Transcripts For CSPAN Senate Hearing On COVID-19 The IRS 20240712

Filing season and the irss. Andling of challenges at the 2020 Filing Season got off to a typical start. Since then, this Filing Season as been anything but typical a result of the National Health emergency stemming from the ongoing pandemic. Almost all regular tax filing and tax payment deadlines have been extended. This includes the individual and Corporate Income tax filings and payment deadlines, which were pushed back from the normal april 15 to july 15. There are some rumors they might be extended again. I dont know. I have heard that at least once. Extendedhese deadlines, the tax Filing Season continues with many taxpayers still filing taxes as usual to get their tax refund. At the same time, consistent with the Government Shutdown orders and cdc guidance, the irs limited much of its work to essential services, closed a number of facilities, and instituted telework policies where practical. Shortstaffed irs during the busiest time of the year. Understandably, that meant to taxpayers experienced longer wait times to get their questions answered. It meant more calls than usual ,hen unanswered and mail including paper returns, went on processed. Over the last couple of weeks, the irs has begun to reopen facilities and start back to normal operations. Commissioner, i will be interested to learn more from you on how the reopening is proceeding and what actions are being taken to clear the backlog of taxpayer correspondence, thee at the irs while irs has worked to keep up with the Filing Season duties. It also has been tasked with implementing a number of tax measures enacted by congress to provide relief for individuals and businesses. Worked treasury have nonstop to put out necessary guidance to taxpayers navigating important provisions designed to and families make ends meet provide businesses with needed liquidity to keep the lights on and employees on the payroll. Even more daunting was the implementation of the rebates for individuals, often referred to as Economic Impact payments. Irs and treasury worked at unprecedented speed to get the payments out the door to hand it to individuals and families forced to stay home due to the pandemic. Over about a two month span, nearly 160 million stimulus payments totaling almost 267 billion were delivered by direct deposit, check, or prepaid debit card. To get took steps payments to as many eligible individuals as possible. This included working with the Social Security Administration Department of Veterans Affairs to get payments for seniors, veterans, and individuals receiving certain federal benefits. Those same people, having no need to file a tax return. For others who typically do not file a tax return, the irs established an online tool to register further payments for 6 million individuals and families who took advantage of that tool. Commissioner, you ought to be andked and i do thank you your staff for working around the clock to get this much needed assistance in the hands of taxpayers during difficult times that was no fault of their own. Years, first time in 244 our government took the step of actually shutting down the economy. This, i consider all would say the irs performed exceptionally well under the circumstances. Of course, when you are tasked with processing 160 million payments in expedited fashion, there are bound to be some pickups hiccups. Be monday always morning quarterbacks eager to criticize even though we all know they couldnt have done any better. I am interested in getting your perspective on how the process rs hasrked, what the i learned and what improvements could be made. Beyond the current Filing Season, the challenges posed by , the irs has been working to implement the taxpayers first act, which was enacted last year, to modernize the irs. Callsxpayers first act for the irs to institute comprehensive Customer Service strategy, modernize its Organization Structure and an Information Technology strategy. I look forward to hearing how the irs has proceeded with those reforms. We thank you once again. Sen. Wyden thank you very much, mr. Chairman. On behalf of the chairman and i, i do have some sad news to begin this mornings hearing with. The chief of staff for the joint committee on taxation has passed away. He was a truly extraordinary person. He accomplished the rare trifecta of making his mark as a respected expert in tax law in business, in government and in the academic world. He was always professional. We all remember him, always professional and fair to both sides. He became a personal friend of mine, a manofwar and good a man of exceptional warmth and good humor. I thought of him as a mensch, a man with exceptional character. I just wanted to make those remarks and the chairman said i should express our sorrow on today on theh was passing of ed. We need to look at our annual oversight hearing. This year of course it is intertwined with the covid19 response, as the chairman mentioned. I want to start with covid19 because i think we are all seeing spikes now across the country, tens of thousands of newly identified cases every hotspotsbeds in running low. The president said out in the open he wanted less testing and he has reportedly gone weeks not speaking to our Top Public Health officials. Icans to say some of their elected leaders have given up. In my view, it defies common sense because it is a certainty jobs and the economy cant come to full strength as long as the pandemic continues with these kinds of spikes in so many communities so hard hit. This community will have to do more. We will be the center of key economic discussions. I feel as my colleagues know we must extend these benefits as long as it takes to get the economy back to normal. I see senator thune and others know that what this means is you have got to have these benefits so people can pay their rent and groceries. That is as unemployment goes down and the senator from south dakota calls it tapering off. When unemployment goes down you are in a different situation. We cant leave people august 1 not being able to pay the rent or afford groceries because they will just be an a position where we will probably have a tsunami of evictions and people will be desperate when they cant feed their families, put groceries on the table, tens of millions of folks are out of work and more and more the temporary furloughs are becoming permanent layoffs. I am hopeful that as we go to the negotiations we can get super charged benefits that are tied to conditions on the ground, the marketplace conditions we got out in the real world. On the subject of irs oversight, i will touch on a stunning new report that shows how years of republican budget cuts have led to wealthy tax cheats getting off scott free. Over three years, the irs failed to audit almost 900,000 wealthy taxpayers who skipped out on filing tax returns. Together, these wealthy taxpayers owed nearly 46 billion in taxes. Colleagues, think of what we could do for hardhit communities if you are talking about having that money, 46 billion in taxes, that was owed to the people. In many cases they fail to respond to one delinquency notice from the irs. People there owed 21 billion. This is not about Shadow Networks of hard to trace shell companies. It would not take a lot of Forensic Accounting to start cracking down on tax cheats because we are talking about people who simply would not file the return. Two issues stick out. First donald trump says he is prolaw enforcement but his administration has not cracked down on these wealthy tax cheats who have stolen tens of billions from american taxpayers. After years of republican bullying, audits of wealthy taxpayers are down. Maybe it does not come as a surprise that donald trump is not doing anything, given what we know about his long record of tax dodging and outright fraud. And it is past time for congress to reconsider how the federal government fights against tax cheating. Over a decade of republican budget cuts to the irs, a third of the enforcement personnel and half of the officers. This new Inspector General shows how easy it is after these enforcement cuts to rip off taxpayers, for the wealthy to get away with cheating, and even those who dont bother to file their tax return. The burden of paying painful tax audits has been shifted unfairly onto those hardworking americans who follow the law. Years of republican budget cuts have made this a good, good time to be a rich tax cheat and the congress should change it. If you dont believe in law and order, you advocate for cuts that allow with tax cheats to get away. Commissioner rettig thank you , for joining us this morning. I hope to get to our question and answers after we hear from the commissioner. Sen. Grassley before i give the introduction, there is something i was wondering about, whether or not we would increase, extend the the time beyond july 15 for filing. I have been informed last night secretary mnuchin announced it would not be extending the filing. And he has the authority under law to do that. Now to introduce our witness, the question of Internal Revenue service, mr. Rettig. Prior to his present position, mr. Reddick was a highly respected Law Firm Partner in california for more than 36 years. There he represented thousands