There are a lot of new people coming on and a lot of people that were there, thinking about past, have stuck around, because they know it is a new day. We have some amazing speakers to discuss the current state of the irs, priorities, the hiring and staffing plans, and what is on their desk. What we can expect in the year or two years to come. Let me get right to introductions. To my right is mary beth murphy, commissioner of Small Business, selfemployed division at the irs, based in washington, d. C. To my left is don fort, chief criminal Investigation Division isthe irs and to my left nina olson, National Taxpayer advocate. Their bios are online. Im going to leave you to review them, but they are amazing individuals. They have done tremendous work on behalf of the taxpayers in this country and it will be a great evening. So let me start by having each of them talk a little bit about the state of the irs in their divisions. Then we will go into some q a and certainly open it up to the audience for any questions you might have. So mary beth, can you kick us off . Ms. Murphy i want to thank the aba for inviting us, and the new york city bar for inviting us today. The commissioner of the Small Business selfemployed. I am in my sixth year. When i look around at our executive team, i think nina and i nina for sure has the longest tenure. But i have one of the longest of the commissioners. So what are we doing . We have a really interesting role. So we are charged with a mission to help Small Businesses and selfemployed taxpayers as well as all 1040 taxpayers understand and meet their Tax Obligations while applying the law and doing it with fairness and integrity to all taxpayers. When you think about that, when you think about the number of taxpayers that we serve, our Customer Base is huge and it is such a diverse work group. As i go around the country and see the work that we do, sometimes i think i cannot believe we do all that we do, whether it be specialty tax, employment tax, excise tax. Our space is unbelievably complex. And on the collection side, we have seen a lot of changes in collection. So we are responsible for 57 million returns filed annually. 6. 8 million corporate returns. 27 million employment tax returns. 875,000 excise tax. 249,000 estate and gift tax returns. And then trust returns as well. About 35,000. So weve got a big job in Small Business. Caroline mentioned the modernization plan and the new commissioner, and i think they really go hand in hand for us. We really need to increase the use of technology to really change the way we do business. Especially in Small Business selfemployed, we have to be able to empower our employees as well as taxpayers. If we have the opportunity, the modernization plan lays out some great foundations and then one of the things we will be working towards over the next couple of years i will talk about a few of those but you will hear some common themes and one of them is an appropriate balance of enforcement and customer service. And we cannot do that without engaging our employees. They meet facetoface. They are the face of the irs. Whether it is a facetoface contact or it is over the telephone. We have been working hard. A couple of years ago, one of our big pushes was our future state. That has now evolved into our modernization plan as well as our strategic goals. And really getting our employees focused on that and listening to them going forward. This last year has been really big for sbse. First and foremost for us, our biggest priority was tax reform. We were responsible for 29 provisions in Small Business. We did not get any extra staffing to do it and i think we had a great team. We are on track, on target. I would say we are in the process of getting ready to train and our commissioner has said we will put out our putning out so you can our training out so you can see what we are working on. It is not yet online, but we are working with our communications folks as we finalize all of our training so you know what we are training our folks as it relates to tax reform. And the 29 provisions we are responsible for. Other priorities for us the passport program. It has been hugely successful for us. It is a great program. Taxpayers come to us. It amazes me the number of full paid taxpayers we see on a weekly basis. And these are taxpayers that have large balance dues as well as small. That is working well with the department of state. And we really have not had any problems. I always like to ask does anyone here have any taxpayers with a passport case . Oh, a couple. One. So we are continuing to work that program. You have had some . Hopefully it went well and you were able to get it resolved. In the process . Ok. Our nonfiler strategy with a reduction in staffing, we have taken a real hard look at nonfilers. That is an area where we are looking for stakeholders to help us to figure out what is the best way to get these people to file again. So we are looking at test and learn. Many of you know some of the programs we have had the substitute for return program. That is a very laborintensive program for us as well as for the taxpayer as well as for the practitioners. We are looking at the refund hold program and how we can make better decisions using data. And really looking at data instead of doing the same things. E used to we have some initiatives out there, we are looking right now at educational letters for taxpayers that may have stopped filing. We have nonfilers, stopped filers how do we get those taxpayers back into compliance . Another priority for us is disaster relief. We have been lucky. We have not had many fires or bad storms, but sbse is responsible for those programs as well across the irs as well as penalties and interest. We do servicewide penalties and interest in the irs for Small Business. Another area we are looking at as well is taxpayer Digital Communications. It is in its infancy, but we have been doing