Nightly News   |  June 04, 2013

Groups targeted by IRS describe red tape nightmare

After being questioned about donors, speakers and even how much time one group spent on prayer, the organizations singled out by the IRS for extra scrutiny spoke on Capitol Hill Tuesday. And in another embarrassment for the IRS, a new Inspector General’s report on travel expenses found the agency spent $49 million on 225 employee conferences between 2010 and 2012. NBC’s Kelly O’Donnell reports.

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>>> now to the continuing scandal stemming from the targeting of certain conservative groups by the irs . today some of them got a chance to tell their stories to congress, describing what they say has been years of abuse. our capitol hill correspondent kel kelly o'donnell covering for us, good evening.

>> reporter: good evening, brian, this is the first time those conservative groups were able to tell their stories directly, and they come from local grassroots organizations that have small budgets, but they described oversized paperwork and hoop jumping they were required to complete. many spoke of fear and mistrust taking on the irs . on capitol hill , voices of the targeted.

>> the questions were chilling. i was shocked that i was being asked those questions.

>> reporter: from iowa, alabama and california.

>> i had anxiety and i felt betrayed, absolutely betrayed.

>> singled out by the irs for extra scrutiny when their groups applied for tax exempt status .

>> the types of questions asked by the irs including asked me to identify the political affiliation of my mentors.

>> reporter: they described a nightmare of red tape , questioned about donors, speakers, even how much time one group spent on prayer.

>> we never thought we would have to defend our prayer activities.

>> reporter: while both democrats and republicans agree the irs crossed the line, some democrats see heavy-handed bureaucracy and not a conspiracy against conservatives.

>> what happened to you was unfair. it was unfair, and incredibly inconvenient, but it was a mistake.

>> reporter: republicans say it was intimidation, but congress needs more answers.

>> we still don't know who initiated this. we still don't know who far it goes up the chain.

>> reporter: today another embarrassment for the irs involving your tax dollars. new inspector general's report on travel expenses found the agency spent $49 million on 225 employee conferences between 2010 and '12. 2010 convention in anaheim cost $4 million. among the guest speakers, a happiness expert paid $11,000. this lincoln portrait was part of a leadership through artwork shoppe. the speak are got $17,000.

>> hey, everybody, i saw a ship!

>> reporter: and the conference showed three employee-made videos for team building that cost taxpayers more than $50,000. and the new boss at the irs says that kind of spending is an unfortunate vestige of a private era and that conferences like that would not happen today.