John Shafer, who described himself as “a conservative Republican,” told congressional investigators he sought advice from his boss on how to handle the first Tea Party application he and a lower-level agent came across in February 2010 because it was a new, high-profile issue.

Asked if the lower-level agent sought to elevate the case to Washington because he disagreed with Tea Party politics, Shafer said this was not the case.

“We never, never discussed any political, personal aspirations whatsoever,” he said, according to a transcript of his testimony reviewed by Reuters on Tuesday.

The IRS controversy erupted on May 10 when a Washington IRS official apologized for the handling of applications for tax exemption submitted to the IRS by conservative groups between early 2010 and early 2012.

The furor since then has led to the ousting of the IRS chief by President Barack Obama, an FBI investigation and a congressional investigation.

Leaks from the congressional investigation, now in its sixth week, have neither clearly supported allegations by Republicans of undue influence by Washington officials or the White House, nor ruled this out.

Some material has undermined the allegations by suggesting that the screeners – some of whom were managed by Shafer at the Cincinnati processing hub – acted largely on their own.

Shafer said his screeners knew when a new issue could be difficult and might need to be evaluated by superiors.

“They were folks that had a lot of experience,” he said. “So as they would be reviewing these initial applications, they would be well aware of things that they may not have seen before.”

Shafer said he was in charge of the tax agency’s first look at all tax-exemption applications sent to Cincinnati. Forms that needed a closer look were sent to another unit, he said.

“On an annual basis there would be upwards to 70,000 applications” submitted to the Cincinnati office, he said. “On a monthly basis there would be 4,000 to 5,000 applications that would go through my group.”

(Editing by Kevin Drawbaugh and David Brunnstrom)

(Reuters) – Internal Revenue Service employees in Ohio, who singled out conservative groups applying for tax-exempt status for extra scrutiny, likely did not consider the political implications, an IRS official in Washington has told congressional investigators.

Providing additional details about the worst crisis to hit the IRS in years, tax agency official Holly Paz told investigators she was concerned when she learned that IRS employees were singling out groups with “Tea Party” and other key words in their names.

Paz is the most senior IRS official to be extensively interviewed by investigators. Ousted acting IRS Commissioner Steve Miller was among the top-level Washington officials grilled by Congress in recent weeks. Investigators conducted longer transcribed interviews with IRS employees behind closed doors.

A mid-level official in Washington before she was put on administrative leave, Paz worked for the director of the tax-exempt unit.

Paz said she was worried the practice of flagging certain groups for scrutiny, which she said was not politically motivated, “might give the impression that there was … some bias,” Paz said in the interview last month. Reuters has reviewed the interview transcript.

Some IRS employees in Cincinnati were screening non-profit groups’ applications for tax-exempt status and chose some applications from Tea Party-aligned groups for closer scrutiny.

In doing so, Paz said, the employees likely did not consider that their decisions and practices could be perceived as politically motivated. “They are not as sensitive as we would like them to be as to how things might appear,” she said.

Roel Campos, Paz’s attorney, said his client “has been exemplary. When she discovered a problem in June 2011 she immediately sent it to her superiors.” Paz could not be reached for comment.

The screening carried out in Cincinnati, which Paz said she became aware of in February 2010, drew complaints from conservative groups and Republican politicians. It fully came to light on May 10 when Paz’s boss, Lois Lerner, publicly apologized for the targeting at a legal conference.

A political furor erupted that led to an FBI investigation, the ousting by President Barack Obama of the chief of the IRS and several congressional hearings. Lerner has also been placed on administrative leave.

Darrell Issa, Republican chairman of the House of Representatives oversight committee leading the inquiry, in a statement, said the Paz transcript shows “we still don’t know why everything happened and who is responsible.”

None of the interviews to date suggest any involvement by elected officials in beginning the screening.

Republicans have noted that Paz gave $2,000 to Obama’s campaign in 2008.

Elijah Cummings, the top Democrat on Issa’s panel, said Paz’s comments confirm an earlier inspector general audit. Paz said in the interview she agreed with nearly all of that report.