unauthenticated or not authenticated chat with taxpayers to answer basic questions. Hopefully, in the future we can use automated responses to give taxpayers basic answers to questions that they have. We are doing text chat in acs and we are doing a very small number of single issue audits in our correspondence examination area. We hope to grow that next year, to do more of those. Taxpayers are adopting into the program. They have to authenticate themselves and there are some challenges with us. Security is paramount. But we hope to continue to increase the number of Digital Communications we can do with taxpayers. So that is kind of the state of sbse. One big highlight for us, we are hiring revenue officers and revenue agents. We are currently at about 18,200 in Small Business and our goal is to get up to about 20,000, 22,000 by the end of september. We have had challenges. I just mentioned to don that we have seen a number of folks we make offers and they decline, they get better jobs. Good jobgh for us in a market, as well as different areas around the country, it is really expensive to live in new york city, to live in california, the boston area. So we have had some challenges but we are on track to hire about 750 revenue officers and about 1200 revenue agents. New hires. So we are excited about that. We have already started with the revenue officers who are in their first week of training. And we will be on boarding revenue agents by the end of the summer. The government lapse in funding slowed us down. It canceled this meeting once, so we are catching up on the hiring but we are excited to get those new folks on board. So you mentioned the declination of the offers not better jobs, higher paying but maybe not better. Yes, higher paying. Thank you, mary beth for the update. Let me turn it to nina. Nina, can you tell us about what is happening in the National Taxpayer advocate office . Ms. Olson as you know, this is on the clock, running down. I will be retiring july 31 after 18 years. So this will be one of my last public appearances. I have obviously been spending a lot of my time trying to think about how to prepare my office to hand it off and to ensure the work we are doing, protecting taxpayer rights, continues. That is my focus. And i have a very short list of some issues that i feel i need to tidy up before leaving. One of the things that has happened to us over the years when i came in 18 years ago, we had 2200 employees in 74 offices and now we are down to 1650 employees spread out over 79 offices. We have actually been shrinking fiveffices over the last years, the number of employees in offices, so that we can open up more offices. We believe that as the irs becomes more and more centralized and disappears from having a geographic footprint around the nation, that we need to be there. Congress has actually said in the law my position is described in the Internal Revenue code. I have tohe code, have at least one office in each state. We have been opening more offices that are smaller. The most recent one is in el paso, texas which i will visit before i leave. So we are trying to get out in the community with fewer employees, which is difficult. We do not, unlike sb or ci, or anybody else that gets to decide how many cases they will start in a given year, we do not. If a taxpayer is experiencing significant hardship, they call us. The case comes in. Now, sometimes my offices try to reject a case but then they email is because my all over the place, and they let me know my office is rejecting them and then they get back into the system. But congress has told us that where taxpayers are experiencing significant hardship as a result of what the irs does, is not doing, or is about to do, they get through the door. I do not know how to say you are experiencing significant hardship but you do not get through the door. I dont know how you do that. So it has been difficult for our employees juggling some of these cases. Some have been brought on by systemic problems in the irs to fairly simple cases, but they take up peoples time. And we are hoping, that is why we are concentrating on some fixes in the fraud detection system. As you file returns and are asking for a refund, you go to the fraud detection system. And it has a very high false positive rate. 81 of the nonIdentity Theft returns last year identified for questionable items, not related to Identity Theft, but like inflated wages or Something Like that or just a mismatch of information, 81 of the returns the irs stopped were legitimate. It determined they were legitimate. That is an abominably high false positive rate. And we have been really focusing systemically to get that fixed, because that has been the largest portion of our cases. They increased by 287 last year from the year before and if we could get them cleared out of our system, we would be able to do a lot of good things. Mary beth mentioned the modernization plan. And this is something in my annual report to congress. I made the number one legislative recommendation that the irs needed multiyear funding in order to replace its archaic 1960sbased databases. The irs has the two oldest databases in the federal government, according to the Government Accountability office, and they happen to be the individual master file and the business master file, which are the two official records of taxpayers accounts. Let us stop and be afraid of that. We really need to modernize those databases. Not just lift them up but actually replace them. And all of the plans on the digital and modernization plan hinge on us getting into 21st Century Technology and if we cant, we will not be able to deliver a meaningful digital account to the taxpayers. All the times that the employee thell the times you call irs person on the phone, any the employee says, i know you contacted us or said something in, but i cannot see that information, it is because the systems do not talk to one another. All of