IRS officials suspended for taking gifts

by Bernie Becker - 06/06/13 12:23 AM ET

The IRS has placed two staffers on administrative leave for inappropriate behavior at a 2010 conference in California and has initiated the process to dismiss them, the agency said Wednesday.

The IRS said the staffers were put on leave over a private party in an Anaheim hotel suite where “food was allegedly inappropriately provided free of charge in violation of government ethics standards.”

According to congressional sources, the staffers received more than $1,100 in free food at the conference in Anaheim, which was the centerpiece of a Treasury audit on wasteful IRS spending released this week.

Congressional sources identified the two staffers on leave as Fred Schindler and Donald Toda, and said both had been working at the IRS to implement President Obama’s healthcare reform law.

The agency said new acting IRS commissioner Danny Werfel learned of the situation Tuesday night.

“When I came to IRS, part of my job was to hold people accountable,” Werfel said in a statement. “There was clearly inappropriate behavior involved in this situation, and immediate action is needed.”

Werfel’s actions came as the agency continued to face the fallout from its targeting of conservative groups seeking tax-exempt status, and ahead of a Thursday congressional hearing on its conference spending.

The audit from Treasury’s inspector general for tax administration found that the 2010 conference in Anaheim cost the IRS more than $4 million and featured a string of speakers, room upgrades and even a video spoof of “Star Trek.” The inspector general also gave the IRS information on the private suite party, the agency said in its Wednesday statement.

Werfel and Faris Fink, an IRS official who played Spock in the “Star Trek” parody, are among the witnesses scheduled to appear at the Thursday hearing of the House Oversight Committee. Russell George, Treasury’s tax administration inspector general, is also expected to appear.

“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.

At least three agency staffers have been placed on administrative leave since Werfel took the reins of the IRS, as the new acting chief moves to quickly clean house under orders from the president.

The IRS placed Lois Lerner, the agency official at the center of the targeting controversy, on leave last month after she declined Werfel’s request to resign.

Steven Miller, the acting IRS chief when the agency disclosed the targeting, resigned under pressure last month, and Joseph Grant, another senior agency staffer, announced his retirement in May.

Schindler’s superior, Sarah Hall Ingram, has also come under scrutiny in recent weeks, after having previously served in the division overseeing tax-exempt applications.

Werfel said this week that he was troubled by stories from conservative groups that told the House Ways and Means Committee about their treatment from the agency. He pledged on Monday that he would work to rebuild public trust in the IRS.

The Treasury audit found that the IRS spent close to $50 million between 2010 and 2012 on conferences, with the Anaheim conference pricing out to more than $1,500 a person.

A keynote speaker at the Anaheim conference, who was paid $17,000, painted portraits of Michael Jordan, Bono, Abraham Lincoln and other famous figures, while a separate video produced for the conference featured agency staffers line dancing.

Werfel has called that conference “an unfortunate vestige from a prior era,” and both the IRS and the Treasury Department have noted that the agency’s travel and training costs have declined considerably since 2010.

— Updated at 8:23 p.m.