Don't Mess With Taxes

Perhaps Sen. Ted Cruz should have read Treasury Inspector General for Tax Administration (TIGTA) report #2013-13-115 during his recent faux filibuster.

It doesn't have quite the lilt of Dr. Seuss' "Green Eggs and Ham," which by the way was an interesting choice since the children's book is about a guy who hated something until he actually tried it.

But TIGTA's audit is at least germane to the ostensible reason why the Texas Republican talked for 21 hours. The report is about the Internal Revenue Service's accounting for -- or not -- of costs in implementing Obamacare.

Sen. Ted Cruz (R-Texas) reads "Green Eggs and Ham" as part of a GOP effort to stall Senate action on the House-passed plan to fund the government past Sept. 30, 2013

The official title of the TIGTA audit is Affordable Care Act: Tracking of Health Insurance Reform Implementation Fund Costs Could be Improved.

TIGTA isn't kidding about improvements needed when it comes to tracking money designated for the IRS' role in putting health care reform -- or Obamacare as the Patient Protection and Affordable Care Act (ACA) is popularly known -- into full effect next year.

The IRS oversight agency says the IRS effectively "lost" $67 million of Obamacare implementation money.

Sure, that amount is not quite 14 percent of the overall $488 million that was charged to the Health Insurance Reform Implementation Fund (HIRIF), which is administered by the Department of Health and Human Services.

But as the old saying about Congress and dollars goes, a million here, a million there and soon you're talking real money.

Here, directly from the audit report, is the problem TIGTA found:

[T]he 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.

Let me repeat/paraphrase a portion of TIGTA's findings that is particularly salient. By not having accurate and complete information on how much has been spent so far by the IRS on Obamacare implementation, it will be difficult -- perhaps impossible -- to fully estimate the resources, aka money, needed in the future for the health care reform effort.

I must admit that I am an Obamacare supporter. My position is based on my own personal difficulties in obtaining medical insurance years ago when I left a company and the health coverage I had there. It was a horrific and horrifically expensive ordeal. I'm convinced that the ACA will do better.

But I also know that for Obamacare to work properly and efficiently, the costs associated with it must be tracked. Any first-year accounting student will tell you that accurate spending data is a crucial component in evaluating and determining how to reduce any household's or company's or government's costs.

TIGTA recommended several corrective actions to the IRS, including the development of documentation requirements for direct labor costs attributable to ACA implementation.

It's no surprise that beleaguered IRS management agreed with all the inspector general's suggestions.

You also might find these items of interest:

• Mediator says 'no' to IRS employee bonuses
• Turnaround specialist John A. Koskinen tapped as next IRS commissioner
• Maryland Rep. Van Hollen sues IRS over its application of 501(c)(4) political nonprofit rules