of individual businesses, corporate taxpayers before the irs, the department of justice tax division, state taxing authorities. He has served as a member and chair of the irs Advisory Council 2008 to 2011. Chaired the taxation section of the bar of california. And on the Advisory Boards of the Franchise Tax board and the board of equalization in california. He has received numerous professional honors. He has been featured speaker at many conferences domestically and internationally, authored numerous tax related articles. He has a ba from ucla and jd with honors pepperdine university, master of law at new york university. Commissioner rettig, we are happy to have you here. We will have your Opening Statement and then questions. Mr. Rettig thank you for the opportunity to discuss this years Filing Season and the irs efforts to help taxpayers. Before i proceed, i would like to extend my sympathies on behalf of the Internal Revenue service to the family of ed kleinberg. I was familiar with him through his tenure at usc and a better and more supportive person for Tax Administration hasnt existed. So we are equally saddened to learn of the passing of ed last evening. I am proud to be working with the Internal Revenue service in my second year as commissioner, knowing 96 of the gross receipts of our country flowing through the irs has strengthened my belief that a healthy, functional irs is critical to the success and wellbeing of our country and our people. The irs Rapid Response to the pandemic shows how critical it is for the agency to receive consistent, timely and adequate multiyear funding so that we can succeed in providing the services our country deserves. The irs employees have worked around the clock the Economic Impact payments to help millions during this challenging time. As stated by the chairman, approximately 100 million Economic Impact payments have been distributed, totaling approximately 270 billion. There is more to do. The irs is focused on making sure every american receives a payment. We are especially focused on getting payments out to the historically underserved communities of our nation, such as individuals experiencing homelessness. We realize the difficult how difficult the pandemic has been for Many Americans. For that reason the irs has provided important administrative relief as well as moving the filing deadlines to july 15 and they will not be extended beyond, but yesterday we issued a notice that had a variety of payment related options that folks can look to. We also temporarily adjusted our processes to help people and businesses during these Uncertain Times under the irs people first initiative. With respect to Filing Season, while we had to adjust and redeploy resources during the pandemic, our employees have remained dedicated to delivering the 2020 Filing Season as they continue to process Electronic Payments, issue direct deposit refunds, and accept Electronic Payments during the pandemic. As of june 19, we have processed more than 126 million individual returns and have issued more than 93 million refunds totaling more than 257 billion. We are in the process of a phase in reopening of some of our operations when and where it is safe to do so. In this regard, we are processing paper returns, tackling the backlog of mail, and reopening our phone lines and adding phone assistors. Refunds anditizing Customer Service, as well as the health and safety of employees and everyone we interact with. We will continue to follow, and we and where possible, exceed applicable safety guidelines and majors. We are committed to delivering on the process promise of a new irs. We continue to be grateful to congress for last years strong bipartisan report support into passing the Taxpayer First act. We will put forth comprehensive strategies for newly envisioned Taxpayer Experience operating through the eyes of the taxpayer. With respect to enforcement, the irs is committed to having a strong, visible tax enforcement presence. During my tenure we have shifted significant Examination Resources and technology to increase our focus on high income taxpayers, especially those who have failed to file returns and those engaged in certain types of questionable transactions. With respect the budget, by providing adequate funding, congress can help the irs deliver on its mission and build a stronger irs for taxpayers as required by the Taxpayer First act. The president s fiscal year 2021 budget requests and appropriation of 21 billion and Program Integrity cap. We are asking for Congress Help legislatively by allowing the irs greater flexibility to address correctable errors and improve irs oversight of paid tax return preparers. This concludes my statement and i would be happy to take your questions. Thank you. Sen. Grassley it looks to me like what i got from the clerk here, most people are going to be remote. So i dont know whether people that are remote have the timer or not. If you do, you know when you need to stop, but if you dont and i see the five minutes time up, finish your question. We will let it be answered and then we will quickly move on. Because i cant see you folks facetoface. That is the best way i can do it to keep things on time. Commissioner rettig, last week the Government Accountability office put out a report discussing the federal response to the covid19 crisis. That included the irs work on getting stimulus payments out to americans. One issue raised was because of a glitch with the irs nonfiler tool, some did not receive the additional 500 for the children claimed on the form. The irs estimated 430,000 stimulus recipients didnt receive the correct amount. I understand the irs intends to send these tax filers any additional amount when they are. When they are. So when can these tax filers expect to see these additional amounts . And then before you answer that, let me refer for a second part of the same subject senator collins sent you a letter expressing similar concerns about those on Social Security with dependents missing out on the additional per child amount due to the april 22 deadline for this group to use a nonfiler tool. As you go back to account for the dependents for other nonfilers, does the irs intend to simply send additional amounts due to any seniors who filled out the nonfiler tool after the april 22 deadline . Mr. Rettig with respect to the first group, the individuals where the 500 payments were missed, i believe the figure is about 365,000. In any event we are going to be reissuing the 500 payments this summer. Similarly, we have an issue with respect to individuals who had filed injured spouse claims and we are taking a look at those, and we anticipate reissuing those, as well, sometime i believe during the summer. But we can verify that separately. With respect to the Social Security information folks, we are taking a look at that. We have some limitations on abilities and capacities to move things through. We are sympathetic with trying to get as much funds out as quickly as possible. That i cant commit on but we are taking a look at it. Sen. Grassley for much of the Filing Season, the irs has operated on short staff this has resulted in a backlog. We have irs resolution system waiting to be addressed. Many are returns filed by low income taxpayers claiming the eid see and Child Tax Credit. What steps is the irs taking to clear this backlog and how is it prioritizing returns that were flagged for error resolutions . Mr. Rettig the eidc have extreme priority. I think you are aware, we are brought we brought back employees on a voluntary basis and have been bringing people back week by week with full staffing given, under the new procedures, by july 15. We expect to move through the eitc claims as quickly as we can but they have priority. We allocated priority to refunds, we allocated priority to Customer Service calls with Customer Service representatives on the campus. The Taxpayer Service side of the organization is what we have stood up first, and most importantly, that we are trying to address. Sen. Grassley there is a significant mail backlog for the same reason, that staff couldnt come to the office. We have even heard reports that you had to bring in tractortrailers and rent extra Storage Space to store the mail. How long do you expect it to take to address the backlog and are there procedures in place to prioritize certain types of correspondence such as tax returns and audit requests . Mr. Rettig paper return are being prioritized. In terms of the inventory, which is 12. 3 million pieces of correspondence, which includes paper returns and other correspondence, we are focused on paper returns because many of c refundsl have eit and otherwise but that is another focus. Sen. Grassley i will say, could you explain the reasoning for not screening out payments to the deceased from the start . What procedures were put in place to limit such payments as well as recover those that went out . Mr. Rettig with respect to the deceit irs followed the practice with respect to the payments that went out in 2008 for the stimulus payments, and after three weeks of issuing payments, treasury and counsel issued guidance indicating the people decedents should not be receiving those payments. Irs changed the processing for that. Because there was no clarity in the cares act that decedents should not be receiving payments, we administered the cares act as written. As treasury came to the policy conclusion with counsel, decedents should not be receiving the payments, we adjusted our filters after the third day and input the death bomb. Sen. Wyden commissioner, lets go to the infuriating new report from the Inspector General that found millionaires are getting away without paying the taxes they owe. Between 2014 and 2016, nearly 5000 taxpayers who owed at least 500,000 in unpaid taxes did not file a return and were not audited by the irs. Owed an00 scofflaws accumulated 15. 