that needs to be changed and Congress Needs to fund that with a multiyear stream so we do not start and stop and start and stop and never get ahead. But on the topic of digital and this is something i have been focusing a lot with all of the commissioners i have worked under, all 5, 6, or seven depending on if you count all of the acting ones 41 million taxpayers in the united states, taxpayers, people that have filed a return in the last three years based on our statistically representative survey of u. S. Taxpayers that we did two years ago 41 million do not have Broadband Access in their home. 49 million of the 150 million taxpayers, individual taxpayers filing returns each year. Any modernization strategy that does not understand that you have to provide in personal service for taxpayers, persontoperson service, and on the phones as well as moving them to digital is going to not serve the taxpayers. It will create harm to them that mary beths folks have to deal with in a downstream consequence. One of the things i have been thinking about, not just to throw this out and turn it over to caroline, i have been noodling about i will probably write it in my report, is something i am calling the taxpayer anxiety index. And that is that that is a way to think about how you want to communicate with taxpayers from the taxpayers perspective. So lets say taxpayers are perfectly comfortable when they filed their return. They are willing to go in and check online. You can do an analogous situation to you all as practitioners. Do aend something in taxpayer account that was your client, you can check that the document has been received. You are fine about that. You go in. That is great. It saves you a phone call. But let us say you are waiting for a response . You are a taxpayer waiting to get your refund . They go back in online to check and the message has changed or the message is the same. Or the message goes we are looking at your return, check back in two weeks. Suddenly, that clutching feeling in the throat of the taxpayer your anxiety has just increased. And you may even be willing to check back in two weeks but in another time, if you dont get an answer, you are going to pick up at the phone and try to force people to digital, when their anxiety is increasing all along the way, which will undermine what you are trying to do in driving compliance. The practitioner analogy coming you can get in there and you can see a document has been received. And now youre waiting for a response. You get no response. You are going to want to call. You have a paying client. You also want to know what the irs is thinking about that document. If you get pushed online and cannot get to a live human being to have that discussion, there might be exposure for you because there is not a meeting of the minds. Understanding where anxiety levels are and where you need to have that persontoperson interaction should be the driver of our modernization plan. And i fear that with the budgets the way they are, it puts the driver of the modernization plan has how many people we can get as how many people we can get on my because it is cheaper and eliminate some employees that would be answering the phones, etc. I am watching that like a hawk. Whether i am inside the irs or outside the irs. Followup questions, i can talk more about the passport program. I do not have the same sanguine view of it. Private Debt Collection, international issues, offshore issues. People trying to resolve multiple International Tax issues with regimes that have very different concepts of taxpayer rights and dispute resolution. Those are all things i have been looking at. Nina mentioned this is her last public appearance in her tenure and it has been an amazing tenure. We are extremely grateful to have you here tonight. She has opened the questions, so i hope you brought them with you. There is a treasure trove of information out there for the Taxpayer Advocate office. So lets turn now to ci. Of taxpayer anxiety, lets turn to don. He is a career agent, 28, 25 years with the service. Cione knows see i like like don does. We are so lucky to have him as chief and his deputy chief, erik kelton, tony is in the audience. Ci is a great place to be these days not as a target, mind you, but as an agent under this leadership. Don, why dont you tell us what is going on with ci . Don we will start with the fact that im not a morning person. And add to that, i just came back from a 10 day trip to scotland and ireland so it feels like it is about 1 00 a. M. In the morning. But i am pleased to be here and honored to be here with my colleagues, with nina and mary beth. We dont do this enough. This is a good, diverse panel. And caroline, i have had the pleasure of working with and the doj. I know many of you out there in the audience. I am 28 years with ci. Only with ci. I am a cpa as well and have had the unique experience of basically having almost every position held within ci. Unique experience knowing basically every corner of the organization and all the work that we do. So it is a really exciting time. Were going to talk more about those priorities and initiatives. It is a great year for us this year. Our 100thy celebrate anniversary as a Law Enforcement agency. Not many Law Enforcement agencies can say this. Starting with six agents 100 years ago, an incredibly rich history and tradition within ci. To lead this agency is incredible. In my 28 years, there have not been many of those years where ci was not led by a career agent. So i think some of you are familiar with us. I will just give you kind of a quick overview of the work that we do. We are the only agency that has jurisdiction over federal tax crimes. So i like to say if you hear about, read about any federal criminal tax case, there is 100 chance that ci were involved in that. We have a much broader jurisdiction than that. So i also like to say, if you hear of any significant financial investigation, Money