You Paid for an IRS Official to Live in a $1 Million Home for a Year
Policy + Politics

You Paid for an IRS Official to Live in a $1 Million Home for a Year

REUTERS/Jonathan Ernst

Last year, the IRS’s Chief Technology Officer who resides in Texas routinely commuted to Washington to confer on the Affordable Care Act enforcement, foreign account compliance and other matters. In total, Terry Milholland spent 30 weeks in the nation’s capital and stayed much of the time at the Grand Hyatt downtown or other high-end hotels.

In all, he spent $50,907 on hotels, meals, cabs, dry cleaning and other incidentals. Technically, Milholland was operating within the Internal Revenue Service’s rules for per diem reimbursement for travel, as the IRS has stressed. However, a new Senate committee report concludes that IRS officials are wasting hundreds of thousands of dollars on travel without attempting to reduce costs.

Related: IRS Now Pegs Tax Cheating by Americans at $458 Billion Annually

In fiscal 2015 alone, Milholland and 26 other IRS employees traveled 125 business days or more at a total cost of over $1.4 million, according to the report of the Senate Finance Committee. While federal guidelines suggest that government workers exercise prudence in selecting accommodations and transportation, the average cost of each trip was about $52,800. And in many cases, the officials stayed at luxury hotels and apartments and used pricey car services.

The Finance Committee study, first reported by Fox News, found that more than half of the long-distance travel time was spent in Washington by IRS officials who were based in other cities. The report cited the example of five officials living in Washington for months at a time in expensive hotels who didn’t attempt to find cheaper, alternative housing.

Rather than using the authority it has to pressure employees to cut travel costs, the IRS typically allows them to spend up to $7,099 a month on lodging alone.

“The Committee sees virtually no circumstances where an employee living in Washington on a month by month basis would ever need to spend $7,099 per month on rent,” the report states. “However, the lodging selected by these employees often appeared to be excessive and inappropriate.” 

The committee complained that while the IRS has a number of employees who travel more than half of the fiscal year, the tax collection agency has not routinely taken steps allowable to reduce its travel-relate per diem expenditure. Moreover, despite some realignment of its executive posts, the IRS continues to allow officials to live in cities far removed from where their primary job duties reside.

Related: Budget Cuts and Mismanagement Boost IRS Tax Cheats

Milholland, the well-traveled Chief Technical Officer, left the agency last summer after eight years. The former top technical officer at VISA International, Electronic Data Systems, and Boeing was recruited to help modernize and streamline the IRS’s IT operations.

According to the Senate Finance Committee report, he would drive his vehicle to a nearby airport in Dallas, park it there in a terminal, and then fly to Washington for the week. He would then typically depart Washington on Thursday afternoon of the same week to return to Texas, where he would pick up his car and drive home.

Milholland’s annual Dallas Airport parking fees were $2,538. He also collected $1,146 for mileage on his privately owned vehicle and tolls and another $1,572 in taxi fares while away from home.

One employee rented a $1.07 million, four-bedroom townhouse in suburban Arlington, Va., for a year, at a cost to taxpayers of $4,950 a month. Another worker stayed in a $4,605-a-month downtown Chicago hotel with a view of the river.

Related: Criminals Accessed IRS Taxpayer Info 720,000 Times in 2015

“If the IRS would follow its own internal guidance without exception and institute best practices from other agencies, it could see significant cost savings among all employees who travel for significant amounts of time during the year, not just those traveling for more than half of the year,” the report states.

In a letter to IRS Commissioner John Koskinen, Senate Finance Committee Chair Orrin Hatch urged the IRS to “better utilize its own internal policies and procedures, without exception or administrative maneuvering.”