7 billion over three years and they got away with it. The report found overall, hundreds of thousands of taxpayers with significant incomes were skipping out on filing tax returns, and paying a cumulative 45. 7 billion in taxes over three years with the irs doing nothing about it. I think this is infuriating. And i hope you are as angry about this. My question is, we confirmed you here in this room almost two years ago. I have got to assume you learned about this outbreak of lawlessness i have described, and i want to know why you didnt call then chairman hatch and i up and say, hey, this is what happened. It is outrageous. I want to stop it now. Here is what i need from the finance committee. We never got such a call. Mr. Rettig that report addresses a time before i was confirmed. Sen. Wyden i understand, but when you learned about it, why didnt you call the chairman and i and say, lets stop this . Mr. Rettig we are. Sen. Wyden no, you are doing various things with budget and the like. Im interested in hearing it, but im asking you a specific question. When you learned about this, it seems to me this is priority business. We are talking about billions of dollars. You all can find time to go after folks who could get the earned income tax credit. Why didnt you call up chairman hatch and i and say, we have to do something about it now . In my view, this should have been a call made almost two years ago. Why didnt you do that . Mr. Rettig can i tell you what we are doing . You like to tell sen. Wyden commissioner, i want to know first why, when you saw this going on shortly after you were confirmed, why you didnt say to this committee i have got to stop this . Answer that first. Then tell me what you are doing now. Mr. Rettig after i was confirmed, this issue was not brought to my attention. Sen. Wyden lets stop. Are you saying you and your staff did not know that 900,000 individuals skipped out on filing their returns and paying the 46 billion they owed . Is that what you are telling us . Mr. Rettig that report relates to tax years 2014, 2015, 2016. Can i talk about what i did when i got on board . Sen. Wyden i want to know what you did when you learned about that. Mr. Rettig when i learned about that, a lot of this has been public, we changed certain folks with respect to certain positions in the irs. We moved somebody from the Criminal Division of the irs to a commissioner, Small Business selfemployed. The deputy chief of criminal investigation is the commissioner of Small Business self employed. We created a fraud Enforcement Group headed by a career irs criminal enforcement, criminal investigation person. We created a promoter, coordinator position. We recently added a significant counsel attorney to the front fraud Enforcement Group. We have touched all nonfilers we are aware of with respect to 2017, 2018. We will with 2019. For fiscal year 2019, we closed more than 364,000 automated substitute for return matters resulting in 6. 6 billion in additional assessments. We have a nonfiler should you strategic plan. Time isen my essentially up and i have given you an opportunity to respond. How much of the 46 billion has been recovered . Mr. Rettig i dont have those figures. Sen. Wyden can we have those figures within a week . The reason i want the answer, to the best of your ability is because we always hear about things being done in the future. We hear about changes with respect to policy and new people being named, but this is a brandnew report. It is the latest report from the Inspector General and it says offlaws are making off with enormous sums of money we need for priorities at home. I am trying to figure out when you actually learned about this and what you did to collect that money. I am over my time. I would like a written response to my questions within a week. Thank you. Sen. Grassley senator thune. After that, by remote, senator stabenow. Sen. Thune medical professionals around the country have come to hardhit areas to help, forming an essential part of the medical response and saving lives. I believe these Frontline Health care workers are heroes and deserve our nations profound gratitude. However, others, including some state leaders, believe these individuals are deserving of something else, tax bills. Ive introduced Bipartisan Legislation along with senator brown called the remote and mobile workforce relief act which would establish a special 90 day standard for healthcare workers who traveled to another state to fight coronavirus and help ensure these workers dont face surprise tax bills for the critical assistance they have provided. It addresses possible tax complications that could face remote workers, including state withholding and nexus issues. I know the safety of irs workers is paramount to you, and much of your workforce has had to work remotely as well. As a Large National employer with a footprint in many states, is it safe to assume you are having to confront many of these same state tax withholding issues presented by remote work . Mr. Rettig that is accurate. Sen. Thune i would hope we could make progress on addressing that and provide certainty and clarity for a lot of these employees who are crossing state lines, in many cases to provide assistance to help us defeat the coronavirus. I am hoping that legislation can ride on whatever the next cares packages. This year, the president s budget once again proposes to improve clarity and worker classification requirements. For the past two congresses, i introduced legislation will do that. My bill the new gig act creates a safe harbor based on objectives taxable for income and employment tax purposes. What is new this year is how him more important gig work has become. During the pandemic many of us have relied on these workers to deliver our food and groceries among other necessities. Companies who have wanted to provide additional benefits to workers, from ppe to financial assistance, hesitated to do so for fear that as a result of their support, they could accidentally see these workers be reclassified from independent contractors to employees. Will you continue to work with me to add the muchneeded certainty to our worker classification rules so companies can provide support for workers to help them stay safe during the pandemic . Mr. Rettig yes, sir. Coons sen. Sen. Thune i introduced legislation in to allow the tax march filing deadline to be extended from april to july. Shortly after that, you proceeded to approve that request, or the Treasury Department did, and yesterday, as the chairman noted, the irs and treasury announced a deadline would not be postponed. Could you speak to whether this decision was made in response to feedback from states regarding their own fiscal concerns . Is that your impression small and mediumsized businesses have enough liquidity to pay their tax bills . Mr. Rettig the decision was ultimately made by the treasury, but we were interactive with various professional organizations, professional service organizations. We were interactive with various states on the course of the map. The decision was cumulative after one of the organizations i know solicited 1000 of its members to get input. They were supportive of not postponing the july 15, and the comment was that the businesses have started to settle into a degree of reality. In issuing the notice, the irs issued a notice yesterday with a host of Payment Options for folks who may not be able to pay by july 15. Sen. Thune would more separate deadlines be better or worse . We are moving into with respect to the irs we are always processing two Filing Seasons at once. We are moving into the next one. It becomes cumbersome but that was not taken into account. Irs employees will rise to the challenge. With respect to taxpayers and particularly self employed or underrepresented taxpayers, too many dates against to get a little confusing in the trenches. Giving some degree of certainty that they can move to and having us exercise discretion on the back end is a proper path forward. Sen. Thune thank you. My time is expired. Sen. Grassley senator stabenow, and for everyone else that is remote, i dont know if you know when the five minutes or up. I dont intend to cut you off right at five minutes but if you hear a tapping of the gavel like that, that means i should go onto the next people. We have a lot of people. We have got 24 people that want to ask questions today. Sen. Stabenow i understand. Thank you and the Ranking Member for holding the hearing and thank you, commissioner, for joining us today. This is an important discussion. I want to speak about the 1200 Economic Impact payments that have been so vital to stabilizing so Many American families during this pandemic. I think along with the pandemic, Unemployment Insurance has really allowed millions of families to just survive through all of this. Families in michigan have received more than 4. 