15:0626(133)CA - IRS, Los Angeles District Office and NTEU -- 1984 FLRAdec CA



[ v15 p626 ]
15:0626(133)CA
The decision of the Authority follows:


 15 FLRA No. 133
 
 INTERNAL REVENUE SERVICE
 LOS ANGELES DISTRICT OFFICE
 Respondent
 
 and
 
 NATIONAL TREASURY EMPLOYEES UNION
 Charging Party
 
                                            Case No. 8-CA-415
 
                            DECISION AND ORDER
 
    The Administrative Law Judge issued the attached Decision in the
 above-entitled proceeding finding that the Respondent had engaged in the
 unfair labor practices alleged in the complaint and recommending that it
 be ordered to cease and desist therefrom and take certain affirmative
 action.  The Respondent filed exceptions with respect to the Judge's
 Decision.  /1/
 
    Pursuant to section 2423.29 of the Authority's Rules and Regulations
 and section 7118 of the Federal Service Labor-Management Relations
 Statute (the Statute), the Authority has reviewed the rulings of the
 Judge made at the hearing and finds that no prejudicial error was
 committed.  The rulings are hereby affirmed.  Upon consideration of the
 Judge's Decision and the entire record, the Authority hereby adopts the
 Judge's findings, conclusions, and Recommended Order as modified below.
 
    In finding that the Respondent violated section 7116(a)(1) and (8) of
 the Statute by failing to comply with the provisions of section
 7114(a)(2)(B) of the Statute, the Authority agrees with the Judge's
 conclusions that the tax audit examination, under the factual
 circumstances presented herein, was but an "extension of the
 investigation" of the employee;  that it constituted an examination of a
 unit employee by an agency representative in connection with an
 investigation;  that the employee reasonably believed that disciplinary
 action might result from the examination;  and that the employee
 requested union representation, which request was denied.  /2/
 
    However, the Authority disagrees with the Judge's finding that the
 Respondent's statement to the union steward in the February 25
 memorandum that "we must also advise you that your appearance as these
 employees' representative could constitute a felony" was a threat in
 violation of 7116(a)(1) of the Statute.  In finding that such a
 statement did not interfere with, restrain or coerce the union steward
 in the exercise of her rights under the Statute, the Authority notes
 that such a statement, presented as advice, merely reflected
 Respondent's reasonable and consistently held position, supported by a
 March 19, 1981 letter from the Office of Government Ethics, that
 employees of the IRS are prohibited by 18 USC 205 from appearing as a
 representative on behalf of any taxpayer (including fellow employees)
 before any governmental agency.  Nothing in the record indicates that
 the statement at issue herein was anything other than a good faith
 expression of that position to the union steward.  Further, at no time
 did the Respondent threaten to prosecute the union steward, but merely
 informed her that her attendance "could" constitute a felony under its
 interpretation of applicable law.  Viewed in this context, a reasonable
 interpretation of this statement would not have engendered a belief that
 a threat was implied.  Accordingly, the Authority concludes that the
 Respondent's advice to the union steward did not independently violate
 section 7116(a)(1) of the Statute, and shall order that this allegation
 of the complaint be dismissed.
 
                                   ORDER
 
    Pursuant to section 2423.29 of the Federal Labor Relations
 Authority's Rules and Regulations and section 7118 of the Statute, it is
 hereby ordered that the Internal Revenue Service, Los Angeles District,
 shall:
 
    1.  Cease and desist from:
 
    (a) Refusing or failing to afford an opportunity to the National
 Treasury Employees Union, or any other exclusive representative of its
 employees, to be represented at a tax audit examination of James Ashley,
 or any other bargaining unit employee in connection with any
 investigation which could reasonably result in disciplinary action, when
 such representation is requested by the employee.
 
    (b) In any like or related manner interfering with, restraining, or
 coercing its employees in the exercise of their rights assured by the
 Federal Service Labor-Management Relations Statute.
 
    2.  Take the following affirmative action in order to effectuate the
 purposes and policies of the Statute:
 
    (a) Afford the National Treasury Employees Union, or any other
 exclusive representative of its employees, the opportunity to be fully
 represented at any tax audit examination of an employee in the unit by a
 representative of the agency in connection with an investigation, if the
 employee reasonably believes that the tax audit examination may result
 in disciplinary action against the employee, and the employee requests
 such representation.
 
    (b) Expunge from James Ashley's official personnel folder, and any
 other documents or reports, any reference to the February 1980 tax audit
 examination.
 
    (c) Refrain from using, in any future disciplinary action against
 James Ashley, any information obtained or derived from the February 1980
 tax audit examination of James Ashley.
 
    (d) Post at its facilities in the Internal Revenue Service, Los
 Angeles District, copies of the attached Notice on forms to be furnished
 by the Federal Labor Relations Authority.  Upon receipt of such forms,
 they shall be signed by the District Director, Internal Revenue Service,
 Los Angeles District, or his designee, and they shall be posted and
 maintained by him for 60 consecutive days thereafter, in conspicuous
 places, including all bulletin boards and other places where notices to
 employees in the District are customarily posted.  Reasonable steps
 shall be taken to ensure that such Notices are not altered, defaced, or
 covered by any other material.
 
    (e) Pursuant to section 2423.30 of the Authority's Rules and
 Regulations, notify the Regional Director, Region VIII, Federal Labor
 Relations Authority, in writing, within 30 days from the date of this
 Order, as to what steps have been taken to comply herewith.
 
    IT IS HEREBY FURTHER ORDERED that the alleged violation in the
 complaint pertaining to the statement in the February 25, 1980
 memorandum be, and it hereby is, dismissed.
 
    Issued, Washington, D.C., August 28, 1984
 
                                       Barbara J. Mahone, Chairman
                                       Ronald W. Haughton, Member
                                       Henry B. Frazier III, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 
 
                          NOTICE TO ALL EMPLOYEES
 
  PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
 RELATIONS
 AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
 OF TITLE
 5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
 RELATIONS
 
                   WE HEREBY NOTIFY OUR EMPLOYEES THAT:
 
    WE WILL NOT refuse or fail to afford an opportunity to the National
 Treasury Employees Union, or any other exclusive representative of our
 employees, to be represented at a tax audit examination of James Ashley,
 or any other bargaining unit employee, in connection with any
 investigation which could reasonably result in disciplinary action, when
 such representation is requested by the employee.
 
    WE WILL afford the National Treasury Employees Union, or any other
 exclusive representative of our employees, the opportunity to be fully
 represented at any tax audit examination of an employee in the unit by a
 representative of the agency in connection with an investigation, if the
 employee reasonably believes that the tax audit examination may result
 in disciplinary action against the employee, and the employee requests
 such representation.
 
    WE WILL expunge from James Ashley's official personnel folder and any
 other documents or reports any reference to the February 1980 tax audit
 examination.
 
    WE WILL refrain from using, in any future disciplinary action against
 James Ashley, any information obtained or derived from the February 1980
 tax audit examination of James Ashley.
 
    WE WILL NOT in any like or related manner interfere with, restrain or
 coerce any employee in the exercise of any right under the Statute.
                                       (Activity)
                                       By:  (Signature) (Title)
 
    Dated:  . . .
 
    This Notice must remain posted for 60 consecutive days from the date
 of posting, and must not be altered, defaced, or covered by any other
 material.
 
    If employees have any questions concerning this Notice or compliance
 with its provisions, they may communicate directly with the Regional
 Director, Region VIII, Federal Labor Relations Authority, whose address
 is:  350 South Figueroa Street, 10th Floor, Los Angeles, CA 90071, and
 whose telephone number is:  (213) 688-3805.
 
 
 
 
 
 
 
 
 
 -------------------- ALJ$ DECISION FOLLOWS --------------------
 
    Robert J. Wilson,
    Attorney for Respondent
 
    David Handsher,
    For the Charging Party
 
    E. A. Jones,
    Attorney for the General Counsel,
    Federal Labor Relations Authority
 
    Before:  Isabelle R. Cappello
    Administrative Law Judge
 
                                 DECISION
 
    This is a proceeding under the Federal-Service Labor Management
 Relations Statute, 92 Stat. 1191, Chapter 71 of Title 5 of the U.S. Code
 (hereinafter referred to as the "Statute"), and the Rules and
 Regulations issued thereunder and published in 45 Fed.Reg. 3482-3524
 
 
 (1/17/80), 5 C.F.R. 2421 et seq.
 
