(Bloomberg) Acting Internal Revenue Service Commissioner Danny Werfel told lawmakers he is working to restore trust in the beleaguered U.S. tax agency and said more funding isn’t necessarily the answer.

“If you start with more money, it’s the wrong starting point,” he told lawmakers at a House hearing today, his first appearance before Congress since President Barack Obama appointed him to the post on May 22.

Obama’s budget for fiscal year 2014 seeks a $1 billion, or 9 percent, increase in the IRS budget. Werfel said while he supports the budget proposal he wants improvements to occur before pushing for more money for the tax-exempt division.

The controversies involving the IRS are occurring as the agency is charged with helping to administer Obama’s signature 2010 health care law and police offshore tax avoidance. Werfel’s job is to start fixing damage caused by the revelation that the IRS applied tougher scrutiny to small-government groups applying for tax-exempt status.

“The agency stands ready to confront the problems that occurred, hold accountable those who acted inappropriately, be open about what happened and permanently fix these problems so that such missteps do not occur again,” Werfel told a House Appropriations subcommittee.

Parody Videos
Lawmakers of both parties criticized the treatment of tax-exempt groups and an inspector general’s report about spending on IRS conferences, which will be released tomorrow and is expected to focus on a 2010 conference in California that included parody videos and expensive hotel suites.

J. Russell George, the Treasury Inspector General for Tax Administration, said a whistle-blower within the IRS alerted his office to the conference spending.

“It seems we have a new misstep every day at the IRS,” said Representative Hal Rogers, a Kentucky Republican and chairman of the full appropriations committee. “I’m very troubled at what may come to light next.”

Rogers said Congress may further restrict the IRS’s funding with fresh constraints.

Six congressional committees have opened inquiries and the Justice Department is pursuing a criminal probe.

Tougher Scrutiny
George said he has been unable to determine who first came up with the idea of giving Tea Party and “patriot” groups tougher scrutiny based solely on their names.

“I’m frustrated too,” Werfel said. “I want these facts to emerge quickly.”

Werfel said he plans to produce a report by the end of the month detailing his progress. He has replaced several top managers at the agency.

Rogers questioned thousands of dollars of bonuses paid to IRS managers, including Lois Lerner, the director of exempt organizations, who is on paid leave.

George, the inspector general, said he is conducting an audit of IRS bonuses that is expected to be released this year.

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