8 million in payments, the money helping people through the crisis. I want to thank you for working with the Social Security commissioner and the secretary of Veterans Affairs to ensure people are receiving social people receiving socials that eip without having to file tax returns. However, a lot of folks still arent getting or havent gotten the payments. The center for budget and policy priorities estimated about 12 million families. We have estimated more than 300,000 families in michigan that are eligible, but have not received them because they didnt file tax returns, they havent used the irs website. So these are likely to be our lowest income families. Disproportionately people of color. And there are people that 500 per child, it is extremely important. So my first question is really basic. Does the irs have an estimate of how many people are eligible for eip but havent yet received them . Mr. Rettig i can think that that 12 tell you million is significantly overstated. Stabenow what do you think the right number is . Mr. Rettig i would say it is overstated multiple times. Part of the difficulty here is we cant count people who we cant identify and issue payments to people we cant identify. We have reached out and personally i have reached out to numerous folks around the country and thousands of Different Community organizations, including organizations involving homelessness and other arenas which have a significant contingent of folks who have the ability to operate off the radar screen. With respect to the federal government. Sen. Stabenow i appreciate that. In the interest of time, i will proceed a little more because when we are talking about another covid package, one of the things on the table is an additional 1200 payment which i hope will happen. What should we be doing in the current round in terms of getting people the , andnts that they deserve any future rounds, what should the strategy be . How should we write this . What can we do to support your efforts to make sure the people who most need this help right now are able to get it . Mr. Rettig there are Lessons Learned when you go through a process like this, including outreach to various state organizations that might be providing subsidies to members of the state the federal government might otherwise be unaware of. Folks who dont otherwise have a filing obligation. Similarly we have created what we call toolkits. One is for members of congress and the senate and the other is for literally every type of organization you can consider. We have a lot of information. We have put our information in more than two dozen different languages because there is a lot of situations with respect to certain communities that are not interactive. But we can provide some information on a go forward basis. The people we have been able to identify now, we have and we can identify them, i think that is hugely positive but we have a significant will stop you,i finally, i just want to refer to the fact that a lot of what we are talking about are folks that are unbanked. They dont have bank accounts, they have difficulty open bank accounts. I know we have sent payments by debit cards. Some unbanked people, unfortunately they werent expecting it. People thought it was fraud. They threw it in the trash. When we are looking at another round of statements and checks, using a debit card which can make sense as a strategy, what solutions can we avoid repeating . What problems can we avoid repeating with the people who did not know it was coming and basically did not take it seriously . Are you reaching out to them . Because the debit card would make sense to people that dont have a bank account, but there needs to be a strategy, some kind of communique so they know it is coming. Mr. Rettig issuing payments by debit card was determined by the bureau of Fiscal Services rather than the Internal Revenue service. We were instructed to provide a file in a certain manner and they made the determination of how the payments went out, whether it was by check or by debit card for unbanked people. But i think certainly, marketing outreach, any kind of Public Service announcement not only by the Internal Revenue service but a number of other agencies and state agencies and similarly, congress. I dont think we can do too little. Sen. Grassley senator portman, by remote. Are you there, senator portman . Sen. Portman i am here, mr. Chairman. Can you hear me ok . Sen. Grassley i can. Sen. Portman thank you for your service. Your last year as commissioner must feel like 10 years of service. We appreciate the challenges you face and how you have handled it professionally. I will ask questions about some concerns i have. But overall, let me say that i am pleased you got the checks out as quickly as possible. There has been a lot of discussion about that this morning. One data point in your testimony in 2008, it took us 10 weeks to get the first check out, 10 weeks into this when we had 90 90 5 of the checks out. I heard from my content my constituents about, where is my check . I think that was one of the areas we did bad in terms of the legislation we passed in congress and getting help to people. It was needed. We may do it again. I think these questions are appropriate to ask. One is what are you doing to correct some of the problems that were encountered, in particular those who did not have a bank relationship, were unbanked and have had a tough time getting their checks . They log on to get my payment, which i encouraged all of them to do, and they find out their check has gone to another account they have never heard of, as an example. So these are folks who often are low income, and need the checks more than anybody. What is the status of some of these nondelivered or incorrect payments and what steps are being taken to make sure checks are being processed and reissued . Mr. Rettig reissuing checks is a priority for the Internal Revenue service. We take it seriously, the concept of getting these payments as quickly as possible. We put together the portals. The first portal was launched on april 10. The portal for expect to get my payment was launched on april 15. 14 Million People successfully used it. This portal 6. 1 Million People successfully used it. 192 Million People successfully verified the status of their payment on the get my payment portal. We have moved forward with that information. Our focus is on the people who the irs is unaware of their existence. Identifying people and try to get payments into their hands is one of the reasons why they moved to using debit cards. As far as distribution of payments, one of the limitations was the capacity that was about five to 7 million checks per week. The Internal Revenue service was ready to go by april 10, with the information we had to launch the payments, which is how 81 million payments launched on april 10. I appreciate your focus on those who needed the most. The other question i have is about refunds this year. I am surprised how many people, before the deadline, 148 million have been processed as of june 19, which is on par with 137 million last year. Most people did not take advantage of that, in part because they wanted the refund. I am concerned that even though people have filed, they have not had their tax returns processed. There are many individuals, nearly 5 million paper returns are sitting unprocessed at a Processing Center somewhere around the country, as well as the 10 million difference in refunds process this year compared to last year. We are taking peoples tax returns but we are not processing them. As a result, these refunds are sitting in the federal treasury rather than going out to people, as they should. This would be a de facto second stimulus. It would be huge if we could get the money out the door. It seems to me that should be our top priority. We have received hundreds of inquiries from recipients cannot file electronically and need their refund to make ends meet, to make their car payment, to make their rent. Can you tell us what your plans are to process that and make sure refunds get out the door as quickly as possible . Mr. Rettig the paper returns are a high priority. I think we are running through that at about one million per week. Getting those out is a priority. Returns that mightve been called up and to Identity Theft situations are also priorities. The refund side of the houses the first thing for our Customer Service representatives. Currently we have a run 8300 folks working those. I would encourage you to read over your efforts there. More of whats happening now in the economy, we still have 10 Million People out of work. We have ourselves in a recession. And getting these refund checks out is incredible. We have the information that its something that can be done. I would think it would be a high priority. With regards to the issue of irs reform, i have a few questions i want to submit to the record. I would just say that, with regards to high risk reforms, we appreciate all you have done. We are looking forward to the restructuring report that is due by september 