Laundering, cyber case, there is a very good chance that ci was involved as well. I talk about the jurisdiction that we have, i always say that i believe we have one of the largest and broadest jurisdictions of any federal Law Enforcement agency because of that ability, being the only agency that has Tax Jurisdiction. Having jurisdiction over Money Laundering opens up our ability to be involved in literally hundreds of predicate offenses. We are also heavily involved in bank secrecy cases. That being said, my priority is to make sure that we have our core mission coverage. Core mission covered, the tax cases. We are the only agency that can do that. Staffing, in terms of we are down to about 2100 special agents, from about 3600. About 20 years ago. I have been here for the height and for the level we are at now. It is where we were at about 50 years ago. Think about some of you are not old enough to think about what the world was like 50 years ago but if you are, think about how many more people, how many more tax returns are filed, how much more complicated the system is with fewer people. So we have had in those substantial declines, we will talk about the good news, but the decreases obviously create challenges, and it kind of is a perfect storm. For us, we have over a 56 year period, you have 1000 agents leaving. And that is leaving for optional retirement. Law enforcement system, 20, 25 years, you can retire. So 1000 of your most experienced employees leave and you are not bringing any new employees in, and there is not really a transfer of knowledge to the next generation. There are a lot of positives to the hiring, but it brings along a lot of challenges. And in the period we have lost 1000, we have only hired about 250. So two or three classes of 24 agents a year over the last five or six years is obviously not enough to keep pace. We are no different than any other operating division. Nina talked about her staffing, mary beth as well. We are all competing for limited resources. So the hiring there are brighter days ahead. You know, we talked about i think everyone of the operating divisions is hiring. For us, we have some unique challenges. We do not have complete control over the hiring system. We set the parameters and the bar for who we are going to hire, but all of our agents go through the federal Law Enforcement training in georgia. That is run by dhs. There are close to 100 federal agencies that compete for space at that training academy. Almost every federal agency is hiring, so there is intense competition. So it is kind of ironic now that we are in hiring mode and worrying about making sure we are getting our agents through. I spend a lot of my time i talked about the First Priority thaty being protecting court tax mission, but the second is the hiring. Getting them in and getting them trained. Making sure we have appropriate folks to train them and get them online. Our agents go to training for six months before we release them into the field. And then there is a pretty extensive onthejob training program. Betweene hoping to hire now and the end of fiscal year 2020, we are hoping to bring on 300 special agents, which would be a significant uptick. Also recognizing the reality is that we lose about 140150 agency year to optional agents a year to optional retirement. Not as great as it sounds, but still fantastic news given the recent climate. I enjoy doing the panels with other folks from other operating divisions. One of the things i like to talk about is our role in Tax Administration and that ci is part of that role in Tax Administration. The commissioner has really reinforced that message repeatedly. But i think about i heard and have heard the former Deputy Attorney general Rod Rosenstein speak a number of times in one times, and one of the things he spoke about a year or so ago that really resonated with me in terms of federal Law Enforcement and relate Law Enforcement in general and really, Law Enforcement in general, is this idea of deterrence. I will not get the quote exactly right but the idea was it is not so much the number of cases that we prosecute but it is the number of crimes we prevent. And that is really thinking about how critical ci is to the overall ecosystem in Tax Administration, really being the backbone of voluntary compliance. And one of the things that sets the u. S. Tax system apart from other countries as having a really strong criminal tax component and recognizing that for those taxpayers that are compliant, that there are avenues for them, service avenues that nina talked about, that mary beth talked about. But equally important for the portion of the population that is criminally noncompliant, that there are repercussions for that and the knowledge that you can go to jail for those criminal actions. And that the general public understands that there are ramifications for that and they see that there is fairness in the system. I talked about and a couple of folks have talked about the new commissioner coming in. He is a if you have heard him speak or knew him before, you know he is a huge fan of enforcement. He has talked about, he talks about enforcement. He talks about criminal enforcement repeatedly. And one of the things that again resonates with me is and he said that the criminal enforcement is a service to those who are doing it accurately and correctly. And i think that that, again, resonates with me, the deterrence impact we have. But he does talk about the importance of the criminal tax system and also making sure that we are a part of the team. That it is one irs. But ci is not a separate entity. That ci is not a separate entity. We are all part of one Tax Administration. So we are hugely thankful to have a commissioner that is both supportive of ci and look forward to that, as caroline said. It is fast approaching a year here. A couple of priorities. I talks about i talk about tax and hiring as being more on the tax