The Washington Post

Audit details lavish spending at IRS conference

“Taxpayers should take comfort that a conference like this would not take place today,” Acting IRS Commissioner Danny Werfel, left, said. He’s shown with Treasury Inspector General for Tax Administration J. Russell George. (Charles Dharapak/AP)

The 2,609 Internal Revenue Service managers who flew to Anaheim, Calif., for a three-day conference on “Leading Into the Future” were treated to a welcoming reception with free cocktails and gifts — including briefcases, engraved pens and Los Angeles Angels baseball tickets.

Some attendees stayed in two-bedroom presidential suites at the Anaheim Hilton, complete with wet bars and billiard tables.

One conference speaker was paid $27,000 in taxpayer money — plus $2,500 for a first-class plane ticket — to deliver two one-hour speeches on how seemingly random ideas can drive innovation. Another speaker collected $11,430 to give workshops on how to increase IRS managers’ happiness at work.

These and other examples of what many in and outside of government would consider excessive spending are detailed in a new audit by the Treasury Inspector General for Tax Administration. A House hearing on the matter is set for Thursday.

The audit 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 approval of top agency officials.

Inspector General J. Russell George said in a statement that the expense — one of 225 conferences the tax agency held in fiscal 2010 through 2012 at a cost of $49 million— “do not appear to be a good use of taxpayer funds” at a time when government is putting a premium on efficiency and managing costs.

IRS managers were unable to provide auditors with accurate data or supporting documentation on many conference costs in Anaheim, the inspector general said.

The agency has made many changes to rein in employee training and conference spending, prompted in part by revelations of similar excesses at a four-day junket in Las Vegas that the General Services Administration held in 2010 for 300 employees.

“Taxpayers should take comfort that a conference like this would not take place today,” Acting IRS Commissioner Danny Werfel, appointed by President Obama in May to clean up the agency, said in a statement.

“While there were legitimate reasons for holding the meeting,” Werfel said, “many of the expenses . . . were inappropriate and should not have occurred.”

He said that “sweeping new spending restrictions” have been put in place and that travel and training expenses have dropped more than 80 percent since 2010. Similar large conferences have all but disappeared, Werfel said.

A lack of guidelines on what was appropriate, and an apparent lack of judgment 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.

The agency said Tuesday the conference was held to give managers safety and security training after a software engineer who was angry at the IRS crashed his plane into a field office in Austin in 2010. The pilot and one IRS worker were killed.

But while attendees were credited for 24 hours of leadership training, no one was required to document attendance at any conference session.

The report, released Tuesday, comes amid another round of congressional hearings on the tax agency’s widely criticized scrutiny of conservative groups that were applying for tax-exempt status, a practice that George brought to light in another report in May.

The Republican-led House Committee on Oversight and Government Reform has scheduled a hearing on the Anaheim conference for Thursday. Lawmakers want to know “who was held accountable for this bad behavior,” committee spokesman Ali Ahmad said.

The IRS failed to adhere to the standard government practice of negotiating lower room rates, instead accepting concessions such as food and elite rooms. The higher-priced rooms were paid for at the government rate, but federal agencies are supposed to try to negotiate the cost of conference accommodations down.

“The solicitation and use of hotel room upgrades increases the perceptions of wasteful spending,” the inspector general said.

Two training videos — a “Star Trek” parody featuring employees and another showing workers learning a line dance — cost at least $50,000, though IRS employees could not tell auditors how they estimated the cost or provide documentation of how the money was spent.

Other questionable costs include a decision by conference planners to hire three outside event planners to find the hotels and plan the event at a price of $133,000, while failing to enter signed contracts with them. Another $36,000 was spent on scouting trips to Anaheim for more than 25 employees, and $135,350 was spent on 15 outside speakers, most of them under sole-source contracts.

Lisa Rein covers the federal workforce and issues that concern the management of government.

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