The IRS isn’t watching purchase card transactions closely enough, study finds

The Internal Revenue Service is not sufficiently monitoring its employees' purchase card transactions, according to a study released Tuesday by the Treasury Inspector General for Tax Administration.

The audit found that thousands of the more than 174,000 transactions made between Sept. 1, 2007, and March 31, 2009, by 4,200 IRS employees with purchase cards were not in accordance with federally mandated rules. All purchase card transactions during that period totaled $1 million, it said.

The study, dated Aug. 1, said 2,955 of the purchase card transactions appeared to be attempts by employees to circumvent the $3,000 transaction limit on the cards, which are provided by agencies to cover small nontravel expenses and office supplies. Other purchases were made without necessary approval for funding, or through vendors other than those specifically contracted by the IRS.

The IG analyzed Citibank data of employee transactions and discovered numerous instances where the same card was used for multiple purchases from the same vendor on the same day, totaling more than the $3,000 limit. The report cited an example of one IRS employee spending $16,500 in one day with the same vendor to pay for a group of employees to attend a training class.

The IRS had attempted to identify split purchases in October 2009 through a random sampling of employee transactions, but this method was dismissed by the report as an ineffective way to sniff out split purchases.

The inspector general issued several recommendations to IRS officials in the report, all of which the IRS agreed to. Among the recommendations were calls for the IRS to update its purchase card guide, to create guidelines for implementing corrective action against employees who abuse their purchase cards and to begin tracking potential split purchases with Citibank transaction data instead of random samplings.

The report also recommended the agency's credit card services branch expand the scope of its monthly transaction reviews to determine whether preferred vendors are being used.

The IRS is not the only federal agency dealing with recent purchase card abuse. As reported by, the Homeland Security and Energy departments also have had to contend with a lack of purchase card oversight within the past two years.

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