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IRS puts two employees on leave for taking conference gifts

A woman walks out of the Internal Revenue Service building in New York in this May 13, 2013 photo. REUTERS/Shannon Stapleton
A woman walks out of the Internal Revenue Service building in New York in this May 13, 2013 photo. REUTERS/Shannon Stapleton

By Kim Dixon and Patrick Temple-West

WASHINGTON (Reuters) - The U.S. Internal Revenue Service, already battling political scandal and accusations of lavish spending, has put two employees on administrative leave for accepting gifts of food and other items at an agency conference, according to two congressional staff members briefed on the matter.

Acting IRS Commissioner Danny Werfel said in a statement: "There was clearly inappropriate behavior involved in this situation, and immediate action is needed."

The two IRS employees both work on the agency's implementation of President Barack Obama's healthcare law, the Affordable Care Act, according to the congressional sources.

Agency rules allow government employees to accept items worth $20 or less, provided the total value of gifts from the same person is not more than $50 in a calendar year, according to the Office of Government Ethics.

The workers were attending a conference held for the IRS small business division in Anaheim, California in 2010.

Republicans, who have voted more than 35 times in the U.S. House of Representatives to repeal Obama's healthcare law, are likely to pounce on the employees' healthcare ties.

Werfel took over the job late last month after President Barack Obama fired acting Commissioner Steven Miller amid a report finding the IRS gave extra scrutiny to applications from conservative and Tea Party groups seeking tax-exempt status.

Sarah Ingram, not one of the employees put on leave, was in charge of the tax-exempt unit implicated in that controversy before moving to handle health care matters in December 2010.

The two employees put on leave worked for Ingram.

According to congressional aides briefed on the matter, one of the employees put on leave is Fred Schindler, director of implementation oversight in Washington. The second person is Donald Toda, an employee based in California. Messages were left at both individuals' office phone numbers seeking comment.

The Treasury Inspector General for Tax Administration on Tuesday criticized the tax agency for wasteful spending on conferences. It said the IRS spent about $50 million on 220 conferences in recent years, including to pay for luxurious hotel rooms and speakers.

The inspector general said IRS employees at the 2010 Anaheim conference failed to negotiate lower hotel rates and instead sought free food and more highly-priced hotel suites.

The IRS has noted that its conference spending has been cut dramatically in recent years, to less than $5 million in fiscal year 2012 from about $38 million in 2010.

At least three congressional panels are probing the agency for the unrelated controversy over extra scrutiny given to Tea Party and other conservative groups seeking tax-exempt status.

The House Oversight and Government Reform Committee, one of those panels, will hear from the inspector general and the new chief of the IRS on Thursday on the conference expenses matter.

(Reporting By Kim Dixon; Editing by Kevin Drawbaugh, Sandra Maler and Cynthia Osterman)

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