The IRS, the feared government agency that demands a chunk of everyone's income, is apparently depriving other organizations of their income by failing to get its house in order. During a recent audit it was discovered that the IRS was running two dozen software products that it could not produce licenses for. Maybe it's time to put them head to head with the Business Software Alliance for a settlement battle royal.

As the famous quote from Benjamin Franklin goes, there are only two certain things in life – death and taxes.

We all pay taxes and in the United States its the job of the Internal Revenue Service (IRS) to scoop up the cash from the public and place it in government coffers. It’s currently collecting somewhere north of $2.5 trillion and has a budget in excess of $12 billion.

But despite all the money rolling around and the IRS’s ability to suck up the last dollar from errant payers, it apparently has trouble keeping its computer department in order. According to the findings of a recent audit, the IRS is in quite a mess when it comes to paying for software it’s using and not paying for stuff that it isn’t.

“The proper management of software licenses helps to minimize risks by ensuring that licenses are used in compliance with licensing agreements and cost-effectively deployed, and that software purchasing and maintenance expenses are properly controlled. This audit was initiated to determine whether the IRS is adequately managing software licenses,” the report from the Treasury Inspector General for Tax Administration begins.

Thanks to rightsholders’ efforts to toughen up the law, the effective managing of software licenses is a serious business. Running unlicensed software can constitute a breach of federal copyright law, something a government agency such as the IRS should seek to avoid. According to the report, it seems to have failed.

“The IRS is not adequately performing software license management and is not adhering to Federal requirements and recommended industry best practices. The IRS does not have enterprisewide or local policies, procedures, and requirements for software license management,” the report states.

As a result the audit discovered that out of a total 27 products examined, proper licensing documentation could be produced for only three of them.

The Treasury Inspector General also notes that in 2011 the IRS spent $235 million on computer software and that efficient and cost-effective management of those resources is crucial to providing efficient services to taxpayers. But somehow and in addition to the under-licensing, the IRS also managed to license software that they didn’t use.

“Until the IRS implements an effective program to manage software licenses, the IRS is incurring increased risks,” the report adds.

“These risks include: 1) not complying with licensing agreements that could result in embarrassment, legal problems, and financial liability; 2) not using licenses in the most cost-effective manner; and 3) not effectively using licensing data to reduce software purchase and software maintenance costs.”

As many companies around the world will agree, not having the correct licenses for software can indeed become a financial liability. Over the years many have been targeted by the Business Software Alliance who, often acting on tips from employees, pursue companies for audits and then pressure them into settlements. Actions against under-licensed software even take place with the support of armed police.

In Belgium a company was pressured by the BSA due to under-licensed software and was told that its computers would be taken away unless it paid 30,000 euros ($40,000) in settlement fees. The CEO of the company described the event as “a robbery more than a check-up.”

It’s notable that the BSA aren’t barking at the heels of the IRS though, which is a bit of shame. Watching the BSA trying to extract money from the best money-collectors in the United States would be something to behold and probably the only battle in which the public would cheer for the IRS.