WASHINGTON - The Internal Revenue Service (IRS) did not always comply with strict

purchasing requirements when spending funds it received under the American Recovery and

Reinvestment Act of 2009 (Recovery Act), according to a new report publicly released today by

the Treasury Inspector General for Tax Administration (TIGTA).

The IRS received $203 million in Recovery Act funds and, at the time of TIGTA's audit,

planned to use approximately $85 million for Recovery-Act funded procurements. As of

February 18, 2011, it had awarded approximately $85 million in procurements for

reprogramming IRS computer systems, updating related tax forms and publications, and

providing customer service to assist taxpayers.

However, TIGTA found three IRS procurements totaling approximately $58,000 that were not

tracked or timely reported to the Office of Management and Budget and were awarded without

meeting Recovery-Act procurement requirements.

TIGTA determined that the IRS Office of Procurement Policy did not take immediate corrective

action once these unreported procurements were discovered. Additionally, TIGTA found that

only one of the 19 additional Recovery Act procurements reviewed met all planning and award

requirements.

"The Recovery Act required unprecedented levels of transparency, oversight, and

accountability," said J. Russell George, Treasury Inspector General for Tax Administration. "If

the IRS does not consistently meet these requirements for its procurements, taxpayers will not

always know how Recovery Act funds were used by the IRS."

TIGTA recommended that the IRS evaluate the management control weaknesses and

noncompliance issues identified during the audit and document any lessons learned which could

be used as a reference for future legislation requiring special tracking and reporting requirements

for procurements.

IRS officials agreed with TIGTA's recommendations and stated that the Office of Procurement

plans to work with its operating divisions to document any lessons learned, including an

assessment on Recovery Act reporting and a discussion on ways to improve the process. Going

forward, the Office of Procurement also plans to ensure that all procurement managers are

briefed on new legislation, including any special requirements for planning, awarding, tracking,

and reporting procurements.