Issa and Cummings have been squabbling over whether to release full transcripts of the congressional interviews. This continued on Sunday. “It’s time to stop politicizing this investigation,” Cummings said in a statement.

The inquiry by congressional committees is continuing. Republicans are trying, without success so far, to link Obama to the screening, while Democrats are trying to put an end to the controversy, which is headed into its sixth week.

A report last month from the U.S. Treasury Inspector General for Tax Administration, an IRS watchdog, found “inappropriate criteria” were used by IRS agents to select applications for added attention. The report found no political motivations.

20 MORE INTERVIEWS POSSIBLE

Paz is one of more than six IRS employees who have been interviewed in the probe. A congressional aide said last week that investigators may seek interviews with 20 more people.

Paz said front-line IRS employees, such as those who conducted the screening, are unaccustomed to their work being in the spotlight.

“Many of these employees … were used to a world where how they would talk about things internally was not something that would be public or anyone would be interested in,” she said.

The U.S. tax code allows many types of non-profit groups to be tax-exempt, but sets limits on their political activities. The IRS has to ensure that groups apply for tax exemption respect those limits, though they are often vaguely defined.

The Supreme Court’s 2010 “Citizens United” decision unleashed a torrent of new money into politics. Some of it flowed into groups organized under Section 501(c)(4) of the code. Many of these groups were politically conservative.

Campaign finance critics say 501(c)(4) attracts political “dark money” because the law allows such groups to keep donor identities secret. Such groups may be politically active, but under the law, this cannot be their primary purpose.

The IRS has struggled for years with enforcing the law, and related 501(c) tax-exemption statutes for non-profits.

On the issue of balance, Paz told investigators that she knew of some liberal, pro-Democrat groups that had received extra scrutiny in Washington too.

“I had no indication that we were not being balanced in what we were doing,” she said.

(Additional reporting by Patrick Temple-West; Editing by Stacey Joyce)

IRS lawyer Carter Hull will be deposed by congressional lawyers on Friday, said sources close to the Republican-controlled House of Representatives committee taking the lead in an inquiry that involves several panels on Capitol Hill.

In an earlier interview with the House Oversight and Government Reform Committee, a lower-level worker from the IRS office in Cincinnati criticized Hull for micro-managing the processing of applications for tax-exempt status from conservative groups when they began emerging in 2010.

Congressional panels and the FBI are investigating revelations that came to light last month about the IRS using terms such as “Tea Party” and “Patriot” to single out groups for scrutiny when they applied for tax-exempt status through the Cincinnati office.

Some Republicans have alleged there were political motives behind the practice and are trying to find evidence linking it to the White House.

An audit last month from the U.S. Treasury inspector general for tax administration, which monitors the IRS, found no evidence of political or White House involvement. The congressional panels are conducting their own investigations.

At least five IRS officials have given transcribed interviews so far to congressional investigators. Those interviewed include four workers in Cincinnati and Holly Paz, a mid-level Washington official who oversaw tax-exemption applications. Paz was replaced last week.

Hull was involved early on in assisting the Cincinnati office to review applications, according to a transcript of a congressional interview with an IRS specialist in Cincinnati.

Attempts to reach Hull were unsuccessful.

WASHINGTON OVERSIGHT

Elizabeth Hofacre handled Tea Party applications and told investigators that Hull reviewed her responses to applicants, according to transcripts reviewed by Reuters.

Hofacre was in charge of the Tea Party applications in April 2010 and was the primary specialist on them until October of that year, when she applied for and got another job within the IRS, she said in the interview.

It is unclear from Hofacre’s interview how much authority Washington asserted over her handling of the cases. In one exchange she said, “I had no autonomy.” In another, she said, “They gave me the leeway just to work with them and go by their guidance.”

At another point, “They weren’t involved in … actual reviewing.”

At least one Cincinnati IRS official not previously interviewed was called in to speak with investigators this week, according to a congressional committee source involved in the inquiry.

The House Oversight and Government Reform Committee has identified about 20 more officials for future interviews, another source close to the process said.

Leaders of the House committee have been squabbling all week about whether to release full transcripts of the interviews their staffers have done.

