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IRS 'needs improvement' on Obamacare bookkeeping

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The U.S. Internal Revenue Service needs to do a better job tracking its spending related to President Barack Obama's new health-care law, an IRS watchdog says.

With Congress debating whether to take funding away from the Affordable Care Act, or Obamacare, the Treasury Inspector General for Tax Administration said in an audit that the IRS failed to account for some of the agency's spending to implement the law.

Federal agencies must report their spending so there is an accurate measure of the full cost of government programs.

The IRS did not report $67 million in costs the agency incurred for employees who were working on the law for fiscal 2010 through 2012, the report said.

(Read more:8 things to know about Obamacare)

The money was part of $488 million the IRS tapped from a special fund the agency was using to implement Obamacare.

"Funding related to direct labor were sometimes inaccurate and not always substantiated by reliable supporting documentation," TIGTA said.

TIGTA's report recommended the IRS improve its record-keeping. IRS said in response that it agreed with TIGTA's recommendations and had already put fixes in place.

"The IRS ensured that ACA funds were accurately tracked," adding that it spent appropriately the money it used from the special fund, the agency said in a statement.

(Read more: Obamacare fire sale: Stripped-down plans dirt cheap)

Enacted in March 2010, the healthcare law made many tax code changes, including requiring the IRS to verify that most people have health insurance in 2014. It must also disperse new tax credits meant to help people meet their insurance costs.

The IRS expects to spend $360 million on Obamacare implementation in fiscal 2013, which ends September 30, TIGTA said.

Unless Congress gives the IRS more money for the healthcare law, the agency will have to dip into its operating budget, already cut by Congress, TIGTA said.

(Read more: Premiums unveiled for health overhaul plans)

Republicans in the House of Representatives have proposed cutting the IRS budget by 24 percent in fiscal 2014 and have voted repeatedly to defund Obamacare.

The Obama administration's fiscal 2014 budget requested $440 million for the IRS to administer the law's tax provisions.

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