This IRM enables the IRS to meet the requirements in 5 USC 45 that gives agencies the discretion to pay a cash award to, and incur necessary expense for the honorary recognition of, an employee who:

Laws: 5, USC, Government Organization and Employees:

2018 Consolidated Appropriations Act: dated March 23, 2018, Section 110 (page 197 of 891), at Public Law 115-141.

Regulations: 5 CFR, Administrative Personnel:

26 USC 7804(a), Appointment and Supervision.

Treasury Order 102-01, Delegation of Authority Concerning Personnel Management, dated July 5, 2022.

Treasury Human Capital Issuance (HCIS) TN-15-006, Monetary Recognition and Employee Misconduct (Non-SES), dated December 15, 2014 (copy available in HCO’s Policy Office).

Awards and recognition requirements of the IRS and National Treasury Employees Union (NTEU) National Agreement (NA), Document 11678.

The National Performance Awards Agreement (NPAA) between IRS and NTEU establishes policies and procedures for implementing a program to recognize and reward high employee performance.

Memorandum of Understanding - Employee Referral Bonus Program.

Document 11678-B, 2025 Addendum to the 2022 National Agreement, Article 18, takes precedence for BU employees. BU employees should review appropriate negotiated agreement provisions relating to this IRM. Should this IRM conflict with a provision of a negotiated agreement, the agreement prevails.

Delegation Order 6-22 - Authority to Approve Monetary and Time-Off Performance, Performance Bonuses, Individual and Group Special Act Awards, Manager Awards, Bilingual Awards, Honorary Awards, Employee Suggestion Awards, Informal Recognition, and Quality Step Increases at IRM 1.2.2.7.12.

The IRS Human Capital Officer is the executive responsible for the Servicewide awards policy.

The HCO Policy Office is responsible for developing policy and authoring this IRM content.

The Labor/Employee Relations and Negotiations (LERN) Division’s Performance Management and Recognition (PMR) office is responsible for creating specific operational guidance, implementing policy, establishing and providing systems, tools, misconduct and tax compliance screening, and contractual obligations with NTEU, all related instructions to business units and administers the IRS Employee Recognition Program.

The LERN Field Operations office provides guidance and representation to supervisors in areas such as grievances, discipline, and performance cases.

The HCO, HR Shared Services (HRSS), Payroll office processes PARs for all awards.

Program Reports and Effectiveness: The Policy Office gauges the effectiveness of the awards program based on feedback from customers and program owners about subjects contained in this IRM. During review and publishing of this IRM, sections are revised, added or deleted based in part on this process. The Policy Office plays an integral role in program management, review and effectiveness by:

The Policy Office develops and deploys policies, materials and programs to increase Servicewide awareness and understanding of the awards program. Additionally, the Policy Office collaborates with other HCO organizations and Servicewide stakeholders to support education and outreach activities as they relate to bargaining unit (BU) and non-bargaining unit (NBU) Employee Performance Awards, Special Act Awards, Manager Awards, Bilingual Awards, QSIs, and Employee Referral Bonus Awards.

The following activities help ensure program success:

Performance Awards/Bonuses - Monetary award to recognize individual employee’s performance as reflected in the most recent rating of record.

Time-Off Awards (TOA) - Awards granted at management discretion to recognize individual employee’s performance based on the most recent rating of record in the form of time-off from duty, without charge to leave or loss of pay, in lieu of a monetary award. Time-Off Hours can be awarded for the following awards:

Quality Step Increases (QSI) - Increases eligible general schedule (GS) employees' rates of basic pay from one step of the grade to the next higher step of that grade.

Special Act Awards - Discretionary awards granted for commendable individual employee or group achievements of a unique employment-related activity or service that contributes to the efficiency, effectiveness or economy of government operations. These have a higher calculated cash or time off value and the level of delegated authority for approval is beyond the employee’s immediate supervisor. Refer to Delegation Order 6-22 at IRM 1.2.2.7.12.

Manager Awards - Discretionary awards granted for a commendable individual employee or group achievements of a unique employment-related activity or service that contributes to the efficiency, effectiveness or economy of government operations. These have a lower calculated cash or time off value and the level of delegated authority for approval rests with the employee’s immediate supervisor, thereby reducing the number of approvals needed resulting in faster processing. Monetary Manager Awards range in value from $50 to $500 or eight hours of time off. Refer to Delegation Order 6-22 at IRM 1.2.2.7.12.

