hilton IRS managers stayed five nights in a two-bedroom Presidential Suite at the Hilton in Anaheim, Calif. in 2010, according to the agency’s inspector general. Source: Hilton Web site

The 2,609 Internal Revenue Service managers who traveled to Anaheim, Calif. for a three-day conference on “Leading into the Future” were treated to a welcome reception with free cocktails and promotional gifts including briefcases and engraved pens. Many managers stayed in two-bedroom presidential suites at the Anaheim Hilton.

And while they were there, a speaker who was paid $27,000 in taxpayer money spoke for an hour about how “seemingly random combinations of ideas can drive radical innovations.”

These and other examples of what many in and outside of government would call excessive spending are detailed in a new report by the Treasury Inspector General for Tax Administration, which reveals that the IRS spent $4.1 million to fly managers in its small-business and self-employed division to California in August 2010 with the full approval of  top agency officials.

“Effective cost management is especially important given the current economic environment and focus on government efficiency,” Inspector General J. Russell George said in a statement. “Certain of the IRS’s expenses associated with the Anaheim conference do not appear to be a good use of taxpayer funds.”

The report, released Tuesday, comes as congressional hearings continue this week on the tax agency’s scrutiny of conservative groups that were applying for tax-exempt status, a practice George’s office brought to light in another report in May. President Obama and  congressional Republicans have denounced the practice, which forced out the IRS’s acting commissioner, led another top official to retire early and put another on administrative leave.

The Anaheim conference was one of 225 the IRS held in fiscal years 2010 through 2012 at a cost of approximately $49 million, the inspector general reported. Auditors said they focused on this one because the spending excesses were glaring, the report said.

The IRS has since made many changes to rein in employee training and conference spending, changes that were prompted in part by a report from the inspector general for the General Services Administration that revealed similar spending at a four-day junket off the Las Vegas strip, also held in 2010.

But a lack of guidelines on what was appropriate, and an apparent lack of judgement by top IRS officials who did not question the expenses in Anaheim, are likely to bring fresh scrutiny to the tax agency, even as it brings on new leadership.

Among the questionable costs cited by the inspector general.

—Conference planners hired outside three event planners to find the hotels and plan the event at a cost of $133,000.

—The IRS sent more than 25 employees on scouting trips to Anaheim before the conference, at a cost of $36,000.

— Fifteen outside speakers were paid $135,350 for presentation, most of them under sole-source contracts.

— Employees watched two training videos during the conference, one a six-minute “Star Trek” parody featuring employees discussing strategies to identify and address allegations of tax fraud. In the other, employees are shown getting “ready for Anaheim” by learning to perform the “Cupid Shuffle,” a line dance. The videos cost at least $50,000.