How Will Werfel Restore Trust at the IRS?

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Daniel Werfel was appointed by President Obama as acting Commissioner at the IRS.  He replaced Steven Miller a couple weeks ago and his honeymoon period lasted only a couple hours.  A lot is expected of Werfel, and Congress (and the American people) are not likely going to give him too much time to get it done.  We need to know what he’s going to do to clean things up at the IRS.

He has been at it for less than three weeks so far, but I think he’s on the right track.  He is focused on holding IRS employees accountable for their missteps.  He has ensured that the managers responsible for the tax exempt investigations fiasco no longer have jobs at the IRS, even if that means encouraging them to resign instead of firing them.  Either way they’re being removed, which is the main thing.  He appears to be committed to bringing all the dirt out into the open as a first step in restoring trust.

The newest example of IRS waste that has come to light is the $4.1 million conference that was held in Anaheim, CA in 2010.  At least two high-level IRS employees reportedly accepted lavish gifts in violation of IRS ethics rules and stayed in $1,500 per night rooms during this conference.  Werfel is taking the necessary steps to expeditiously terminate these individuals too.

I do feel like Werfel “gets it” when it comes to restoring trust.  He appears to be acting decisively and quickly.  He is not dodging questions during hearings.  He has also said that what the IRS needs is not more money; it needs better management, which I think is key.  Although that comment can be taken with a grain of salt because who would ask for more money 3 weeks into the job?  Maybe if we give him a few months he’ll be whining about underfunding too.

The Neglected Government-Issued BlackBerry

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Most people wouldn’t pay for internet service if they didn’t have a computer.  And most people wouldn’t keep the car insurance current on a rusted bucket of bolts that isn’t being driven.  But the IRS isn’t “most people.”  The latest report from the Treasury Inspector General for Tax Administration (TIGTA) reveals waste within the IRS that rivals situations like these.

According to TIGTA, the IRS has been wasting millions of dollars on BlackBerrys and aircards (which supply mobile internet access).  In 2011 the IRS spent about $8.5 million on 35,000 aircards and $2.9 million on 4,400 BlackBerrys.

The audit found that some of these devices were left completely unused for months.  It’s kind of inconvenient to have to carry around two phones all the time; I get that.  I imagine IRS employees discarding their BlackBerrys for their own phones (probably much cooler iPhones) because they are not allowed to use their government issue phone for anything other than business purposes.

The audit also revealed that some smart phones and aircards were given without obtaining proper permission/approval.  Besides managers and field officers, I just don’t see that there are too many IRS employees who would need these devices.  I can understand why a revenue officer may need mobile internet access and a smart phone.  For example, they do need to see when they’re getting a call about a wage garnishment, even if they’re on the road (and even if they’re not going to actually answer).  But most IRS employees are bean counters and the job of a bean counter is fairly sedentary.

IRS Reimbursable Service Agreements

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The IRS is often called upon to assist other branches of the Federal Government.  Even though the IRS is normally willing to “do them a solid,” those agencies that contract with the IRS through reimbursable work agreements are not paying the IRS fairly.  The IRS is not always getting fully reimbursed for services rendered.  But according to the latest TIGTA audit report, nobody deserves more blame for this than the IRS itself.

To give an idea of how common these service agreements are, TIGTA identified 89 such agreements in 2011 alone.  They selected just 6 agreements for audit and found that 50% of them were not reimbursed properly.  These are some of the problems TIGTA found:

  • IRS is not consistently including overhead in the calculation of the reimbursable service costs
  • IRS is not consistently documenting the costs associated with service agreements so they can be independently verified
  • IRS is not consistently involving the CFO Office of Cost Accounting in the calculation of overhead

These are multi-million dollar errors that result in less money to spend on frustrating the tax relief efforts of ordinary taxpayers and their attorneys.  Further proof that the IRS needs to do better with what they’ve got before we can in good conscience allocate to them any more funding.