The IRS’s credit card fraud

Mia Raths | Communications Associate, Americans for Tax Reform

With the implementation of Obamacare underway, the non-partisan Government Accountability Office has calculated that the IRS has the responsibility of executing 47 new provisions, including 20 tax increases. Given the number of cases in which the IRS has targeted right-leaning groups for special scrutiny, that should already be cause for concern. But should the American people really trust the IRS not to abuse these powers, considering the way it spends its own money?

The IRS spent almost “$4,000 in improper decorative and give-away items,” such as toy bathtub boats, popcorn machine rentals, kazoos, the “world’s largest crossword puzzle,” and Thomas the Tank Engine rubber wristbands, which is the most comical of the profligacies in a recent report conducted by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA also identified many extravagant entertainment expenses, including: “more than 28 bottles of wine for 41 people” and lunches that “cost the IRS $100 per person, five times the Federal Government per diem rate in Washington.” It may seem unbelievable that the IRS purchased Nerf footballs that were never opened and remain in some filing cabinet to collect dust, but even more shocking is the fact that this purchase was deemed “appropriate” spending! The review by TIGTA explains what the underlying issues are that allow for such “wasteful” spending.

TIGTA reviewed two reports, for fiscal years 2010 and 2011, conducted by an outfit called Credit Card Services (CCS), which is the branch of the IRS that is responsible for the management and oversight of the purchase card program. The TIGTA report found that the CCS did not provide proper and accurate oversight of employees who abused their purchase cards, leading to numerous “inappropriate” and “improper purchase card transactions.”

One issue that TIGTA uncovered was that the credit cards which allowed IRS employees to charge purchases were not cancelled before that employee left the IRS.  In the two years that were reviewed, TIGTA found that a shocking 98 percent of cards remained activated after the individual was no longer employed by the IRS.  Four cards remained activated for more than three months after the departure of the account owner. The IRS administration directs employees to take no action of their own to close their purchase card accounts, as they claim it will be done automatically — clearly they are mistaken.

Another issue is that IRS agents are able to bypass the $3,000 purchase limit very easily. When making a purchase of a larger amount, cardholders can split their purchases, creating several transactions, with each one below the purchase limit. Splitting purchases violates federal regulations, yet the CCS failed to identify 244 potential split purchases over the two years which TIGTA reviewed. Of these, the IRS determined that 136 could not be defined as split purchases due to the vagueness of the definition, but dozens of indisputable cases occurred nonetheless.

To make matters worse, more than half of the instances identified were never reported to the labor relations office that deals with employee conduct. During fiscal years 2010 and 2011, the CCS office “identified more than 249 purchase card transactions,” of which 149 were never reported.  Of the cases that were, 93 percent resulted in “disciplinary actions by IRS managers that were less severe than those suggested in the IRS penalty guidelines.” Why review IRS employees’ credit card purchases if no action is taken to stop the ones abusing them? Again, the CCS blamed this failure on the lack of written standards.

It is a very twisted system — the IRS complains about not having solid guidelines, and then when guidelines do exist, they aren’t followed! The IRS has no issue holding American taxpayers accountable to a tax code that fills up more pages than the Bible, yet freely blame the lack of proper guidelines for their embarrassing “mistakes”.

If it can get even more ridiculous, the GAO found improper purchases made years earlier by the IRS. The agency is either unwilling or unable to clean up their act since things clearly have not changed.

Health care is not something to be played with, and to allow the IRS any control over Obamacare is a mind-numbingly dumb idea, given their own record managing money.

Tags : obamacare
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