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Rep. Elijah Cummings, D-Md.
Associated Press/Photo by Charles Dharapak
Rep. Elijah Cummings, D-Md.

Apology time

IRS Scandal | Back in the spotlight on Capitol Hill, IRS officials say 'sorry' for lavish conferences

It was mea culpa time for the Internal Revenue Service on Thursday. And the apologies had nothing to do with the ongoing targeting scandal that has embroiled the agency’s dealings with conservative groups.

IRS officials sat before lawmakers on Capitol Hill to answer for a new Treasury inspector general report detailing how the IRS spent $49 million on conferences from 2010 to 2012. The 225 events, paid for by taxpayers, included the budget for elaborate video skits showing IRS managers parodying television shows Star Trek and Gilligan’s Island. It also included a video spoofing IRS employees line dancing. For one conference taxpayers footed the $17,000 bill for a speaker whose talent involves live painting portraits of famous figures such as Albert Einstein and Abraham Lincoln.

“While there were legitimate reasons for holding the meeting, many of the expenses associated with it were inappropriate and should not have occurred,” Acting Internal Revenue Service Commissioner Danny Werfel told the House Committee on Oversight and Government Reform.

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Faris Fink, commissioner of the IRS small business and self-employed division, played the Star Trek character Spock in one of two conference videos that cost a combined $50,000. He apologized to lawmakers at the hearing.

“They would not be used today,” Fink said of the videos. “The fact of the matter is that they’re embarrassing … and I regret the fact that they were made.”

For a conference in Anaheim, Calif., the IRS spent $4.1 million on an event for more than 2,500 managers of the small-business and self-employed division. Some of the top attendees upgraded their hotel rooms to VIP suites.

J. Russell George, Treasury inspector general for tax administration, said the “IRS did not have effective controls to track and report those costs.” The report said that more than $3 million of that cost came from an unused fund designated for hiring more IRS agents. While IRS spending on conferences peaked at nearly $38 million in 2010, George told lawmakers at the hearing that conference bills dropped to $5 million last year.

Werfel, the acting IRS commissioner appointed in the aftermath of the targeting scandal, testified that he already has taken steps to ensure that such lavish spending won’t happen again.

“Taxpayers should take comfort in knowing that these kinds of expenses are no longer permitted and such a conference would not take place today,” Werfel said.

But that did not stop a bipartisan parade of lawmakers from using Thursday’s hearing to deliver lectures to the IRS officials present. The politicians threw around words like outrageous, deplorable, irresponsible, and inexcusable to describe the agency’s activities. Just a day before the hearing, the IRS placed two managers on leave for violating rules by improperly taking gifts such as food.

Rep. Elijah Cummings, D-Md., took special exception to the costly parody videos he called appalling.

“I live in a block where most people don’t even make $50,000 a year,” he said. “But yet still we can make a video that has no redeeming value—none and spend taxpayers hard earned dollars for that.’

Rep. Darrell Issa, the Republican from California who is the chairman of the committee, blasted the IRS, calling some agency officials guilty of tax fraud for not disclosing gifts they got at the conference.

“Americans have a right to know that the money Washington takes from them through the IRS is well spent,” Issa said. “But to find out that not only does the IRS take your money, not give you proper answers and then when it comes to tens of millions of dollars use it in a way that is at best maliciously self-indulgent … as taxpayers, we should be appalled that there are two standards—one for us and a different one for the people who work for the IRS.”

The Anaheim, Calif., event included 15 guest speakers who were paid a combined $135,350. One speaker got $14,000 to talk about “how seemingly random combinations of ideas can drive radical innovations.” The audit says that the IRS did not negotiate for lower hotel rates and event planners were paid $66,500 in commission from the hotels. IRS staffers took three pre-conference planning trips to California, costing about $35,800. The IRS forked over more than $30,000 for 45 IRS employees who lived in the local area to stay at the hotels.

During questioning at Thursday’s hearing, Cummings, the top Democrat on the committee, asked Werfel, the IRS acting commissioner, about the allegations that the agency leaked the National Organization for Marriage’s (NOM) confidential donor list to a rival group. The disclosed list was used to try to intimidate donors from giving more money to NOM, a group that supports traditional marriage.

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