    Pursuant to a Charge filed on March 19, 1980 by the National Treasury
 Employees Union (hereinafter, "NTEU" or the "Union"), and an amended
 charge filed on August 29, 1980, a Complaint and Notice of Hearing was
 issued on August 29, 1980, and an amended Complaint was issued on
 November 21, 1980, by the Regional Director, Region VIII, of the Federal
 Labor Relations Authority (hereinafter, the "Authority").  /3/
 
    The amended Complaint alleges a violation by Respondent (also
 referred to as "IRS") of Section 7116(a)(1) and (8) of the Statute by
 denying the request of IRS employee James Ashley to be represented by
 his unit's exclusive representative in an income tax audit examination
 of his personal Federal income tax returns.  The amended Complaint also
 alleges a violation by Respondent of Section 7116(a)(1) by providing a
 memorandum to the exclusive representative in which IRS threatened
 possible felony prosecution if the representative were to represent the
 employee at the examination.  Respondent denies the facts, as alleged,
 and that any violations have occurred.
 
                       Statutory Provisions Involved
 
    Section 7116(a) of the Statute provides, in pertinent part:
 
          (a) For the purpose of this chapter, it shall be an unfair
       labor practice for an agency--
 
          (1) to interfere with, restrain, or coerce any employee in the
       exercise by the employee of any right under this chapter;
 
                                  * * * *
 
          (8) to otherwise fail or refuse to comply with any provision of
       this chapter.
 
    Section 7114(a) of the Statute provides, in pertinent part:
 
          (2) An exclusive representative of an appropriate unit in an
       agency shall be given the opportunity to be represented at--
 
                                  * * * *
 
          (B) any examination of an employee in the unit by a
       representative of the agency in connection with an investigation
       if--
 
          (i) the employee reasonably believes that the examination may
       result in disciplinary action against the employee;  and
 
          (ii) the employee requests representation.
 
    Section 7102 of the Statute provides, in pertinent part:
 
          Each employee shall have the right to form, join, or assist any
       labor organization . . . freely and without fear of penalty or
       reprisal, and each employee shall be protected in the exercise of
       such right.
 
    A hearing was held on February 9 and 10, 1981, in Los Angeles, CA.
 All parties were afforded a full opportunity to be heard and introduce
 evidence.  Briefs were filed by the parties on May 13, 1981.  Based upon
 the record made at the hearing, my observation of the witnesses and
 their demeanor, and the briefs, the following findings and conclusions
 are made and order recommended.
 
                           Findings of Fact /4/
 
    1.  NTEU is the exclusive representative of certain IRS employees,
 including auditors and revenue agents.  Revenue agents are employed in
 IRS's Examination Division.  They conduct field examinations of Federal
 tax returns.  Auditors are also employed in the Examination Division, to
 conduct less complicated examinations, in IRS offices.  (References in
 this decision to "examiners" refer to both revenue agents and auditors.)
 Because of the confidentiality of tax information, an employee may not,
 ordinarily, disclose such information to anyone other than a Treasury
 Department employee or official.
 
    2.  James Ashley is a GS 13 revenue agent employed in IRS's
 International Tax Section.  His duty post is in the Los Angeles District
 Office, but most of his cases are outside Los Angeles.  He has been an
 IRS employee for 17 years.  There are some 3500 employees in the Los
 Angeles District Office.
 
    3.  Beginning on or about May 15, 1978, Mr. Ashley was the subject of
 a so-called Special Inquiry Investigation by IRS's Inspection Division.
 This Division is largely responsible for investigating breaches of
 employee integrity, e.g. IRS's Code of Conduct violations.  A Special
 Inquiry Investigation is begun where circumstances indicate a
 possibility of a Code of Conduct violation.  Initially, the basis of the
 Ashley investigation was an allegation that Mr. Ashley may not have
 complied with tax laws in possibly trying to secure for his wife an
 erroneous refund of taxes paid.  The investigation was subsequently
 expanded to look into other allegations, including possibly impending
 IRS operations with respect to examination of the tax returns of Mr.
 Ashley and his wife.  Impeding IRS operations constitutes a possible
 basis for finding an IRS Code of Conduct violation, and discipline.
 
    4.  During the period of the Ashley Special Inquiry, Mr. Ashley's
 1976, 1977, and 1978 Federal tax returns were being subjected to the
 scrutiny of IRS's Examination Division.  The investigators conducting
 the Special Inquiry on Mr. Ashley made six or eight contacts with the
 examiners of these returns during the period of the Special Inquiry.  It
 was one of the examiners who furnished the information upon which the
 Special Inquiry was expanded to include an allegation of possibly
 impeding IRS operations.  One of the audit reports generated by one of
 the examiners was "killed" by a supervisor, who because "very irate"
 over Mr. Ashley, as an IRS employee, challenging a mere $59 deficiency
 found on one of the returns, and threatened to open up additional areas
 of his tax returns.  The last of the examiners to handle these tax
 returns of Mr. Ashley was Jacqueline Flynn, in February.  She was
 contacted by an investigator to inquire into the status of the ongoing
 Ashley examination, in an "attempt to determine, if in fact, there were
 any activities ongoing on the part of any party to impede the audit."
 (TR 437-438).  Ms. Flynn told him that Mr. Ashley "might do anything to
 delay or lengthen the Procedures and to forestall any resolution." (TR
 381).  After Ms. Flynn completed her audit report, and before the last
 investigator completed his final report on the Special Inquiry, the
 investigator reviewed Ms. Flynn's audit report on Mr. Ashley.
 
    5.  Ms. Flynn, a GS 11 revenue agent, contacted Mr. Ashley about her
 audit of his 1976, 1977, and 1978 tax returns by letter dated August 3,
 1979.  She indicated that Mr. Ashley's 1976 return was assigned to her
 for "completion of the examination" initiated by another examiner.  She
 indicated that she wished to discuss certain items with him
 "personally," although there would be "no objection" if he wished to
 have a representative or witness present.  (GC 31) She indicated what
 items needed "verification." (GC 31)
 
    6.  Earlier, while Mr. Ashley was overseas on official business, Ms.
 Flynn had contacted Mr. Ashley's tax representative, Martin Stoger.  Mr.
 Stoger was handling technical aspects of the proper allocation of
 retirement-income contributions between the separately-filed returns of
 Mr. Ashley and his wife.  This was the issue which had been the focus of
 the 1976 and 1977 examinations.  Mr. Stoger had Mr. Ashley's tax
 records.  Mr. Stoger, whose business is in Houston, TX, declined to come
 to Los Angeles, where IRS insisted on holding the examinations.  Upon
 Mr. Ashley's return to this country, in January, Mr. Stoger informed Mr.
 Ashley that he, Mr. Ashley, was being accused by IRS of delaying the
 examination.
 
    7.  After Mr. Ashley returned from overseas, in January, Ms. Flynn
 set February 26 for the audit, and advised that the examination could
 continue on February 27 and/or 28 and/or 29.  The national average time
 for the examination of a simple salary tax return is two hours.  Mr.
 Ashley was disturbed that so much time was being set aside for the
 February examination.
 
    8.  Mr. Ashley was also disturbed because he viewed the Flynn audit
 of his 1976 and 1977 returns as a reopening.  There is a dispute as to
 whether, technically, the Flynn audit was a reopening.  It has some
 indication of a reopening, in that appeal rights had been granted.
 Reopenings must go through a series of supervisory reviews, and signal
 that there may be evidence of fraud, malfeasance, collusion,
 concealment, or misrepresentation of a material fact-- any of which
 constitutes a Code of Conduct violation which can result in discipline.
 
    9.  Mr. Ashley was also concerned over the fact that Ms. Flynn was to
 examine his 1978 return.  His 1978 return would not yet have become
 available for an ordinary examination unless requested by the Inspection
 Division.
 
    10.  At the time of his scheduled February examination, Mr. Ashley
 was also disturbed over horror stories he had heard of IRS using
 employee tax returns to check on employee integrity.
 