Bilingual Awards - Granted to employees who use their bilingual skills on a regular basis and are currently rated at least “Fully Successful.” BU and NBU employees who meet these criteria will be granted this award.

Foreign Language Awards - Foreign Language Awards are not the same as IRS Bilingual Awards. Foreign Language Awards may be granted only to law enforcement officers as defined in statue (5 USC 4521, et seq.), e.g., series 1811 Criminal Investigators (Special Agents) assigned to the Criminal Investigation Division.

Honorary Awards - Formally recognize significant employee contributions to the IRS mission, strategic goals, balanced measures or other commendable accomplishments.

Informal Recognition of Employee Accomplishments - Recognition tools used to recognize employee accomplishments and provide incentives for high performance and serve as a vehicle to increase employee engagement. Many of these tools are of little or no cost to the supervisor or the IRS and do not require complicated procedures.

Public and Private Sector Awards Sponsored by External Organizations - Designed to improve government operations by motivating and rewarding employee excellence in the workforce.

Additional guidance regarding the IRS recognition program and procedures is available on the HCO Awards and Recognition website. The information supplements this IRM.

IRS business units (refer to IRM 1.1.1, Organization and Staffing, IRS Mission and Organizational Structure) may establish recognition policies, programs, and procedures and issue guidance that supplements the provisions of this chapter, but business units are encouraged to consult with the Policy Office as they develop unit-specific recognition programs. When proposed changes to any awards or recognition policy or program affects BU employees, the business unit must comply with IRM 1.11.2.5.1.4, IRM Changes Affecting Conditions of Employment of Bargaining Unit Employees, and IRM 1.11.9.4.4, Labor/Employee Relations & Negotiations.

General information on federal award programs may be found at OPM’s Performance Management Cycle site under the Rewarding tab, which does not supplement this chapter.

The IRS will not grant awards or high-level recognition to non-SES employees when it is deemed necessary to protect the integrity of the IRS. The 2022 National Agreement (NA) provides specific information on how screening results for both misconduct and tax compliance will be handled for BU employees. As a matter of policy, the NA screening provision also applies to NBU employees. Refer to the 2025 Addendum to the 2022 National Agreement, Article 18, Section 1.D, at Document 11678-B.

Business unit points of contact (POC) serve as liaisons between the business unit and the Labor/Employee Relations and Negotiation (LERN) office for the misconduct screening process.

All covered awards and recognition described in IRM 6.451.1.6.3, Covered Awards and Recognition, will be screened for misconduct per the Awards Misconduct Screening and Case Process at Awards Misconduct Screening and Case Process SOP [Standard Operating Procedure], as well as for federal tax compliance prior to initiating any type of covered awards or recognition.

The applicable period for review will be the 12-month period, or relevant performance year as appropriate, prior to the effective date for the type of award under consideration.

The following types of awards and recognition are covered by the misconduct and federal tax compliance screenings:

5 USC 4505a(a)(2), provides that a monetary performance award/bonus shall not be more than 10% of the employee’s annual rate of basic pay, which must include: any applicable locality-based comparability payments under 5 CFR 531, Subpart F; special rate schedules for recruitment and retention under 5 CFR 530, Subpart C (special salary rate schedules); or similar payment or supplement under other legal authority. For an employee receiving a pay retention under 5 CFR 536, Subpart C (or similar authority, such as 5 CFR 359.705), the rate of basic pay is the maximum payable rate for the employee’s grade or level, rather than the retained rate.

As an exception to the 10% limitation, a performance award/bonus of not more than 20% of the employee's annual rate of basic pay may be approved by the Commissioner of the Internal Revenue for exceptional performance. Requests for exception to the 10% limitation for NBU employees is covered by this IRM (refer to IRM 6.451.1.4, Coverage). Coverage should be forwarded to the business unit awards coordinator, through the Director, Policy Office to the Deputy Commissioner for approval.

