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Kazoos and Thomas the Tank Engine wristbands? New IRS spend-a-thon exposed

Jennifer Azara
by Jennifer Azara
April 24, 2015
3 minute read
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Another day, another government agency’s wasteful spending comes to light. Except this time it’s a particularly high-profile one: IRS.

Seems the agency that’s so concerned with what your company does with its money isn’t so great at controlling its own.

That’s according to a letter sent by Senate Finance Committee Chairman Orrin Hatch (R-Oregon) to IRS Commissioner John Koskinen last week. It outlined a series of outlandish and wasteful purchases.

Take a look at what the Taxman’s been buying and how you can keep wasteful spending in check.

Do as I say, not as I do

This may sound familiar to CFOs: IRS has been complaining that its budget has been pinched in recent years and that it’s being forced to do more with less.

But it seems like some smarter spending could make those dollars go a lot further.

Take a look at just some of the purchases highlighted in Senator Hatch’s letter:

  • $4.3 million on market research and opinion (we bet they didn’t need to spend a dime on this to figure out what people think of the IRS)
  • $4 million on office furniture
  • $8,000 on a fitness stair climber
  • thousands of dollars on “give-away items,” such as plush animals, toy footballs, kazoos, bathtub toy boats and Thomas the Tank Engine rubber wristbands for manager meetings.

Now IRS does fight back on the office furniture spend, claiming the purchase was not only necessary, but saved money in the long run because it was part of an office space consolidation that will save taxpayers some $15 million.

But it’s yet to be able to justify those tub toys.

Regardless, every company can take a page from this latest high-profile spending gaffe.

Turn their complaints into opportunities to save

No doubt you’ve heard other departments bemoan the size of their budgets, just like the Taxman.

That’s an opportunity to really take a look and see if there isn’t wasteful spending that can be plucked from the agenda. You’re likely not going to find any Thomas the Tank engine rubber bracelets on the list, but you might find things equally as unnecessary.

Issue them a challenge to see what they can spot that’s a candidate for cutting.

No one needs to fly business class, if it’s keeping them from devoting budget dollars to more strategic initiatives.

And beware the old “You have to spend money to make money” defense. Of course in some cases that holds true, but often it’s simply a windup to make a rather large purchase that may or not pay off.

Steer them in the right direction

To give folks a springboard to spot excess spending, pass along this list of some of the places dollars are most wasted in companies every day:

  • T&E – we referenced it earlier, but this area is full of areas to overspend. Even bumping down a single hotel class can result in serious savings
  • Excess inventory – that’s wasted money languishing on warehouse shelves
  • Office space – most companies have more than they need, and that eats up dollars
  • Utility spending – everything from a usage audit to a reminding folks to power down at the end of the day can help, and
  • Staffing – personnel is likely one of your biggest costs. Remind managers not to let a bad hire linger. Not only are they wasting salary dollars but there are plenty of indirect costs, such as lost productivity.
Jennifer Azara
Jennifer Azara
Jennifer, a member of the CFO Daily News staff, has covered business and finance for more than 22 years. She has written for CFOs, credit and collections professionals and accounts payable practitioners and has spoken at industry conferences on sales and use tax compliance.

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