    11.  On February 21, Mr. Ashley wrote a memo to IRS's District
 Director, at Los Angeles, in which he stated that he had reason to
 believe that the examination of his tax returns for 1976, 1977, and 1978
 could result in disciplinary action and, therefore, requested that he be
 given an opportunity to have his Union steward present.  He designated
 Sylvia Kellison as his Union representative, but "only in employment
 related matters," and not as his Circular 230 tax representative.  (GC
 3) Circular 230 contains IRS regulations governing the practice of tax
 representatives before IRS.  See GC 4.  Mr. Ashley expected Ms. Kellison
 to advise him on what repercussions he could expect from certain steps
 and statements he might make, "as an employee versus a normal taxpayer."
 (TR 307)
 
    12.  On February 21, Ms. Kellison, Chief Steward of the Union,
 forwarded the February 21 memo of Mr. Ashley to the District Director
 and, in her transmittal memo, stated:  "I believe that my representation
 of the employee in the employment-related matters is not violative of MT
 0735.1-10, 237.2(c)(2) and that the Civil Service Reform Act, 5 USC
 7114(a)(1) requires me to represent this member of the bargaining unit
 in this examination." (GC 3 A) MT 0735 is a reference to IRS's Handbook
 of Employee Responsibilities and Conduct (hereinafter, the "Handbook").
 
    13.  On February 25, Respondent's Chief of Employee-Labor Relations
 Section, Michael Spies, sent a memo to Ms. Kellison confirming his
 verbal notification that she would not be permitted to represent Mr.
 Ashley and another employee, during the examination of their tax
 returns.  The reason given was that "because the examination of these
 tax returns is outside the employer/employee relationship, the
 examinations do not fall within the definition of 'investigation' under
 Section 7114(a)(2)(B)" of the Statute.  (GC 28)
 
    14.  In the February 25 memo, Mr. Spies also stated that:  "We must
 also advise you that your appearance as these employees' representative
 could constitute a felony." The memo than stated:  "Title 18 USC 205,
 provides that an employee of the United States who acts as agent for
 anyone before any department in any proceeding in which the United
 States is a party or has a substantial interest shall be fined or
 imprisoned or both." /5/ In addition, the memo warned that IRS's
 Handbook specifically prohibits employees of the Service from appearing
 as a representative on behalf of any tax payer before any government
 agency involving a tax matter."
 
    15.  IRS has apparently not interpreted 18 U.S.C. 205, or its
 Handbook, as preventing Mr. Ashley from acting as his wife's
 representative, at her tax audits before IRS.  Such consent was given by
 IRS in June.
 
    16.  Ms. Kellison did not attend the tax audit of Mr. Ashley because
 she "felt (she) would be subject to prosecution, and that (she) also
 might receive a notice of proposed termination based on the Code of
 Conduct violation that (Mr. Spies) referenced in (his) letter." (TR 111)
 
    17.  The February audit of Mr. Ashley's tax returns took place over a
 two-day period.  It took place at an attorney's office in Alhambra, CA,
 and also involved the returns of Mr. Ashley's wife.  Mr. Ashley attended
 on his own time.  He again requested Union representation.  Ms. Flynn
 stated that she lacked the power to act on the request.  At the time Ms.
 Flynn received the Ashley file for audit, in August 1979, she was told
 that Mr. Ashley was an IRS employee, but she did not receive any
 instructions to conduct Mr. Ashley's audit differently from that of any
 other taxpayer.  Mr. Ashley and Ms. Flynn were the only persons present
 at the audit.  Mr. Ashley declined to produce records for the 1976 and
 1977 returns because he felt that proper reopening procedures were not
 followed.  Mr. Ashley asked Ms. Flynn to sign statements on records he
 produced and a letter from his wife explaining her nonappearance.  Ms.
 Flynn refused.  See TR 358.  Mr. Ashley asked Ms. Flynn to provide him
 with IRS documentation on reopening returns.  She replied:  "And so I
 asked him, you know, if you know all these procedures and you know the
 numbers and you can get them as easily as I can, why don't you just get
 them, and he said, because I want you to provide them so I can use them
 in my defense." (TR 361) At the audit examination, Ms. Flynn questioned
 Mr. Ashley about his 1978 tax returns and examined documents he
 furnished to verify the return.  Mr. Ashley later came to Ms. Flynn's
 office to request technical advice.  He also filed technical appeals.
 As a result of Mr. Ashley's behavior during the audit, and after, Ms.
 Flynn formed the conclusion that Mr. Ashley was "uncooperative and
 difficult." (Tr 382, 381) Ms. Flynn concedes that she may have told the
 investigator handling the Special Inquiry on Mr. Ashley that Mr. Ashley
 was being "uncooperative and difficult," when the investigator contacted
 her about "the status" of her examination of Mr. Ashley's returns.  (TR
 382-383, 363) Ms. Flynn's testimony on this point appeared to be
 evasive;  and I find that she did, in fact, report Mr. Ashley to the
 investigator as being uncooperative and difficult.  Ms. Flynn did not,
 on her own initiative, refer any matter concerning Mr. Ashley's audit to
 the Inspection Division.
 
    18.  The Special Inquiry investigative report on Mr. Ashley contained
 information, inter alia, that Mr. Ashley had "purposefully impeded
 examination activity." (GC 40) In January 1981, the report was reviewed
 by Mr. Ashley's supervisor, group manager, and branch manager "for among
 other things, Rules of Conduct violations." See Stipulation of Facts, #2
 (GC 2).  They concluded that there was no basis in the report for
 discipline of Mr. Ashley, and forwarded their recommendations to the
 Chief of the Examination Division.  The Chief, in a referral-back memo
 raised several questions, including a question as to just what Mr.
 Ashley had done which could be construed as impeding IRS operations with
 respect to the examination of his and his wife's tax returns.  Further
 investigation action is still "possible." (TR 428) IRS claims that an
 "administrative error" occurred in sending the report to Mr. Ashley's
 supervisors.  (RBr 26)
 
    The last investigator to work on the Ashley Special Inquiry is not
 "entirely" aware of why his report was referred to Mr. Ashley's
 supervisors "except for the fact . . . that t(he) Special Inquiry
 investigation regarding Mr. Ashley was ongoing for a period of time
 during which there were also lengthy examination procedures ongoing."
 (TR 405-406)
 
          The general treatment by IRS of employees' tax returns
 
    19.  IRS conducts examinations of employees' tax returns under
 several different programs or procedures.
 
    (a) One is the normal computer screening process known as "DIF,"
 which is applicable to all taxpayers.  Treatment of employees under the
 normal screening process varies, somewhat, from that of other taxpayers,
 however.  Employee returns are specially marked and secured to insure
 employee privacy.  Each IRS District maintains a list of all employees
 currently under audit in the District.  However, IRS does not know if
 all employees being audited are on the list, since employee status is
 determined only if information on the tax return is sufficient to
 indicate IRS employment.  The purpose of keeping the list is to control
 the employee examinations only while they are in process;  and it is
 destroyed after audit processes are completed.  Employee returns may not
 be returned by the agent assigned to the audit, for lack of adequate
 potential to justify an examination, as in the case of other taxpayers,
 without special permission from higher authority.
 
    (b) Another program under which IRS examines employees' tax returns
 is the New Employee Audit Program.  It is applicable to employees going
 into sensitive positions.
 
    (c) Another program is the Employee Under Reporter Program (EURP), in
 which there is a matching of information documents to returns of IRS
 employees.  Employees do not have to respond to questions by their
 supervisors under this program.
 
    (d) Another program is the Employee Federal Tax Delinquency Program
 (EFTDP) a non-file, late-file, non-pay program.  It is based on an
 annual computer run to insure employee returns are filed and timely
 paid, if tax is due.  For the period January 1, 1975 through September
 30, 1980, 250 cases were referred, under this program.  Fourteen
 reprimands and fifteen oral admonishments resulted.
 
