Watchdog: IRS execs skirted travel taxes

Several IRS executives should have paid taxes on expenses they racked up for out-of-town travel for work, according to a new inspector general report.


Treasury’s inspector general for tax administration found that the expenses for nine IRS executives — out of 31 whose travel was examined — were wrongly deemed to be nontaxable, on average reimbursements of $51,420.

Those executives traveled an average of 140.5 days combined in fiscal 2011 and 2012, the two years examined by the inspector general. The IRS had at least 350 executives in each of those years, meaning the inspector general report covers just a fraction of the agency’s top officials.

In general, IRS executives are expected to pay taxes on their travel expenses when he or she work at a single out-of-town location for more than a year, or when out-of-town duties are so indefinite that one office becomes that person's central work location.

The tax administration inspector general looked into the matter after finding last year that IRS executives spent $9.5 million in travel expenses in 2011 and 2012, with several claiming more than $100,000 a year. The inspector general released that report just weeks after it outlined the extra scrutiny the agency gave to Tea Party groups. 

In the new report, the inspector general said that the IRS had policies in place to inform executives about when travel reimbursements can be taxed. The IRS now reviews every quarter whether an official’s travel could be taxable, a process started early in 2012.

But the inspector general added that those procedures could be improved, and that the IRS’s chief financial officer should change and document how it reviews executive travel.

“Without an effective periodic assessment and management review of the executives’ travel activities, the IRS cannot ensure that its executives’ travel reimbursements are properly classified,” Russell George, the inspector general for tax administration, said in a statement. 

According to the report, the IRS said it agreed with that recommendation.