Committee Chairman Darrell Issa, a Republican, first released selected excerpts from some interviews on June 2. He was criticized for that by Elijah Cummings, the committee’s top Democrat, for “cherry picking” statements to prove there was political involvement.

Cummings on Sunday unveiled his own selected excerpts, including comments from an IRS manager in Cincinnati who described himself as a “conservative Republican.”

Cummings said the interview showed the screening of conservative groups originated in Cincinnati office and called on Issa to release the full transcripts completed thus far.

To respond to Issa’s contention that doing so would compromise the investigation, Cummings proposed Issa redact portions that would interfere with the investigation by Monday.

(Editing by Kevin Drawbaugh and Peter Cooney)

Carter Hull, an IRS lawyer, will be interviewed this week, said a source close to the Republican-controlled House of Representatives committee taking the lead in various investigations of the matter.

In an earlier interview with the House Oversight and Government Reform Committee, a lower-level worker from the IRS’ Cincinnati office criticized Hull for micro-managing the processing of applications for tax exemption when they began emerging in 2010.

Several congressional panels are probing revelations that came to light last month about the IRS using politically volatile terms, such as “Tea Party” and “Patriot,” to single out for added scrutiny applications for tax-exempt status at the Cincinnati office where the applications are handled.

Some Republicans have alleged there were political motives behind the practice and are trying to find evidence linking it to the White House.

An audit last month from the U.S. Treasury inspector general for tax administration, which monitors the IRS, found no evidence of political or White House involvement. The congressional panels are conducting their own investigations.

At least five IRS officials have given transcribed interviews so far to congressional investigators. Those interviewed include four workers in Cincinnati and Holly Paz, a mid-level Washington official who oversaw tax-exemption applications. Paz was replaced last week.

Hull was involved early on in assisting the Cincinnati office to review applications, according to a transcript of a congressional interview with an IRS specialist in Cincinnati.

Attempts to reach Hull were unsuccessful.

Elizabeth Hofacre handled Tea Party applications for tax-exempt status in mid-2010. She told investigators that Hull reviewed her responses to applicants, according to transcripts reviewed by Reuters.

She called his involvement unusual and said it eventually led her to seek a new job with more autonomy.

Leaders of the House committee have been squabbling all week about whether to release full transcripts of the interviews their staffers have done.

Committee Chairman Darrell Issa, a Republican, first released selected excerpts from some interviews on June 2.

He was criticized for that by Elijah Cummings, the committee’s top Democrat, for “cherry picking” statements to prove there was political involvement.

Cummings on Sunday unveiled his own selected excerpts, including comments from an IRS manager in Cincinnati who described himself as a “conservative Republican.” Cummings said the interview showed the screening of conservative groups originated in the Cincinnati office.

(Editing by Kevin Drawbaugh and Peter Cooney)

Under the proposal, income from intangible assets such as patents and trademarks earned by U.S. companies abroad would face an immediate 15 percent tax rate. That would be well below the present 35 percent tax rate that can be deferred by leaving profits abroad. Companies would also get an immediate deduction for taxes paid.

This would represent a major shift in U.S. taxation of the foreign profits of U.S. multinationals, many of which now park profits offshore, often in countries where taxes are very low, or through methods that allow them to avoid tax altogether.

“Companies would feel less pressure to shift income to low-tax jurisdictions because that income would be taxed at the same rate – whether it is earned in the United States or Bermuda,” Dave Camp, chairman of the Ways and Means Committee in the U.S. House of Representatives, said at a hearing on Thursday.

The session comes at a time of heated discussion in Europe, and to a lesser degree in the United States, about corporate tax evasion. The problem is expected to be a point of discussion at next week’s Group of 8 meeting of the leaders of the world’s top industrialized nations in Northern Ireland.

On Capitol Hill, momentum toward overhauling the U.S. tax code, including laws covering multinationals, stalled last month amid a political controversy at the U.S. Internal Revenue Service. Camp is trying to get overhaul efforts moving again.