    (e) Another program is the National Coordinated Inspection Program
 (NCIP).  The NCIP program was in effect in IRS's Western and Midwest
 Regions around the time of Mr. Ashley's February audit.  The object of
 this program was to identify and initiate investigation of individual
 cases of alleged breakdowns in employee integrity.  The Western Region
 includes the Los Angeles District, where Mr. Ashley's February audit
 took place.  The program included review of the 1975-1977 tax returns of
 technical employees, including revenue agents such as Mr. Ashley.
 Employees using their "inside knowledge to take advantage of the
 processing system" were the target.  (GC 19.3) Where the Inspection
 Division had an interest in any matter pending with the Examination
 Division involving an employee tax matter, the "NCIP coordinator" was to
 be advised.  (GC 20.2) NCIP was underway in April 1979, during which
 month 78 current or former employees in the Western Region were under
 audit.  By January 12, NCIP had resulted in discipline of three
 employees.  One employee came under suspicion when he became "aggressive
 with the office auditor" during an examination of his 1976 tax return.
 This was used as an example, in IRS's April 23, 1979 "NCIP Status
 Report," of a case turned up independent of NCIP, but which would have
 been included in the project sample.  (GC 21.50) In the Los Angeles
 District, 78 employees tax returns were referred for examination under
 NCIP.  Throughout the Western and Midwest Regions, 818 returns were
 referred to the Inspection Division, 231 were referred for audit, and
 168 were actually audited.  NCIP has ended.  No Los Angeles District
 employees have been disciplined as a result of NCIP.  However, there is
 still a possibility of such discipline, as all investigations generated
 under NCIP have not been completed.
 
    20.  IRS examined all Code of Conduct cases relating to taxes for the
 period January 1, 1975 through September 30, 1980.  In addition to those
 found under EFTDP and NCIP programs (see findings 19(d) and (3),
 above.), there were cases where a tax matter was only part of the
 charge.  In one case a tax examiner was removed, in part, for two
 specifications of failure to file.  There was a 10-day suspension of a
 revenue agent, in part for three specifications for failure to timely
 file and pay.  A contact representative was given a five-day suspension,
 in part for failure to timely pay and two specifications of failure to
 report all income.  There was a 10-day suspension of a revenue agent, in
 part for failure to timely pay.  There was a removal of a clerk, in part
 for three specifications of failure to timely file.  A probationary
 employee was terminated for failure to report all income and failure to
 timely file.  One employee retired while a proposed removal was in
 effect, for claiming false exemptions and appearing on behalf of a
 taxpayer without approval.  There was one case of a removal of a
 taxpayer service representative for failure to timely file and pay.  A
 tax examiner was removed for, in part, failure to pay and claiming false
 exemptions.  A tax examiner resigned while a proposed removal letter was
 in effect for making false entries on a return.
 
    21.  IRS has another special procedure for examining employee tax
 returns.  Specific and general allegations of employee misconduct are
 referred to the Inspection Division, which can request that an audit be
 conducted of the employee's returns by the Examination Division.  The
 case inspector briefs the examiner on pertinent aspects of the pending
 investigation and maintains liaison with the examiner, who makes status
 reports to the case inspector "on a timely basis, including any
 significant information that may develop." (GC 16) Upon completion of
 the requested audit, "the cooperative examiner" submits a copy of the
 audit report to the Investigations Branch which requested it.  (GC 16) A
 summary of the audit, and its effect upon the case are reported to the
 case inspector and made a part of the investigative file.
 
    22.  A witness for IRS testified that Mr. Ashley's February audit was
 not generated under NCIP, EFTDP or EUPP.  See TR 321-323.  This witness
 did not identify the program or procedure under which the audit at issue
 did take place.  It is not clear from the record just how or if an
 employee would know the program under which he was being called in for
 an audit of his tax returns.  Auditors and reviewers know, in part, from
 the "charge out card." (TR 175).
 
    23.  The IRS has a Rule of Conduct dealing with tax matters.  It
 states:
 
          (1) The mission of the Service is to encourage and achieve the
       highest possible degree of voluntary compliance with the tax laws
       and regulations and to maintain the highest degree of public
       confidence in the integrity and efficiency of the Service.  In
       light of this mission, it is imperative that our employees comply
       fully with all applicable requirements of governmental taxing
       authorities at all levels-- Federal, State and local.
 
          (2) It is expected, therefore, that employees will:
 
          (a) file timely and properly all tax returns in keeping with
       the requirements of law, regulation, or ordinance;
 
          (b) pay timely any valid tax due.
 
          (3) A "valid tax due" as used in this subsection includes:
 
          (a) a balance due on an original return as filed with a
       governmental agency;
 
          (b) an uncontested tax assessment of a governmental agency;
 
          (c) a tax otherwise due a governmental agency which is
       acknowledged by the employee;
 
          (d) absent (a), (b), or (c) a final administrative
       determination confirmed by notice of a tax lien issued by a
       government agency.
 
          (4) A "governmental agency" as used in this subsection includes
       Federal, State, or local agencies.
 
          (5) Employees who fail to adhere to this subsection are subject
       to removal from the Service.
 
    See GC 6.1 (Sec. 223.6).  Employees are reminded annually of the
 requirement to file timely and proper tax returns and that they are
 "subject to disciplinary action, including removal" for failure to do
 so.  (GC 8)
 
    24.  Examiners are required to refer Code of Conduct violations to
 the Inspection Division.  Reviewers of the audit report are instructed
 to "be alert for indications of activity in violation of the Rules of
 Conduct." (GC 12) If violations are found, reviewers are instructed to
 send a copy of the report to the Inspection Division.
 
    25.  All employees are subject to dismissal and criminal prosecution
 for failure to report to their supervisors any knowledge or information
 of the violation of any revenue law by any person, including employees.
 
    26.  The Inspection Division ordinarily initiates a Conduct
 Investigation concerning any Code of Conduct violation referral from the
 Examination Division.  It may initiate a Special Inquiry where
 circumstances merely indicate a possibility, rather than a probability,
 of an employee violation of the Code of Conduct, and where there is
 reason to believe the matter may be resolved favorably to the employee
 by reviewing the income tax returns in question or interviewing the
 examiner.  Where the examination report of the examiner clearly shows
 intent to evade taxes, gross negligence or other derogatory information,
 an investigation may be dispensed with and the information transmitted
 for appropriate administrative action such as discipline.  The results
 of any Inspection investigation are referred for appropriate
 administrative action, which can include discipline.  All Inspection
 Conduct cases are routed through IRS's Labor Relations Office.  That
 office gives advice on whether employees should be disciplined because
 of Code of Conduct violations;  and reliance is placed on the tax audit
 report.
 
    27.  There is a dispute as to whether IRS expects its employees to
 attend their own tax audits.  IRS has no written rule on the subject.
 The Union has not sought advice on the subject and has found no case
 where an employee was disciplined simply for failure to attend his or
 her tax audit.  In March, an IRS revenue agent, Margarete LeQuesne,
 requested IRS to give her an interpretation of the Code of Conduct as it
 applied to an employee audit, namely:  "What types of situations would
 generate disciplinary actions because of an employee audit." (R 15 B).
 IRS's reply was:  "A violation of the Code of Conduct constitutes cause
 for disciplinary action." (R 15 A) Another IRS employee, David Branson,
 wrote to IRS on March 26, asking whether he was being "ordered" to
 attend an audit of his tax return.  (GC 26 C) IRS replied:  "There is no
 order to attend the audit." (GC 26 D) At a national negotiation session
 with the Union, management officials, including the Assistant
 Commissioner for Coliance, three District Directors, and three Service
 Center Directors, strongly argued that "it was an employees duty to
 answer questions in tax audits and to attend their audits, if they were
 to be a 'good citizen,' they would go to the audit and how could we ask
 for compliance from other tax-payers if we didn't attend our own
 audits." (TR 198) IRS eventually conceded, at this session, to allow
 official time to employees attending a tax audit examination requested
 by the Inspection Division.  The Union has apparently not asked for
 official time for employees attending other audit examinations.
 
    28.  IRS witnesses testified to their belief that IRS did not require
 employee attendance at their tax audit examinations and to being unaware
 of any discipline imposed for failure to attend.  However, Ms. Flynn
 expressed her opinion that an employee failing to show up, without prior
 notice, would be regarded as "uncooperative," and she "suppose(d)" she
 would characterize such conduct as impeding an audit.  (TR 391-392).
 
    29.  In view of the strong views expressed by high-ranking, national
 and field IRS officials, in negotiations with the Union, and the
 importance attached by IRS to employee integrity in regard to their tax
 returns, I find that IRS does expect its employees to attend their own
 tax audit examinations, absent special circumstances, such as being
 absent from the area on official business.
 
    30.  IRS Rule of Conduct Sec. 217.1 (GC 7) provides as follows:
 
          Responding to Questions in Matters of Official Interest
 
          When directed to do so by inspection or other competent
       Treasury or Revenue Service authority, employees must testify or
       respond to questions in matters of official interest.  Employees
       must give such testimony, or respond to questions under oath when
       required or requested to do so.
 