Performance award/bonus certificates are provided electronically or printed and distributed by the supervisor of record via the self-service offering on the Human Capital website. For more information, refer to the Awards Certificates at Formal Awards Certificates.

Employees who leave the IRS may be eligible to receive a performance award/bonus for their final rating of record if they met the performance award/bonus criteria associated with their performance plan:

The IRS will grant performance awards/bonuses to NBU employees who are assigned Outstanding performance ratings of record.

The IRS will grant performance bonuses to supervisors (IR) who are assigned an Exceeded rating of record, who exceed in both their responsibilities and their commitments. Supervisors (IR) who are assigned an Exceeded rating of record but do not exceed both their responsibilities and commitments will not receive a performance bonus. There will be no exceptions.

Non-supervisory employees who are assigned Exceeds performance ratings of record may be provided performance awards at management discretion.

Performance bonuses will not be provided for supervisors (IR) with a Met rating of record. There will be no exceptions.

A rating of record for the current FY is required for the employee to be eligible to receive a performance award/bonus.

Employees occupying an NBU position on the NBU award cut-off date may receive an NBU performance award/bonus if all other NBU award/bonus criteria are met, including those established by the business unit.

The award/bonus cut-off dates are:

Eligibility requires the candidate be an IRS employee and assigned to a “permanent” NBU position. The word permanent refers to the position of record, not the appointment type. The requirement is based on the employee’s permanent position of record as recorded in the Treasury Integrated Management Information System (TIMIS), not a temporary assignment to another position, such as a detail or temporary promotion of less than 365 days. Refer to exception below.

Awards/bonuses will be funded and processed by the business unit the employee is permanently assigned to on the applicable cut-off date.

Performance award/bonus calculation methods:

The eligibility criteria beyond the scope of this IRM, determination of the award/bonus amount, and the calculation method will be at the discretion of each business unit. All criteria used to determine the distribution of performance awards/bonuses must be documented in each business units’ NBU Award/Bonus Plan, provided to the Policy Office by November 30 each year, and posted or made readily available to employees, if requested.

A non-supervisory employee is not eligible to receive a QSI and a performance award for the same rating period.

If the IRS determines the value for a performance award/bonus as a percentage of salary, the performance award/bonus must be based on the employee's rate of basic pay per 5 CFR 531, Subpart B.

Performance awards/bonuses must make meaningful distinctions based on levels of performance. This means employees with higher ratings of record must receive larger performance awards (either as a dollar amount or as a percentage of salary) than those with lower ratings of record.

Performance bonuses will not be provided for supervisors (IR) with a Met rating of record; there will be no exceptions.

Granting of QSIs for NBU-Other and management officials are at management discretion following the QSI Policy Guidance and must adhere to all funding levels set forth by the Chief Financial Officer (CFO).

Once all NBU performance awards/bonuses have been paid, if there are any funds remaining, the business unit has the option of using those funds for discretionary awards. If excess performance award/bonus funds are realigned to pay NBU discretionary awards, the decision must be documented.

Annually, each business unit must review the awards pool to determine the eligibility for granting awards/bonuses.

Each business unit is responsible for establishing the number of Exceeds or Exceeds Fully Successful for non-supervisory employees who are eligible to receive awards based on objective criteria. For management officials, the determination will be made based on reviewing the complexity of their commitments on Form 12450-B/D performance agreement. For NBU-Others, on Form 6850 performance plans, the determination will be based on a cut-off score.

Each business unit shall document all monetary and TOAs in compliance with OPM guidelines.

Each business unit will identify a POC for awards/bonuses referred to as award coordinators.

All GS and GL employees described under the QSI Eligibility criteria are covered.

The IRS QSI eligibility criteria shall be based on official personnel records, rating of record approved by management and validly processed in the approved performance management system and other information available to supervisors.

Per regulatory requirements, supervisors may recommend/nominate IRS employees for QSIs who meet eligibility requirements. To be eligible for a QSI, employees must:

Supervisors may nominate employees for QSIs at their discretion per the criteria in IRM 6.451.1.10.1, QSI Eligibility, and business unit timelines and procedures.

Supervisors will submit nominations using Form 14776, QSI Nomination, and must include a justification regarding the outstanding accomplishments that warrant the granting of a QSI.

