IG Report: IRS Can’t Document All Expenses for $4.1 Million Conference

By Michael W. Chapman | June 10, 2013 | 5:18 PM EDT

(AP Photo)

(CNSNews.com) – A new report by the Treasury Inspector General for Tax Administration (TIGTA) concerning a three-day, $4.1 million conference for Internal Revenue Service employees, shows that the IRS was not able to document all its expenses for the event including, for instance, receipts and W-2 wage and tax statements.

“While IRS management provided documentation showing the total final costs at $4.1 million, we could not obtain reasonable assurance that this amount represents a full and accurate accounting of the conference costs,” stated the IG report.  “The IRS was unable to provide documentation to support all costs associated with the conference.”

“Procedures at the time of the conference did not require IRS management to track and report actual conference costs,” said the report.  “As a result, TIGTA could not validate the conference cost reported by the IRS.”

The IRS’s Small Business/Self-Employed (SB/SE) Division’s All Managers Conference took place Aug. 24-26, 2010 in Anaheim, Calif., and some 2,609 IRS employees attended, staying at hotels run by Marriott, Hilton and Sheraton.

Among some of the unverified conference costs the Inspector General uncovered or noted were the following (emphasis added in bold):

-- There were numerous training sessions at the conference and “IRS management stated that all attendees were credited with 24 hours of leadership training that was recorded in the IRS’s training system.  However, SB/SE Division management also stated that attendees were not required to document their attendance at any conference session.”

U.S. currency. (AP Photo)

-- “Although IRS management established an internal tracking code for employees to charge their conference travel, we determined that this code was not always used as required.  For example, we identified 188 employees who attended the conference but did not use the code on their travel voucher (representing approximately $245,000).  As a result, we cannot validate that the ‘final’ conference cost of $4.1 million reported by the IRS and detailed in Appendix VII is accurate.”

-- “At the time the Anaheim conference was planned and conducted, the IRS did not have any guidelines requiring management to track and report the actual costs incurred for conferences.”

-- Concerning the non-governmental event planners who helped arrange the conference, the report said “the IRS had no contractual agreement with these two individuals.  IRS procedures currently require background investigations and tax compliance checks be performed on contractors doing business with the IRS.  However, because the IRS had no contractual agreement with these event planners, the IRS did not perform background or tax compliance checks on these two individuals.”

-- One of the session speakers who was paid $17,000 created six paintings at two sessions – portraits of Albert Einstein, Michael Jordan, Abraham Lincoln, Bono, and Statue of Liberty (two). Three of the paintings were donated by IRS management to the Combined Federal Campaign as auction items, selling for $75, $130 and $380.  However, the IRS’s “SB/SE Division management stated that the final painting prepared during these presentations was lost.”

--  As for a second keynote speaker, the IG report said: “According to the contract, this speaker’s fee of $27,500 included a $2,500 flat fee for travel, which the contracting officer authorized to accommodate first-class travel. … No travel receipts were obtained by the IRS for our review, and the contracting officer did not know whether the speaker traveled first class or not.”

--  “As previously stated, the IRS reported that it expended $50,187 on ‘videos’ for the conference, but was unable to provide any details supporting this cost.”

--  “The IRS constructed a mock set at its television studio located in New Carrollton, Maryland, at a cost of $2,400. However, SB/SE Division management does not have any documentation supporting this amount.”

--  “No documentation was maintained to track any costs associated with the development of the other production costs, such as the script development, makeup, lighting, and videotaping.”

This video image from an Internal Revenue Service video shows an IRS employee portraying Mr. Spock  parodying the TV show "Star Trek" that was made for a 2010 IRS training conference in Anaheim, Calif. The agency says the video, filmed at an agency studio in Maryland, along with a training video that parodied the TV show "Gilligan's Island," cost about $60,000. The "Star Trek" video accounted for most of the money. The IRS on March 22, 2013 said it was a mistake for employees to make the six-minute video. (AP Photo/IRS)

--  “IRS management informed us that four of the 38 employees they knew had performed local travel were not issued a Form W-2 as required.  In addition, IRS management agreed that two of the seven additional employees we identified incurred taxable travel expenses and were not issued Forms W-2.”

--  “They [IRS] disagreed with the other five [local travel employees’ travel costs] because they believe the employees’ residences and posts of duty were more than 30 miles from the conference location.  However, our research indicated that the posts of duty for these employees were within 30 miles of the conference location.  As a result, we believe that these employees incurred taxable travel.”

In concluding its report, the Treasury Inspector General, based on the IRS data it could obtain, stated there were 225 IRS conferences in fiscal years 2010-2012 that cost $48,631,800.00.

In fiscal year 2012, the IRS conducted 1,481,966 audits of individual tax returns, reported USA Today.
Michael W. Chapman
Michael W. Chapman
Michael W. Chapman