IRS official says conference lavish, but followed rules

WASHINGTON -- An Internal Revenue Service official at the center of the agency's latest scandal told lawmakers Thursday that an expensive conference in 2010 conformed to existing rules, though he acknowledged it was not the best use of taxpayer money.

The official, Faris Fink, said spending at the $4.1 million gathering should have been more closely scrutinized, and new rules would prevent such a conference today.

"I think it is important to point out that in carrying out this 2010 meeting, we followed IRS and government procedures that were in place at the time," Fink told the House Oversight and Government Reform Committee.

In 2010, Fink was a top deputy in the IRS small-business and self-employed division, which staged the conference. A 32-year IRS employee, Fink was promoted to lead the division in 2011.

"The Treasury inspector general's office review found no instances of fraud," Fink said. "But we are now in a very different environment and there are many new procedures in place at the IRS governing training and travel."

The hearing focused on a new report by the IRS inspector general that said the IRS spent nearly $50 million on 225 employee conferences from 2010 through 2012. The 2010 conference in Anaheim, Calif., attended by 2,600 IRS managers from across the country, was the most expensive.

At that conference, Fink stayed in a luxury suite and starred in a cheesy but slickly produced "Star Trek" video filmed by IRS employees.

From the witness table, Fink watched the video screen in the hearing room without expression as excerpts played showing him in his role as Mr. Spock.

The IRS spent more than $50,000 to produce three videos that were shown at the conference, the report said, including the "Star Trek" parody.

"What were you thinking?" asked the committee chairman, Rep. Darrell Issa, R-Calif.

Fink said the videos were "a well-intentioned" attempt at humor, shown at the opening and closing of the conference.

"They would not occur today, based on all the guidelines that exist and frankly, they were not appropriate at that time, either," Fink said. "The fact of the matter is, it's embarrassing, and I apologize."

Several members of the House oversight committee were unimpressed.

"I find your apology today hollow," said Rep. Mark Meadows, R-N.C. "It's not enough."

Rep. Elijah Cummings of Maryland, the top Democrat on the committee, was more sympathetic.

"You came and you took some tough blows, and you were honest and you laid it out the best you could," Cummings said to Fink. "The fact that you are remorseful means a lot to me."

Fink stayed in a room that normally cost $1,499 a night, the inspector general's report said. A total of 132 IRS officials received room upgrades at the conference.

The tax agency paid a flat daily fee of $135 per hotel room, the report said, but the upgrades were part of a package deal that added to the overall cost of the conference.

The IRS faces mounting criticism both for spending on employee conferences and for improperly targeting conservative political groups that applied for tax-exempt status during the 2010 and 2012 elections.

The IRS was screening the groups' applications because agents were trying to determine their level of political activity. IRS regulations say tax-exempt social welfare organizations can engage in some political activity but the activity cannot be their primary mission. It is up to the IRS to make that determination.

The revelations about IRS agents' improperly targeting tea party and other groups have led to investigations by three congressional committees and the Justice Department. One top IRS official was forced to resign, a second retired and a third was placed on paid administrative leave.

This week, the IRS began taking action against employees who were involved in the 2010 conference.

On Wednesday, the IRS' new acting commissioner placed two officials on administrative leave for accepting free food at a party in a private suite at the conference. Pending a review, the two officials could lose their jobs, the agency said.

The IRS said spending on conferences fell from $37.6 million in the 2010 budget year to $4.9 million in 2012. The agency said it has already imposed strict regulations to prevent expensive conferences in the future.

"I will do everything possible to ensure that tight spending protocols are in place at the agency to protect the use of taxpayer dollars," acting Commissioner Danny Werfel told the committee.

Werfel said employee training remains important to the IRS. But, he added, "We must make sure we undertake it in the most efficient and cost-effective manner. Unfortunately, that did not occur in this case."

Werfel took over the IRS last month after President Barack Obama forced the previous acting commissioner to resign following revelations that IRS agents had been improperly targeting conservative political groups.

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