Each business unit will ensure that all ratings of record are timely completed, approved and validly entered into the approved performance management system within the deadlines described in the IRM 6.430 Performance Management series and the NA.

Each business unit will develop and issue nomination timelines and procedures to their supervisors to ensure QSI nominations and selections are timely completed. Business units will not develop any additional QSI nomination criteria.

Each business unit will determine the approving official(s) for QSIs within their respective divisions in compliance with Delegation Order 6-22 at IRM 1.2.2.7.12.

Business units may not exceed the QSI funding levels provided by the CFO.

Employees will be given five business days to decide whether to accept the QSI offer. Supervisors will need to adjust these timeframes for employees on approved leave. Business units will make reasonable attempts to facilitate a timely response. If no response is received, the form will be documented as “no response, QSI not accepted” and the employee will not be granted a QSI.

Each business unit must determine which employees will receive a QSI no later than eight weeks prior to the effective date for the annual IRS-NTEU performance award payments or timeframe indicated in IRS guidance.

The QSI final approval will be completed by the IRS Human Capital Officer or their designee.

The HCO Performance Management and Recognition (PMR) office will communicate QSI effective dates annually in coordination with the annual performance award payouts.

Each business unit will be responsible for the timely input of QSI PARs for all BU and NBU employees. The PAR actions must be input into the automated HR system at least two full pay periods prior to the effective date. If not, the date of the PAR action will be changed to the following pay period. The narrative justification used on Form 14776, QSI Nomination, for granting the QSI must be included in the remarks section of the PAR, along with the rating period covered and date the misconduct/tax compliance screenings were complete. Refer to the SOP 451-1, Processing Awards in HRConnect, at Standard Operating Procedures, HR Shared Services SOPs.

Once a QSI election is confirmed and accepted by the employee, it cannot and will not be rescinded.

A QSI does not affect the timing of an employee’s next regular Within-Grade Increase (WGI), unless the QSI places the employee in step 4 or step 7 of their grade. In these cases, the employee must complete the full waiting period for the new step 104 weeks for steps 4-6, or 156 weeks for steps 7-9. However, the time an employee has already waited is not lost; it continues to count towards the waiting period for the next step increase. The QSI provides the employee the benefit of receiving an additional step increase at an earlier date than they originally would have without losing any time creditable towards their next WGI.

Employees at step 9 should consider the effective date of their next WGI to a step 10 and whether a QSI is advantageous. The example below provides greater detail in determining the benefit of a QSI for employees at the step 9.

This example shows that the employee’s WGI would be received on the due date of September 22, 2023; therefore, the QSI would not be granted since the employee would be at step 10 on the QSI effective date of October 22, 2023.

Further details are available on Form 14776, QSI Nomination.

A QSI must be applied to the rate of pay for the position on which the rating of record was based. If an employee receives a career ladder promotion or competitive promotion after their rating of record is issued but before the effective date of said QSI, the employee will lose eligibility for the QSI. However, the employee retains eligibility for a performance award.

If the rating of record is based on the employee’s performance in the temporary promotion, the QSI must be based on the rate of pay for the temporary position. When the temporary promotion terminates, the employee loses the benefit of the QSI because pay is set at the lower grade as if the employee had not been temporarily promoted (refer to IRM 6.531.1.2.11, Setting Pay upon Demotion (Change to Lower Grade/Band)). The employee may receive the benefit of the QSI upon re-promotion provided the temporary promotion is held for over 365 days (refer to IRM 6.531.1.2.15, Rates of Basic Pay that May be Used as the Highest Previous Rate). In this situation, employees should weigh the benefits of the QSI in the temporary position and the impact the QSI will have when moving back down to the lower grade of their prior position.

If the rating of record was based on the employee’s performance in the permanent position, the QSI cannot be awarded based on the rate of pay received during a temporary promotion. The employee would be eligible to be granted the QSI after termination of the temporary promotion when the employee returns to the lower-graded position. This is an exception to the IRS policy of effecting all QSIs on the same date.

If an employee is approved for a QSI on their position of record and a temporary promotion becomes permanent, the QSI cannot be granted in the higher-graded position to which the employee was promoted (e.g., if a QSI is approved based on outstanding performance at the GS-9, the QSI cannot be granted at the GS-11). However, the employee retains eligibility for a performance award.

