The Internal Revenue Service needs to take more aggressive action to address the fraudulent misuse of individually billed travel cards, according to a new report.
The report came from the Treasury Inspector General for Tax Administration, whose audit report came on the heels of one that provoked a furor earlier this month when TIGTA found that IRS employees in the Exempt Organizations division had used terms like “Tea Party” and “patriot” to filter out applications for tax-exempt status for extra scrutiny.
In the latest report, TIGTA acknowledged that the design and implementation of the controls on the IRS’s travel card program are generally effective at identifying transactions occurring outside of official travel, and IRS delinquency rates are below one percent. However, the current controls do not include any steps designed to detect inappropriate or personal use while employees are on official travel business.
TIGTA’s audit also discovered that the disciplinary actions taken by the IRS in response to confirmed misuse were less severe than those suggested in the IRS penalty guidelines in approximately half of the cases reviewed. In addition, hundreds of cardholders with evidence of significant financial problems, including insufficient funds checks or suspended and charged-off accounts, were not referred for re-evaluation of national security clearances and background checks.
“As its mission includes requiring taxpayers to pay taxes owed on time and voluntarily, the IRS should take further steps to address employees who do not voluntarily pay their travel card bills on time,” said TIGTA Inspector General J. Russell George in a statement. “Identified misuse should be met with appropriate disciplinary action in order to maintain the integrity of the program.”
The IRS defended its travel card program in an email from a spokesperson to Accounting Today, stating, "As the report indicates, the IRS’s travel card program controls are generally effective with delinquency rates below one percent. Though the vast majority of cardholders used their travel cards in an appropriate manner and paid their bills on time, the IRS appreciates TIGTA’s recommendations and we have already implemented a number of them, including monitoring daily ATM limits. We are working to improve our controls and appreciate TIGTA’s support as we implement the recommendations."
TIGTA recommended that the IRS make improvements in several areas, including designing controls to detect personal use of the travel card while employees are on official travel. TIGTA also recommended that the IRS develop a process for referring cardholders with evidence of financial problems to personnel security officials for reevaluation of the employees’ security clearances and suitability for their positions.
In its official response to the report, IRS management agreed with the recommendations and plans to implement several corrective actions to address them, including developing and implementing a process to identify personal use of travel cards while employees are on official travel and developing a policy for reevaluating security clearances and suitability for employment of employees with evidence of significant financial problems associated with travel card misuse. In addition, David A. Grant, chief of agency-wide shared services at the IRS, noted that some of the corrective actions have already been implemented.