IRS workers' compensation program vulnerable to fraud
- By FederalSoup Staff
- Jun 19, 2018
Over a four-year period, the Internal Revenue Service paid an average of about $40 million per year for workers’ compensation claims, and it needs to do a better job at ensuring that fraudulent cases aren’t making it through the system, a new report finds.
“Given the substantial cost of this program, it is important for the IRS to accurately initiate and consistently monitor claims to ensure that taxpayer funds are spent properly,” a June 15 Treasury Inspector General for Tax Administration, or TIGTA, report states.
According to the report, the Federal Employees’ Compensation Act program, which provides workers’ compensation (compensation and medical benefits) to federal employees is vulnerable to fraud because program benefits equal up to 75 percent of the injured worker’s pre-disability wage income tax free.
TIGTA found that, as of July 2016, 892 (62 percent) of 1,433 IRS employees in the program had received benefits for six or more years, including more than 100 employees who had been receiving workers’ compensation for more than 30 years and almost 50 employees receiving benefits for more than 40 years.
It estimates that about 133 (9 percent) of a sample of claims from that period were not initiated properly, such as the employee failed to provide required documents or a physician did not indicate that workers’ injuries were a result or IRS work activities.
TIGTA found one sampled case with insufficient documentation that had total compensation costs of more than $1 million.
The report made three recommendations: that the IRS human capital officer: 1) train IRS specialists to ensure that all elements are met when initiating workers’ compensation claims, 2) develop procedures to remind specialists when it is time to obtain updated documentation to monitor active claims, and 3) conduct quality reviews of active claims to determine whether updated documentation is being obtained and reviewed as required.
Read the full report here.