If an employee is approved for a QSI on their position of record and becomes eligible for a career ladder promotion while on the temporary promotion, or if a competitive permanent promotion is effective prior to the effective date of the QSI, the QSI cannot be granted. However, the employee retains eligibility for a performance award.

In all cases, a QSI must be effective prior to the employee’s receipt of a subsequent rating of record. If the QSI is not processed due to a temporary promotion and a subsequent rating of record is issued before the employee returns to their position of record, they lose eligibility for the QSI. In these cases, the employee retains eligibility for a performance award.

All documentation for those selected and offered QSIs must be forwarded to the employees’ immediate supervisor for filing in the EPF. Documentation includes the final Form 14776, QSI Nomination, which must include the QSI offer and employee response.

Business unit QSI Coordinators will maintain records of the nomination and selection process, including names of all nominations, selections, misconduct screening, offer letters, and Personnel Action Request (PARs).

After QSIs have been made effective, business units and HCO will review QSI distribution patterns.

In accordance with decisions of the Government Accountability Office, a QSI may not be granted retroactively. This means that a QSI may not be made effective before the date it was approved by the authorized official (the IRS Human Capital Officer or their designee). However, delays beyond normal processing cycle due to human or computer error may constitute an administrative error, which is grounds for processing the QSI retroactively. The business unit must have completed the QSI Nomination Process within the annual timeframe issued by the HCO PMR office and obtained the business unit approval signatures prior to this cut-off date to satisfy this exception.

The business units will allocate a percentage of their BU and NBU performance award budgets to fund monetary Special Act/Manager Awards. The percentage to be set aside for BU awards is specified in Article 18, Section 1(B)(3), of the 2025 Addendum to the 2022 NA. Funding allocations for NBU monetary Special Act and Manager Awards will be established as a minimum of 10% of the NBU performance award allocation. Increases in this allocation may be made at the discretion of each business unit and must be documented in the business unit’s annual NBU Performance Award Plan.

Each business unit will develop internal procedures for their supervisors to ensure award nominations are reviewed against the Special Act/Manager allocations prior to approval and processing.

There is no limit to the number of monetary Special Act/Manager awards an employee may receive for their accomplishments either as an individual or a member of a group or team. Written justification is required for each monetary Special Act/Manager award and requires approval as outlined in Delegation Order 6-22 at IRM 1.2.2.7.12. For additional guidance, refer to Standard Operating Procedure (SOP) 451-1, Processing Awards in HRConnect at Standard Operating Procedures, HR Shared Services SOPs. Guidance on determining the amount of a Monetary Special Act/Manager award is provided in Form 9127.

Time-Off Special Act/Manager awards are granted in the form of time-off afforded to employees assigned to a BU or NBU position and are granted under guidance by 5 CFR 451.104 (a) and Article 18, Sections 4 and 5 of the 2025 Addendum to the 2022 NA.

Time-Off Special Act/Manager awards granted under these provisions are not charged to the awards or bonus budgets; however, the value of these awards is limited to a maximum percentage of the business unit’s performance award budget. Business units may utilize any amount up to the designated limitation to ensure organizational needs are met. The designated percentage will be determined corporately on an annual basis and published on the HCO Performance Awards site.

Each business unit will develop internal procedures for their supervisors to ensure award nominations are reviewed against the defined limitation prior to approval and processing.

Conversion of a time-off Special Act/Manager Award to a monetary award is prohibited. 5 CFR 451.104 (f) states, “A Time-Off Award granted under this subpart shall not be converted to a cash payment under any circumstances.”

BU employees who were issued a leave restriction letter within 12 months before the award effective date are not eligible for a time-off Special Act/Manager Award under this policy, per Article 18, Section 5D of the 2025 Addendum to the 2022 NA. This provision does not apply to NBU employees.

Supervisors nominating an employee for a time-off Special Act/Manager Award must complete Form 9127 and include written justification describing the employee accomplishment that is the basis for the time-off Special Act/Manager Award. This form must be maintained in the employee’s EPF.

Time-Off amounts are limited to a minimum of one hour requiring management approval.