Camp’s goal is to cut the top corporate and individual tax rates to 25 percent. In a draft proposal issued in 2011, the Michigan lawmaker proposed three options to prevent erosion of the tax base under any plan to trim the corporate tax rate.

He said that one method, dubbed “Option C” got “the most support from the business community.”

That option would impose an immediate 15 percent tax rate on certain “intangible” income earned offshore by U.S. companies. Intangible income is highly mobile.

Profits of this sort are presently taxable at the 35 percent corporate income tax rate, though many multinationals avoid paying that rate by leaving the profits overseas. No tax is due on much of offshore profits as long as they are not brought into the United States under a practice known as offshore tax deferral.

Camp has vowed to move legislation out of his panel this year to revamp the convoluted and widely disliked U.S. tax code for the first time since 1986.

STATELESS INCOME

University of California law professor Edward Kleinbard was skeptical of Camp’s approach. Kleinbard said it would be extremely difficult to estimate the profits from intangible assets.

Kleinbard, a former chief of staff to the congressional Joint Committee on Taxation, said at the hearing that stronger measures are required. He proposed mandating that companies reveal where their income is earned and the tax rates they paid around the world.

That would help solve the problem of “stateless” income, which came up at a congressional hearing last month on computer giant Apple Inc.’s tax planning.

The Senate Permanent Subcommittee on Investigations found that Apple in 2012 avoided $9 billion in U.S. taxes using a strategy involving three offshore units with no discernible tax home or “residence.”

Apple Chief Executive Tim Cook said the company abides by all tax laws and made no apologies for its tax planning.

But Kleinbard said “The stream of tax-free foreign income encourages U.S. firms to engage in tax arbitrage, by leaving all their global interest expense in the U.S. parent, where it erodes the domestic tax base.”

Camp’s Democratic counterpart in the Senate, Finance Committee Chairman Max Baucus, is working on a parallel effort to revamp the code.

Both leaders face major hurdles, including divisions among the parties about whether to raise new revenue and which “loopholes” to cut to fund lower rates.

(Editing by Kevin Drawbaugh and Dan Grebler)

In an official interview transcript released on Sunday by Democratic Representative Elijah Cummings, the manager said he and an underling set aside “Tea Party” and “patriot” groups that had applied for tax-exempt status because the organizations appeared to pose a new precedent that could affect future IRS filings.

Cummings, top Democrat on the House of Representatives Oversight and Government Reform Committee conducting the probe, told CNN’s “State of the Union” program that the manager’s comments provided evidence that politics was not behind IRS actions that have fueled a month-long furor in Washington.

“He is a conservative Republican working for the IRS. I think this interview and these statements go a long way toward showing that the White House was not involved in this,” Cummings told CNN’s “State of the Union” program.

“Based upon everything I’ve seen, the case is solved. And if it were me, I would wrap this case up and move on,” he added.

Cummings, a Maryland Democrat, said he would release a full transcript of the committee’s interviews with IRS officials by the end of this week, if the panel’s Republican chairman, Representative Darrell Issa, does not.

Issa has released his own excerpts of interviews with IRS employees the committee is conducting jointly, which the Republican says suggests the added attention given to Tea Party groups originated from Washington, D.C. and had political motivations.

Issa vowed to press ahead with the investigation and said the IRS manager’s comments “did not provide anything enlightening or contradict other witness accounts.”

“I strongly disagree with … Cummings’ assertion that we know everything we need to know about inappropriate targeting of Tea Party groups by the IRS,” the California Republican said in a statement released by his office.

Revelations that the tax agency set aside conservative groups for scrutiny has raised a political furor over the past month, leading President Barack Obama to fire the IRS commissioner. The House oversight panel, several other congressional committees and the FBI have launched investigations.

The Treasury Inspector General for Tax Administration issued a report on the matter last month finding no evidence of involvement beyond IRS officials.

Still, Republicans have raised questions about whether the scrutiny was directed politically at Obama’s opponents and have sought evidence of any White House involvement.

The House oversight committee has now completed five lengthy interviews with IRS employees, including four based in the Cincinnati office where applications for tax exempt status are handled.

Cummings said congressional investigators now know what happened based on these interviews.