30, 2020. The Restructuring Commission led back in 1997, made a difference to improve the industry. We look forward to that restructuring report, and look forward to additional questions and getting your answers. Thank you for your service. Senator cassidy, by remote. Sen. Cassidy thank you for being on. A couple of things off the back. Senator menendez will ask you a couple more questions. But i want to say our bipartisan bill attempts to revise the state and local relief. Let me ask you to set the stage for that. Do you agree with related to the pandemic because revenues could fall off the cliff, not mismanagement by that local city . Mr. Rettig i personally have not analyzed that. We have worked seven days a week, 12, 15 hours a week since march. I am aware with the private sector and the government sector being shut down that there has been a big impact. Great. That sen. Cassidy sounds great. Regarding conservation, the neighborhoods in downtown new orleans, like baton rouge, which has been revitalized, i know there has been a review of conservation and it seems that the Historic Preservation got caught up in that, which are a fraction of the conservation. It doesnt seem like the irs evaluation of conservation has drawn a distinction between Historic Property and the land conservation. With the irs be willing to create a safe harbor for those the preservationists who wish to use the program, which is the way congress intended. Mr. Rettig with respect to policy on issues like that, we are willing to take a look on it. But a distinction between historic easements and the conservation is that syndicated conservation. Internal Revenue Service is supported of it. Its supportive of legitimate conservation. And that syndicated that we have seen significant abuse and thats where a significant part of our Enforcement Effort has been and will continue to be. Sen. Cassidy i dont know if this is you or treasury, but the holdup seems to be that the indians are being denied over mandatory changes. For example, putting in a compliant wheelchair ramp, which is a little bit of a catch 22. You dont do well if you do put it. That is the concern. There is also an issue im sorry, my computer, im trying to follow more than one computer. I apologize for the delay. There is also the issue of the ministry recovered 19 relief. I am interested in paid leave which is contained in hr 6201. Could you give your insights on these administrations of the paid leave tax credits. My colleagues and i are contemplating other legislation and we would love your thoughts on this. Mr. Rettig as tax administrators, on behalf of the country, we are doing our best to administer one of these provisions. They are relief provisions to provide relief for businesses in this context, and individuals and whatnot. I can tell you from our perspective, we have prioritize this entire arena and are doing our best. Sen. Cassidy is the program doing well, or is this Something Congress needs to help you address . Mr. Rettig today i am not aware of something i would call a hiccup, but we would relish the opportunity to meet with members of congress and others who are looking at trying to provide our assistance and meet with staff, or anybody. Sen. Cassidy i have one more question. We have some companies which have employees who work for Foreign Corporations overseas. The guy working in an Energy Sector is doing something off the coast of israel with natural gas development. I am told the irs released guidance saying the activity for these workers trapped in the u. S. Right now because of travel restrictions would not result in the Foreign Corporation being deemed that a u. S. Trade or business is having a permanent establishment in the u. S. Can you release more guidance . There is concern about relying only on an online faq and a formal irs notice would be preferable and then you updated to include the documentation necessary to prove the travel imparement. Mr. Rettig the guidance would be a treasury policy call, but i will take that back. Sen. Grassley senator menendez. Senator menendez . Ok. Senator lankford. Senator lankford . Ok. Senator carper was here in person, so i will go to senator dames by remote. You suppose our system has broke down or anything . Senator cardin . Go ahead, senator cardin. Sen. Cardin thank you, commissioner. I want to figure out a way to get checks out, rather than having to wait for their refund in the next tax season. I know that would be a terrible inconvenience. Thank you for your commitment to find a way to deal with this. I do want to talk to little bit about the Taxpayer First act. We recognize that covid19 has challenged the implementation that requires the irs to be more customer friendly, that deals with training and deals with several of these issues we have been working on for a long time as members of the Senate Finance committee. You tell me how you have been impacted on implementing that act in covid19. Mr. Rettig unfortunately, we have been impacted. We had to redeploy services in a number of different arenas. Somewhere within two to three weeks ago we sent a letter up indicating that we probably will need to move the september date to later this year, november, december. We are working very hard on it. The irs takes the experience of taxpayers quite seriously. I think you are aware of the fact that its a significant purpose why i did come on board. I was trying to make things better for everyone who interacts with the Internal Revenue service. Every employee wants to do more and wants to do their best. The Taxpayer First act as an opportunity and privilege for us to move the Internal Revenue service into the arenas where i think we are actually doing things through the eyes of the taxpayer as opposed through the eyes of the federal agency. We are also looking at the organizational structure. We have had more than 1000 interactions in terms of focus groups and comments and such. Receiving information from all over. Anybody can submit a comment on the website in terms of this. We are working hard, but we did get pushed back with respect to covid. We were doing really well. Sen. Cardin lots of members of our committee are very interested in this. I would suggest we have an opportunity for briefings so we understand exactly what you are trying to do. We understand that covid19 will impact the past schedule here. We would urge you to keep us informed. I want to cover two other points. To deal with the Employee Retention credit. We know there has been some credits that have been given. We would welcome your thoughts as to how that program has been implemented. We know the house is interested in modifying the program. We will look at legislation, i hope, soon in regards to the next stimulus package. The retention credit was one of our major initiatives. What challenges have you found to try to implement that . Mr. Rettig there has been a degree of fraud for folks who looked at it to take advantage of a really good Program Designed to help a lot of businesses, as well as employees. We think we are pretty good in terms of identifying a fraud. We have indicators and filters, but i think you have probably seen a number in the prosecution. The quickest prosecution was within two weeks. An individual was indicted within two weeks of submitting paperwork. Thats an arena we would like to have some input on in terms of how we can limit that. In terms of the entire cares act there have been a few scams, for lack of a better word. We have devoted quite a few resources to that as the treasurys Inspector Generals office. We would welcome the opportunity to meet with staff to explore options. Sen. Cardin the last point i want to mention is that the cares act did provide relief in regards to Retirement Security by a rallying relief among distributions and other provisions. These are temporary issues. We know that in regards to the Retirement Security it will be impacted by covid19. We are looking at substitute changes. Senator portman and i have introduced legislation that would provide additional help for Small Businesses for , parttime workers and low income workers. I would just urge that we were together and get your experiences during covid19 as to how we can use the Internal Revenue code to encourage more Retirement Security options for vulnerable workers. Sen. Grassley thank you senator cardin. Would people from menendez, dames, ifcarper or you want to be recognized, please tell the staff. I skipped over you to go to cardin. I bigger pardon. Go ahead. Senator bennett . Are you available . Mr. Chairman, can you hear me . Thank you, mr. Chairman for holding a hearing. Thank you senator carper for yielding. Thank you, commissioner, for all you are doing. The irs created a portal around households to register for their 1200 Economic Impact statement. However, unbeknownst to its users, the portal seems to have created a limited tax return, or filed a tax return as a formality for each household. When the taxpayers to file the 2019 return and received her income tax credit, they were prevented from doing so. Its my understanding that they can still file a paper return and the irs has limited capacity to process paper until late june and was not processing paper returns at all. I suspect, if i understand this correctly, a lot of people are