The state Department of Transportation (DOT) improperly paid nearly $321,000 to eight employees working on the Tappan Zee Bridge project for their commute to work in Tarrytown, even after an internal audit identified it as inappropriate, according to an audit released today by State Comptroller Thomas P. DiNapoli.
As a result of the improper travel reimbursement, DOT may have failed to report nearly $227,000 in travel expenses to the proper taxing authorities for the three calendar years 2009-2011. According to IRS guidance, reimbursements for commuting are taxable and are never excludable from income.
“DOT needs to make sure its managers are aware of state travel rules and enforce them,” DiNapoli said. “After an internal audit identified the improper payments, DOT continued to make them, even with multiple opportunities to remedy the situation. DOT needs to do a better job protecting taxpayer dollars and ensuring its employees are not paid for routine commuting costs.”
In August 2007, DOT selected property in Tarrytown for the Tappan Zee Bridge project office. DOT then assigned eight employees to work at the Tarrytown office, but incorrectly designated Poughkeepsie as each employee’s official station. Because the project office is about 55 miles from Poughkeepsie, and more than 35 miles from each employee’s home and official station, DOT inappropriately allowed these employees to claim car mileage and toll costs for their commute from their homes to Tarrytown and back each day.
In March 2011, a DOT internal audit report questioned the official station designation of the eight employees. The audit further concluded they should not have been in travel status when they traveled from their homes to their usual place of work in Tarrytown. For the period from September 2007 through May 2010, the internal audit identified improper travel reimbursements totaling $219,050 that were made to the eight employees.
An analysis of time and travel data by DiNapoli’s auditors found that seven Tappan Zee Bridge project employees continued to work at the Tarrytown office through September 2011, but DOT failed to act on the internal audit’s findings and continued to designate Poughkeepsie as the employees’ official station and improperly paid them for their regular commuting costs.
DiNapoli’s auditors identified $101,706 in personal car mileage, tolls and other travel expenses from June 2010 through September 2011. In total, DOT reimbursed Tappan Zee Bridge personnel $320,756 for commuting expenses incurred from September 2007 through September 2011. The payments included $299,602 for personal car mileage and $21,154 for tolls and other expenses.
DOT officials acknowledged the official station designation of Poughkeepsie was incorrect and attributed the problem to administrative error. According to DOT officials, pertinent managers were unaware of state travel guidance and the agency lacked sufficient formal policy for the designation of employees’ official station.
According to the Internal Revenue Service (IRS), reimbursements for commuting are taxable and are never excludable from income. During calendar years 2009 through 2011, the eight employees received nearly $226,994 in reimbursements for commuting expenses. About $211,875 of this, or 93 percent, was for personal car mileage; the remaining $15,119 was for tolls and other expenses. DOT, however, did not report these expenses as taxable payments to the employees.
DiNapoli’s auditors recommended DOT:
- Ensure that each employee’s official station is established in compliance with state travel rules and is in the best interest of the state; and
- Take necessary corrective action related to the potential taxable status of the eight Tappan Zee Bridge project employees’ commuting expenses.
DOT officials agreed with the audit’s recommendations and have expressed their commitment to resolving the issues raised. DOT has also been working with the Comptroller’s Office to properly determine and address any tax implications of the travel payments.
For a copy of the report visit: http://www.osc.state.ny.us/audits/allaudits/093014/12s93.pdf