IRS does not pay ‘bounties’ to retirement plan auditors

I found this interesting exchange in the reader comments on Employee Benefits Adviser. I changed the names and of course can’t vouch for the authenticity of the writers. The article topic was the increased rate of audits of retirement plans since the IRS is aware that a high percentage of retirement plans have major deficiencies.

COMMENT BY TRUST MANAGER: I have been told but have not confirmed that DOL now does pay its auditors/investigators a form of “bonus” which is tied to the amount of penalties they assess. If true, that means that they become more “bounty hunters” and less willing to be helpful. I wonder if someone can confirm that????? Secondly the big consulting firms and the big audit firms seem to be on an overt effort to push funds to retain them instead of smaller firms – which leads to surveys like this one.

RESPONSE FROM ESBA ACCOUNTANT: The Department of Labor does not pay any commissions or rate employees based on penalties assessed or collected. We are not “bounty hunters”. We are instead dedicated public servants who try every day to provide great compliance assistance to a very large plan community. Penalties are a tool for us but are never assessed against plan administrators who have acted in good faith.