focus. We spent about right now, we are running 75 of our investigative time on tax work which is at or near an alltime high for us in terms of the percentage of time we spend on tax cases. And one other thing, if youre not that familiar with the criminal tax work is we do not control we do not have complete control over our cases. We have a lot of we take a lot of information in, information comes from a lot of different sources within the irs, outside the irs, but at the end of the day it is a partnership with the department of justice. There is not one case that we can bring without the the rj, whether it is a tax case, a nontax case, and that means we spend a lot of time and effort with those relationships with doj and aligning the priorities of the department of justice and all the judicial districts with the work that we do. And the other thing that i talk about is the goal is really balanced enforcement. We have many priorities. If you just take the Tax Jurisdiction that we have, you have employment tax, International Tax issues, return preparer, Identity Theft the list goes on and on and on. Theres many, many priorities. We could spend all of our time on any one of those areas. Take employment tax. We could deploy every single agent to Work Employment tax cases, but our job is broad enforcement. We are responsible for every one of the program areas. All the tax program areas, the threats in terms of Money Laundering, counterterrorism work, things like that and it is all about selecting the right cases. You know, broad Program Coverage and selecting the right cases. Our cases take on average about 18 months to investigate. And that is not counting the time that then it goes to the department of justice and requires additional work. Us behooveses us to look at cases that are more critical. Case selection is critical on the front end for us. I talked about the hiring i wont spend much more time on that. Other than you bring 300 agents on, a critical component to our hiring process is an onthejob training phase. These cases take a long time to work. Typically, when agent graduates from the training academy, we pair them up with an experienced agent for their first case. So you think about the impact, 300 agents notg completely offline, but part of their time to make sure we are properly training the future agents of ci. And i think again, we are no different from the other operating divisions. The training, we put a lot of time and effort into the training. What comes with that is we have a staff we have to have many people involved in the training. To deliver the training. To service onthejob instructors. So a lot of my time and effort goes into that process. A few investigative priorities i mentioned employment tax. This will be news to carolines ears, because we both worked very closely, when she was there, bolstering and looking at our employment tax program both civilly and criminally. We are at about 10 of our investigative time spent on employment tax cases, which is a significant uptick for ci. 4, 5 years ago we were at 4 to 5 , so we have more than doubled in terms of our investigative time. Definitely a bright light in terms of fraud referrals a reduction of revenue officers and special agents, we have seen an uptick in fraud referrals in employment tax cases. We have also been able to self develop through Data Analytics tools some employment tax cases. So we are having a lot of success there. A lot of cases are in inventory and a lot of great sentences in the last few years in terms of the employment tax. International tax enforcement. Last 10 years, we have done incredible work, really going back to the ubs case. Many taxpayers, facilitators, Financial Institutions over that 10 year period. We have had a lot of success. Up through, really, the swiss bank program, but we are continuing our efforts. We are constantly refining and looking for new avenues. We have a program where we are the only part of the irs that stations employees overseas and we are adding to that. We are in the process of adding an attache to dubai constantly looking at our oftprint, where the flows money are, where the best deployment of our resources is. That is a huge financial obligation when we put someone overseas representing the u. S. Government. And to increase that is a significant signal to us in the importance of International Tax enforcement. We also have an innovative approach in the International Tax arena, its called the joint chiefs of global tax enforcement. We call it the j5. It is my counterparts in the u. K. , the netherlands, canada, and australia. It is an outgrowth of oecd. Getting our employees to work more closely together. Sharing training and methodologies, looking at particular threat areas. We have been up and running for about a year. I mentioned that cases take about a year and a half. We do not have any public successes yet, but an incredible amount of cooperation, training. Next week, we are actually hosting with the world bank in washington, d. C. A cyber summit which is really focused on the methods and techniques of looking at cyber crimes and cryptocurrencies and things like that, and we will be hosting many other countries that we have invited to that training. We have done a lot of work traveling around the world in training our counterparts in how to investigate those crimes. Cyber crimes and cryptocurrency are probably next to Data Analytics that i talk extensively about. We have put a lot of resources into investigating cyber crimes. Whenever there is a lack of visibility and transparency into financial transactions, the risk of fraud goes up. What level of fraud we are going to see in cryptocurrency i dont know. I can tell you that we have criminal cases out in the field now. We get a lot of information in about noncompliant taxpayers in that area. So we are looking at it. We have trained our workforce and mandated that all of our agents do some basic cyber training. I