The conference, held Aug. 9-13, 2010, at a Marriott Hotel here, was a training session for secretaries who work for an IRS subgroup called the "Small Business/Self-Employed" division -- the same group that sent managers to Anaheim.
The division processes returns from small businesses, partnerships and farmers.
An IRS spokesman said the Kansas City meeting was to train employees on the proper handling of tax returns.
The IRS said 736 students and instructors attended the event; the treasury inspector general, however, said there were 562 attendees.
IRS spending on conferences dropped precipitously from 2010, when the agency spent $37.5 million in Anaheim and other cities, to 2012, when spending was $4.8 million. Many of those meetings are now done through conference calls and video hookups.
But a significant part of that 2012 spending was in Kansas City, where the agency booked 168 rooms at the Sheraton Crown Center last fall for a 3-week training session for revenue agents.
That's nearly a fourth of the hotel's 730 rooms, which were booked at the government rate, currently $99 a night. The cost for taxpayers: more than $400,000, before taxes and fees.
Costs for food and other expenses were not available.
An IRS spokesman said the hotel provided a complimentary shuttle service to a local laundry as well as free Internet and health and fitness club access.
And because it could not accommodate an IRS request for microwaves in every room, the Sheraton also provided a hospitality suite for the entire 25-day training session and stocked it with snacks and soft drinks.
That's where a party unfolded over the Halloween weekend, according to some other Sheraton guests.
"I couldn't believe the number of drunks coming in and out of that suite," said Tim McCormick, a small business owner from Omaha who brought his wife to town for the Halloween weekend.
He said at least 75 people were partying in the suite when he went by, and many were wearing what he called professional-looking costumes with professional-looking makeup.
"Here they are trying to squeeze me for every dollar I've got, and they are prancing in and out of the hospitality suite," McCormick said.
The IRS said it did not provide free liquor.
McCormick, who owns a photography studio in Omaha, said what irked him most was that he had been entangled for several years in a dispute with the IRS over some back taxes that went unpaid earlier in the recession.
"We were paying all this money back and the total never seemed to go down," he said.
McCormick said he was joined on the elevator at one point by an inebriated partier who left the IRS hospitality suite wearing a "devil costume, with horns and all."
Steve Shalit, general manager of the Sheraton and Westin Hotels at Crown Center, said he was not aware of complaints about the Halloween party from any guests at the time.
He said the Kansas City hotel market thrives on such government meetings and conventions, adding that the IRS is a long-term client.
Shalit said there is value in face-to-face training sessions such as the one held by the IRS, "and we hope to be chosen for future training classes."
The IRS said it has instituted a number of procedures over the last three years that ensure sound financial decisions are being made in regard to spending. Since 2009, the IRS has achieved $1 billion in budget savings and efficiencies, the agency said.
The IRS revelations have not occurred in a vacuum.
In October 2010, two months after the Anaheim meeting, another federal agency spent $820,000 at a regional conference for 300 employees at the 4-star M Resort Spa Casino outside Las Vegas.
An investigation of the meeting, for employees of the General Services Administration, found "excessive and wasteful" expenditures including eight off-site planning meetings and excessive spending on food and beverages.
Less than a year later, in the summer of 2011, the Veterans Administration spent more than $6 million on two conferences in Orlando, Fla., according to that agency's inspector general. Among the unauthorized costs was a "Gen. George S. Patton parody video."
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