Economy & Finance

IRS officials try to tame conference spending scandal

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WASHINGTON (Reuters) – Internal Revenue Service officials on Thursday tried to tame another scandal plaguing the agency, apologizing to lawmakers for a lavish 2010 conference in California that included an elaborate Star Trek spoof training video.

“After I saw the production, I fully regretted it,” said Faris Fink, the IRS small business commissioner who played the character Spock in the Star Trek parody that included a tax-themed skit. “It’s embarrassing.”

The IRS, already under a cloud of scandal related to the targeting of conservative groups, this week faced fresh criticism over a Treasury watchdog report on wasteful spending.

Lawmakers on the House Oversight and Government Reform Committee accused the agency of grossly misusing taxpayer money when it spent at least $4.1 million at the conference on luxury hotel rooms, expensive training videos and outside speakers on topics such as leadership through painting.

A Treasury report released this week condemned the conference and said $3.2 million of the cost was funded by money set aside to hire enforcement employees.

Fink on Thursday said the IRS did not keep full records of the Anaheim, California, conference and warned the overall cost could have been as high as $5 million.

The conference scandal has further eroded the public image of the IRS, which is under fire after it was revealed last month that workers in a Cincinnati, Ohio, field office targeted conservative groups for intense scrutiny when considering applications for tax-exempt status.

Republicans, including House Oversight Chairman Darrell Issa, have accused the IRS of following direction from Washington in the targeting, but current and former top IRS officials have denied that there was political motivation.

On Thursday, Issa blasted the IRS for the conference spending, calling it “at best, maliciously self-indulgent.”

Lawmakers particularly seized on the $50,000 the IRS spent during the conference on training videos, which also included a line-dancing routine video “designed to engage managers and help facilitate a connection between executives and managers.”

Elijah Cummings, the top Democrat on the committee, said he was up at 3 a.m. watching the Star Trek video trying to find a way the cost could be justified.

“I swear I do not see the redeeming value,” Cummings said.

Acting IRS commissioner Danny Werfel, who started in the position on May 22 after President Barack Obama fired Werfel’s predecessor, told lawmakers that the IRS is “an agency in crisis” and pledged to clean up its reputation.

The tax agency has been under fire since early May, when IRS official Lois Lerner publicly acknowledged that IRS workers had inappropriately targeted Tea Party groups seeking tax-exempt status and apologized for the behavior.

Multiple congressional committees and the Justice Department have since opened probes into the matter, but it is still unclear exactly who initiated the targeting and what the motivation was behind it.

Current and former IRS officials have said the Cincinnati office made a poor choice in using criteria such as “Tea Party” and “patriots” to sift through a flood of applications for tax-exempt status.

Obama denied knowing about the targeting before Lerner’s apology on May 10 and fired Steven Miller, who was the acting head of the IRS. Lerner has been put on administrative leave.

On Wednesday, two IRS staffers were suspended because of the conference spending scandal.

Werfel said in a statement that the incident related to food that was inappropriately provided free of charge at a party inside a private suite at the conference. He said that represented a violation of government ethics standards.

J. Russell George, the Treasury Inspector General for Tax Administration, on Thursday compared IRS mismanagement at the center of the Tea Party scandal to the conference spending, saying there was a similar lack of oversight and sound judgment.

“Managers seemed to have a lack of concern about how the expenditures would be perceived,” George said at the hearing.

(Reporting by Kim Dixon and Patrick Temple-West- Writing by Karey Van Hall- Editing by Doina Chiacu and Tim Dobbyn)

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