NEW: New IRS head says more information coming on targeting
A House committee looks at wasteful IRS spending at a $4 million conference in 2010
An inspector general's report disclosed the spending on hotels, gifts and parody videos
The hearing is the seventh by Congress in recent weeks on IRS controversies
An Internal Revenue Service official involved in a 2010 conference cited for wasteful spending said Thursday no rules were broken and no fraud occurred, though he acknowledged that video parodies, fancy hotel suites and other excesses funded by taxpayers never should have happened.
“It’s embarrassing, and I apologize,” said Faris Fink, the IRS official who portrayed the Mr. Spock character in a training video for the conference that parodied the “Star Trek” television show and films.
Fink told a congressional hearing that new federal regulations would prevent such a video and conference from occurring today. However, he said planners “followed IRS and government procedures that were in place at the time.”
He also noted that an inspector general’s audit that revealed high hotel bills and other wasteful spending for the $4.1 million cost of the conference found no fraud occurred.
“In hindsight, many of the expenses that were incurred at the 2010 conference should be been more closely scrutinized or not incurred at all,” said Fink, a 32-year IRS veteran.
His testimony under oath to the House Oversight Committee followed fierce criticism from the panel’s top Republican and Democrat.
GOP Chairman Rep. Darrell Issa of California called the waste by the agency that collects taxes from the public “maliciously self-indulgent.”
He noted that in some cases, IRS workers who received employee benefits from the conference failed to file W-2 forms for the income, saying “the IRS effectively was guilty of tax evasion.”
The panel’s ranking Democrat, Rep. Elijah Cummings of Maryland, berated Fink for wasting the money of people who earn less in a year than the cost of the “Star Trek” parody video.
Insisting he found “no redeeming value” from the video, Cummings cited examples of working people in his neighborhood, such as a hotel cleaning woman he saw at the bus stop on Thursday morning.
“That is her money, the one who makes $35,000, that’s her,” he told Fink. “The gentleman up the street from me who makes $45,000 hauling trash. That’s their money and so, it was wasted.”
Thursday’s hearing was the seventh in recent weeks on controversies at the IRS. The others focused mostly on the targeting of conservative groups seeking tax-exempt status that was uncovered in a separate inspector general’s audit made public last month.
Despite the public displays of outrage by legislators, Issa and Cummings conceded that such wasteful IRS spending on conferences and travel no longer occurred due to government reforms.
“It’s not a new occurrence and many of these things may not be happening today,” Issa said, while Cummings credited both the committee and the Obama administration for taking effective action in response to a similar spending scandal involving the General Services Administration that was uncovered in 2011.
On Wednesday, the IRS announced it has placed two employees on administrative leave in connection with the Anaheim, California, conference in 2010.
Daniel Werfel, the acting IRS commissioner appointed by President Barack Obama last month to clean up the mess at the agency, said Thursday the move was a step toward firing the two employees, who have not been identified.
In his report on the conference spending made public on Tuesday, Treasury Inspector General J. Russell George said the IRS spent taxpayer dollars on everything from event planners’ commissions to speakers’ fees to guest prizes to parody videos.
“Questionable expenses” comprised much of the budget, according to George’s report, which also said $3.2 million to pay for the conference expenses came from unused funds allocated for hiring.
The August 2010 conference, held by the Small Business/Self-Employed division, had 2,600 attendees at three hotels in Anaheim. Fink said the conference provided valuable training for new managers at the time, despite what he called inappropriate spending.
That didn’t satisfy the legislators from either party, who questioned how IRS employees notorious for being sticklers on compliance with the law did not realize or protest the excess and waste of the conference.
Democratic Rep. Gerald Connolly of Virginia called the problem “a culture of arrogance and a real tin ear to the concerns of the public that pays the bill” rather than something criminal.
Gregory Kutz, an official in the inspector general’s office who helped conduct the spending audit, agreed with Connolly, telling the panel it didn’t appear to be fraud but rather “a case of people who lost sight of the fact they were spending taxpayer money.”
While outrage over the wasteful spending was bipartisan, both sides sought to score political points on Thursday.
Issa, a leading GOP messenger in efforts to depict the Obama administration as government gone wild, complained of a “culture without whistle blowers” in the federal government and referred specifically to the targeting scandal his panel also is investigating.
He wondered out loud how many IRS workers involved in the improper targeting could have benefited from better training and more staff paid for by the money spent instead on the Anaheim conference.
Cummings, meanwhile, noted that IRS spending on conferences doubled during the final years of the GOP Bush administration, when the nation headed into recession.
“It would be legislative malpractice if we don’t figure out what happened there,” he said.
Some Republicans sought to link the IRS controversies to Obama’s health care reform law, pointing out the tax agency will enforce compliance with requirements for people to purchase health insurance.
GOP Rep. Trey Gowdy of South Carolina said the problem was a “cultural, systemic, moral, character” issue at the IRS that no amount of training would solve.
Noting that people now will submit health information to the IRS, which already has their financial information, Gowdy said “those are details we don’t share with people we do trust.”
Cummings took exception with such remarks, saying that the misdeeds of some at the IRS didn’t impugn the 90,000-employee agency or its ability to do its work.
“I don’t buy this because we had some bad players, we can’t do the job,” he said, asking Werfel if the IRS was up to the task of taking on the health care law’s mandate.
“Yes,” replied Werfel, saying the IRS has reached all key milestones so far in preparing for its new responsibilities and adding he would be “very active in this area because it’s one our critical operational priorities.”
On the targeting issue, Werfel said the agency and the inspector general would soon be providing additional information on groups seeking tax-exempt status that came under extra scrutiny.
In the inspector general report last month, an IRS unit that handles applications for tax-exempt status was found to be using criteria that included conservative labels such as “tea party” to target groups for extra questioning.
Republicans contend the targeting was political discrimination, but the report blamed poor management in dealing with unclear regulations and an increased workload rather than a political motivation.
CNN’s Dana Bash and Ashley Killough contributed to this report.