CINCINNATI SOUGHT ADVICE FROM WASHINGTON

The excerpts of interviews with IRS workers released by Cummings indicate that the IRS manager and an underling first decided to contact Washington, D.C. IRS officials for guidance on the cases from groups aligned with the anti-tax Tea Party movement.

They did so to consolidate them, as they might be precedent-setting for future cases, the manager said, according to the interview transcripts.

It was an unidentified Cincinnati IRS worker who reported to the manager, identified as John Shafer by committee aides, who identified the first Tea Party case. That individual has not been interviewed by the committee yet.

Investigators asked Shafer if he believed the decision to centralize the screening of Tea Party applications was intended to target “the president’s political enemies.”

“I do not believe that the screening of these cases had anything to do, other than consistency and identifying issues that needed to have further development,” the manager answered, according to a transcript released by Cummings.

Asked if he believed the White House was involved, the manager replied: “I have no reason to believe that.”

John Shafer could not be reached for comment.

“They wanted to make sure that it was handled in a way whereby when other cases came behind it that were similar, that they would be treated in a consistent way,” the lawmaker said.

Another Cincinnati screener who worked for Shafer, Gary Muthert, indicated in committee interviews released in part by Issa last week, that “Washington wanted some cases,” to review.

Democratic committee staff said Muthert’s involvement came later, after the initial screener and Shafer first sought advice from Washington about the legal aspects of the newly-emerging cases.

(Reporting by David Morgan and Kim Dixon; Editing by Maureen Bavdek and Theodore d’Afflisio)

More than 40 tax code changes were part of 2010′s Affordable
Care Act (ACA), the president’s signature domestic policy
achievement. Some changes are already in place, but several take
effect in January 2014 and the IRS is still figuring them out.

The task grew more complicated in the past month as the IRS
also faced sharp criticism over agents targeting conservative
political groups for scrutiny; revelations of costly
conferences; and turmoil among senior personnel.

On May 15, Obama fired acting Commissioner Steve Miller
after Cincinnati IRS agents applied extra scrutiny to tax-exempt
status applications from groups with words such as ‘Tea Party’
in their names. Miller was replaced by White House budget
official, Danny Werfel.

On Wednesday the IRS suspended Fred Schindler, director of
oversight for implementation of the Affordable Care Act.
Congressional sources said Schindler faces allegations that he
accepted free gifts and food at a costly 2010 IRS conference in
California.

On Thursday, J. Russell George, the U.S. Treasury
Department’s Inspector General for Tax Administration, whose
office has played a central role in bringing allegations against
the IRS, warned at a hearing of what lies ahead for the agency.

“The IRS is about to engage in one of the most comprehensive
and unprecedented aspects of its activities in terms of
implementing the Affordable Care Act,” he said.

For a factbox of the health care law’s tax provisions, see:

SEVERAL BIG JOBS

Under the health care law, the IRS is charged with
collecting tax penalties from employers who fail to provide
insurance coverage and individuals who fail to get coverage.

Some businesses trying to implement the healthcare law are
worried that the upheaval at the agency, said Seth Perretta, a
partner at law firm Crowell & Moring LLP. “You can’t help but be
nervous because so much has to get done before 2014,” he said.

The IRS must also finish writing certain legal definitions
such as what “minimum value” means for employers’ health plans.

Some worker advocacy groups are concerned the IRS might rule
for a minimum value that is too low, leaving workers unable to
waive a bare-bone employer health plan for a federal tax credit
to buy insurance on a new state exchange. Stakeholders have
until July 2 to send comments to the IRS.

The IRS is also finalizing rules for “minimum essential
coverage.” Most Americans will face a tax penalty to IRS for
failing to obtain health insurance that meets the minimum
essential definition.

The IRS is also expected to issue guidance soon on new forms
employers and employees must fill out for healthcare purposes.

Werfel on Thursday at a hearing sought to reassure lawmakers
on the IRS’s ability to meet its healthcare challenges. “We’re
on a path to hit the rest of our key milestones,” he said.

