In findings that could serve as a caution for other agencies that also pay public transit subsidies to their employees, an IG audit has found that while the IRS has substantial controls over its program, there still is potential for misuse of the benefits.
The transit subsidy program is a government-wide authority for agencies to pay employees up to $255 a month tax-free–typically in the form of transit passes but sometimes in cash–to cover the cost of using public transportation in their commuting. At the IRS, more than 18,000 employees participated in 2016, receiving more than $17.5 million in benefits, a report said.
It said the agency has controls to assure that payments were limited to that maximum and that purchases were made only at transportation-related vendors. However, the program “remained vulnerable to misuse by participants,” it said, estimating that more than 6,400 of them used a total of almost $1.6 million more than was necessary for their commuting, or while in nonpay status, on leave or while teleworking counter to the agency’s policies. In addition, some individuals continued to use the benefits after they separated or transferred out of the agency, it said.
Further, some participants the IRS identified as misusing the program were not disciplined, and those who were disciplined were not removed from the program and did not repay the benefits they misused, it said.
The agency agreed with the IG’s recommendations, saying it will update its procedures for conducting audits of participants, immediately suspend funds when participants separate or transfer to another agency, and will assure that substantiated cases of misuse are communicated to the program office.
