The Corner

Report: IRS Executives Incorrectly Classified Travel Reimbursements as Tax-Exempt

Thirty percent of Internal Revenue Service executives reviewed in a recent audit improperly classified their travel reimbursements as non-taxable, according to a report from the agency’s inspector general made public on Tuesday. 

The findings came after the Treasury Inspector General for Tax Administration analyzed the travel reimbursements of 31 IRS executives, selected at random — that’s approximately 10 percent of the total number of agency executives — and found that nine claimed tax exemption for their long-term travel reimbursements without qualifying for it. That resulted in the executives’ “potentially underreporting income, Federal, State, Medicare, and Federal Insurance Contributions Act taxes,” the report said. The reimbursements claimed by the employees averaged $51,420. 

The latest findings come on the heels of a report issued last July, which concluded that a handful of the agency’s executives accumulated “extremely high travel expenses.” In 2011 and 2012, the report indicated, twelve IRS executives spent over 200 days traveling each year; in some cases, the number of travel days they logged exceeded the number of business days in the year because the employees remained on “travel status” throughout weekends and holidays.

In response to the agency’s most recent findings, the inspector general recommended that the IRS’s chief financial officer conduct routine reviews to determine whether employees are accurately reporting the taxability of their travel expenses and remind employees of the agency’s policies on an annual basis. IRS management, according to the report, agreed with the inspector general’s recommendations. 


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