can put it this way i think it is similar to how international cases were a decade ago, where some cases had an International Component but you did not see it in every case. Now, it is rare to have a case that does not have some type of International Component. And the reason why i think this area is so important is i think it is not going away. So i am not saying it will be the sole part of a criminal tax case or a Financial Crime case, but i think more and more you will see Cryptocurrency Transactions and cyber elements to every one of the cases that we work. And i want to be in a position where our agents are suited and trained to be able to types ofte these crimes. We are on the cutting edge of this. We have been involved in every major nontax case the darknet and dark web takedowns had irs special agents involved. The way you salt all of these crimes, whether it is tax or nontax is following the money. We are the only agency that does that, so we put in a lot of time and effort into that area. Data and technology. Every part of this service is working on this. I dont think there is a private or Government Entity that is not putting a lot of resources into this area. But we have had a lot of success in ci. You know, weve got an unbelievable amount of rich data within the irs and it would take the Smartest Group of agents and employees that i have years to make connections just by looking through terabytes of information that we have. So it is the combination of really strong analytical tools smart people, and that is agents and Data Scientists. We have had some Great Success in developing models, algorithms, and partnering seeing what other Law Enforcement agencies have, partnering with our other operating division counterparts within the irs. Looking to academia to help us out and maybe contribute as well as internationally. You know, there are a lot of incredible tools out there. So we are really looking to diversify our portfolio in terms of data and analytics. And i often say that data and Data Analytics is the least Law Enforcement thing you can talk about. You wont hear anybody else in Law Enforcement really talk that much about it. But when the work you do is Financial Crimes and it is tracing money and it is financial transactions, it is incredibly conducive to the work that we do. And we have had some incredible success. We are investing heavily trying scientists. I say trying to because everyone is trying to hire Data Scientists, finding them and trying to entice them to work for the government is sometimes a challenge, but we see huge potential in the leveraging technology, really, and we are excited about that. It is an exciting time. A lot of great stuff going on. With that, i turn it back to you, caroline. Caroline thank you. Im going to ask the first question to don because it is a question i get when we go to conferences together. Can you tell us what is a Data Scientist and what do they do in criminal investigations . Mr. Fort geez. We do have some. The agents are trained the first part of training is eight or nine weeks in constitutional law and how to use firearms and defensive tactics and the use of force, things like that. And then how to actually investigate a case. To Data Scientists know how operate the systems and we use palantir. There are a lot of other sophisticated tools out there, open source and otherwise. The agents have access to palantir and are expected to use palantir, but some of the more sophisticated tools require a Data Scientist. And it is not just a Data Scientist, it is folks in those analytical fields. You know, statistics, economics, mathematics, modeling, things like that. I dont want to pigeonhole it just to Data Scientists. The idea is in the future of ci and the future of the irs is more than just special agents. It is folks that can help us Leverage Technology and work handinhand with the agents to Leverage Technology to the best of their abilities. Ms. Olson you know, one of my concerns about the focus on data i really applaud criminal investigation for its work in that. My concern is that the irs is focused on data to identify the noncompliant taxpayers and they have not used all of those very tools, those wonderful tools to help the taxpayers who are trying to comply. And one of the areas i have been focusing on, in my short list before i leave, is to get the irs to agree to create an Economic Hardship filter. We have a ton of data about peoples financial situations. We know, based on their last filings were other databases that we have access to, even what their Family Structures are , etc. What assets they own. And we have all sorts of collection powers where we do not have to go to a judge and ask them to let us levy against the bank account or to garnish their wages. We are required by law, by law, required if the taxpayer has Economic Hardship, meaning they cannot pay their basic living expenses, we must release that levy. And we have identified all sorts of processes, including allowable living expenses, to identify what the level is based on family size where a taxpayer cannot afford to pay their basic living expenses. So i just described a formula. We have all the data on the income. We may not know cash income but we have a lot of data about income. We know family size. And we know the threshold for Economic Hardship. That is a formula. That is an algorithm. My office has created an algorithm that we applied toward the taxpayers, against the taxpayers who had entered into and streamlined installment agreement by the automatic collection system. And we found that 40 of the taxpayers, 40 of the taxpayers who entered into streamlined installment agreements which is about 70 of our installment agreements 40 of them had incomes below their allowable living expenses, meaning they could not afford to pay the debts they were paying. And in fact, it has proven that we saw that 39 of those 40 actually defaulted on their installment