The Internal Revenue Service placed two employees on leave for accepting free food during a party at a 2010 agency conference that will be the subject of a congressional hearing today.

At least one of the employees works for the IRS division administering President Barack Obama’s health-care law, according to a congressional aide who wasn’t authorized to discuss the matter publicly. The IRS employees accepted $1,100 in food and other items at the $4.1 million conference in Anaheim, said the aide.

“The incident involves a party inside a private suite at a hotel in Anaheim,” according to an IRS statement. “Food was allegedly inappropriately provided free of charge in violation of government ethics standards.”

IRS conference spending is gaining attention as Congress and the Justice Department separately investigate the agency’s extra scrutiny of small-government groups that sought tax-exempt status.

Daniel Werfel, the acting IRS commissioner, is scheduled to testify today before the House Committee on Oversight and Government Reform. So is Faris Fink, commissioner of the IRS division that ran the conference. Fink, then deputy commissioner, stayed in a discounted presidential suite and starred as Spock in a Star Trek video parody made for the event.

The Anaheim event for about 2,600 employees was the most expensive of 225 IRS conferences held between fiscal 2010 and 2012 with a total cost of $49 million, according to an inspector general’s audit released June 4.

Reduced Spending
The IRS and the Treasury Department reduced conference spending in subsequent years and implemented new policies on travel and video productions. The IRS spent less than $5 million on large conferences in 2012, compared with about $37.6 million in fiscal 2010.

Werfel took action after learning June 4 of the situation involving the two employees, according to the statement.

The IRS “has started the process to remove the employees pending a further review,” according to the statement. It didn’t identify the employees placed on leave.

The congressional aide said the IRS told congressional officials that one of the two employees is Fred Schindler, director of implementation oversight for the IRS division that will administer the health care law. Employees placed on administrative leave are typically paid.

“When I came to IRS, part of my job was to hold people accountable,” Werfel said in the press release. “There was clearly inappropriate behavior involved in this situation, and immediate action is needed.”

Coburn Letter
Senator Tom Coburn, an Oklahoma Republican, wrote a letter to Treasury Secretary Jacob J. Lew on June 3 asking why the department previously said it had held just five conferences with a total cost of less than $500,000 from Jan. 1, 2005 to June 1, 2012. IRS makes up most of Treasury’s budget.

“It appears that the response provided by Treasury was inaccurate and incomplete,” Coburn wrote.
Similarly, Bloomberg News in April 2012 sent a Freedom of Information request to the Treasury Department, asking for a list of overnight conferences funded by the department and attended by more than 50 employees since 2005.

Treasury, after charging $276.46 for processing, sent an Excel spreadsheet with five conferences listed. When asked why events were missing from the list, the FOIA office said the list only included events for “Departmental Offices of the Treasury.” IRS events weren’t on the list.

Several Agencies
After a Bloomberg News reporter noted that the request hadn’t differentiated between components of the Treasury Department, the FOIA office sent an e-mail with procedures for filing an appeal. Bloomberg didn’t appeal the request.

The IRS is one of several federal agencies being criticized for excessive conference spending in the past several years.

The General Services Administration and the Department of Veterans Affairs had similar audits last year of employee conference spending. GSA expenditures included $823,000 for a Las Vegas event featuring a clown, a mind reader and a $75,000 bicycle building exercise. Martha Johnson, the GSA administrator, resigned.

Department of Veterans Affairs employees improperly accepted gifts such as massages and incurred $762,000 in unauthorized and wasteful expenses tied to two conferences in Florida, the agency’s inspector general reported last year. John Sepulveda, the VA’s assistant secretary for human resources, resigned the day before the report was released.

‘Material Weakness’
“This is part and parcel of a problem that is marbled throughout federal agencies,” said Leslie Paige, a spokeswoman for Citizens Against Government Waste, a Washington-based nonprofit group that seeks to eliminate mismanagement. “It is a material weakness.”

It also undermines complaints from department leaders about the effects of federal spending cuts that began taking effect this year, Paige said in a telephone interview. The cuts may reduce federal spending by $1.2 trillion over nine years.

“It makes it very difficult to argue that furloughs and sequestration are so draconian when they’re spending this kind of money on these kind of events,” she said.

The IRS constructed a mock set at its television studio in New Carrollton, Maryland, at a cost of $2,400 to make the Star Trek video, the inspector general’s report said. Executives featured in the video bought their costumes with personal funds, it said.

Line Dancing
They made a separate line-dancing video featuring some of the same employees.

The Department of Veterans Affairs was criticized by its inspector general for spending too much on a video used at employee conferences. It spent about $50,000 for a 15-minute video spoofing the Oscar-winning movie “Patton” that was used at two conferences held near Walt Disney World in 2011.

In addition, 11 VA employees accepted gifts such as tickets to see the Radio City Music Hall Rockettes, massages, helicopter rides and free meals from vendors while planning the conferences, according to an inspector general’s report released last October.

—With assistance from Danielle Ivory in Washington. Editors: Laurie Asseo, Jodi Schneider

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