Employees are responsible for obtaining their supervisor’s approval for the use of time-off hours in the same manner as all leave approval requests.

Employees may not use the TOA until it is posted in Single Entry Time Reporting (SETR). Once available, time-off may be taken in a single block of time or in one-hour increments.

The granting of time-off does not increase an employee’s “use or lose” annual leave, and time-off should be scheduled so as not to conflict with existing “use or lose” annual leave. Time-off absence is not justification for the restoration of forfeited annual leave.

Because time-off is not annual leave, it cannot be transferred to another federal employee under the Voluntary Leave Transfer Program.

Time-off balances will be forfeited if there is a balance at the time of separation.

Time-off must be scheduled and taken within one year after the effective date of the award unless one of the exceptions in this paragraph applies. Time-off that is not taken within one year (26 pay periods) and not subject to one of the exceptions below, will be forfeited and will not be restored. The second-level supervisor may grant a written exception prior to expiration in the following situations:

When time-off is approved as an award, the time-off hours shall be calculated as follows:

If the value of the TOA is divided by the employee’s hourly rate of pay and exceeds the 40-hour limitation, the balance of the award will be paid as a monetary award. For example, if the recommended award amount is $800 and an employee earns $15.72 an hour, the $800, award is divided by $16 (the $15.72 hourly rate of pay, rounded to the nearest dollar). The result of 50 hours exceeds the 40-hour limitation; therefore, the employee would receive a 40-hour TOA, and the balance of $160 would be issued as a monetary award.

For calculating time-off, the hourly rate of pay is determined by the employee’s basic annual salary on the date the award is approved. The annual rate of basic pay used must include any applicable locality-based comparability payments 5 CFR 531, Subpart F, special rate schedules for recruitment and retention, 5 CFR 530, Subpart C, or similar payment or supplement under other legal authority. For an employee receiving pay retention, 5 CFR 536, Subpart C (or similar authority, such as 5 CFR 359.705), pay, the rate of basic pay is the maximum payable rate for the employee’s grade or level, rather than the retained rate.

Hourly rates of locality pay for employees paid under the GS are posted on the Office of Personnel Management’s (OPM’s) page, Salaries & Wages. Hourly rates for employees paid under the IRS Payband System are posted on the Payband Resource Center.

Supplemental Monetary Awards. If the time-off component of a performance award (calculated as described in paragraph 2) results in hours that exceed the 40- or 80- hour limitation described in IRM 6.451.1.12.1, Scheduling and Taking Time Off, or IRM 6.451.1.12.2, Calculating Time Off and Supplemental Awards, a supplemental monetary award shall be paid for the value of the excess hours. This award is paid because the employee is not authorized to receive time-off hours in excess of the limitation.

Eligibility is based on the employee’s assigned position. BU and NBU employees assigned to a bilingual PD who, on a regular basis rather than occasionally, utilize their bilingual skills and whose performance is currently rated at least Fully Successful are eligible to receive a Bilingual Award of the negotiated amount beginning with the FY24 performance cycle.

Employees who were not assigned to a bilingual or interpreter PD but who, on a regular basis rather than occasionally, utilize their bilingual or interpreter skills, may be entitled to a Bilingual Award. For BU and NBU employees, the supervisor must apply the criteria in Article 18, Section 6, of the 2025 Addendum to the 2022 NA to determine whether a Bilingual Award is warranted.

Employees will be eligible to receive only one Bilingual Award per calendar year.

To be eligible for an ERBP award, the referring employee must meet all the following criteria:

The IRS HCO will post the positions designated as HTF and eligible for an ERBP award. The HTF listing consists of Mission Critical Occupations (MCO) and Direct Hiring Authority (DHA) series. Business units will socialize the vacancy announcement(s) and any associated ERBP award using established communication outlets. Business units will also:

The Employee Referral Bonus amount will not exceed the negotiated amount. Refer to the ERBP Memorandum of Understanding on the National Agreement site.

One-half of the specified bonus amount will be paid after the new hire completes six months in the HTF position. The other half of the bonus will be paid after one year in the HTF position. The six month and one year counter begins on the new hire’s EOD date.

There is no limit on the number of ERBP awards an eligible employee may receive.

An SF-50 is generated for the award payment.