By STEPHEN OHLEMACHER AND ALAN FRAM, THE ASSOCIATED PRESS
WASHINGTON — Internal Revenue Service officials can expect a grilling when they face lawmakers over the latest controversy to rock the agency: lavish spending at employee conferences.
The IRS, however, is planning a robust defense at a congressional hearing Thursday. The agency has already imposed strict regulations to prevent expensive conferences in the future. And on Wednesday, the new acting head of the agency placed two officials on administrative leave for accepting free food at a party in a private suite at an IRS conference in 2010.
Pending a review, the two officials could lose their jobs, the agency said.
"When I came to IRS, part of my job was to hold people accountable," acting IRS Commissioner Danny Werfel said in a statement. "There was clearly inappropriate behavior involved in this situation, and immediate action is needed."
Thursday's hearing by the House Oversight and Government Reform Committee comes as the IRS faces mounting criticism for spending on employee conferences, and for improperly targeting conservative political groups that applied for tax-exempt status.
The IRS inspector general issued a report this week that said the agency spent nearly $50 million on 225 employee conferences from 2010 through 2012. The IRS said spending on conferences fell from $37.6 million in the 2010 budget year to $4.9 million in 2012.
The two officials were disciplined for accepting free food at a 2010 conference in Anaheim, Calif., that cost $4.1 million, the IRS said.
The agency did not publicly identify the workers, but two congressional aides said one is a top deputy in the IRS office that oversees implementation of the new health care law – Frederick Schindler, director of implementation oversight in the agency's Affordable Care Act office.
The aides spoke on condition of anonymity because they were not authorized to discuss personnel matters on the record.
The training conference in Anaheim was held for 2,609 managers in the IRS' small business and self-employed division.
At the conference, the commissioner of the division, Christopher Wagner, stayed in a presidential suite that normally cost $3,500 a night, according to the inspector general's report. Wagner became chief of the IRS office of appeals in 2011 and retired this year.
His deputy, Faris Fink, stayed in a room that normally cost $1,499 a night, the report said. Fink, who was later promoted to head the IRS division that staged the conference, is scheduled to testify at Thursday's hearing, along with Werfel and the inspector general.
Fink has the distinction of playing Mr. Spock in a cheesy but slickly produced "Star Trek" video that IRS employees filmed for the conference.
A total of 132 IRS officials received room upgrades at the conference, according to a report by J. Russell George, the Treasury Department inspector general for tax administration. 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 also spent more than $50,000 to produce three videos that were shown at the conference, the report said, including the "Star Trek" parody that featured Fink and other IRS employees.
"The wasteful Anaheim conference is one example of a culture of excess that plagues the IRS and many federal agencies," said Rep. Darrell Issa, R-Calif., chairman of the House oversight committee. "Taxpayer money meant to pay for a core agency mission, the hiring of more enforcement personnel, was instead spent on a lavish party."
Rep. Elijah Cummings of Maryland, the top Democrat on the oversight committee, said IRS spending on conferences, especially the $37.6 million in 2010, was "simply indefensible." But, he added, "I want to make sure we're clear that a lot has already been done to correct the situation."
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 when they 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, another retired and a third was placed on paid administrative leave.
"The agency stands ready to confront any problems that occur, hold accountable anyone who acted inappropriately and permanently fix these problems so that such missteps do not occur again," Werfel said.
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