going to become discouraged when unable to file online, and this is in 10 million households that dont have a clear way to file taxes and no way to claim the earned income tax credit and the Child Tax Credit until a suitable Online System is put in place to deal with this, created by the irs system. Millions will go without the money they desperately need. For example, a mother of three received 2700 in Economic Impact payment, but could be eligible for double, but is unable to claim it because she is in this socalled filing trap. Can you confirm that the portal is filing tax test filing tax returns on behalf of these taxpayers and the users of that portal. Mr. Rettig the purpose for the portal was for them to provide us with dependent information, which was the additional 500 per qualifying child to get that in. We are about to issue guidance for these individuals to file a paper return. It will be marked, and amended and we will have specific guidance. Amended eip returns in paper. We will extract those from the mail and process those on an expedited basis. Commissioner, thank you for doing the outreach on the additional 500 payment. You and i had a conversation about the importance of that payment, but is there no way to is there a reason why this cannot be done in a more expeditious way an online . I appreciate you saying the payments will be prioritized, it feels like it will be slower than these people would need to get these payments. Mr. Rettig we are trying to get things to come in through certain portals, i cannot commit to another lane for having us come in right now. This will be the lane we will be announcing and we will be expediting it. I think you are aware we have specific email for members of the house. House. Gov or senate. Gov. If you have folks reaching out to you on these issues, you can forward that to us. Those emails are handled on an expedited basis as well. We have truly tried, given the fact that our employees are dealing with the same thing everyone else in the country is, and we have around 56,000 employees currently teleworking, we have worked hard to try to address as many issues as we can. Continually today i say, this is a priority that is a priority and those are accurate statements. When i have a priority, its knowing that we have the Human Resources to back that up. We also have the employees that have the desire to make that happen. Our people care, and they care a lot. Let me just ask a final question. Whether there is anything preventing the irs from automatically paying child benefits households in this situation using the w2 data that the irs already has on file . Or is there any other way you think it could be expedited, or, in a sense, automated, given the challenges the agency is phasing with the dire need that so many of our families are in . Rettig when i came on board is when i learned a lot about the eitc. I was there with people who had been working since 1976. About 98 of all refunds are paid within them and processed accordingly and paid within 21 days. Its the 2 that gets held up for a number of reasons. A large percentage of those would be in the eitc arena. We devote a lot of resources to figure out, as do members of congress, senate and others, try to figure out how to make the program more efficient and quicker. At the end of the day, these are subsidies that get into the hands of the people that truly need them. Sen. Grassley senator carver. Thank you for your service and our thanks for the people who work with you. A difficult job, but we are grateful for all you do. Sometimes folks at her new in jobs, evening your job are reluctant to reach out. This is something i share with you. I would urge you to do this. Robert lighthizer was here a couple of weeks ago. Hes really good at doing that. We ask you to keep that in mind. A couple of things. With respect to the resources that we provide, we are looking at the numbers and it looks like, from a high point of 2010, in terms of real resources provided there was a significant drop. The Budget Proposal for 2021 is an improvement modest, but an improvement nonetheless. The former commissioner used to come here and plead with us for additional resources. Hire people with the Technical Skills that are needed for these complex tax returns. Talk to us about the people, the Human Resources that are needed and the folks with tactical skills. Are you able to find them . Mr. Rettig that gave us streamline critical pay. We have been exercising that. It is with respect to cyber and i. T. Thats a huge benefit to the agency. It allows us to get on an even keel basis. All of federal government has difficulty on boarding people. Theres a time lag in on boarding people. From when we meet them to get them on board, they are approached. I have actually taken to, in the town halls and interactions with our employees and ambassadors, when youre out and about, either in public or private sector folks, or folks from other agencies, let them know how great it is to work for the Internal Revenue service. Bring those people into our agency so we can get them on board quickly. We do have resource issues from the human perspective. Significant percentage of our Employee Base is to retire for the next two years. We had no real hirings from 2011 to 2018. We were able to hire last year, we are hiring this year, but its difficult to replenish. I think our enforcement went up about 1 , even with some considerable hiring. This also brings in i will ask you to stop there. The point is well made. I want to refocus on free file. A million years ago i used to hold town Hall Meetings, hundreds of them. Every year in the middle of march, we went to three counties to host town Hall Meetings about midmarch, and we would invite irs to come. We would invite the commissioner of revenue and help people with their taxes. We did that for almost 10 years. As it turns out, there is a better way to do that, in terms of providing assistance. Its something called free file. Which most people dont even know exists. I think in the country, there is close to 100 million taxpayers. Post a 100 million who could take advantage and its free. Just a couple of million actually use that. What can you do . What can irs at type of informat . Irs resources and the allocation of those resources is a lot effort that goes into where the dollar should go and a dollar for answering the phone call or the equivalent or cyber we have to be aware of a lot of different things. Im am a huge proponent of free file. It helps the right people. Free file combined with tax counseling for the elderly, military, i think makes a huge different. Difference. The report came out, and i agree with it, outreach and knowledge, irs issues of guidance or issues a press release. It does not necessarily get to the person at the Corner Grocery store. So having people become aware of it is a significant issue. If you dont know free file, youre not going to use it. This year, 27 increase in usage, not including the nonfilers portal, but the Free File Alliance was instrumental in helping us launch the portal. The cares act came out march 27 that we march that portal april 10 and the Free File Alliance with significant help to us in getting that done. There is something we can do about this. And im very encouraged by what this commissioner said. Chm. Grassley senator menendez by remote. Sen. Menendez earlier this year and investigation was concluded that i investigated into the potential abuse for Carbon Capture and second station by big fossil fuel companies. It confirmed that these companies had incorrectly claims almost 900 million and 45 q credits. At the 10 companies claiming 99 point 9 of the credits the , ig found that only three had the required monitor reporting and verification plans in place with the epa. I subsequently wrote a letter to you urging the irs to take a number of steps to both ensure that companies that have previously, incorrectly claimed the credit are held accountable and to ensure these abuses dont continue moving forward. I sent that back on april 29. 6 00 p. M. , i got an answer to my april 29 letter. I understand the irs has examined a portion of the incorrectly claimed credits and retroactively denied them. Portion couldonal come under audit in the near future. However, in your response, you also declined to commit to auditing all previous claimants to ensure that they are in compliance. You would not permit to implementing a campaign to examine this going forward. You said, the irs cannot initiate examinations on a select group of taxpayers without proper justification, documentation, and approval. But if the facts are supported by an investigation of the Inspector General doesnt constitute proper justification and documentation, i dont know what does. I understand the irs has limited resources, but it seemed clear to me that ensuring compliance with the 45 q carries a significant return on investment for the american taxpayer. So let me ask you in person, will you commit to auditing all previous claims of more than 10,000 in 45q credits to initiate a campaign to examine future claims . Mr. Rettig senator, we are exercising our best efforts with respect to the 45 q credit. We take complaints seriously. Compliance seriously. We continue to apply significant audit resources in this arena. And as i believe that report also states, the irs examiners have consistently denied the credit. I think of the pool they were looking up, the examiners denied about 60 of those credits. I will commit to trying to exercise our best efforts there, but we have to balance that, as senator wyden opened with, we have similar areas that we need to also devote resources. We only have 6430 revenue agents. Sen. Menendez i appreciate that, and i have been someone who has supported your resourcing and the irs and your job. The bottom line is, 45 q, in terms of Energy Production and innovating new technology and this is all we got back, i could just imagine. If 900 million is what we got back originally, i could just imagine. Let me turn one other question. The covid pandemic has devastated our communities which has been forced to set up and provide an unprecedented level of services. The consequences that had a real drain from texas to colorado from South Carolina to new jersey. No state is immune. We have had 1. 