IG: IRS violated few policies in spending millions on conferences

Tuesday - 6/4/2013, 6:21pm EDT

The Internal Revenue Service held 225 employee conferences between 2010 and 2012, at a total cost of $49 million, according to a new report from the Treasury Inspector General for Tax Administration (TIGTA). The report also revealed the embattled agency used funding originally slated to hire front-line employees to foot most of the bill for a $4.1 million conference held in Anaheim, Calif., in 2010.

Absent from the IG's report, however, are any indications of widespread fraud or contracting improprieties. The report also noted numerous times that many of the practices detailed did not explicitly violate IRS policy at the time they took place.

Auditors zeroed in on the Anaheim conference, held for more than 2,600 employees in the agency's Small Business/Self-Employed Division, because it was the most expensive training event hosted by the IRS in the years examined.

Among the spending uncovered by the IG:

  • $50,187 for videos, including a Star Trek parody

  • $135,350 for guest speakers

  • Combined spending of about $64,328 for promotional items, including 800 lanyards, 75 travel mugs and 2,800 spiral journals

The organizers of the Anaheim conference also circumvented established IRS guidelines, the IG found, because they used private party planners to book hotel rooms instead of IRS officials whose job it is to locate cost-effective sites for training events.

IRS paid a flat rate of $135 per hotel room — the government-approved per diem amount. But the use of private planners increased the risk that the government would pay more for the conference, because the planners "had no incentive to negotiate a lower government room rate," auditors wrote in the report.

Some 132 IRS employees received hotel-room upgrades and other perks, the report noted. IRS officials said the extras were complimentary and did not add to the overall cost of the conference.

But TIGTA disagreed.

"We question whether the room rate could have been negotiated at a lower rate if some of these services were not included and event planners were not used," the report stated.

Many practices didn't violate policies at the time

While much of the lavish spending may not pass the common-sense test, according to the IG's report, it didn't necessarily violate IRS rules and procedures at the time.

For example, TIGTA said it could not obtain "reasonable assurance" that the $4.1 million the IRS said it spent on the conference — actually less than the $4.3 million organizers anticipated spending — is an accurate depiction of the true cost because IRS officials failed to keep documentation.

But at the time, the agency did not have any guidelines requiring management to track and report conference costs, the report stated. It wasn't until March 2012 that the IRS chief financial officer unveiled new rules for tracking and reviewing conference spending.

The IG cited the use of private party planners as putting IRS at risk for overpaying, but noted a lack of policy or guidance "outlining the appropriate use of non-governmental event planners and how these types of individuals should be selected for use by IRS management."

In November 2012, officials at the Treasury Department, which the IRS is a part of, limited the use of private planners and required prior approval from Treasury's chief financial officer to use them to select conference sites.

Similarly, the thousands spent on swag and other promotional items didn't violate specific IRS policies at the time, the IG said. In August 2011, however, the agency issued new guidance barring the purchase of promotional items for conferences unless authorized by the deputy commissioner.

In a response to the IG report, IRS officials said the type of spending uncovered by the IG is no longer allowed and won't happen again.

"While there were legitimate reasons for holding the meeting, many of the expenses associated with it were inappropriate and should not have been incurred," the IRS said in a response to the IG report. "Taxpayers should take comfort in knowing that these kinds of expenses are no longer permitted and such a conference would not take place today."

The IRS says it has not held any similar "large-scale" conferences since 2010 and has cut spending on travel and training by more than 80 percent since that time.

During a hearing Monday, in his first appearance before Congress since being named acting commissioner, Danny Werfel called the conferences "an unfortunate vestige from a prior era."

Funding initially slated for hiring