WASHINGTON — Tax-payer funding of lavish hotel suites along with high-cost dance and “Star Trek” videos with low production values were hard to defend at today’s hearing of the House Oversight and Government Reform Committee investigating alleged abused by the Internal Revenue Service.
“It’s embarrassing and I apologize,” said Faris Fink, commissioner of the IRS Small Business and Self-Employed Division.
Committee chairman Darrell Issa, R-Calif., began the hearing with photographs of several expensive hotel suites rented at the August 2010 conference in Anaheim, Calif., and a clip from the “Star Trek” video.
Fink, who played Mr. Spock in the “Star Trek” sketch, said the videos “at the time they were made were an attempt to use humor in a well-intentioned way to open or close the conference.”
The videos cost a total of $50,000 to make.
“It would not occur today and, frankly, they were not appropriate at that time either,” Fink said.
“In hindsight many of the expenses at the August 2010 conference were unwise,” he acknowledged in his opening statement. “We would not expend this today.”
Democrats on the committee did not try to defend him.
“As a taxpayer, I am appalled,” said ranking member Rep. Elijah E. Cummings, D-Md. “That’s my money, that’s your money, and it was wasted.”
J. Russell George, treasury inspector general for tax administration, or TIGTA, reported the results of an internal audit that showed the Anaheim conference was provided to approximately 2,600 IRS employees at an estimated cost of $4.1 million.
In his opening statement, however, George acknowledged that the IRS could not account for all of the conference costs.
The agency, therefore, was in violation of tax accounting rules that it enforces on citizens.
According to the TITGA report released last Friday, the IRS reported spending more than $49 million on more than 200 conferences for employees between 2010 and 2012.
Yet, last year, when Sen. Tom Coburn, R-Okla., asked then-Treasury Secretary Timothy Geithner how much the IRS spent on conferences during that time period, Geithner replied the agency had spent only $500,000 on just five conferences.
George told the House panel today that the IRS paid top hotel rates at the Anaheim conference without discounts in order to receive concessions, including daily continental breakfasts for attendees, a welcome reception with two drink coupons and a substantial number of suite upgrades.
The TIGTA report found other questionable expenses, including $44,000 in travel costs for IRS employees who staffed the information booths, and approximately $64,000 in promotional items and gifts.
In a particularly heated exchange, Rep. Jason Chaffetz, R-Utah, pressed Fink on when he became aware there was a problem with the 2010 Anaheim conference.
The exchange started when Fink indicated that in his more than 30-plus years with the IRS, his hotel suite at the Anaheim conference was one of the largest hotel rooms he ever had at an agency conference. He remembered he got a hotel suite at an IRS conference in Chicago in 2009 that was nearly as large as the one in Anaheim.
Fink declined to acknowledge he got the large suite because of his advancement in the IRS management hierarchy. He recalled that his takeaway gifts included a blue carry bag that held a plastic fish.
“When did you think the expenses for the Anaheim conference were wrong?” Chaffetz pressed Fink.
“I do not think the conference was wrong, because of the needs of our employees at that time,” Fink responded. “In retrospect, I think we should have been more diligent to these expenses in respect of the American taxpayer, but I don’t think the conference was wrong.”
Gregory Kutz, assistant inspector general for audit, testified that IRS records show Fink had signed off on a $3.8 million authorization of the 2010 Anaheim conference in advance.
“So you personally signed the routing slip approving the expense?” Chaffetz pressed Fink.
“I signed the routing slip,” Fink admitted.
“And this raised no warning signal?” Chaffetz continued.
“We were experiencing a whole new taxpayer base ... ” Fink attempted to explain.
Chaffetz interrupted: “You signed off on the routing slip, you participated in the meetings planning for the Anaheim conference, and now you want to tell us you didn’t fully appreciate the costs?”
The exchange prompted Issa to caution Fink that he was testifying under oath. The chairman reminded Fink that he faced perjury charges if he attempted to convey to the committee that he did not understand he had approved the costs of the Anaheim conference in advance.