(Editing by Kevin Drawbaugh and David Gregorio)

Transcripts of the interviews, reviewed by Reuters on Thursday, provided new details about Washington managers’ awareness of the heightened scrutiny applied by front-line IRS agents in Cincinnati to applications for tax-exempt status from conservative groups with words like “Tea Party” in their names.

A political furor over the practice has engulfed the tax agency for nearly a month since a senior IRS official publicly apologized for it at a conference. Since then, the IRS’ chief has been fired by President Barack Obama, the FBI has mounted an investigation and Congress has held numerous hearings.

The transcripts show that in July 2010, Elizabeth Hofacre, an IRS official in Cincinnati who was coordinating “emerging issues” for the agency’s tax-exempt unit, was corresponding with Washington-based IRS tax attorney Carter Hull.

In April 2010 Hofacre had been put in charge of handling tax-exempt status applications from conservative groups by her Cincinnati supervisor.

She was asked to summarize her initial findings in a spreadsheet and notify a small group of colleagues, including some staff in the Washington tax-exempt unit. However, she sent her email to a larger number of people in Washington by accident.

“Everybody in DC got it by mistake,” Hofacre said in the transcripts. She later clarified that she did not mean all officials but those in the IRS Exempt Organizations Rulings and Agreements unit.

The Cincinnati office, where IRS reviews of applications for tax-exempt status were centralized, used a “be-on-the-lookout” (BOLO) list that included the words “Tea Party” and “Patriot” for flagging applications for extra review.

This practice has drawn criticism. However, the Treasury Inspector General for Tax Administration, which closely studied the matter, has said no evidence exists that the list was created by high-level IRS officials, or political officials in the U.S. Treasury or the White House.

Lois Lerner, the IRS official who set off the controversy, has said that she first learned of the BOLO list in June 2011, and that she ordered the partisan criteria to be removed immediately. The Treasury inspector general backed up that statement.

Neither Hofacre, nor a second IRS worker in Cincinnati, Gary Muthert, knew who asked for the partisan names to be added to the BOLO list in the first place, the transcripts showed.

Still, Muthert said that when his supervisor in Cincinnati initially asked him to look for “Tea Party” applications, “he told me Washington, D.C. wanted some cases,” according to his interview with congressional investigators.

Hofacre, however, indicated that a Cincinnati official told her to use the criteria. That official “told me what I needed to put on this particular BOLO list,” Hofacre said, referring to the list for Tea Party cases only.

Hofacre lashed out at Washington officials for attributing the extra scrutiny to the staffers in Cincinnati. “It was a nuclear strike on us,” she told congressional investigators.

(Editing by Kevin Drawbaugh)

Faris Fink, commissioner of the agency’s small business and self-employed division, told lawmakers the videos, which cost more than $50,000 to produce, were well-intentioned but in hindsight inappropriate.

“It’s embarrassing. I apologize,” said Fink, who played the character Spock in the Star Trek parody that included a tax-themed skit. “I regret the fact that they were made.”

The IRS, already under a cloud of scandal related to the targeting of conservative groups, this week faced fresh criticism over a Treasury watchdog report on wasteful spending.

The report released on Tuesday found that the IRS used money originally intended for hiring enforcement employees to partially fund a $4.1 million conference in Anaheim, California, that included luxury hotel rooms and a speaker paid $17,000 to talk about leadership through painting.

Republican Representative Darrell Issa, chairman of the House Oversight Committee holding the hearing on Thursday, accused the IRS of grossly mismanaging taxpayer money with conference spending that was “at best maliciously self-indulgent.”

Elijah Cummings, the top Democrat on the committee, said he was up at 3 a.m. watching the Star Trek video trying to find a way the cost could be justified.

“I swear I do not see the redeeming value,” Cummings said.

The tax agency has been under fire since early May, when IRS official Lois Lerner publicly acknowledged that IRS workers had inappropriately targeted Tea Party groups seeking tax-exempt status for intense scrutiny, and apologized for the behavior.

Multiple congressional committees and the Justice Department have since opened probes into the matter, but it is still unclear exactly who initiated the targeting and what the motivation was behind it.

