IRS Spent Nearly $5M a Year for Executive Travel

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The Internal Revenue Service spent over $4.8 million in fiscal year 2011 and $4.7 million in fiscal year 2012 for executive travel, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found that a small number of executives had extremely high travel expenses compared to the rest of the executives, and that several executives reside outside the Washington area but frequently travel to the Washington, D.C. area to conduct day-to-day operations.

The report came in the wake of recent congressional hearings examining IRS conference expenses, delays in approving applications for tax-exempt status and other concerns, with TIGTA Inspector General J. Russell George frequently called on to testify on his audit findings. The TIGTA reports and increased congressional scrutiny have led to the departures of a number of high-ranking IRS officials and a pledge from IRS principal deputy commissioner Daniel Werfel, who is now leading the agency, to rein in unnecessary spending at the agency.

TIGTA found that 12 executives—including seven in fiscal 2011 and five in fiscal 2012—were in travel status for over 200 days out of the year. 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.

TIGTA found that about 4 percent (15) of IRS executives accounted for about 26 percent ($1.1 million) of the total spent on executive travel in fiscal year 2011 and approximately 23 percent ($1.2 million) in fiscal year 2012. In addition, in fiscal year 2011, the top 15 executive travelers traveled an average of 202 days and each incurred an average of $81,544 in expenses. In fiscal year 2012, the top 15 traveled an average of 184 days and spent an average of $73,054 each, according to TIGTA’s report.

“Cutting costs is a top priority, and the IRS has put in place a number of steps to reduce expenses involving executive travel,” the IRS said in a statement forwarded to Accounting Today by IRS spokesperson Julianne Fisher Breitbeil. “As discussed in principal deputy commissioner Danny Werfel’s report, “Charting the Path Forward,” 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 previous practice, while allowed under federal rules, is no longer appropriate for this tight fiscal environment.

"The IRS notes the finding by TIGTA that overall executive travel does not appear to be excessive," the IRS added. "Travel by leadership is critical because the IRS is a national operation, with about 90,000 employees located in 620 locations from coast-to-coast. Face-to-face interaction with employees and managers is critical to ensure that sound practices and proper procedures are being followed both for taxpayer service efforts and tax compliance.”

TIGTA recommended, and the IRS agreed, that the IRS Chief Financial Officer should require an analysis that compares the costs and benefits of a long-term travel situation to that of a temporary or permanent change of station, and demonstrates that the more favorable alternative was selected before placing an executive in long-term travel.

“The IRS has over 300 executives, many of whom are required to travel in the course of acting out their responsibilities due to the geographic dispersion of their programs in over 620 posts of duty,” wrote IRS CFO Pamela J. LaRue in response to the report. “IRS executive positions are highly specialized and demand unique skill sets due to the complexity of the underlying tax law and technology infrastructure. It can take years to build the necessary experience in fields such as information technology and tax enforcement and administration—areas critical to successfully running a tax system that collects $2.5 trillion a year. The employees best prepared to handle these demanding and complex jobs may not always live where the position is located and may not be in a position to relocate, necessitating some additional travel.”

While the review was ongoing, the IRS instituted a change in its travel policy in April 2013 that generally restricts executives from being in travel status more than 75 nights in any fiscal year.

In addition, the IRS issued guidance in June 2013 that requires that each executive position have an identified position post of duty and that the official station be identified as either location-specific or location-neutral (the work activities can be performed in virtually any geographical location).

“It is encouraging that in response to TIGTA’s findings, the IRS is taking action to better control executive travel,” said TIGTA chief J. Russell George in a statement.

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