Ranking member Cummings intervened, asking Fink to testify in detail what he saw before the conference.
Following Cummings’ leading questions, Fink admitted on the record he signed the routing slip, approving the costs of the Anaheim conference in advance.
“What was the purpose of handing out these items at the Anaheim conference,” Rep. Michael Turner, R-Ohio, asked Fink, holding up an example of the $60,000 worth of “swag-bags” handed out at the Anaheim conference that include plastic squirting fish. “Was this a reflection of the party atmosphere of the IRS conference?”
Fink replied, “This is an expense that would not be made today."
Rep. Carolyn Maloney, D-N.Y., got Fink to admit he played the role of Spock in the IRS video.
“That video was an insult to the memory of Star Trek,” she said.
Just one of hundreds
Under questioning by Rep. Jim Jordan, R-Ohio, Kutz admitted the Anaheim conference was the only conference TIGTA examined, leaving 224 IRS conferences held between 2010 and 2012 unexamined.
Kutz also admitted that senior officers from the IRS tax-exempt section could have attended the Anaheim conference or one or more of the 224 conferences, although he did not know whether on not that was the case.
“We need to know many of these IRS conferences were attended by the IRS tax-exempt division,” Jordan said. “This is the IRS section that was targeting conservatives and will be implementing Obamacare.
"We looked at one conference and discovered these improprieties," he continued, "yet we know nothing of the other 224 conferences held in the time period 2010 to 2012.”
As the hearing proceeded, Republican committee members expressed their discomfort with the testimony given by the IRS officials and the inspector general.
“There is only one recommendation here, Mr. inspector general, and that is, ‘Start over!’” Rep. Trey Gowdy, R-S.C., angrily rebuked George.
“The IRS has had 100 years to figure out that when the American people – the ones who pay your salaries – are losing their jobs and their homes, this is not a ‘training issue.’ Not only does the IRS have access to our financial information, it will soon have control over our health issues. Training isn’t going to fix it.”
Rep. Mark Meadows, R-N.C., was equally unwilling to accept an apology from Fink.
“Could the cost of the Anaheim conference have been $5 million, or $6 million?” Meadows asked, reminding Fink that he was a witness testifying under oath.
“Yes, it could have been $5 million,” Fink admitted. “In 2010, the IRS did not have in place the cost-accounting measures to make an accurate statement of costs.”
'I understand the enormity of the moment'
Cummings questioned Danny Werfel, the IRS acting commissioner, about the charge by National Organization for Marriage chairman John Eastman that the IRS violated the law by leaking the organization’s private donor list to the Human Rights Campaign, a “gay rights” advocacy group.
“I’ve been a government employee for 16 years,” Werfel said, while declining to comment on any specific taxpayer issue. “I understand the enormity of the moment.”
Joe Solmonese, the president of HRC at the time the group published the list of NOM donors on its website, had just recently become a national co-chairman of the Obama re-election campaign, according to Breitbart.com.
Solmonese, a left-wing activist and a Huffington Post contributor, used the leak, described as coming from a “whistleblower” in a Huffington Post story, to question why Republican Party presidential nominee Mitt Romney had donated $10,000 to NOM.
Subsequently, an HRC press release used the information to accuse Romney of using “racially divisive tactics." Solmonese, then still the HRC’s president, was quoted in the press release as saying he believed Romney’s “funding of a hate-filled campaign designed to drive a wedge between Americans is beyond despicable,” Breitbart.com reported.
Werfel volunteered to the committee that since assuming his position as IRS acting commissioner, he has not been to the White House for a single meeting.
In response to questioning by Ohio Rep. Jordan, Werfel cautiously said he would encourage Lois Lerner, who managed the IRS tax-exempt division, to appear before the committee and answer questions. Lerner invoked the Fifth Amendment, refusing to answer questions before the House Oversight and Government Reform Committee at a May 22 hearing
Lerner is currently on paid administrative leave from the IRS.