IRS top executives spend $4.8 million tax dollars on travel

Pricey travel creates more IRS trouble By: Rachael Bade July 23, 2013 03:07 PM EDT

A handful of top Internal Revenue Service executives are spending “significant” amounts of taxpayer money traveling to Washington and living out of their suitcases for work, according to a new agency watchdog report. Although the Treasury inspector general for tax administration released a report Tuesday that found the IRS followed federal rules and spent “reasonable” amounts of money on official travel, some IRS executives’ reimbursement checks set off alarm bells. In 2011, for example, one top official received $161,000 from the IRS for travel expenses, which covered airfare, rental cars or taxis, hotel stays and a per diem for food or other necessities like laundry.

 “When you compare that to the average IRS executive [travel expenditure] — which is between $12,000 and $13,000 per year — you can see it’s quite a significant difference,” David Holmgren, TIGTA’s deputy inspector general for inspections and evaluations, said on a conference call with reporters Tuesday.

In total, the IRS spent more than $9 million in fiscal 2011 and 2012 sending top agency officials around the country for work — but that’s actually not that much, TIGTA said.

“Overall, executive travel does not appear to be excessive,” according to the report.

Even before the report was released, the agency’s acting leader, Daniel Werfel, said he was cutting back on employee travel costs. The agency reiterated that in a statement on Tuesday.

“The IRS has put in place new procedures to stop the practice of allowing executives to routinely leave their home office to travel to another city to conduct their principal work,” the IRS said. “The previous practice, while allowed under federal rules, is no longer appropriate for this tight fiscal environment.”

The findings come about a month after the same watchdog office reported that the IRS spent millions of dollars on lavish conferences between 2010 and 2012, prompting outrage on Capitol Hill.

The IRS is consumed in scandal after the agency acknowledged in May it wrongly scrutinized conservative groups applying for tax exemption. The agency came under additional scrutiny Tuesday from congressional Republicans seeking answers about whether the IRS released thousands of Social Security numbers to the public.

TIGTA looked into executive travel after receiving a tip “alleging possible noncompliance with tax ability provisions of travel,” Holmgren said.

Under the law, employees are supposed to pay taxes on certain expenses if they’re traveling in their work positions for more than a year. Over the next few months, the IRS watchdog will review whether IRS employees living out of their suitcases for work are following these rules. A closer look at IRS expense reports revealed that much of the total travel cost was incurred by a small number of executives that had “extremely high travel expenses compared to the rest of the executives and that several executives frequently travel to the Washington, D.C., area to conduct day-to-day operations.” About 4 percent of IRS executives — 15 people — accounted for 26 percent of the total $4.8 million spent on top-level travel expenses in fiscal 2011. That’s $1.2 million. In fiscal 2012, the agency spent $1.1 million on travel for 15 people — about 23 percent of the total $4.7 million in travel bills the agency fronted that year.   Compare that with the expense reports for 60 percent of IRS executives, which totaled about $10,000 or less on travel expenses for those same years. Most of the executives with the priciest travel budgets lived around the country but traveled to Washington to perform their jobs, which are “national headquarters-types of positions where it appears the IRS selected the people they thought were best for the position, but the majority or all of them, in fact, were not here in the D.C. area,” Holmgren said. In other words, most were hired to do Washington jobs but were allowed to commute at the agency’s expense. Some of these people lived on the road for more than half a year, and a few even traveled more days than they worked at the IRS. TIGTA estimates that there are about 250 IRS workdays each year between holidays and weekends, but one executive spent 321 days and 298 nights on the road. Ten of them — five each year — were on the road for more than 180 days. In fiscal 2011, the top 15 executives with the biggest travel expenses were on the road or stayed at hotels for an average of 202 days, each incurring travel expenses of about $81,544 that year. The following year, the top 15 averaged 184 days of travel, about $73,054. “The cost and frequency of travel for these executives indicate that they may not live in the best location to economically accomplish their roles and responsibilities,” the report says, detailing executive travel averaged 40 days in fiscal 2011 and 38 days in fiscal 2012.   Despite the high numbers, the IRS didn’t break any rules. “We found no misconduct within the IRS on executive travel,” Holmgren said. “There’s nothing that says any particular executive or the service itself was doing anything improper.” Still, the IRS could be more efficient, he said. Holmgren told reporters the cost of relocating employees “could be significantly less than long-term travel.” “While the Federal Travel Regulation does not set any total monetary or duration limits on temporary duty travel, the IRS should consider a temporary or permanent change of station as an alternative to long-term temporary duty travel,” the report suggests. TIGTA also recommends that the IRS’s chief financial officer do a cost-benefit analysis of long-term travel situations. Because of the review process, the IRS has already taken steps to address the problem. In April, for example, it began restricting travel to 75 nights a year. “It is encouraging that in response to TIGTA’s findings, the IRS is taking action to better control executive travel,” TIGTA chief J. Russell George said in a statement.