The change to the working day would result in an extra 45 minutes work each week and more than four extra days each year.
“The first offer made to staff included a proposal to increase the length of the working day from seven hours 21 minutes to seven hours 30 minutes,” an ATO spokesperson told SBS News in a statement.
Staff have repeatedly pushed back and rejected three new enterprise agreement proposals since a 2011 agreement expired in June 2014.
Bargaining negotiations have now entered their third year.
Staff members have not had a pay rise since 2013 and they will not receive back pay.
Under the 2011 agreement, standard hours of duty are 8.30am to 12.30pm with a lunch break and then a return to work from 1.30pm to 4.51pm.
It’s one of the shortest working weeks in the government sector.
The ATO maintains that there are many staff members who work outside of these hours and any changes to the standard working day would be ‘productivity improvements’.
“We remain committed to reaching an agreement that provides a good outcome for staff, the ATO, the government and the Australian taxpayer. This includes ensuring that we can meet our service commitments to the community.”
The ATO says the proposal to lengthen the standard working day has been removed from subsequent offers even though it would boost productivity.
It is now looking to modify how productivity is calculated to offset pay increases.
Australia’s public sector union says the idea that ATO staff head home en masse at 4.51pm is "ludicrous”.
"This was never the only issue for our members, though they were understandably upset at a cut to their hourly pay rate via changing working hours at the same time as they were being told to accept a measly pay offer at that stage of 0.8% a year," CPSU national secretary Nadine Flood said in a statement.