    Tax returns are "matters of official interest." See GC 24.  However,
 an IRS labor relations specialist testified that a revenue agent or tax
 auditor is not a "competent authority," under Rule 217.1.  (TR 453-454)
 When asked how a violation of this Rule comes about, he testified,
 somewhat unsurely, that:  "I believe that competent authority would have
 to cite the Rule of Conduct, or something of that nature, and tell the
 employee that if they did not respond charges would be taken against
 them, or be made against them." (TR 454) Whether this interpretation has
 been explained to employees is not a matter of record.  Statements made
 at tax audit examinations are not taken under oath.
 
    31.  Returns selected for audit usually indicate a likelihood that
 IRS may recover unpaid taxes.  The presence of a deficiency, in an
 employee's return, may suggest an improperly-filed return, under the IRS
 Code of Conduct.  If an employee, or his representative does not attend
 an audit, IRS can disallow claims and find deficiencies, based on what
 documentation it has available.  See TR 386.  In some instances
 deficiencies found have resulted in referrals to the Inspection
 Division.  (TR 460)
 
    32.  The Inspection Division, after receiving information developed
 during the tax audit process, conducts an independent investigation of
 the underlying facts.  During an Inspection Division examination, IRS
 concedes that a Union representative has the right to be present.  (RBr
 18)
 
    33.  In March, the Chief of IRS's Examination Division, Los Angeles
 District, sent out a memo to 14 auditors on the subject matter of
 examining employee tax returns.  This was after the Ashley examination
 here at issue, which occurred in February.  The March letter stated that
 the examinations were "outside the realm of the employer/employee
 relationship" and that they were "to treat the employee examined as
 (they) would any other taxpayer." (R 1) The memo also stated:  "Under no
 circumstances are you to invoke regulations pertinent only to Service
 employees such as those in MT 0735.1-10, Handbook of Employee
 Responsibility and Conduct, when conducting these examinations." (R 1)
 The instructions in the March letter do not supersede general
 instructions that auditors are to report" facts (which) are disclosed
 upon examination which indicate that an official or employee is, or has
 been engaged in violation of the Rules of Conduct of the Service." See
 GC 9 and TR 329-330.
 
    34.  The auditors record the taxpayer's position on a particular
 issue, but not all of the conversation that transpires.  An alleged
 false statement made to an auditor during an examination of an employee
 tax return can be a basis for a proposed adverse action against an IRS
 employee.  See GC 23.
 
    35.  The Inspection Division investigates allegations regarding the
 filing of proper returns by employees.  Inspectors in this Division are
 not in the same bargaining unit as revenue agents.  "Most normally," the
 examiner of the return is interviewed.  (TR 410) "Almost invariably,"
 the employee being investigated is interviewed.  (TR 411) At such
 investigations, IRS recognizes the right of the employee to Union
 representation.  See TR 411.
 
    36.  An employee can be disciplined for what comes out of a tax audit
 examination.  Even an uncooperative attitude, such as delaying an audit,
 can trigger the investigative process leading to discipline.  In the
 Joyce King case involving her proposed removal or disciple, the Chief of
 the Los Angeles Examination Division cited to her the following language
 from the IRS Handbook:  "An employee may be subjected to severe
 disciplinary action and prosecution for intentionally making false or
 misleading verbal or written statements in matters of official interest.
  Some of these matters of official interest are transactions with . . .
 fellow employees . . . entries on tax returns . . . and affidavits,
 transcripts of testimony, or statements to Inspection, whether or not
 under oath." See GC 23.2.  One specification supporting the proposed
 action was a statement given by Ms. King to a revenue agent in the
 course of an audit.
 
    37.  Between 1975 and 1979, IRS officials imposed upon, or proposed
 discipline for 37 employees in the Los Angeles District for tax-related
 violations of the Code of Conduct.  Some resulted, in part, from
 statements made to an IRS agent during the examination of personal tax
 returns.
 
    38.  All Inspection Division cases on employee conduct are routed
 through IRS's Labor Relations Office which advises on whether the
 employees should be disciplined because of Code of Conduct violations.
 In making such determinations, reliance can be placed on the examiner's
 work papers, report, and testimony.
 
    Additional facts relating to IRS's "threat of criminal prosecution"
 
    In addition to findings 11 through 16, the following facts relate to
 this issue.
 
    39.  A witness for IRS, who has been the Labor Relations Specialist
 for the Los Angeles District for about one and a half years, testified
 that it was the opinion of his Section that it was impossible to
 differentiate between personnel and tax representation at a tax audit.
 He reached this opinion after reviewing a memorandum prepared by the
 Director, General Legal Services Division and which reached the Los
 Angeles District on January 11, 1979.  This memorandum on "Union
 Representation Rights at Employee Tax Audits under 5 U.S.C. 7114" cites
 Section 7114(a)(2)(B) of the Statute and concludes that it 'would appear
 on its face to apply to employee tax audits conducted by the Internal
 Revenue Service." (R 13.1) It then proceeds to reach a contrary
 conclusion, by reasoning that the tax audit was not an "investigation
 within the meaning of 5 U.S.C. 7114(a)(2)(B)" (R 2), and that, even if
 entitled to union representation, a union representative may not be a
 fellow employee because "possibly violative of 18 U.S.C. 205," and also
 "could possibly constitute a conflict of interest." (R 13.9) The
 memorandum reached the same conclusions "even if Inspection referred an
 employee for audit." (R 13.10)
 
    40.  IRS now concedes that its employees are entitled to Union
 representation at Inspection-referred audits.  Ms. Kellison was allowed
 to represent an employee at such an audit in late February or early
 March 1979.  At this audit Ms. Kellison advised Bernice Johnson whether
 or not certain of her answers could lead to discipline and pointed out
 that statements made in a matter of official interest, such as an audit,
 result in discipline.
 
    41.  In a one-page, three-paragraph letter dated March 19, 1981, the
 Director of the U.S. Office of Government Ethics, Office of Personnel
 Management, responded to a letter dated March 13, 1981, from IRS's
 Acting Director, General Legal Services Division.  See attachment to
 Respondent's brief.  The March 19 letter states to the Acting Director:
 "(Y)ou raise the issue under 18 U.S.C. 205 of whether an employee of
 (IRS) may represent another IRS employee during a tax audit." The March
 19 refers to Section 7114 of the Statute and states that the exception
 in 18 U.S.C. 205, which allows one agency employee to represent another
 agency employee in "disciplinary . . . or other personal administration
 proceeding . . . does not apply to permit employee representation in
 connection with a tax audit." The March 19 letter states that a tax
 audit is a "proceeding with a taxpayer (who happens to be an employee);"
 that it "is distinct from a proceeding with an employee (who happens to
 be a taxpayer);" and that it is not "characterizable as a
 labor-management issue." IRS does not reveal whether it shared with the
 Office of Government Ethics the findings made in this case as to its
 practice of using employee tax returns as a source for establishing
 employee misconduct and discipline.
 
                        Discussion and Conclusions
 
          A. Respondent violated Section 7114(a)(2)(B)(i)(ii) of the
       Statute by denying James Ashley's request for Union representation
       at the February 1980 tax audit examination of his income tax
       returns.
 
    The principal issue presented here entails the application of the
 Weingarten right embodied in Section 7114(a)(2)(B)(i)(ii) of the
 Statute.  /6/ That Section expressly provides that the Union shall be
 given the opportunity to be present at any examination of a
 bargaining-unit employee by a representative of the agency, in
 connection with an investigation, if the employee reasonably believes
 that the examination may result in disciplinary action against the
 employee, and the employee requests representation.  U.S. Department of
 the Navy, U.S. Marine Corps, Marine Corps Logistics Base, Albany,
 Georgia, 4 FLRA No. 54 (1980);  Internal Revenue Service, Washington,
 D.C., and Internal Revenue Service, Hartford District Office, 4 FLRA No.
 37 (1980).  In this case there is no dispute that James Ashley is a
 bargaining-unit employee, that he requested Union representation at the
 tax audit examination of his income tax returns, that an investigation
 into his conduct was ongoing, at the time of the examination, that the
 request for Union representation was denied, and that Mr. Ashley
 thereafter attended the examination and was questioned by an IRS revenue
 agent.
 
