TIGTA conducted the audit as part of its continuing oversight of the IRS's implementation of the 2009 economic stimulus.
"The IRS, along with all federal agencies, is required to ensure that Recovery Act funds are used for authorized purposes and appropriate measures are taken to prevent waste, fraud and abuse,” said J. Russell George, the Treasury inspector general for tax administration. "While IRS management did take corrective actions to reduce erroneous claims when TIGTA brought these process weaknesses to its attention, more clearly needs to be done."
The IRS noted in a statement that "the erroneous claims identified in this TIGTA report represent only a small fraction of Recovery tax relief, less than 0.02 percent of the $260 billion in Recovery Act tax relief taxpayers received through December 2010."
"The IRS took immediate action to put additional protections in place to stop improper vehicle payments," an IRS spokesman told The Hill in an email. "We are also taking aggressive steps to recapture the credits people erroneously claimed."
The economic stimulus included several provisions to encourage the purchase of motor vehicles that operate on clean renewable sources of energy.
In addition, approximately 29 prisoners also received $49,926 in vehicle credits even though they were in prison all of 2009, according to TIGTA’s review.
The IRS agreed with TIGTA's recommendations and made corrections that protected about $3.1 million in revenue.
This story was updated at 3:30 p.m.