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IRS Loses $67 Million Set Aside For PPACA Enforcement

Doug Mataconis
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Well, this is embarrassing:

Hoo boy…this isn’t going to go over well.

The IRS has seen its summer from hell extended into autumn, as a report issued today by the Treasury Inspector General for Tax Administration (TIGTA) revealed that the Service cannot account for $67 million that was set aside in a slush fund to help pay for Obamacare.

Obamacare – or more formally, the Patient Protection and Affordable Care Act – adds several new taxes to the Code, as well as the requirement that beginning in 2014, most individuals must carry a minimum amount of health insurance or be required to pay a sum to the IRS upon filing their tax return. Perhaps you’ve read about this so-called “individual insurance mandate,” and if you’re a Republican, perhaps it’s caused you to spend an inordinate amount of your free time over the last three years typing in all caps on various message boards.

From 2010 through 2012, the IRS’s $488 million cost of implementing Obamcare was paid for by the Health Insurance Reform Implementation Fund (HIRIF), a slush fund set up by the Department of Health and Human Services.

TIGTA took it upon itself to conduct a little audit to ensure that the Service had the necessary processes in place to properly account for the Obamacare-directed costs. Things did not go well. In the report was this little nugget:

TIGTA also found that the IRS did not track all costs associated with implementation of the ACA including costs not charged to the HIRIF.  Specifically, the IRS did not account for or attempt to quantify approximately $67 million of indirect ACA costs incurred for Fiscal Years 2010 through 2012. 

What word is appropriate when you lose track of nearly $70 million dollars? Somehow, “whoops” doesn’t seem to cut it.

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9 responses to “IRS Loses $67 Million Set Aside For PPACA Enforcement”

  1. Todd Avatar
    Todd

    From the actual report

    WHAT TIGTA FOUND

    TIGTA identified several opportunities where the IRS could improve the process it uses to account for and report costs associated with the implementation of the ACA. For example, controls over the tracking of direct labor charges associated with the HIRIF could be improved. TIGTA found that costs charged to HIRIF funding related to direct labor were sometimes inaccurate and not always substantiated by reliable supporting documentation.

    TIGTA also found that the IRS did not track all costs associated with implementation of the ACA including costs not charged to the HIRIF. Specifically, the IRS did not account for or attempt to quantify approximately $67 million of indirect ACA costs incurred for Fiscal Years 2010 through 2012. Indirect costs include, for example, providing employees with workspace and information technology support.

    The IRS established a methodology to track ACA costs in its accounting records. However, the IRS accounted for only direct costs, such as labor and contract costs, because it did not believe that indirect costs should be recovered from the HIRIF. The IRS’s use of HIRIF funding only for ACA direct costs is consistent with the HIRIF requirements.

    However, by not also identifying and tracking indirect costs, the IRS lacks complete information regarding the full cost of ACA implementation. This lack of complete information on ACA implementation costs limits the IRS’s ability to accurately report to stakeholders the total resources it applied to the ACA implementation and fully estimate the resources needed in the future for this effort.

    This is an argument about methodology, not “lost” money.

  2. James Pearce Avatar
    James Pearce

    Before her retirement, my Mom was a government accountant who at one time was tasked with trying to reconcile accounts for the Cobell case. I’ve heard enough horror stories about the shoddy accounting practices at Interior to be less than surprised by similar follies at Treasury.

    Although, you’d think the IRS would be better at this than the BIA….

  3. DC Loser Avatar
    DC Loser

    $70 million is a rounding error in the DoD.

  4. Rafer Janders Avatar
    Rafer Janders

    What word is appropriate when you lose track of nearly $70 million dollars? Somehow, “whoops” doesn’t seem to cut it.

    If whoops won’t do for $70 million, I imagine you must have used a really, really bad word when the Bush regime lost $9 billion — with a “b” — in Iraq:

    Audit: U.S. lost track of $9 billion in Iraq funds

    Monday, January 31, 2005 Posted: 0412 GMT (1212 HKT)

    WASHINGTON (CNN) — Nearly $9 billion of money spent on Iraqi reconstruction is unaccounted for because of inefficiencies and bad management, according to a watchdog report published Sunday.

    An inspector general’s report said the U.S.-led administration that ran Iraq until June 2004 is unable to account for the funds.

    http://edition.cnn.com/2005/WORLD/meast/01/30/iraq.audit/

  5. rudderpedals Avatar
    rudderpedals

    Bit quick on the trigger? The last big TIGTA report was a red flag to read all future reports very closely. Good on Todd.

  6. Gromitt Gunn Avatar
    Gromitt Gunn

    Quantifying indirect costs is always a bitch, and I can understand why a governmental agency would take the approach of only tracking those things it feels that it has an express statutory or administrative mandate to track.

    This is one of those stories that the “Waste! Fraud! Abuse!” folks who don’t actually understand accounting will use to work themselves up into a frothy lather. It will play well to the rubes who think a governmental shutdown is a good idea. And it is another great example of why people with professional acumen in one area, such as the law, should be smart enough to know when not to double down in an area where they don’t have professional acumen, such as accounting or finance or economics,but clearly aren’t.

  7. wr Avatar
    wr

    Here’s a hint: If the “article” in question refers repeatedly to a government account set aside for a certain legal purpose as a “slush fund,” you might want to take the rest of its claims with a couple grains of salt…

  8. JWH Avatar
    JWH

    What word is appropriate when you lose track of nearly $70 million dollars? Somehow, “whoops” doesn’t seem to cut it.

    How about “whoopsiedoodles?”

  9. Tyrell Avatar
    Tyrell

    Another reason why these agencies and departments need to undergo an annual audit by an independent firm with results made available to the public.
    It is scary and ridiculous to think that the Infernal Revenue Service will be in charge of “enforcement”. If that isn’t enough to scare people away, nothing is. That will give them another book of blank checks to threaten, seize property and bank accounts, lock people up without a warrant, close businesses, and spy on more non profit groups like churches. I wonder who had the bright idea of putting them in charge?

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