Republicans have accused the IRS of following direction from Washington, but current and former top IRS officials have denied that there was any political motivation.

Instead, they say the Cincinnati office made a poor choice in using criteria such as “Tea Party” and “patriots” to sift through a flood of applications for tax-exempt status.

President Barack Obama denied knowing about the targeting before Lerner’s apology on May 10 and has since fired Steven Miller, who was the acting head of the IRS. Lerner has been put on administrative leave.

On Wednesday, two IRS staffers were suspended because of the conference spending scandal.

Congressional staff members briefed on the matter said two employees – including one working on Obama’s healthcare initiative – were disciplined for improperly accepting gifts at the Anaheim conference.

(Reporting by Kim Dixon and Patrick Temple-West; Writing by Karey Van Hall; Editing by Doina Chiacu)

The tax-collecting agency – already battling a political scandal and accusations of lavish spending – has begun a process to remove the two employees for violating ethics rules pending a review, the IRS said.

“There was clearly inappropriate behavior involved in this situation, and immediate action is needed,” acting IRS Commissioner Danny Werfel said in a statement on Wednesday.

The agency did not identify the suspended employees, but congressional aides briefed on the matter said they were Fred Schindler, an IRS official in Washington, and Donald Toda, an IRS employee based in California.

Messages left at their office numbers were not returned.

The aides said that Schindler works for Sarah Ingram, who now leads the IRS’s office responsible for enforcing tax laws related to the Affordable Care Act, the Obama administration’s makeover of the U.S. healthcare system.

Ingram has been under scrutiny in recent weeks because in 2009 and 2010, she led the IRS office that inappropriately targeted conservative groups for extra scrutiny when they applied for tax-exempt status.

The IRS’s acknowledgement last month that the targeting occurred has ignited a political scandal that has led to the departure or suspension of three top IRS officials, including Ingram’s successor in the agency’s tax-exempt division.

At least three congressional panels are investigating the targeting of conservative groups with names such as “Tea Party,” and “Patriots,” while the Justice Department has launched a criminal probe.

The suspensions on Wednesday were not related to the targeting scandal, but rather to a Treasury inspector general’s report that criticized extravagant spending by the IRS in 2010, a year in which Treasury reported that the tax agency spent $38 million on conferences designed to educate and boost the morale of its employees.

The Treasury report focused on a conference held for the IRS small business division in Anaheim, California, in 2010.

Some of the perks IRS employees enjoyed – potentially in lieu of better room rates – included room upgrades, the report said. The commissioner of the agency’s small business and self-employed division stayed five nights in a room that the Treasury report described as having a private bedroom, wet bar and billiard table, the report said.

That official, Faris Fink, will be grilled on Thursday by members of the House Committee on Oversight and Government Reform. Fink will also under the spotlight because he acted as the “Star Trek,” television and movie series character Mr. Spock in an employee training video spoof, an expenditure also detailed in the Treasury’s report on wasteful spending.

OHIO IRS WORKERS INTERVIEWED

The House Oversight panel is among congressional committees examining the political targeting scandal, which has led Republicans to question whether the Obama administration, in the months before the 2012 election, was involved in trying to stifle conservative groups that generally oppose the president.

The White House has rejected such suggestions. A Treasury inspector general’s report that first detailed the targeting scandal did not find any evidence that the administration was involved.

Congressional investigators have been interviewing workers from the IRS’s office in Cincinnati, Ohio, headquarters to the agency’s tax-exempt division, which carried out the targeting of conservative groups in its role examining groups for tax-exempt status.

Investigators conducted their latest interview with an IRS employee in the Cincinnati office this week, and have another planned in the coming days, according to a congressional aide.

On Thursday, the House Committee on Oversight – led by California Republican Darrell Issa, a vocal critic of the administration – will focus on overspending by the IRS.

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

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

In response to widespread criticism of its spending, the IRS has noted that the amount it has spent on conferences has dropped dramatically, from about $38 million in 2010 to less than $5 million in fiscal 2012.

(Reporting by Kim Dixon and Patrick Temple-West; editing by David Lindsey, Sandra Maler and Cynthia Osterman)