Section 1203: The Ten Acts That Can Get an IRS Employee Fired

In 1998 Congress passed the IRS Restructuring and Reform Act. Section 1203 of that law did something unusual for federal personnel rules. It listed specific acts and omissions and told the Commissioner to fire any IRS employee found to have committed one of them in the performance of official duties.

People call them the ten deadly sins. The phrase is informal. The list is not. It is printed as a statutory note under 26 U.S.C. 7804, and it shapes how collection employees think about their own exposure.

What the statute says

Section 1203(a) says that, subject to the Commissioner's authority described below, the Commissioner of Internal Revenue shall terminate the employment of any IRS employee if there is a final administrative or judicial determination that the employee committed any act or omission described in subsection (b) in the performance of official duties. The termination is a removal for cause on charges of misconduct.

IRM 6.752.1 (rev. 2026-09-04), the IRS's own discipline manual, describes it the same way: RRA 98 requires mandatory termination of any IRS employee who commits any of the ten specific acts or omissions in Section 1203(b).

The ten acts and omissions

Here is the list from Section 1203(b), in the statute's order, lightly condensed.

• Willful failure to obtain the required approval signatures on documents authorizing the seizure of a taxpayer's home, personal belongings or business assets.
• Providing a false statement under oath with respect to a material matter involving a taxpayer or taxpayer representative.
• Violating, with respect to a taxpayer, taxpayer representative or other IRS employee, any right under the Constitution, or civil rights established under specified federal civil rights laws, including titles VI and VII of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, the Age Discrimination in Employment Act, the Age Discrimination Act of 1975, sections 501 and 504 of the Rehabilitation Act and title I of the Americans with Disabilities Act.
• Falsifying or destroying documents to conceal mistakes made by any employee with respect to a matter involving a taxpayer or taxpayer representative.
• Assault or battery on a taxpayer, taxpayer representative or other IRS employee, but only if there is a criminal conviction or a final civil judgment with respect to it.
• Violating the Internal Revenue Code, Treasury regulations or IRS policies, including the Internal Revenue Manual, for the purpose of retaliating against or harassing a taxpayer, taxpayer representative or other IRS employee.
• Willful misuse of section 6103 for the purpose of concealing information from a congressional inquiry.
• Willful failure to file any required federal tax return on or before the due date, including extensions, unless the failure is due to reasonable cause and not willful neglect.
• Willful understatement of federal tax liability, unless due to reasonable cause and not willful neglect.
• Performing, delaying or failing to perform, or threatening to do so, any official action, including an audit, with respect to a taxpayer for the purpose of extracting personal gain or benefit or for a political purpose.

Read item six twice. Using the Internal Revenue Manual itself as a weapon to retaliate against or harass a taxpayer is on the list. The manual is a rulebook, not a club, and Congress said so.

Only the Commissioner can reduce the penalty

Section 1203(c) gives the Commissioner authority to take a personnel action other than termination. That authority is at the Commissioner's sole discretion and may not be delegated to any other officer. The Commissioner may set up a procedure for deciding which cases get referred for that determination. And the Commissioner's determination may not be appealed in any administrative or judicial proceeding.

IRM 6.752.1 repeats the point several times. RRA 98 grants the Commissioner the exclusive right to mitigate the penalty of termination, and that authority cannot be redelegated. Only the Commissioner has authority to mitigate Section 1203 violations.

Congress added a follow-on rule in 2019. Under 26 U.S.C. 7804(d), the Commissioner may not hire anyone previously removed for misconduct or whose employment was terminated under Section 1203.

It also reaches private debt collectors

Section 1203(e), added in 2015, applies the same list to individuals working under a qualified tax collection contract, which is the private debt collection program. An individual is no longer permitted to perform services under such a contract if there is a final determination under the contract that the individual committed any of the listed acts or omissions in performing those services.

How Section 1203 shows up in collection work

You will not see the phrase Section 1203 in most collection letters. You see its effects in the procedures.

The seizure approval requirement in item one is why the seizure process is wrapped in approvals and checklists. The retaliation and harassment item sits alongside the fair tax collection practices rules in IRC 6304, which I cover in Fair Tax Collection Practices. IRM 5.1.10.6 (rev. 2025-04-24) tells Revenue Officers that violations of IRC 6304 could subject the United States to a civil action and could subject IRS employees to termination for misconduct.

The employee tax compliance items explain why IRS employees' own accounts get special handling. As I note in The IRS Collection Pipeline, IRS employee balance due accounts bypass ACS and the queue and go straight to a Field Collection group manager's hold file.

Related rules from the same law

The 1998 Act included other personnel provisions printed in the same statutory notes under 26 U.S.C. 7804. Section 3706 says an IRS employee may use a pseudonym only if the employee provides adequate justification, including protection of personal safety, and the employee's supervisor approves it before it is used. So an IRS employee using a name other than their own is not automatically a scam, but it is supposed to be justified and approved in advance.

Section 3701 required the Treasury to maintain records of taxpayer complaints of misconduct by IRS employees on an individual employee basis. An earlier 1996 law, also printed there, requires an annual report to the congressional tax committees on categories of IRS employee misconduct and their dispositions.

Together, these provisions show what Congress was worried about in 1998: employees who abused their authority, hid their mistakes or used the system for themselves. Section 1203 is the hammer. The complaint tracking and reporting rules are the measuring tape.

What this means if you think an employee crossed the line

Section 1203 is a personnel statute. It requires a final administrative or judicial determination, and the IRS and its Inspector General handle misconduct investigations. It is not a tool a taxpayer uses to win a case, and it does not cancel tax.

But it matters. If an employee falsified a document, threatened an audit to get something for themselves, retaliated against you using IRS procedures or seized property without the required approvals, Congress has said that conduct is serious enough to end a federal career. The Treasury Inspector General for Tax Administration's online Submit a Complaint page includes a category for IRS employee crime or misconduct, including an IRS employee threatening to audit someone or soliciting a bribe, and says submissions must name the IRS employee and give a detailed explanation of the allegation.

Be careful with this. Accusing an employee of misconduct because you disagree with a lawful levy is not a Section 1203 complaint. It is a disagreement, and the appeal process exists for those. Save Section 1203 for conduct that actually fits the list, and document it.

Most IRS employees I deal with do their jobs within the rules. The ones who do not are working under a statute that names their conduct and sets the penalty. That is worth knowing.