IRS Paid Speaker $17,000 to Paint Michael Jordan at Event

The Internal Revenue Service spent $17,000 to hire a speaker who painted pictures of Michael Jordan and U2 singer Bono to motivate employees at a 2010 conference in California, the agency’s inspector general said.

IRS officials financed some costs of the conference in Anaheim, California, with $3.2 million in unused funds for hiring enforcement personnel, the review said.

The tax agency spent about $49 million on 225 conferences from fiscal 2010 to 2012, including $4.1 million on the Anaheim meeting, said the inspector general report released today. In Anaheim, some IRS employees stayed in rooms typically costing as much as $3,500 a night, and the agency paid $135,350 to speakers, including $17,000 for a lecture by Erik Wahl on “The Art of Vision,” the report said.

The IRS contract said Wahl was “uniquely qualified” because of his “artistic abilities and his presentation skills,” the report said. “In each presentation, he will create a unique painting that reinforces his message of unlearning the rules, breaking the boundaries, and freeing the thought process to find creative solutions to challenges.”

The amount the IRS spent on conferences is adding to criticism of the tax agency, which is being investigated after disclosing that it gave extra scrutiny to small-government groups that sought tax-exempt status. The agency is under investigation by six congressional committees and the Justice Department regarding its review of those groups.

Most Expensive

The House Oversight and Government Reform Committee plans a June 6 hearing on the IRS spending.

The Anaheim meeting was the most expensive IRS conference held between fiscal 2010 and 2012, according to the inspector general’s report.

The IRS “specifically requested numerous upgraded rooms and other concessions” from the Anaheim hotels, the report said. The costs could have been reduced if the tax agency had instead negotiated for a lower room rate, it said.

“The wasteful Anaheim conference is one example of a culture of excess that plagues the IRS and many federal agencies,” Darrell Issa, a California Republican and chairman of the House Oversight panel, said in a press release. “Taxpayer money meant to pay for a core agency mission, the hiring of more enforcement personnel, was instead spent on a lavish party.”

Safety, Security

An IRS fact sheet said the Anaheim meeting’s focus included safety and security training after a suicide attack on an IRS facility in Austin, Texas, earlier that year. The agency no longer hires paid outside speakers, it said.

The IRS has “dramatically reduced its conference spending,” according to a Treasury Department statement. Spending on large conferences dropped about 87 percent to $4.86 million in fiscal 2012 from $37.6 million in fiscal 2010, it said.

The inspector general said the agency paid about $34,000 to house local employees at hotels during the Anaheim conference and paid for two top officials to stay in presidential suites that typically cost between $1,499 and $3,500 a night. The IRS paid the government rate of $135 a night for all rooms, according to the report.

“Because these free rooms and upgrades were part of the Letters of Intent with the hotels, they are not gifts to employees,” the report said. “However, the solicitation and use of hotel room upgrades increases the perception of wasteful spending and should be carefully considered in the future.”

Presidential Suite

The commissioner of the IRS small business and self-employed division stayed in the presidential suite at a Marriott International Inc. (MAR) hotel that typically cost $3,500 a night, according to the report. Christopher Wagner was the commissioner of the small business division at the time of the event, according to Jose Manuel Vejarano, an IRS spokesman. Wagner recently retired as the IRS chief of appeals.

The small business division’s deputy commissioner stayed in a presidential suite at a Hilton hotel, owned by private equity firm Blackstone Group LP. (BX) Faris Fink, now the division’s commissioner, was the deputy commissioner for that division at the time of the event, Vejarano said in an e-mail.

The Anaheim gathering, for workers overseeing small businesses and self-employed taxpayers, featured an IRS-produced video parody of Star Trek. Fink played Spock in the spoof.

‘Dance Party’

The IRS constructed a mock set at its television studio in New Carrollton, Maryland, at a cost of $2,400 to make the Star Trek video, the report said. Executives featured in the video bought their costumes with personal funds, it said.

Agency employees also participated in a “dance party” video that mentioned plans for the Anaheim conference.

Some employees received prizes, including 24 tickets to two Los Angeles Angels baseball games, which IRS management said were provided by the hotels. The agency spent more than $64,000 on gifts and trinkets for employees who attended the conference, according to the report.

Two attendees also received a painting done by Wahl, the speaker. Three other Wahl paintings were donated to the Combined Federal Campaign workplace charity program and one was lost, the report said.

IRS officials estimated that the event for about 2,600 employees cost $4.1 million, according to the inspector general’s report. The agency’s auditors were unable to verify the cost figure, the report said.

Actual Costs

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

The Anaheim conference was approved by the deputy commissioner for operations and the deputy commissioner for services and enforcement in April 2010, according to the report. Mark Ernst was the deputy commissioner for operations support at the time, said Vejarano, the IRS spokesman. Steven T. Miller, the former acting commissioner who was recently forced out of the position, was deputy commissioner for services and enforcement at that time.

Danny Werfel, the new acting IRS commissioner, said in a statement last week that the event was “an unfortunate vestige from a prior era” and the agency has since cut training and travel expenses.

GSA, Veterans

The General Services Administration and the Department of Veterans Affairs had similar audits last year of employee conference spending. GSA expenditures included $823,000 for a Las Vegas event featuring a clown, a mind reader and a $75,000 bicycle building exercise. Martha Johnson, the GSA administrator, resigned.

Department of Veterans Affairs employees improperly accepted gifts such as massages and incurred $762,000 in unauthorized and wasteful expenses tied to two conferences in Florida, the agency’s inspector general reported last year. John Sepulveda, the VA’s assistant secretary for human resources, resigned the day before the report was released.

To contact the reporters on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net; Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editors responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net; Jodi Schneider at jschneider50@bloomberg.net

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