    Respondent breaks down Section 7114(a)(2)(B) into six component
 parts, and argues that the General Counsel proved none but the sixth.
 The six elements are:
 
    (1) Any examination;
 
    (2) Of an employee in the unit;
 
    (3) By a representative of the Agency;
 
    (4) In connection with an investigation;  if
 
    (5) The employee reasonably believes that the examination may result
 in disciplinary action against the employee;  and
 
    (6) The employee requests representation.
 
    As will be discussed, element by element, IRS is able to sustain its
 arguments only by taking a myopic view of its employment practices.  In
 particular, it seems to wink at its practice of using employee Federal
 tax audit examinations as an easily available source of information on
 employee misconduct, and of allowing its investigators free access to
 its examiners and their reports.
 
    (1) An "examination" took place.  IRS argues that the tax audit here
 involved is not an "examination" because Mr. Ashley did not have to
 attend it.  (RBr 5-9).  While stopping short of ordering its employees
 to attend their own tax audits, high management officials of IRS made it
 clear to the Union, during bargaining sessions, that employees should
 attend and cooperate at their own tax audit examinations.  Unless
 special circumstances exist, such as the employee being out of the
 country on official business, IRS clearly expects such attendance and
 cooperation by its employees.  The revenue agent wrote to Mr. Ashley
 that she wished to discuss some items on his returns with him
 "personally," indicated what items needed verification, scheduled the
 examination, queried him at the examination, and examined documents he
 furnished.  This constitutes a statutory "examination."
 
    (2) Mr. Ashley remained an "employee" during the examination.  IRS
 argues that Mr. Ashley was not an "employee" at the time of the audit
 examination here involved because:  the audit was not held at an IRS
 office and Mr. Ashley attended on his own time as he would with any
 other "personal task," such as "seeing his barber," or "buying a used
 car." (RBR 10).  Since neither Mr. Ashley's barber nor his car salesman
 is likely to be questioned by an IRS investigator as to whether Mr.
 Ashley was impeding IRS operations, on an audit examination of his tax
 returns, as happened here, the barber/used-car-salesman comparison is
 not persuasive.  Nor are the two cases cited.  One, Polson Industries,
 242 NLRB 185, 101 LRRM 1344, involves an ex-employee.  The other, Mt.
 Vernon Tanker Co. v. NLRB, 549 F.2d 571 (CA 9, 1977) involves the
 special relationship that exists during the course of a voyage between
 the crew and the captain of a vessel, when the normal employer-employee
 relationship is suspended, and acts normally protected by Federal labor
 statutes, such as a strike, can be punishable, under maritime law, as a
 mutiny.  The fact that the meeting was not at an IRS offices does not
 sever the employment bond.  IRS has control over where the examination
 will take place, as is evidenced by the fact that it refused to hold it
 at the office of Mr. Ashley's tax representative.  The fact that Mr.
 Ashley attended the audit, on his own time, is also insufficient to
 sever the employment relationship.  Presumably, he had to apply to IRS
 for leave to attend-- something not required of the ordinary taxpayer.
 
    (3) The examiner was a "representative" of IRS.  IRS argues that no
 representative of the agency conducted the tax audit examination because
 the examiner and Mr. Ashley are in the same bargaining unit;  the
 examiner was not authorized to recommend discipline;  the examiner was
 told not to go beyond audit duties in conducting the examination;  and
 the auditor was not a supervisor, management official, confidential
 employee, or personnel employee.  (RBr 11-12).  As to the last argument,
 Ms. Flynn was certainly a "confidential employee" to the extent that she
 was given free access to confidential information, namely the personal
 tax returns of an IRS employee.  Furthermore, IRS does not disavow any
 action taken by her.  It invested her with authority to audit a fellow
 employee's tax returns, to schedule appointments with him, to question
 him, and to examine documents furnished by him.  IRS required her to
 cooperate with the inspector conducting the Ashley Special Inquiry into
 possible Code of Conduct violations;  and she did so.  Under these
 circumstances, IRS disavowal of agency is not persuasive.
 
    IRS cites several cases, two involving Facility Review Boards of FAA
 looking into system errors (FAA Las Vegas), 4 A/SLMR 569, #429
 
 
 (9/30/74) and FAA Cleveland, 4 A/SLMR 580, #430 (9/30/74) and one
 involving an agency doctor giving a fitness-for-duty examination (U.S.
 Postal Service, 252 NLRB 14, 105 LRRM 1200 (1980).  The FAA cases were
 decided before the Supreme Court decided Weingarten and appear to
 reflect a more restrictive view of the right to union representation
 than that case, and the Statute now require.  The Postal Service case is
 a post-Weingarten one in which the National Labor Relations Board (NLRB)
 did hold a union representative was not entitled to be present at the
 physical examination, as there was no atmosphere of confrontation such
 as Weingarten envisions;  and the doctor was not the supervisor of the
 employee examined.  While Ms. Flynn was not the supervisor of Mr.
 Ashley, she was required to report conduct and statements made by him to
 the IRS inspector conducting the Ashley Special Inquiry;  and a
 confrontational situation did exist between Ms. Flynn and Mr. Ashley,
 leading her to report to the investigator of the Ashley Special Inquiry
 that Mr. Ashley was difficult and uncooperative.
 
    4.  The examination was "in connection with an investigation." IRS
 argues that the examination here was not in connection with an
 "investigation," but merely "to determine tax liability." (RBR 13).  In
 making this particular argument, IRS makes no reference, whatsoever, to
 the Ashley Special Inquiry investigation that was underway at the time
 the audit was being conducted on Mr. Ashley.  Nor does IRS refer to the
 fact that one allegation being investigated was based on information
 given to the inspectors by an examiner of Mr. Ashley's tax returns.  Nor
 does IRS refer to the fact that the inspectors working on the Ashley
 Special Inquiry made continual checks on the status of the Ashley tax
 audit examinations to determine the validity of the allegation.  See RBr
 13-15.
 
    IRS cites the FAA and Postal Service cases referenced above, and also
 Alfred H. Lewis, Inc. v. NLRB, 587 F.2d 403, 99 LRRM 2841 (CA 9, 1978).
 In Lewis, the Ninth Circuit interpreted Weingarten to hold that "the
 right to representation arises when a significant purpose of the
 interview is to obtain facts to support disciplinary action that is
 probable or that is being seriously considered." Id. at 409.  In Lewis,
 union representation was held to be necessary at employee counseling
 sessions or disciplinary sessions involving production quotas.  The
 Eighth Circuit has used similar language in a case involving a chance
 encounter in a parking lot when the employee asked for a union steward
 before the employer had even stated what he wished to discuss.  See AAA
 Equipment Service Co. v. NLRB, 598 F.2d 1142, 101 LRRM 2383 (1979).  In
 view of the continual liaison between the Ashley investigators and
 examiners, it would appear that discipline of Mr. Ashley was being
 "seriously considered," under the Lewis and AAA rationale.
 
    Subsequent to the Lewis and AAA cases, the Fifth Circuit has taken a
 more expansive view of Weingarten and ruled:  "For the Weingarten
 rationale to be effectively achieved, courts must not narrow the scope
 of the doctrine enunciated by the Supreme Court:  It is whenever the
 risk of discipline reasonably inheres in an investigatory interview that
 a union representation is required, and not merely when disciplinary
 action is 'probable' or 'seriously considered.'" See Lennox Industries,
 Inc. v. N.L.R.B., 637 F.2d 340, 344 (1981).  In Lennox, an interview of
 a production-line employee in the office of a second-line supervisor,
 who made no threats, but merely told the employee to improve
 productivity, was held to be an investigation.  The Fifth Circuit
 concluded that:  "Such questioning is investigatory in that it is
 designed to elicit responses which might well result in discipline
 against the employee." Id. at 344.
 
    Here, IRS uses examination of employees at tax audits as a method of
 uncovering misconduct, and requires its examiners to report facts
 concerning misconduct to its Investigation Division.  Therefore, "the
 risk of discipline reasonably inheres" in any tax-audit examination of
 an employee's tax returns, under the Lennox interpretation of Weingarten
 and, ergo, under Section 7114(a) which is fashioned after Weingarten.  I
 believe that this Authority should adopt the Lennox interpretation of
 Weingarten, as being the correct one.
 
