Treasury Inspector General for Tax Administration
June 25, 2013
TIGTA - 2013-23
Contact: David Barnes
WASHINGTON – The Internal Revenue Service (IRS) lacks sufficient controls to provide assurance that its employees do not improperly use government-issued purchase cards, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
The IRS, like other Federal agencies, uses credit cards with a purchase limit per transaction of $3,000 to make small purchases directly from vendors.
TIGTA conducted this audit, in part, to determine whether the IRS had implemented recommendations from an August 2011 TIGTA report. The objective of this review was to assess the effectiveness of IRS processes to identify questionable and abusive purchase card transactions. The review covered the two-year period ending September 30, 2011.
During Fiscal Years 2010 and 2011, the IRS had 5,241 purchase card accounts. Purchase cardholders made approximately 234,000 purchases totaling $103.2 million with these cards.
TIGTA’s report identified the following concerns:
“Inadequate procedures to identify, report, and address inappropriate use leave the IRS purchase card program vulnerable to repeated violations of applicable laws and regulations,” said J. Russell George, the Treasury Inspector General for Tax Administration. “While the majority of
IRS cardholders appear to use their purchase cards properly, TIGTA’s audit identified some troubling instances of inappropriate usage,” George added.
TIGTA’s report raised concerns about the purchase of improper decorative and give-away items for managers’ meetings and Combined Federal Campaign fundraising events. The IRS disagreed with TIGTA’s assessment that these items were inappropriate. In addition, TIGTA found one purchase cardholder who made what appeared to be personal purchases. The cardholder has since been charged with embezzlement.
In addition, IRS officials used purchase cards to pay for multiple lunches, dinners, and related alcohol purchases when entertaining foreign officials during an International Executive Conference in 2010. While the expenditure of appropriated funds for this purpose was authorized and TIGTA did not find any Department of the Treasury or IRS criteria to assess the reasonableness of these charges, TIGTA considers the costs related to this entertainment to be high. For example, TIGTA identified a dinner at an approximate cost of $140 per person and lunch at an approximate cost of $100 per person.
Finally, the IRS’s Credit Card Services Branch did not report for consideration of potential disciplinary action all instances of inappropriate purchase card use that it identified.
TIGTA recommended that the IRS:
IRS management agreed with all 11 recommendations and stated that they plan to develop and implement corrective actions.
Read the report.
Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.
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