agreements. So we set them up to fail. Now, why we are spending our valuable resources dealing with those folks when we could be looking at folks who do have the ability to pay, we are basically getting the low hanging fruit into making payments but by law they should not be paying. And we are not using our data in order to identify those taxpayers, put an indicator on their account so when they call us we can say to them let us spend some time talking about your finances so we can find out whether they cannot afford to pay, really. That is all i am asking. We could also use that to screen them out of the private Debt Collection program, which also has 40 of its installment agreements, the taxpayers are at or below their allowable living expenses. And so that is on my list. We have already shown that it can be done. A blog thisshed week that said ok, the irs or the commissioner has come back and said is there a federal Poverty Level that could screen these people out . And we have just published the 50 a, showing that 2 federal Poverty Level is a pretty good measure. What i am looking at for the irs in the future is that they not only use data to nab the bad actors, but they also use data to assist the taxpayers who may even be making mistakes but are trying to comply. And if you do not do that, then you lose trust of all of those taxpayers in your system. And as a colleague and friend of mine in the audience here from the university of vienna, and an economic psychologist said if you do not have trust then youre going to have to control. Meaning you are going to have to go after these people. And we dont have the resources to go after these people so we really have to think about the tools to build trust from our taxpayers. And some of that is using data in a proactive way to assist them. Caroline that is a good point and maybe a good segue to mary sbse, yourms of revenue officers and collections. How are they using data in new ways these days . If you want to speak to that issue. Ms. Murphy an example of where we are using data is the employment tax. As you know, the employment tax we did not get to taxpayers per year, sometimes a year and a half after they had accrued what we called pyramid employment tax and now we are using data. We are running data runs to see when their deposits were made. Do we see any indicators that they were having trouble paying . Were they late . And so now we are getting out within eight weeks we are seeing when a taxpayer misses a deposit and sometimes earlier. We are seeing great improvements there. We are also using data, as i mentioned, in our nonfiler programs. We have a Program Assessment model, so we using models to run through different scenarios to see how we can help taxpayers in filing returns. What is the best model . We are also using data really exciting, we are working and partnering with nina on some notices. Traditionally, we send one type of notice to taxpayers. We have what we call the call me notice. We cannot answer the phones. Like nina, we cannot control how many taxpayers have balance due s and we have seen a Record Number of taxpayers call. After the lapse in funding, we saw some backed up demand. On april 15, we had an 82 increase in the number of calls from last year. So we are using data to look at what kind of notices we developed a notice, actually five different notices. I thought, which one are we going to pick . What we ended up with is using all five, because different taxpayers respond to different kinds of notices. Looking at their behavior, geographic location, ages, Different Things to see how we can get a taxpayers attention. We used different language, colors in some of them, different fonts. So looking at taxpayer behavior, for us, that is a huge indicator of whether someone is going to pay and what prompts them to pay. So we are using data in that aspect. And then on the exam side, we are constantly looking at our business rules and filters and applying more data to that. Working with lbi to see how we get the best case election. Caroline mary beth, we have heard from Field Collection in the last couple of years about hiring new revenue officers, at gs levels, more training, and a focus on behavior modification. Does that go along with the Data Analytics and trying to do Taxpayer Service in the collection field . Ms. Murphy yeah, it does. It is a balance with enforcement and customer service, like we talked about. Higher grades, we increased the grade level for revenue officers. The journey level is now a gs 11. 9. Was a gs revenue agents are now gs 12. Training is going to be challenging. When we hire 750 revenue officers, first we have to take people off line to train them. This year, we will try to rehire folks. We went and looked to see how many folks retired over the past couple of years, we sent letters to folks, would you be interested in coming back . We are going to try to get some of our past trainers. But oji has a concern that we want to go out with the best people and, like don, it takes a while to get up to speed. They have been with oji for a year. Looking at data, the commissioner has asked us to look at the collection work and so we have lots of activities around how data can help us get to the best case. And to ninas point, we dont want to be pursuing cases that result currently in a noncollectible status. Caroline and im going to throw this open to everyone. But there is a lot of tax in the news these days. But what did not get a lot of attention in the news, i dont think, is the near flawless filing system that we just experienced with the irs. We went through a time where tax reform was enacted at the 11th hour in 2017. Mary beth talked about her team having 29 provisions with no additional staffing. Nina spoke, obviously staffing is down across the board at the irs and they are answering questions from every income level. I think there is somewhat of a misconception that the Taxpayer Advocate is