4 million american , ultimately all of the Public Service field, the people we need the most on the front lines you are our nations tops top tax official. Do you think state and local governments would be facing the immediate fiscal crisis they are experiencing if it werent in the middle of a pandemic and recessions had caused revenues to fall off the cliff . Mr. Rettig i think i answered this question earlier. It was in a different format, but i have not been focused on the state and local governments. I am aware of the impact universally of public and private sectors by having so many people out of work, businesses shut down and people home as well as the consequences for the health and safety side, which increases expenses for a lot of people. Sen. Menendez if we had 3 million or 4 million Public Employees laid off, we are going to have a lot less federal revenue come to the nations treasury, because those people will be paying, right . We are in that mold. We have 56,000 employees teleworking. Of the balance of employees, those with nonportable work that need to come in, we need to be socially distanced. And the rest we are trying to accomplish. Examinations, telephones, processing returns and whatnot. With a limited workforce. Sen. Menendez i was referring that if you had 3 million or 4 Million People laid off, not furloughed working remotely, the end of the day the consequences will be millions of people are not paying their federal taxes and all cost a lot more to the federal treasury. Chm. Grassley senator warner. Senator warner, i was told you were available. Are you here, senator warner . I see you, go ahead. Sen. Warner thank you for your testimony today, echoing what a number of the other members have said, i want to thank you, the men and women of the rs for what they have been doing to implement the cares act. Its extraordinary significant. I want to start my question today on one of the tools of the cares act. The employees retentions act. The Employee Retention tax credit. It got a very favorable response from treasury. There was an enormous expansion. Ive been working with a number of my democratic colleagues, although there is a republican parallel effort, that would rtc, whichilize the et would greatly expand this tool. As you know, one of the key components, this allows keep their payroll tax deposit to be applied , so it helpsr tc them with their cash flow. Is greater than the payroll tax deposits they would file a a new form, which i appreciate you guys creating very quickly. Form 7200. It advances future payroll tax payments so it can become this refundable credit. Now, we know, so far, there has not been that many that were filed in 7200. The credit is fairly modest so we dont know the full take up rate because there may be a number of people who are simply withholding payroll taxes and have not had the use the form 7200, but if we are looking at expansion of this tool, one of the things i am really concerned about that, so far at least, the irs has only utilized a form of 7200 rather than the e filing form. I would like to know why is that the case . If congress is looking at a major expansion of the e rtc, it seems that we need you to focus on updating the filing. I would imagine you have to take that toform and convert when online form. Why not have the online form available from the outset . Onset . Can you address that and when we might get that updated . Mr. Rettig we were proud of the fact we got the paper format as quickly as we did on the 7200. We are taking a look at all options to streamline all interactions with us going forward. Its probably best that i get back to you on the ability to do that. I think you are aware we just created the ability to electronically file income tax returns. It takes quite a bit of programming. Our i. T. Individuals are spectacular. But we have quite a few projects, not to lessen the importance of this. Sen. Warner i do appreciate the fact that you got 7200 for the new form, you got it out, but this is what one of those unique spots where. You have the administration of isasury thinking the ertc very prominent. You have the house doing a greatly expanded version. You have an expanded use on the democratic side in the next covid package. A number of my republican colleagues have got a variation on this, which also uses the ertc. So i really hope you will bump this up higher on the list. Let me move to my last couple of seconds, to another area. I have been focused for a long time on gig workers and easing their Tax Compliance. I asked the gao to publish a major study. They did. For example, they suggested that irs make several changes to update instructions to form 1040 and adding a reference to form 1099 k. Just generally speaking in the last few seconds can you talk about what you hope to do to ease the gig workers Tax Compliance . Mr. Rettig we are looking at a lot of different facets of the gig workers. I think there is a study out there that says there is a significant portion of their receipts go to expenses and so we thinkbly isnt what it might otherwise be. We are looking at options to ease their ability to comply and it is not limited to gig workers. Its pretty pervasive to all folks who might be in the realm of an independent contractor. Sen. Warner i really want to keep working with you on this. It is an area that is only going to grow. We appreciate your cooperation. Thank you, mr. Chairman. Chm. Grassley senator cantwell. Sen. Cantwell many of the activities that must take place to keep the housing credit production schedule on track, over the last few months we have seen significant interruptions to can show action shortages of materials. Many properties will be unable to meet certain problematic programmatic deadlines. The National Council of state housing agencies sent the irs a letter in march asking the irs to extend programmatic deadlines and provide other flexibilities needed in these current circumstances. It was signed by over 200 organizations. The irs has not given guidance on this. If we dont act soon we are going to impact the Affordable Housing market even more. Is that guidance forthcoming . Mr. Rettig let me get back to you as to whether that will be forthcoming. I believe its on the treasury side the responses coming, but let me get back to you. I would look into that. Sen. Cantwell we dont have enough Affordable Housing at all. Now the problem is going to be more exacerbated by the covid crisis. A little guidance could help us keep some projects because every valuable for helping us solve this problem. I noted to some of my colleagues, hospitals are now paying for Affordable Housing to keep people out of the emergency room. If they can keep them in Affordable Housing, they are not going to show up in the emergency room every day. This was a pervasive problem. I wanted to ask you about, according to the National Taxpayer well, in march, as a result to the coronavirus, they closed offices. I want to ask about taxpayer assistance. According to the National Taxpayer advocate the only , resources readily available are at the irs. Gov website and automated phone lines. So, many washingtonians rely on in person assistance, including the elderly. What are the steps taken to serve those that require that kind of assistance . Mr. Rettig all phone lines are open. Our Assistance Centers will be open by mid july. The 358 Assistance Centers. 31 are not staffed fulltime, but we do rotate folks in there. We have folks doing a circuit. We also not only irs, but a lot of folks use sites for a variety of different things. 