Accordingly, 26 CFR Chapter I is proposed to be amended by adding part 801 to Subchapter H to read as follows:
(a) In general. Modern management practice and various statutory and regulatory provisions require the IRS to set performance goals for organizational units and to measure the results achieved by those organizations with respect to those goals. To fulfill these requirements, the IRS has established a balanced performance measurement system, composed of three elements: Customer Satisfaction Measures; Employee Satisfaction Measures; and Business Results Measures. The IRS is likewise required to establish a performance evaluation system for individual employees.
(b) Measuring organizational performance--(1) In general. The performance measures that comprise the balanced measurement system will, to the maximum extent possible, be stated in objective, quantifiable and measurable terms and, subject to the limitation set forth in paragraph (b)(2) of
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this section, will be used to measure the overall performance of various operational units within the IRS. In addition to implementing the requirements of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat. 685, the measures described here will, where appropriate, be used in performance goals and performance evaluations established, inter alia, under Division E, National Defense Authorization Act for Fiscal Year 1996 (the Clinger- Cohen Act of 1996), Pub. L. 104-106, 110 Stat. 186, 679; the Government Performance and Results Act of 1993, Pub. L. 103-62, 107 Stat. 285; and the Chief Financial Officers Act of 1990, Pub. L. 101-576, 108 Stat. 2838.
(2) Limitation--quantity measures (as described in Sec. 801.5) will not be used to evaluate the performance of or to impose or suggest production goals for any organizational unit with employees who are responsible for exercising judgment with respect to tax enforcement results (as defined in Sec. 801.5) except in conjunction with an evaluation or goals based also upon Customer Satisfaction Measures, Employee Satisfaction Measures, and Quality Measures.
(c) Measuring individual performance. All employees of the IRS will be evaluated according to the critical elements and standards or other performance criteria established for their positions. In accordance with the requirements of 5 U.S.C. 4312 and 9508 and section 1201 of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206 (112 Stat. 685), (as is appropriate to the employee's position), the performance criteria for each position will be composed of elements that support the organizational measures of Customer Satisfaction, Employee Satisfaction and Business Results; however, such organizational measures will not directly determine the evaluation of individual employees.
(1) Fair and equitable treatment of taxpayers. In addition to all other criteria required to be used in the evaluation of employee performance, all employees of the IRS will be evaluated on whether they provided fair and equitable treatment to taxpayers.
(2) Senior Executive Service and special positions. Employees in the Senior Executive Service will be rated in accordance with the requirements of 5 U.S.C. 4312 and employees selected to fill positions under 5 U.S.C. 9503 will be evaluated pursuant to workplans, employment agreements, performance agreements or similar documents entered into between the Internal Revenue Service and the employee.
(3) General workforce. The performance evaluation system for all other employees will:
(i) Establish one or more retention standards for each employee related to the work of the employee and expressed in terms of individual performance; and--
(A) Require periodic determinations of whether each employee meets or does not meet the employee's established retention standards; and
(B) Require that action be taken, in accordance with applicable laws and regulations, with respect to employees whose performance does not meet the established retention standards.
(ii) Establish goals or objectives for individual performance consistent with the IRS's performance planning procedures; and--
(A) Use such goals and objectives to make performance distinctions among employees or groups of employees; and (B) Use performance assessments as a basis for granting employee awards, adjusting an employee's rate of basic pay, and other appropriate personnel actions, in accordance with applicable laws and regulations.
(4) Limitations. (i) No employee of the IRS may use records of tax enforcement results (as defined in Sec. 801.5) to evaluate any other employee or to impose or suggest production quotas or goals for any employee.
(A) For purposes of the limitation contained in this paragraph (c)(4), employee has the meaning as defined in 5 U.S.C. 2105(a).
(B) For purposes of the limitation contained in this paragraph (c)(4), evaluate includes any process used to appraise or measure an employee's performance for purposes of providing the following:
(1) Any required or requested performance rating.
(2) A recommendation for an award covered by Chapter 45 of Title 5; 5 U.S.C. 5384; or section 1201(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206 (112 Stat. 685, 713-716).
(3) An assessment of an employee's qualifications for promotion, reassignment or other change in duties.
(4) An assessment of an employee's eligibility for incentives, allowances or bonuses.
(5) Ranking of employees for release/recall and reductions in force.
(ii) Employees who are responsible for exercising judgment with respect to tax enforcement results (as defined in Sec. 801.5) in cases concerning one or more taxpayers may be evaluated with respect to work done on such cases only on the basis of information derived from a review of the work done on the taxpayer cases handled by such employee.
(iii) Performance measures based in whole or in part on Quantity Measures (as described in Sec. 801.5) will not be used to evaluate the performance of or to impose or suggest goals for any non-supervisory employee who is responsible for exercising judgment with respect to tax enforcement results (as defined in Sec. 801.5).