focused on low income taxpayers. That is not the case. I will ask nina to speak to that in just a moment. But despite all of the endurance and the shutdown, a very long shutdown that had a Significant Impact on the employees of the irs and their personal lives, they came through that Filing Season essentially with high marks all the way across the board. So i applied the irs i applaud the irs on that. Now that we have gotten through the Filing Season, though, and may be focused a little more on enforcement, we have heard a little in the news about the high wealth audits. And whether such audits will continue. And so i tossed that to you, mary beth. Can you tell us about what is in store in that area . Ms. Murphy so i will not go into any specifics, but yes, those audits will continue. Like i just said, we identified our work through an audit Selection Process of across all process across all different income levels. It applies to business rules, filters, scoring, to all returns to identify potentially noncompliant taxpayers. And so, in addition to these lbi doesked in sbse, some of them as well, our threshold is 10 million and below. Lbis is 10 million and above. But those will continue. I am sure you have heard the commissioner, employment tax is something we are pursuing. There are several other programs that we are working across the irs. Caroline so we should expect those to continue . Ms. Murphy yes, absolutely. Ok, great. Nina, let me toss it back to you for the point i made earlier about the perception that the Taxpayer Advocate may be focused on low income taxpayers. That is not been my experience. I am hoping you can speak to that. Weve got a lot of individual taxpayers coming into our cases, but they are taxpayers of all income levels. And certainly, the Filing Season results in calls, peoples refunds being held up and they are desperate for their refunds. But we also get very wealthy taxpayers or corporations that are desperate for their refunds as well. We have, in recent years with the uptick in looking at offshore and interNational Taxpayers, the Taxpayer Service to interNational Taxpayers is a is astoundingly poor. There is no tollfree line. You cannot email the irs and get a response. Therefore, you have to go on a toll line or mail them a letter. Good luck with that. And unlike criminal investigation, the irs a few years ago eliminated, about the was enacted, the last overseas service to help taxpayers. There is no one on the service side, even as we have ramped up passport programs and offshore initiatives. So a lot of those cases come to us to resolve. I have actually been looking at establishing local Taxpayer Advocate offices overseas. I figure we will get some candidates for paris. But that would be something, even if we just had a person and a secretary over there and worked the case is back in the u. S. , we would at least be able to assist, educate, and find out the kinds of systemic problems people are having. We really do get all sorts and i do want to say this i dont know how many of you have tried to bring a case to the Taxpayer Advocate service and maybe you have had success and maybe you havent but congress has recognized that the cost of representation can create a significant hardship. That is one of the statutory 7811 of thein Internal Revenue code to define what hardship is. So if you are working on a case and it could be something as simple as you cannot find the person that you need to in the organization, it is a simple problem, but you are spending hours and hours trying to find the person. That is something you should go to the Taxpayer Advocate service about, because we can at least find the person or send the case somebodysay to somewhere, you need to work this case or find somebody to work it. And then, we have many more complex issues that often raise to my level and i have attorney advisors on my staff and some of you may have worked with them and may have had cases in my office. Where we have worked together for i have issued a taxpayer assistance order ordering the irs to do something or not do something. So it really is a whole grab bag of issues. Right now, one of my major issues is looking at the amish. Because the Internal Revenue code was changed in tax reform to require Social Security numbers for the Child Tax Credit and the amish do not believe in participating in the Social Security system because they depend on themselves and not the government for assistance. They also do not claim the earned income tax credit. And when we had dependency exemptions come there was a exemptions, there was a process that the irs has used for about four decades with the amish would come in, prove they were the amish to the Social Security department, the Social Security agency would tell the irs that yes, they are approved, and every year they would file their return and before the return was processed, the irs would have them file paperwork to show that their children existed, etc. , etc. , etc. , and then we would file their returns. The irs has refused to do that this year because the Child Tax Credit requires a Social Security number. And i am writing a vigorous response. I have already raised this in congressional testimony. I think this is a violation of the religious freedom restoration act and several other provisions. And we will see where we go with that. But it is rare you get a tax thational issue in might be successful, but we will see where we go with that. Im doing my best. Caroline so if you are sitting there thinking that your client would not benefit from a 911, i worked on a multinational multimillion dollar case. It just came to resolution and we worked for many months on a very complex case. Case, a really difficult because without giving any details the relationships we are going to leave this discussion on the irs at this point. You can see all of our programs online at cspan. Org. We go now live to a discussion on the trump adminisio