Austin Plane Crash Cost IRS $38.6 Million

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The single-engine airplane that was flown by an enraged pilot into an Internal Revenue Service building in Austin, Texas, in February 2010 cost the agency $38.6 million, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, detailed the costs of the incident. On Feb. 18, 2010, an irate taxpayer, Andrew Joseph Stack III, set fire to his own house and then piloted a single-engine Piper Cherokee airplane into a building in Austin, Texas, housing IRS offices (see Plane Crashes into IRS Building). The plane crash killed one longtime IRS employee, Vernon Hunter, and injured 13 others. The resulting fire, which took 75 minutes to extinguish, severely damaged the structure of the building and the contents were almost a total loss.

The IRS responded by implementing business resumption plans that included specific procedures for managing such events. The Austin incident displaced approximately 200 IRS personnel who worked in the building.

The IRS spent more than $38.6 million from Feb. 18, 2010, through Sept. 30, 2011, as a result of the Austin incident. The costs the IRS incurred included approximately $6.4 million for immediate local incident response and business resumption activities and approximately $32.2 million to evaluate and enhance employee safety and physical security at IRS facilities nationwide.

The IRS used $31.7 million in a combination of user fees (fees collected by the IRS to help offset the costs of providing services to specific taxpayers) and carryover funds (appropriation funds not yet obligated for an authorized purpose to pay for unplanned expenses), and $6.9 million in fiscal years 2010 and 2011 appropriated funding to pay for costs related to the Austin incident.

The majority of the $6.9 million in appropriated funding came from the IRS’s Operations Support appropriation. The Operations Support account provides funding for functions such as infrastructure and information services.

The IRS advised TIGTA that the costs incurred as a result of the Austin incident caused no direct budgetary impact on the IRS’s ability to provide taxpayer services or enforce tax laws. “However, the loss of an IRS employee and the injuries sustained by 13 others is immeasurable,” said the report.

While the IRS timely issued a special accounting code to track the Austin incident expenditures, not all costs resulting from the incident were captured under this code, TIGTA noted. The miscoding of some costs resulted from the IRS omitting a key individual responsible for coding these costs from the information distribution list.

TIGTA recommended that the Deputy Commissioner for Operations Support ensure that communications relating to the use of special accounting codes to track costs associated with unforeseen events are distributed to all IRS personnel involved in coding incident-related expenses.

In response, IRS management agreed with TIGTA’s recommendation and plans to create a form letter to be kept in the Incident Management Planning Toolkit and distributed at the time of an emergency event that gives instructions for use of the internal code. A designated space will be available where the code can be displayed.

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Tax practice