IRS Mismanages Millions of Dollars Procuring Information Technology

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Posted by Isabelle Morales on Thursday, August 12th, 2021, 4:45 PM PERMALINK

The IRS misreported millions of dollars in the Federal Procurement Data System, potentially paid nearly $1 million more than the total award amount for contracts, and did not charge contracts totaling over $700 million to valid expense categories, according to a new Treasury Inspector General report.  

Once again, the IRS proves incapable of being a good steward of taxpayer dollars. This is especially concerning, as President Biden and congressional Democrats have plans to increase the size and power of the IRS and shovel the agency an additional $80 billion.  

The Office of Information Technology Acquisitions is responsible for managing the procurement of information technology products and services, and “ensuring that the IRS acquires them for the best value, within budget, and in a timely manner.” It is also responsible for making sure the acquisition process is managed efficiently, properly, and openly. “As stewards of taxpayer dollars, the IRS must ensure that it only pays for the procured products or services as authorized and delivered under contract,” the report explains. 

The IRS did not meet these standards.  

As the report notes, the IRS may not have properly maintained sufficient receipt and acceptance documentation to support 6,502 invoice payments: 

“Of the R&A documentation provided for our sample, we determined that the invoices were appropriately verified and supported for 44 payments. For 73 invoice payments, we could not make this determination because the IRS was unable to provide all of the necessary supporting documentation requested. Projecting our sample results to the total population of information technology service contracts, we estimate that the IRS may not have properly maintained sufficient R&A documentation to support 6,502 invoice payments made between October 1, 2018, and June 30, 2020.” 

The IRS misreported $7,469,962 in the Federal Procurement Data System and potentially spent $893,804 more than the total award amount of approximately $139.05 million for 11 information technology service contracts, the report details: 

“Specifically, the IRS overreported $113,498 for 12 modifications, underreported $4,071,286 for three base awards and 12 modifications, and did not report $3,285,178 for two base awards and six modifications…  

… We do not believe that the existing quality review requirements are completely effective due to the multiple locations where conflicting contract award information is sometimes kept in the procurement documentation. We found instances where the approved dollar amounts within a contract and modification do not always match. For example, in one contract, the summary page states that the award amount was $7,244,673.41, but the details in the contract provide that the amount is $6,771,639, a difference of $473,034.41.” 

According to the report, the IRS miscalculated the late payment interest penalties for 168 invoices:  

“Specifically, the IRS underpaid late payment interest penalties of $26,200 for 148 invoices and overpaid late payment interest penalties of $1,664 for 20 invoices.” 

IRS contracts were not charged to valid expense categories, as the report explains: 

“Specifically, 959 contracts totaling $726,067,888 were coded to invalid or no longer active material group code and Federal supply code combinations in the Integrated Procurement System and the Procurement for Public Sector application.” 

If the IRS were a small business, they would be facing major legal repercussions, and would likely end up shutting their doors. Nonetheless, the standards they hold business owners, and even individuals, to are far, far beyond the standards they hold themselves to.  

This kind of irresponsibility is part of a pattern at the IRS. Several audit reports have demonstrated how the agency’s inability to do its job is due to incompetence, not lack of funding:   

  • A Treasury Inspector General for Tax Administration (TIGTA) report on the 2021 Filing Season found that almost 40 percent of printers were not working at tax processing centers in Ogden, Utah and Kansas City, Missouri. However, in many cases the only thing wrong with the printers is that no employee had replaced the ink or emptied the waste cartridge container: “IRS employees stated that the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.”   
      
  • According to a report by the Treasury Inspector General for Tax Administration (TIGTA), special agents at the IRS Criminal Investigation Division (IRS-CI) accidentally fired their weapons more often than they intentionally fired them.   
      
  • The IRS Criminal Investigation Division (IRS-CI) was repeatedly found to leave critical evidence sitting around in break rooms, hallways and stacked outside cubicles, according to a report by the Treasury Inspector General for Tax Administration (TIGTA).   
      
  • The IRS Criminal Investigation Division (IRS-CI) regularly violated taxpayers’ rights and skirted or ignored due process requirements when investigating taxpayers for allegedly violating the $10,000 currency transaction reporting requirements, according to a 2017 report by the Treasury Inspector General for Tax Administration (TIGTA). In addition, less than one in ten investigations uncovered violations of tax law.   
      
  • This year, despite having funding for new hires, the IRS only achieved 37 percent of their hiring goal. They had trouble onboarding new hires as well, as it was “difficult to find working copiers (as noted previously) to be able to prepare training packages.”  
      
  • In 2016, the IRS has lost track of laptops containing sensitive taxpayer data. TIGTA estimates that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.   
      
  • A TIGTA report in 2017 showed that the IRS rehired more than 200 employees who were previously employed by the agency, but fired for previous conduct or performance issues.
      
  • Each year the IRS hangs up on millions of callers -- a practice they refer to as “Courtesy Disconnects.” Currently, if you call the IRS, you have a 1-in-50 chance of reaching a human being.   
      
  • According to the National Taxpayer Advocate’s 2014 Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated: "The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”   
      
  • The agency has repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS's specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002.   
      
  • In 2015, the IRS was spending $1,000 an hour hiring a litigation-only white shoe law firm for an investigation, despite having over 40,000 employees dedicated to enforcement efforts.    
      
  • In 2015, the agency has been caught red-handed wasting taxpayer dollars on Nerf footballs, the world’s largest crossword puzzle, extravagant $100 dollar lunches, and more. 

 

This new report is simply another example of an agency-wide problem with basic competence and due diligence resulting in wasted taxpayer funds and poor execution of core duties. 

Photo Credit: Intellectual

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