recommending official must be at least one level higher than the employee’s supervisor, unless there is no higher official within the IRS.

The approving official must review and approve the EAI request in writing before it can be made effective and paid to the employee.

The determination to pay an EAI must be on a case-by-case basis. All requests must contain a written determination which addresses the following criteria:

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

The employee's manager recommends payment of an EAI through the second-level manager.

The requesting office initiates and completes the EAI Worksheet and Certification Form for non-SES employees. Requests for non-SES are routed to BBHR POC.

The BBHR POC:

HCO, WBP, ACLP will conduct a technical review on non-SES requests. The IRS Human Capital Officer will certify that all statutory and regulatory requirements have been met. The requests for non-SES will be forwarded to the Commissioner or appropriate Deputy Commissioner for approval.

HCO, P&PS creates and processes the PAR and sends a copy of the documentation to the OPF Consolidated Site to be filed in the employee’s OPF.

HCO, P&PS will generate periodic reports on EAI at the request of HCO, WBP, ACLP.

HCO, WBP, ACLP is responsible for overall program administration, policy guidance, and reporting requirements.

For each determination to pay an EAI, the following must be documented in writing on the EAI Worksheet and Certification form:

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the amount of an EAI.

The amount of the EAI payment will be determined on a case-by-case basis. The amount will align with 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 incentive payment may be paid:

EAI are usually paid in a lump-sum at the beginning of the service period.

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

Payment of an EAI is subject to the aggregate limitation on pay under 5 CFR 530, subpart B.

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

The IRS retains the sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for determining the length of a service period.

A service agreement is a written agreement between IRS and an employee in which the employee agrees to a specified period of 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 return for payment of an EAI.

Before the IRS may pay an EAI, an employee must sign a written service agreement to complete a specified period of employment located in a territory or possession of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands.

The service agreement must:

The maximum service period under one or more EAI service agreements with Treasury in a particular authorized location may not exceed five years.

The IRS retains sole and exclusive discretion, subject only to Treasury and OPM review and oversight, to establish criteria for terminating a service agreement.

The officials authorized to approve the payment of an EAI incentive are also authorized to terminate the agreement.

IRS may unilaterally terminate a service agreement based solely on the business needs of the agency. For example, an authorized agency official may terminate a service agreement when the employee’s position is affected by a reduction in force or when there are insufficient funds to continue the planned incentive payments.

If IRS terminates a service agreement based on the reasons outlined in IRM 6.575.1.5.11(4), the employee is entitled to keep all incentive payments received and, if applicable, is entitled to receive any additional amount representing the difference between the amount received and the prorated share of the total incentive attributable to completed service. The employee may receive a portion or all of the incentive payment attributable to uncompleted service only to the extent provided in the service agreement.

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

IRS may not begin paying an EAI under 5 CFR Part 575, subpart E, to an eligible employee who is receiving or fulfilling the requirements of a service agreement for the payment of a recruitment, relocation, or retention incentive (5 CFR 575.506(b)).

HCO, WBP, ACLP will submit a written report to Treasury no later than January 9 of each calendar year, which will include:

Aggregate Limitation: Payment of an EAI is subject to the aggregate limitation on pay under 5 USC 5307, 5 CFR Part 530, subpart B, and IRM 6.530.1.2, Aggregate Limitation on Pay, as follows:

Before receiving an EAI, employees will be subject to misconduct and Federal tax compliance screening in accordance with the Appropriations Act and IRS procedures, which prohibits using appropriated funds to pay employee incentives without considering the employee’s conduct and Federal tax compliance. Details can be found in IRM 6.451.1.23, Employee Performance and Utilization, Misconduct Screening and Tax Compliance at http://irm.web.irs.gov/Part6/Chapter451/Section1/IRM6.451.1.aspx#6.451.1.23.