Sen. Chuck Grassley, R-Iowa -- a member of the Senate Finance Committee -- said in a letter to acting IRS Commissioner Daniel Werfel Tuesday the bonuses would violate a White House directive that federal agencies refrain from paying bonuses because of the federal budget deficit, Politico reported.
"The IRS always claims to be short on resources," Grassley said in a statement Wednesday. "But it appears to have $70 million for union bonuses."
Finance Committee Chairman Orrin Hatch of Utah said the bonuses appear to be "a payoff to union workers at a time when we're drowning in a sea of red ink."
IRS spokeswoman Michelle Eldridge said White House Office of Management and Budget guidelines on withholding bonuses do not apply to "legally required" payouts but CBS News reported Eldridge declined to say whether the IRS believes the bonuses in question are contractually obligated.
"In accordance with OMB guidance, the IRS is actively engaged with NTEU on these matters in recognition of our current budgetary constraints," she said.
The National Treasury Employees Union did not respond to CBS News' requests for comment.
The report came as Tea Party organizers staged a rally in Washington Wednesday to protest not just IRS policy but also U.S. immigration policy and the administration's stance on providing arms to rebels in the Syrian civil war.
The "Audit the IRS" rally on the U.S. Capitol's west lawn featured Republican Senate Tea Party Caucus member and possible 2016 GOP presidential hopeful Rand Paul of Kentucky, House Tea Party Caucus Chairwoman Michele Bachmann of Minnesota and conservative talk radio host Glenn Beck, the Tea Party Patriots tax-exempt political group said on its website.
Paul, addressing an audience estimated in the hundreds, called for termination of IRS agents, The Hill reported.
"Anybody want to fire some IRS agents?" he said.
"We're sick and tired of government bullies and we need to send them home."
House Ways and Means Committee Chairman Dave Camp, R-Mich., a member of the Tea Party Caucus, told the crowd congressional Republicans "will get answers" on the IRS issue.
"It will take time but we will get the facts and we will follow them wherever they lead," he said.
Rep. Sander Levin, D-Mich., said he was "disappointed" Camp took part in the rally Wednesday.
"His participation sends the wrong signal that the Ways and Means portion of the investigation is being politicized," Camp told Politico.
At least 18 political groups alleging they were targeted by the IRS when they applied for 501(c)(4) tax-exempt status as "social welfare" organizations were to participate in the rally, Tea Party Patriots said.
The IRS has apologized for the targeting, which an inspector general's report said began in 2010 and ended last year when senior IRS officials learned of it.
The report, released last month, found an IRS unit in Cincinnati used criteria that included conservative labels such as "Tea Party" to target certain groups seeking tax-exempt status for extra questioning.
IRS rules prevent groups engaged in excessive political activity from becoming tax exempt, but the agency has struggled to develop clear guidelines on the matter.
"We are going to tell the world about how the IRS tried to crush the Tea Party movement," the patriots group said in an email to supporters.
"This bill is at its core amnesty," said Rep. Steve King, R-Iowa. "We're here to today ... to take this debate outside the halls of Congress. If it's not going to be good enough inside, we'll take it outside!"
"Thousands of volunteers will rally in the largest demonstration of Tea Party support since 2010," said the email, first reported by The Daily Caller news and opinion website.
The fiscally focused, quasi-libertarian Tea Party movement was at its height in 2009 and 2010, drawing tens of thousands of attendees to rallies, and was a vocal force in mobilizing voters to support Republican candidates in 2010.