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Tax Carnival #117: Summer Tax Time

IRS issues preemptive apology for tax conference excesses

We got a preview late Friday afternoon of next week's Congressional hearings into actions by the Internal Revenue Service.

That's when IRS Acting Commissioner Danny Werfel issued a statement about a Treasury Inspector General for Tax Administration (TIGTA) report to be released Tuesday, June 4, and which reportedly examines federal spending at more than 200 IRS conferences over a three-year period.

Werfel's public acknowledgement of the upcoming report and his characterization of "inappropriate" expenses associated with it is a preemptive apology in an effort to limit the damage.

Good luck with that, Danny.

A similar, though more clumsily issued apology by Lois Lerner about how the IRS evaluates organizations' applications for 501(c)(4) tax-exempt status, backfired and set off Capitol Hill's continuing investigations into everything IRS.

Another silly video: In connection with the TIGTA conference costs report, the Ways and Means Committee also released another IRS-produced video, this one of line dancing Small Business/Self Employed division employees. It was created for a 2010 training and leadership conference in Anaheim, Calif.

Line dancing IRS employees_IRS video released by Ways and Means Committee
Click image to watch the IRS video, which was made public
by the Ways and Means Subcommittee on Oversight.

Questions about conference arrangements: While the video of line-dancing IRS workers is a great visual and getting a lot of attention, the reportedly more disturbing TIGTA findings focus on some of the deals the agency allegedly made to hold off-site events.

During an appearance Sunday on CNN's State of the Union, Rep. Darrell Issa (R-Calif.) accused the IRS of accepting "basically kickbacks" during the Southern California conference three years ago.

Issa said that instead of negotiating lower room rates, the agency "ended up with free drinks, they ended up with tickets to games, basically kickbacks."

Issa didn't identify individual IRS employees that he believed responsible for the spending decisions. Neither did the chairman of the House Oversight and Government Reform Committee specify who provided the gratis refreshments and sports ducats.

Those details, however, are likely to be addressed by Issa when he convenes his committee on Thursday, June 6, to gather details on, per the hearing's announced title, Collected and Wasted: The IRS Spending Culture and Conference Abuses.

The only announced witness to date is Treasury Inspector General J. Russell George. Geez, this man needs an office on Capitol Hill given how much time he's spent there in recent weeks!

While Werfel is not yet on the witness list, he addressed the spending concerns in Friday's statement:

"This conference is an unfortunate vestige from a prior era. While there were legitimate reasons for holding the meeting, many of the expenses associated with it were inappropriate and should not have occurred."

Issa's hearing is the third (so far) scheduled for next week to look into IRS activities.

Monday, June 3, the House Appropriations Subcommittee on Financial Services and General Government wants to hear from Werfel on how the tax agency parcels out its federal funds. George also is listed as a witness before that panel. See? Office needed.

While the Appropriations subcommittee session was set before word of TIGTA's conference cost report, you can be sure that those panel members will ask about it.

Then Tuesday, June 4, the focus goes back on 501(c)(4) status issues. That day the full Ways and Means Committee will take testimony from organizations, presumably mostly conservative groups, that were targeted as part of the IRS' tax-exempt application review process.

Third video, third strike: The IRS' 2010 IRS training event in Anaheim is coming back to haunt the agency in spades.

That conference is the same one where the IRS' now infamous Star Trek parody video premiered.

A third questionable video, an IRS training take-off on the 1960's sitcom Gilligan's Island also has come under fire from Congress.

In the IRS defense, all these videos were made in-house with already purchased equipment.

And overspending for conferences is nothing new. I've worked for Fortune 500 companies that wasted way too much money on such events.

Yes, I know, that was private sector cash, not taxpayer dollars.

But one thing that is the same in both government offices and private companies is that you've got to do some outrageous things at these gatherings to keep the attendees involved. I can't tell you the number of workplace conferences where I've nearly fallen asleep. A bad video that embarrassed some of my coworkers sure would have been a nice diversion.

Werfel's statement acknowledges, however, that the IRS screwed up (again). And, he promises, it no longer will happen on his watch:

"Taxpayers should take comfort that a conference like this would not take place today. Sweeping new spending restrictions have been put in place at the IRS, and travel and training expenses have dropped more than 80 percent since 2010 and similar large-scale meetings did not take place in 2011, 2012 or 2013.

Cutting down on excessive and inappropriate travel has been a personal priority for me. As Federal Controller at the Office of Management and Budget, I led the development and issuance of multiple government-wide policy directives requiring Federal agencies to reduce their total amount of spending on administrative expenses, including travel and conferences, as well as putting in place strict policies for the review, approval, and public reporting of conference expenditures. 

In addition to the progress at the IRS, these efforts have led to significant progress government-wide, with the Federal government reducing travel expenses by roughly $2 billion in Fiscal Year 2012 compared to Fiscal Year 2010."

Will Werfel's mea culpa satisfy members of Congress and the public? Maybe, until the next evidence of IRS misconduct turns up.

Given the way things are going for the IRS, I'm pretty sure that will happen, probably sooner rather than later.

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Comments

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Karl

Interesting video and insight on the tax conference excess. Thanks for the post!

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