    I find distinguishable the Authority case, Internal Revenue Service,
 Detroit, 5 FLRA No. 53 (1981), relied upon by IRS.  In the Detroit case,
 the Authority found no right to union representation at a meeting
 between an employee and his supervisor, where the employee's work was
 being reviewed to see if he had improved, following notification that he
 was doing substandard work and would be removed if he did not improve.
 Apparently no response from the employee was sought.  Here, responses
 were sought from Mr. Ashley regarding documents he had submitted to IRS
 in a matter of official importance, and as to which IRS expected its
 employees to be as pure as Caesar's wife.
 
    The importance of the examiner, as an "investigator" for the
 Inspection Division, is underscored by the fact that the examiner is the
 tax expert and is relied upon by the investigators as such.  Thus, the
 tax audit examination is, in essence, but an extension of the
 investigation.  As such, the value of representation is diminished, if
 the employee is denied it at the very stage where IRS experts are
 deciding whether he or she has filed an improper return, thereby
 subjecting the employee to possible discipline.  The fact that, at a
 later investigation, the employer is entitled to representation, is of
 little consolation.  Compare U.S. Customs Service Region VII, Los
 Angeles, California, 5 FLRA No. 41 (1981), where this Authority rejected
 compartmentalizing investigations and allowing representation at only a
 part.  In the Customs case, the Authority noted that the section of the
 Statute here involved "reflects the holding and the ratio decidendi
 expressed in the Weingarten case, supra, by the Supreme Court in 1975."
 The Supreme Court in Weingarten, supra, specifically rejected the
 argument that employee rights could be protected by later
 representation, and that a decision as to employee culpability or
 disciplinary action can be readily corrected after the decision to
 impose discipline has become final.  The Supreme Court stated, at 88
 LRRM 2693:
 
          At that point, however, it becomes increasingly difficult for
       the employee to vindicate himself, and the value of representation
       is correspondingly diminished.  The employer may then be more
       concerned with justifying his actions than re-examining them.
 
    It is clear, here, that information developed by the examiners
 immediately became part of the investigation file on Mr. Ashley.  To
 deny him union representation at the part of the process from which IRS
 derives evidence regarding the employee's attitude, and the properness
 of his return, is to make a mockery of the statutory right to
 representation.
 
    5.  There was a "reasonable belie(f)" that the February tax audit
 examination might result in disciplinary action against Mr. Ashley.
 
    The preponderance of the objective facts of record refutes IRS's
 argument that Mr. Ashley had no reasonable grounds for believing that
 his February tax audit examination might lead to disciplinary action.
 At the time of the February examination, Mr. Ashley was the subject of a
 Special Inquiry into an allegation, inter alia, that he was impeding IRS
 operations, an allegation which grew out of a prior tax audit
 examination.  Impeding IRS operations is a possible basis for a Code
 Conduct violation.  IRS appears to view, as significant, the fact that
 the last investigator to handle the Ashley Special Inquiry views it as
 being closed.  See RBr 26.  Insofar as this case is concerned, the
 significant fact is that the Ashley Special Inquiry was active at the
 time Mr. Ashley sought union representation.  Investigators handling the
 Ashley special Inquiry were in continual touch with the examiners
 handling Mr. Ashley's tax returns, in the course of investigating the
 allegations of impeding IRS operations.  One supervisor had threatened
 Mr. Ashley with opening up additional areas of Mr. Ashley's 1976 tax
 return, which was to be one subject of the February examination.  An
 examiner had been assigned, for the third time, to examine several of
 his returns and, in addition, was looking into his 1978 return in an
 unusually short time after filing, unless at the request of the
 Investigation Division which investigates employee misconduct.
 
    In addition, it was known to employees that IRS had an ongoing
 program, at the time of February examination, under which it was using
 the tax returns of employees to ferret out instances of employee
 improprieties.  Employees also knew that examiners of their tax returns
 were under orders to report any possible violations of IRS's Code of
 Conduct.  Conduct and statements made at a tax audit examination can
 result in specifications being filed against an employee which, if
 proved, can lead to discipline.  Since the examiners are the IRS experts
 on tax returns, investigators tend to accept their findings on technical
 matters.  IRS expects it employees to attend and cooperate in the
 conduct of their tax audit examinations.
 
    The totality of these objective facts substantiates Mr. Ashley's
 fears that his February tax audit examination might lead to discipline.
 
          B.  Respondent violated Section 7116(a)(1) and (8) of the
       Statute by threatening a Union steward, attempting to exercise the
       right granted by Section 7114(a)(2)(B), with a Code of Conduct
       violation and possible criminal prosecution.
 
    Ms. Kellison, Chief Steward of the Union, did not attend the tax
 audit of Mr. Ashley out of fear of possible criminal prosecution and
 possible loss of her job under IRS's Code of Conduct.  This fear
 undoubtedly continued to chill her participation in the right granted to
 her Union in Section 7114(a)(2)(B) to be represented at tax audit
 examinations of the type here involved.
 
    Since this is a statutory right, IRS's Code of Conduct must yield to
 it.  And surely Congress did not grant this right only to subject the
 exercise of it to possible criminal prosecution, under 28 U.S.C. 205.
 IRS is only able to justify its action in scaring Ms. Kellison with the
 specter of criminal prosecution, by closing its eyes to its use of
 employee tax audit examinations in connection with disciplinary
 proceedings.  (Even IRS does not argue that investigations into employee
 integrity are not "disciplinary . . . proceedings," which 28 U.S.C. 205
 specifically excludes from its mandate.) IRS employees subjected to
 examination of their Federal tax returns have a dual exposure-- to the
 penalties of any taxpayer;  and also to the threat of disciplinary
 action because of their employee status.
 
    The cases cited by IRS to support its position do not deal with any
 situation such as the one here involved.  One case held that Federal
 employees could not represent indigents in criminal proceedings because
 of a basic conflict of interest regarding their duty to their clients
 and the Government prosecuting their clients.  See RBr 28, citing U.S.
 v. Bailey, 498 F.2d 677 (CA DC, 1974).  Here, Congress has passed a
 statute which obliges Federal employees to represent fellow employees in
 actions involving their agency and, when appropriate, take positions
 adverse to those of their agencies.
 
    IRS cites another case where a court rejected an opinion by the
 Attorney General that a Federal employee did not violate 18 U.S.C. 205
 by representing fellow employees in an action under Title VII of the
 Civil Rights Act of 1974.  See RBr 29, citing Bachman v. Pertechuk 437
 F.Supp. 973 (DDC, 1977).  Of course, it is the Attorney General, and not
 a Federal judge who determines whether prosecution will be brought under
 a criminal statute-- which is what is of concern here.  But, in any
 event, the focus of the Bachman case was entirely different, involving a
 question of whether a Federal employee could represent fellow employees
 in a class action, when he was a member of the class himself and might
 have adverse interests to other members of the class.
 
    Another case cited by IRS, U.S. v. Bynoe, 562 F.2d 126 (CA 1, 1977),
 at page 29 of its brief, also involved 18 U.S.C. 205, in a situation
 where a Federal employee represented persons who were not employees of
 the agency at which he was employed, and for which he was paid a fee.
 Clearly, this is not like the situation here involved.
 
    IRS professes to fear that Ms. Kellison would use "inside"
 information in regard to tax matters in representing Mr. Ashley.  See
 page 29 of its brief.  The fact is that Mr. Ashley is himself an
 "insider," and very knowledgeable about the workings of IRS in regard to
 tax matters.  The illogic of IRS's position is illustrated by the fact
 that IRS is allowing Mr. Ashley to represent an outsider (his wife) in
 her tax audit examination.
 
    Finally, IRS relies on a March 19, 1981, letter which it received
 from the Director of the Office of Government Ethics (OGE) following the
 hearing in this case, in February 1981.  See appendix 1 to IRS's brief.
 The letter states that is in response to a March 13 letter from IRS
 raising "the issue under 18 U.S.C. 205 of whether an employee of the
 Internal Service (hereinafter "IRS") may represent another IRS employee
 during a tax audit." The Director concludes that it may not be done.
 
    The Director does not state, in the letter, what facts IRS revealed
 to it about its practices in conducting employee tax audit examinations;
  and IRS did not see fit to attach a copy of its March 13 letter to OGE.
  If IRS stated, as it argues here, that the sole purpose of an employee
 tax audit is to ascertain tax liability, and that the employee is
 treated just like any other taxpayer, then the OGE letter does not
 address the factual situation presented in this case.
 
