The Treasury Inspector General for Tax Administration revealed in a recently released audit report that in fiscal years 2010 and 2011 more than 1,000 Internal Revenue Service employees misused government charge cards issued by Citibank.

The report said that during the two years in question agency employees sent Citibank a total of 325 bad checks written on personal accounts that had insufficient funds to cover them, that agency officials with top-secret security clearances had their charge accounts suspended for failure to pay the balances, and that the IRS had a tendency of being “overly lenient” in disciplining those who misued the cards.

Despite the more than 1,000 IRS employees who misused the charge cards, the inspector general’s report found that the IRS did a “generally effective” job in controlling its employees use of the cards.

“We found that the IRS was generally effective in implementing travel card controls,” said the IG report. “However, in some instances controls were not implemented effectively, which increased the risk for misuse and resulted in some travel card misuse going undetected.”

The report, which is dated April 18, 2013, was released on May 29.

IRS employees who misused charge cards included an executive-level official, a criminal investigator, and multiple employees with security clearances.

“We found that 15 cardholders with either secret or top-secret clearances had their travel accounts suspended due to their failure to pay outstanding balances,” said the IG report. “Two other cardholders with secret and top-secret clearances presented NSF [non-sufficient funds] checks to Citibank for payment of their travel card balance.”

These were not the only IRS officials who wrote non-sufficient-fund checks after passing government background checks.

“In addition,” said the inspector general, “94 cardholders serving public trust positions requiring moderate and high-level background checks wrote one or more NSF checks, and 36 had their accounts charged off [written off as a loss by Citibank] due to their failure to pay outstanding balances.

“For example,” said the IG, “a tax compliance officer wrote seven NSF checks in FY 2011 while occupying a position that required a moderate-risk background investigation.”

The inspector general determined that the IRS had detected most, but not all, of the bad checks that IRS employees sent to Citibank. “Our analysis of the NSF check control review for FY 2011 found that the IRS identified 110 (99 percent) of 111 of the NSF checks that we identified during our review,” said the IG report. “However, during the FY 2010 NSF check control review, we found that the IRS did not identify 77 (36 percent) of 214 NSF checks due to errors in extraction. This occurred because the IRS did not select the correct NSF code in the Citibank transaction data.”

Continue reading →