As of July 2012, 7 percent of IRS vendors had $589 million combined in federal tax debt. However, these vendors received around $571 million from The IRS between October 2010 and June 2012, the Treasury Inspector General for Tax Administration found, for various goods and services.
The IRS has been called out for these bad practices before, yet has failed to correct the issues.
“When the IRS conducts business with vendors that do not comply with Federal tax laws, it conveys a contradictory message in relation to its mission to ensure compliance with the tax laws,” said the IG, J. Russell George.
As of July 2012, 96 percent of the 1,168 vendors with federal tax debt had no payment plans in place to repay their debt, thus making them delinquent.
TIGTA once again suggested the IRS conduct more effective reviews of the vendors it works with, while also enhancing oversight as whole. IRS agreed with the recommendations and hopes to develop better oversight methods.