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More trouble at IRS as audit finds misuse of credit cards

By   /   May 29, 2013  /   News  /   7 Comments

AP photo

IN THE HOT SEAT: Ousted IRS Chief Steve Miller, center, former IRS Commissioner Douglas Shulman, right, and J. Russell George, Treasury Inspector General for Tax Administration, testify May 21 on during a hearing at the Senate Finance Committee on the Internal Revenue Service (IRS) practice of targeting applicants for tax-exempt status based on political leanings.


By M.D. Kittle | Wisconsin Reporter

Another week, another controversy for the Internal Revenue Service. This time, the problem for the tax collectors involves misuse of agency travel cards.

A new report by the Treasury Inspector General for Tax Administration, or TIGTA, the IRS’s own auditor, points to a “lack of aggressive steps” to address misuse of the credit cards IRS employees use when traveling.

The report follows a scathing audit by TIGTA that found the IRS tax-exempt division targeted conservative groups and delayed their tax documents.

A TIGTA official tells Watchdog.org the release of the latest report is merely coincidental and routine and had nothing to do with the political accusations surrounding the tax agency.

The audit, released Wednesday, found that in fiscal year 2011 the IRS travel card program had approximately 52,000 individually billed government-issued travel card accounts and $121 million in related charges.

At the end of 2012, the IRS workforce totaled 97,717 employees, meaning there effectively is at least one travel card for every two IRS employees.

“The lack of aggressive steps to address travel card misuse and reevaluate the security clearance and suitability for employment of employees with indications of financial problems present a risk to taxpayers, especially when these IRS employees have access to sensitive taxpayer information,” the audit states.

While the IRS’ travel card program controls are “generally effective” and delinquency rates are below 1 percent, the audit found the disciplinary actions imposed by IRS management for confirmed card misuse are sometimes “overly lenient.”

Travel card controls intended to identify transactions occurring outside of official travel are generally effective, according to the report.

“However, current controls do not include any steps designed to detect inappropriate or personal use while employees are on official travel,” the TIGTA audit states.

Similar questions about IRS management arose in the scandal involving the targeting of political groups. In one case, TIGTA found management attempted to deal with the “inappropriate” processes for evaluating conservative groups. The targeting reportedly declined and then picked up again in the months following the changes.

“This audit was initiated to assess the IRS’s controls intended to identify potentially fraudulent or abusive use of individually billed travel cards. With the millions of dollars spent annually by cardholders on official travel, it is essential that the IRS has effective controls in place to prevent and detect misuse. In addition, it is also imperative that identified misuse is responded to with appropriate disciplinary action in order to maintain the integrity of the program,” the latest audit states.

While the “vast majority” of cardholders used their travel cards in an appropriate manner and paid their bills on time, the IRS identified more than 1,000 cardholders who misused their travel cards during fiscal years 2010 and 2011, according to the audit.

“The disciplinary actions taken by IRS management in response to the confirmed misuse were less severe than those suggested in the IRS penalty guidelines in approximately half of the 30 cases TIGTA reviewed,” the report notes.

And hundreds of cardholders with “evidence of significant financial problems, including non-sufficient funds checks or suspended and charged-off accounts, were not referred for reevaluation of national security clearances and background checks.” The majority of those cardholders remained employed by the IRS as of September 2012.

Anyone who has ever been audited or felt the threat of an audit by the IRS may find this point in TIGTA’s IRS audit particularly interesting:

“Because the IRS’s 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,” the report states.

TIGTA recommends the IRS improve controls in several areas, including designing controls to detect personal use of the travel card while employees are on official travel.  TIGTA also recommends the IRS develops 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.

The IRS agreed with the recommendations and says it plans to implement several corrective actions, according to the audit.

Contact M.D. Kittle at [email protected]


M.D. Kittle is bureau chief of Wisconsin Watchdog and First Amendment Reporter for Watchdog.org. Kittle is a 25-year veteran of print, broadcast and online media. He is the recipient of several awards for journalism excellence from The Associated Press, Inland Press, the Wisconsin Broadcasters Association, and others. He is also a member of Investigative Reporters & Editors. Kittle's extensive series on Wisconsin's unconstitutional John Doe investigations was the basis of a 2014 documentary on Glenn Beck's TheBlaze. His work has been featured in Town Hall, Fox News, NewsMax, and other national publications, and his reporting has been cited by news outlets nationwide. Kittle is a fill-in talk show host on the Jay Weber Show and the Vicki McKenna Show in Milwaukee and Madison.

  • Jack Lohman

    I’m guessing that credit card abuse in government is common, though I’m surprised that this is just now coming to light. Of course it should be stopped, with perhaps such invalid charges being taxed as income. But more so it reflects an overall attitude about OPM (other people’s money). We need GOOD oversight, and that we don’t reflects poorly on our politicians.

  • Jane Wegener

    Government is out of control! The IRS is not the only agency that is stealing taxpayer money for personal use. Americans need to stand up and take back our country. Failure to do this will mean that America that is WE THE PEOPLE will end up EXACTLY where the big spending politicians will take us. BANKRUPTCY is NOT AN OPTION. We must stop the theft and waste of taxpayer dollars! Arrogance and ignorance does not equal leadership.

  • Franseenit

    “….surprised that this is just now coming to light.” Because this reckless sense of entitlement is common in government and the male business world. They think it is ‘cute’ that they are ‘pulling one over on someone’ – I have recently been ‘dating’ a corporate guy who brags endlessly about the abuse of expense reports – believe me the IRS is ‘a small pebble in a quarry pit’. It has just been brought up because the desperate GOP is dredging 24/7 to discredit the Obama administration. You can bet this has been the practice for decades. Just hoping to use it to give Obama a ‘black eye’ I think the public is getting wise to these shenanigans and aren’t going to fall for one more finger pointing episode.

  • Larsele

    For heavens sake, don’t even think of marrying that cheat! LOL

  • Jack Lohman

    And don’t forget, these “expense reports” for the most part are tax deductible (as are high CEO salaries and bonuses).

  • Franseenit

    Not to worry… he’s history. But thanks for caring LOL. As a woman business owner I could see a very distinct difference in the ethics standards within each. No offense to anyone but it was obvious to me. The lengths that men would stretch the rules was often disturbing – I’m talking about competing for government contracts. In the end my work was always completed with no call backs – unlike most of the male owned/managed businesses. Seemed there were always problems that cost the taxpayer more money.

  • Orville Wilmot

    i guess that they figure if oibama’s can use it none stop that they can too