It told its 23,000-strong workforce on Monday it would never use such language to describe any of its employees.

The Canberra Times reported on Monday that the ATO was using the current round of enterprise bargaining talks to simplify the procedures it used to deal with under-performers, in a move unions say would leave public servants at the agency vulnerable to unfair treatment.

The Australian Services Union also alleged that the word “duds” was used by tax officials during a recent meeting in Canberra.

But second commissioner of taxation Geoff Leeper sent a message to employees on Monday, and wrote to Fairfax Media, saying the reports were wrong and that he was “setting the record straight”.

“Our bargaining team – which is working constructively with unions and ATO employee representatives to negotiate a new workforce agreement – has not and would never use that term to describe underperforming staff,” Mr Leeper wrote.

“In fact, our bargaining team repeatedly made it clear during negotiations that the term was inappropriate.

“Our priority is to keep our staff informed with accurate information.

“Inaccurate articles such as today’s 'story' only add to uncertainty in the bargaining context.”

The Tax Office, which managed to take action against just two underperformers in its 23,000-strong workforce in the past year, wants to simplify the processes for dealing with those who cannot or will not do their jobs.

Despite repeatedly refusing to answer questions about the bargaining process, the ATO is also unhappy it was not contacted about Monday’s article.

Mr Leeper called on The Canberra Times "to have the nous to take into account the motivations of some commentators".

He said the ATO continued to "bargain in good faith with unions and employee representatives".

"Good faith bargaining means conducting ourselves in a professional manner, not running a public campaign on our position," Mr Leeper said.