IRS spent $49M on conferences


WASHINGTON — The Internal Revenue Service spent an estimated $49 million on at least 220 conferences for employees over a three-year span starting in fiscal 2010, according to a report that will prompt a fresh audit of the agency.

The findings surfaced as the Obama Administration overhauls the agency after officials admitted that dozens of groups were inappropriately scrutinized as they sought tax-exempt status.

In its wake, the agency’s acting commissioner resigned and criminal and congressional investigations began.

A Republican congressman investigating the IRS actions said Sunday that the targeting was likely directed from Washington.

Darrell Issa (R., Calif.), chairman of the House Committee on Oversight and Government Reform, said on CNN that interviews his staff conducted last week with Cincinnati IRS employees indicate the workers were being “directly ordered” from Washington to target Tea Party groups.

The committee’s Republicans on Sunday posted excerpts from interview transcripts of two Cincinnati IRS employees who talked to staffers in Washington. The individuals’ names are being withheld to protect their identities, they said.

It remains unclear who in that office was responsible for using “Tea Party” language to screen applications for extra scrutiny starting in 2010.

“This is a problem that was coordinated in all likelihood right out of Washington headquarters, and we’re getting to proving it,” Mr. Issa said Sunday on CNN’s State of the Union.

The top Democrat on the Oversight Committee, Elijah Cummings of Maryland, accused Mr. Issa off “lobbing unsubstantiated conclusions on national television for political reasons.”

“So far, no witnesses who have appeared before the committee have identified any IRS official in Washington, D.C., who directed employees in Cincinnati to use ‘Tea Party’ or similar terms to screen applicants for extra scrutiny,” he said.

This week, the panel is slated to interview two more senior IRS employees from Cincinnati, aides said.

A low-level, IRS employee in last week’s interview, when asked about whether Tea Party scrutiny “emanated from Washington,” told a committee investigator “I believe so,” transcript excerpts show.

A more senior IRS employee who handled the Tea Party portfolio, said, “I was taking all my direction” from the exempt-organization office in Washington, according to the transcript excerpts.

Three weeks ago a midlevel IRS administrator publicly apologized for the extra scrutiny. That scrutiny was outlined in a Treasury Department inspector general report, which stated mismanagement allowed low-level employees to develop the controversial criteria for targeting political groups. An IRS internal review also concluded that workers in the Cincinnati office were responsible for the scrutiny.

President Obama ousted the agency’s top executive and started an FBI probe.

The audit about the IRS spending $49 million on more than 200 conferences for its employees is set for release Tuesday. It was prepared by the Treasury Inspector General for Tax Administration, the same entity that confirmed allegations against the agency’s tax-exempt unit.

The report is reminiscent of findings released last year after a similar investigation into lavish spending on conferences hosted by the General Services Administration.

Those revelations prompted other inspectors general to begin probes.

In its report, the Treasury’s inspector general provides detailed estimates on hundreds of IRS conferences, but investigators couldn’t independently verify the total costs because the agency failed to keep records of all expenses, the aids said.

IRS Acting Commissioner Daniel Werfel acknowledged the report but he didn’t share any of the findings.

He called the spending “an unfortunate vestige from a prior era” and said that the agency has curtailed significantly conference spending in recent years.

The report focuses especially on an August, 2010, conference held in Anaheim, Calif., for roughly 2,600 agency employees in the IRS’ small business and self-employed division, a unit that assists small-business owners with tax preparation.

The conference cost roughly $4.1 million and was paid for in part with about $3.2 million in unused funds from the IRS’ enforcement budget, a decision that didn’t violate IRS guidelines, according to aides briefed on the audit.

During the conference, employees watched two training videos starring division employees that cost at least $60,000 to produce, according to the audit’s estimates. One video is a parody of the Star Trek franchise and stars employees discussing how they might identify and address allegations of tax fraud.

In the second, the same employees learn the “Cupid Shuffle,” from a 2007 song by the performer Cupid.

Mr. Werfel is slated to make his first public comments today since he became acting IRS commissioner at a House Appropriations subcommittee hearing on the IRS targeting scandal.