When calculating the cost of government, taxpayers should never forget the Internal Revenue Service and its institutionalized waste.

As an official report notes, between October 1, 2010 and December 31, 2012, the IRS gave more than $2.8 million in bonuses to 2,800 employees with “recent substantiated conduct issues resulting in disciplinary action.” So the IRS chooses to reward the worst employees and does more than give them money. As the report notes, these same employees got “more than 27,000 hours in time-off awards” and 69 quality step increases all “within a year after the IRS substantiated their tax compliance problem.” So the bonus recipients were not only terrible employees but owed back taxes to their employer.

Why does this happen? As the report notes, with few exceptions “the IRS does not consider tax compliance or other misconduct when issuing performance awards or most other types of awards.” Further, government policies “do not provide guidance on providing awards to employees with conduct issues.” And providing awards to employees with conduct issues, especially those who fail to pay federal taxes, “appears to create a conflict with the IRS’s charge of ensuring the integrity of the system of tax administration.” So the bonuses to IRS tax deadbeats only “appears” to challenge the integrity of the system.

How to fix it? Somebody called the Human Capital Officer plans to conduct a study by June 30, 2014, “for the implementation of a policy requiring management to consider conduct issues resulting in disciplinary actions prior to awarding all types of performance and discretionary awards.” Actually, since IRS employees get generous salaries and benefits ending all bonuses would save some money. As the report notes, for fiscal year 2011, the IRS awarded almost $92 million in cash and almost 520,000 hours of time off to 70,500 of its approximately 104,400 employees. For fiscal year 2012, the IRS awarded $86 million in cash and almost 490,000 hours of time off to 67,870 of its approximately 98,000 employees.

Meanwhile, IRS employees are not the only government tax deadbeats. In 2011, according to this report, 311,536 federal employees were tax delinquents owing a total of $3.5 billion.