Internal Revenue Service has travel policy abusers within its ranks

The Internal Revenue Service must be tougher on employees who abuse government-paid travel cards, a watchdog said on Wednesday, the latest bad news for an agency reeling from a scandal over its scrutiny of Tea Party groups.

The U.S. Treasury Inspector General for Tax Administration said that although delinquency rates are low, the tax agency should beef up the penalties against IRS workers who misuse individually billed travel cards.

“As its 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,” said J. Russell George, the inspector general. “Identified misuse should be met with appropriate disciplinary action.”

Under federal law, misuse of government-issued credit cards to pay for travel includes using the card for personal expenses, purchase from an unauthorized merchant, and failure to pay the bill on time, among other infractions.

It said the IRS identified about 1,000 cardholders who “misused” their travel cards in fiscal years 2010 and 2011, but they didn’t detail the misuse. In all, the IRS travel card program had about 52,000 individual billed accounts with $121 million in charges for fiscal year 2011, the report said.

The agency has about 90,000 employees.

The inspector general’s audit this month detailing a “be on the lookout” list for conservative groups seeking tax-exempt status has fueled a furor in Washington, with congressional hearings and an FBI probe. The fracas led President Barack Obama to force the acting IRS commissioner to resign, with another IRS official retiring early and a third put on administrative leave.

The travel card report said that when the IRS disciplines employees for card misuse, they generally impose less severe penalties than their internal guidelines suggest.

It said the delinquency rate was low at less than 1 percent but current processes “do not include any steps designed to detect inappropriate or personal use while employees are on official travel.”

The report said “hundreds of cardholders” with evidence of significant financial problems, were not referred to re-evaluation for national security clearance or background checks.

The IRS said in its response it was already implementing the recommendations to correct the problems.

(Reporting by Kim Dixon; Editing by Howard Goller and Doina Chiacu)