IRS Employees Abuse Phone Cards

Employees at the Internal Revenue Service are running up millions of dollars in charges on agency-issued telephone calling cards with little control over their spending.

A new report by the Treasury Department’s Inspector General for Tax Administration found that IRS employees spent $8.4 million between October 2005 and April 2008 on calling card charges. As of February 2008, the IRS had issued approximately 34,000 telephone calling cards to its employees. The TIGTA report found that the IRS had not established effective controls over waste, fraud and abuse. For example, from June 2007 through June 2008, the IRS incurred charges of approximately $59,000 for improper telephone calls made between the U.S. and various foreign countries on a single calling card.

During the period from October 2005 through August 2008, the IRS successfully reviewed telephone calling card charges for potential waste, fraud or abuse only once. This review was performed in June 2008 using the Telecommunications Asset Tool system and was limited to an analysis of telephone calls placed in March 2008. Also, teleconferencing-related telephone calling card charges were not analyzed during the June 2008 review for unusual trends indicative of potential waste or improper use.

TIGTA believes that limiting the TAT system quarterly reviews to an analysis of only one month of telephone call activity is not sufficient to effectively identify potential waste, fraud and abuse relating to the use of telephone calling cards. In addition, corrective actions for the previously reported deficiencies in the TAT system were either not taken or, if taken, were not supported by sufficient and sustained managerial oversight to ensure that they were effective. Finally, the IRS has not validated its telephone calling card inventory since early in fiscal year 2006.

TIGTA recommended that the IRS chief technology officer reinforce the need to review telephone calling card charges quarterly for waste, fraud and abuse and designate a specific executive within the CTO function as responsible for ensuring that the reviews are completed. TIGTA also recommended that a comprehensive assessment of the operational capabilities of the TAT system be performed and that the CTO reinforce the need to conduct inventories of telephone calling cards annually and designate a specific executive within the CTO function as responsible for ensuring the inventories are completed.

In response to the report, IRS officials agreed with TIGTA’s recommendations. The IRS plans to modify the current waste, fraud and abuse runs to allow for a quarterly review of a sampling of the data captured across all three months of that quarter. In addition, the IRS plans to perform a comprehensive assessment of the TAT system, including performing a gap analysis against management information needs.