    Furthermore, the OGE letter is not a "formal advisory opinion" under
 CFR Part 738.303 (46 F.R. 2585) January 19, 1981, as claimed by IRS in
 
 
 footnote 3 of its brief.  See RBr 32.  Such opinions bear a number.  See
 Part 738.305(a)(1).  This one does not.  Copies of such opinions are
 made available for public inspection within 10 working days after
 issuance by OGE.  See Part 738.310(b).  The March 19 letter was not so
 available when I checked at OGE in June.  The March 19 letter appears to
 have no status other than "informational assistance," as explained at 5
 Cfr part 738.312(b)(1).  Accordingly, no reliance is being placed on the
 OGE letter, in this decision.
 
    OGE regulations do provide a means whereby IRS may obtain a
 definitive opinion on the subject, however.  The regulations provide for
 revealing "all material facts necessary for the Director to render a
 complete and correct opinion." See 5 Cfr part 738.304(b)(1).  OGE may
 then seek information from other sources as well.  See Part 738.305(b).
 OGE may provide the Union an opportunity to submit written comments.
 See Part 738.307.  And the Department of Justice is consulted before
 issuance of the opinion.  See Parts 738.305(d) and .308(a)(2).  Until
 such time as IRS has such a formal advisory opinion, stating that a
 Union steward may not represent an employee at a tax audit examination
 of the type here involved, it may not render the gratuitous advice here
 at issue without committing an unfair labor practice.
 
                  Ultimate Findings and Recommended Order
 
    It is found that Respondent has committed the alleged unfair labor
 practices, in violation of Sections 7116(a)(1), by interfering with,
 restraining, and coercing Mr. Ashley and Ms. Kellison in the exercise of
 protected rights and of Section 7116(a)(8), by failing to comply with
 the provisions of Section 7114(a)(2)(B), of the Federal Service
 Labor-Management Relations Statute.
 
    Pursuant to Section 7118(a)(7) of the Statute and Section 2423.29 of
 the Rules and Regulations of the Federal Labor Relations Authority, it
 is therefore, ORDERED, that Internal Revenue Service, Los Angeles
 District, shall:
 
    1.  Cease and desist from:
 
          (a) Refusing or failing to afford an opportunity to the
       National Treasury Employees Union, or any other exclusive
       representative of its employees, to be represented at a tax audit
       examination of James Ashley, or any other bargaining unit
       employee, in connection with a subsequent investigation herein, or
       any other investigation which could reasonably result in
       disciplinary action against him or such employee when such
       representation is requested by the employee.
 
          (b) Interfering with, or discouraging, by implied threat of
       felony prosecution, or otherwise, Chief Steward Sylvia Kellison,
       or any other employee, from exercising the right as a union
       representative to be present at the tax audit examination in
       connection with an investigation, where the employee reasonably
       believes discipline may result and representation has been
       requested.
 
          (c) In any like or related manner interfering with,
       restraining, or coercing its employees in the exercise of their
       rights assured by the Federal Service Labor-Management Relations
       Statute.
 
    2.  Take the following affirmative action in order to effectuate the
 purposes and policies of the Statute:
 
          (a) Afford the National Treasury Employees Union, or any other
       exclusive representative of its employees, the opportunity to be
       fully represented at any tax audit examination of an employee in
       the unit by a representative of the agency in connection with an
       investigation, if the employee reasonably believes that the tax
       audit examination may result in disciplinary action against the
       employee, and the employee requests such representation.
 
          (b) Withdraw and rescind the February 25, 1980, memo from
       Michael Spies to Chief Steward Sylvia Kellison and inform the
       National Treasury Employees Union in writing of such withdrawal
       and rescission.
 
          (c) Expunge from James Ashley's official personnel folder, and
       any other documents or reports, any reference to the February 1980
       tax audit examination of James Ashley.
 
          (d) Refrain from using, in any future disciplinary action, any
       information obtained or derived from the February 1980 tax audit
       examination of James Ashley.
 
          (e) Post at its facilities in the Internal Revenue Service, Los
       Angeles District, copies of the notice marked "Appendix," on forms
       to be furnished by the Federal Labor Relations Authority.  Upon
       receipt of such forms, they shall be signed by the District
       Director, Internal Revenue Service, Los Angeles District and they
       shall be posted and maintained by him for 60 consecutive days
       thereafter in conspicuous places, including all bulletin boards
       and other places where notices to employees in the District are
       customarily posted.  The District Director shall take reasonable
       steps to ensure that such notices are not altered, defaced, or
       covered by any other material.
 
          (f) Pursuant to Section 2423.30 of the Authority's Rules and
       Regulations, notify the Regional Director, Region VIII, Federal
       Labor Relations Authority in writing, within 30 days from the date
       of this Order, as to what steps have been taken to comply
       herewith.
 
                                       ISABELLE R. CAPPELLO
                                       Administrative Law Judge
 
    Dated:  July 7, 1981
    Washington, D.C.
 
 
 
                                 APPENDIX
 
                          NOTICE TO ALL EMPLOYEES
 
  PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
 RELATIONS
 AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
 OF TITLE
 5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
 RELATIONS
 
                   WE HEREBY NOTIFY OUR EMPLOYEES THAT:
 
    WE WILL NOT refuse or fail to afford an opportunity to the National
 Treasury Employees Union, or any other exclusive representative of our
 employees, to be represented at a tax audit examination of James Ashley,
 or any other bargaining unit employee, in connection with a subsequent
 investigation herein, or any other investigation which could reasonably
 result in disciplinary action against him or such employee, when such
 representation is requested by the employee.
 
    WE WILL NOT interfere with, or discourage, by implied or express
 threats of felony prosecution, or otherwise, Chief Steward Sylvia
 Kellison, or any other employee, from exercising the right as a union
 representative to be present at the tax audit examination of James
 Ashley, or any other tax audit examination in connection with an
 investigation, where the employee reasonably believes discipline may
 result, and representation has been requested.
 
    WE WILL afford the National Treasury Employees Union, or any other
 exclusive representative of our employees, the opportunity to be fully
 represented at any tax audit examination of an employee in the unit by a
 representative of the agency in connection with an investigation, if the
 employee reasonably believes that the tax audit examination may result
 in disciplinary action against the employee, and the employee requests
 such representation.
 
    WE WILL expunge from James Ashley's official personnel folder and any
 other documents or reports any reference to the February 1980 tax audit
 examination of James Ashley.
 
    WE WILL refrain from using, in any future disciplinary action against
 James Ashley, any information obtained or derived from the February 1980
 tax audit examination of James Ashley.
 
    WE WILL NOT in any like or related manner interfere with, restrain,
 or coerce any employee in the exercise of any right under the Statute.
                                       (Agency or Activity)
                                       By:  (Signature)
 
    Dated:  . . .
 
    This Notice must remain posted for 60 consecutive days from the date
 of posting and must not be altered, defaced, or covered by any other
 material.
 
    If employees have any questions concerning this Notice or compliance
 with any of its provisions, they may communicate directly with the
 Regional Director of the Federal Labor Relations Authority, Region VIII,
 whose address is 350 South Figueroa Street, 10th Floor, Los Angeles, CA
 90971, and whose telephone number is (213) 688-3805.
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
    /1/ The General Counsel filed untimely exceptions which have not been
 considered.
 
 
    /2/ Our decision herein is limited by the factual circumstances
 presented, i.e., that the audit was but an "extension of the
 investigation" of the employee;  it should not be construed as allowing
 union representation at all tax audits of Internal Revenue Service's
 employees.
 
 
    /3/ The amended Complaint consolidated two other cases against the
 Respondent and the Internal Revenue Service, Washington, D.C., (8-CA-553
 and 8-CA-715).  At the hearing, the Complaints in those two cases were
 severed from this proceeding;  and the Complaint and amended Complaint
 were so amended.
 
 
    /4/ References to the record will be as follows:  "TR" refers to the
 transcript;  "R" Refers to Respondent's exhibits;  "GC" refers to the
 General Counsel's exhibits;  "RBr" refers to the Respondent's brief;
 and "GCBr" refers to the General Counsel's brief.  Multipage exhibits