IRS executives incorrectly classified travel as tax-exempt, report says

February 19, 2014

Thirty percent of Internal Revenue Service senior executives reviewed in a recent audit incorrectly classified their travel reimbursements as non-taxable, according to a report from the agency’s inspector general.

(AFP-Getty Images/ Karen Bleier).
(Karen Bleier/ AFP-Getty Images).

The review from the Treasury Inspector General for Tax Administration looked at a sampling of 31 IRS leaders, or about 10 percent of the agency’s executives, finding that nine from the group had claimed tax-exempt “overnight long-term travel” without qualifying for it. Those employees spent an average of 140.5 days on trips, with an average reimbursement of $51,420, the report said.

The analysis follows a review from 2013 that found the IRS spent $9 million on executive travel in fiscal 2011 and that a small number of the agency’s leaders had racked up extremely high travel expenses compared to colleagues in similar roles.

The IRS said in a statement on Tuesday that it agreed with TIGTA’s audit recommendations and that it is taking new steps to prevent further issues relating to tax classification for travel reimbursements.

“Cutting costs is a top priority, and the IRS has put in place a number of steps to reduce expenses involving executive travel,” the agency said, adding that some executive trips are “critical” because the IRS has 90,000 employees at 620 locations throughout the country.

The report said the IRS had established adequate guidance for defining taxable travel and conducted quarterly assessments to help ensure compliance. But it said the agency could still improve its criteria and should document its procedures for reviewing reimbursements.

Treasury Inspector General Russell George recommended that the IRS modify and document its protocol for periodic reviews and issue an annual reminder to employees about policies related to taxable travel.

Follow Josh Hicks on TwitterFacebook or Google+. Connect by e-mail at  josh.hicks@washpost.comVisit The Federal Eye, The Fed Page and Post Politics for more federal news. E-mail with news tips and other suggestions.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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Josh Hicks · February 19, 2014