Internal Revenue Service employees with government-paid credit cards made more than 174,000 purchases totaling more than $80 million over a period of a year and a half.

A new government report by the Treasury Inspector General for Tax Administration found that the IRS needs to improve its controls over government purchase cards to make sure that all such uses are proper.

The report studied the period between Sept. 1, 2007 and March 31, 2009, and found numerous instances in which the IRS’s 4,270 cardholders made purchases without necessary approvals and verification of funding.

The IRS provides credit cards to some of its employees to make purchases of under $3,000. The purchases are supposed to be used for low-cost items such as office supplies and training. The Federal Acquisition Regulation prohibits splitting high-cost procurements into multiple credit card purchases and requires, whenever possible, the use of existing contracts. Cardholders are also required to seek approval for purchases and verify that funding is available prior to using the credit cards.

However, the TIGTA inspectors found 2,955 purchases that were potentially split into two or more transactions to circumvent micro-purchase limits; and purchases made from improper sources.

“The IRS must develop the controls necessary to ensure that improper and abusive purchases do not occur, that any such transactions are promptly detected, and that appropriate corrective actions are taken,” said TIGTA Inspector General J. Russell George in a statement.

TIGTA made a series of recommendations to the IRS, including reinforcing the fact to cardholders that split-purchase transactions will not be tolerated. The report also recommended that the IRS should also improve its oversight of purchases, and develop and implement guidance for determining an appropriate span of control for approving officials.

TIGTA noted that until management controls are effectively strengthened, implemented, and enforced, the IRS will continue to be at risk for noncompliance with applicable laws and regulations, and the IRS cannot ensure that improper and abusive purchases do not occur. In addition, if such purchases do occur, the IRS cannot ensure the transactions are promptly detected and that appropriate corrective action is taken.

IRS officials agreed with TIGTA’s recommendations, stating that they have changed their reviews of split-purchase transactions and expanded oversight reviews to include the use of contract vendors and preferred sources. IRS officials plan to provide guidance on oversight and enforcement responsibilities; develop examples and scenarios that constitute a split purchase; review the potential split purchases TIGTA identified; and review and develop a policy concerning the current span of control on purchase cards.

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