10,500 of 11,000 in change of the sites shut down. All of the aarp sites shut down. We have been really working as hard as we can and we are trying to ramp up as quickly as we can. Maintaining safety and health reasons. Help for our employees as well , as people who interact with us. In terms ofdify normally it is come in and sit down at the desk. The ones opening will handle matters by appointment only but , the history is that over 50 of who contact the appointment, their matters handle on that call. Sen. Cantwell but they are not getting caught in some Automated System . Mr. Rettig there is a person that answers the phone. Sen. Cantwell that they can get to . Mr. Rettig they answer the phone. They are local. They are retail. They are right out there. Sen. Cantwell what steps are we taking to serve people who are filing for the earned income tax credit . Mr. Rettig the eitc is about 98 of the folks who file go through. The 2 , we have a lot of complexities involved. With congress, the Internal Revenue center, everybody else, if they could take a hard look at the Statutory Authority and the definition of a qualifying child, that is where we launch. We get that claims for eitc. Claims are essentially for many reasons,e or people are deserving and the funds are coming, but there is a tremendous amount of problems for us to be able to verify a qualifying child with there is no link in the system. It does not need to be the parent of a child to be a qualifying child. Similarly, over 51 of eitc claims are done by return preparers. We have continually asked for oversight of return preparers. We have asked for correctable error authority. We cannot adjust a claim on our own with information we otherwise have in our system, which would allow us to not have to go to a deficiency type procedure. Sen. Cantwell my time is expiring. Can we show you language that you can tell us whether you think that would give you the flexibility you need . Mr. Rettig i am available after this hearing. Sen. Cantwell thank you. Thank you mr. Chairman and take you commissioner for being here. And for all of the work that you and your staff are doing on Recovery Efforts underway at the irs. I want to start by thanking you for heeding the calls of my Committee Members and myself to delivering stimulus payments directly to those who do not file tax returns. I want to follow up on something chairman grassley asked you about. Unfortunately, many of these beneficiaries missed out on 500 payments for their children because of short deadlines to provide the irs with dependent information. The irs said these families need to wait until 2021 to get their payments. Along with colleagues on the committee, i sent you a letter urging you to provide these payments as quickly as possible, before 2021. You just referenced in your answer to the chairman that you are considering doing that, but there were some limitations. Can you tell us what specifically you are considering, and what specific limitations the irs is facing with regards to getting these payments to people before 2021 . Mr. Rettig we have a pool of individuals who used our nonfilers portal who should received that 500 payment. We had that information. That portal was im very proud of the effort of our employees, but we built several airplanes while we were flying to other airplanes and then we had to adjust those as we were monitoring. One of the things we did was we had a gap where was not picking up those 500 payments. We are going to be issuing those payments to that pool. The number is 365,000. I believe it substantially ssa and rra recipients. That i believe will happen around july, by the end of july. That is my understanding. If that date changes, we will get back. Similarly, individuals who filed spouse claims, there was a difficulty connecting that. Get the payments out as rapidly as possible, find information that might not be front and center. We did our best, and im very proud of how we did. Lessons learned going forward. We know certain areas to look into. The limitations were in the middle of programming now and 2021 Filing Season. We constantly have two Filing Seasons that our i. T. Department is working on. We are sympathetic to these issues, trying to figure out a way to get the money as quickly as possible. Sen. Cantwell when can you give us information about what that timeline looks like . We have constituents who need these dollars, they are entitled to them, so when can you give us a timeline of what the windows look like for them . Mr. Rettig we will not be able to issue what i would now refer to as secondary payments for everyone who might have a change in circumstances. Some people were married, some got divorced. Senator hassan commissioner, hold on. You put up a very short window for people who were nonfilers to put in information so they could get the 500 payments. You now are saying that for the people you missed who did submit in those 48 hours, you are going to be able to get them out. What i am asking is, the people who were not able to get into the 48 hour window, if they give it to you now, how could they get it before 2021 and when will you share the plan with us . Mr. Rettig its not an easy thing for us to accomplish. Can i address the 48 hour window . Senator hassan i understand it exists, and i have another question. Why dont we take that offline . I appreciate how hard everybody was working. People just need these dollars. Right . Another question is, employers can claim new tax credits to help stay afloat during the covid19 crisis, including credits for providing paid leave and retaining employees. In order to rapidly provide this assistance, the treasury sends advanced payments to employers who request from the irs. However although the irs said , payments would be delivered to employees in two weeks, reports indicate these payments may be taking longer. Could you tell us, please, how quickly the irs is delivering advanced payments to employers, and is the irs proactively planning for a possible increase of request as states partially reopen their economies . Mr. Rettig i will get back to you with specifics, that i believe we processed a third of those that have come through. Some have asked for additional verification. Senator hassan this is a matter of cash flow for businesses desperately struggling. Thank you, mr. Chair. Chm. Grassley im going back to senator lankford. Senator lankford . Ok. Sen. Lankford mr. Chairman, thank you. I do appreciate your testimony today. It is exceptionally important to be able to walk through this. I talked to some of my caseworkers back in state, talking about the Taxpayer Advocate service and the work happening there, their interaction with irs staff. Because of covid19 and the downsizing that is very difficult, theyre getting answers to questions and able to go through this process and help taxpayers at this point. Walk me through what the closures of irs offices and reengagement of employees and Lessons Learned. When we going to get things back going again . What can be done for the future protecting the information of individuals for knowing that we have to be able to work remotely and that we can get the work done again . Mr. Rettig im the person that started shutting down our facilities. At one point, over 90 of our facilities were closed. We took to health and safety of our employees as the significant priority. That created a lot of difficulty for others. We worked closely throughout. We are now, by july 13, essentially all of our processing facilities will be open. All of our call centers will be open, understanding that open is a relative term. Working different schedules, working different ships, having folks spread out. We have people on the ground in each of our facilities essentially monitoring the issues to keep our employees safe. Like everybody else, we are worried about interactions that happen and a potential spike at a facility. We are doing everything we can to get back online. We had 66,140 individuals teleworking. We processed about 14,000 tops for people who do not who have telework work, but were not telework eligible, did not have the facilities and whatnot. We were able to get laptops. Theres a Training Session that goes on with respect to that and respect to security. And a large portion of the work we do is not telework eligible for security, and other similar matters. I can with confidence say that our i. T. Folks are as good as it gets. They are tremendous, they care, they work really hard, and they have moved mountains to get us as efficient as we could possibly be in this unprecedented pandemic. Sen. Lankford i appreciate that very much. Are there lessons that can be that can carry over from what we faced right now into the future in a way to protect that private information . But still get the work done . Mr. Rettig Customer Service representatives, to get a large portion of them able to handle, to work remotely, i think it would help significantly. And we are headed in that direction. Sen. Lankford let us know what we need to do to be able to help and head in that direction, because that will be a significant gain for the future. As we not only look at space and cost, but the greater use of telework in the future, but if there are other issues that come up mr. Rettig i have to express my appreciation. You all have been incredibly supportive of us. We realize there are issues and unfortunate that issues come out of this, but universally, you all have been incredibly supportive. As important as it is to the country and the irs as an agency, its important to our people. Our employees are the strength of our agency and they hear when you make comments and sometimes senators have made comments that i circulated all employee messages. During this time thats all we can give people is a pat on the back. They are working really hard. Sen. Lankford and we are exceptionally grateful to them. They are under enormous pressure having to be able to shift in ways they never would have anticipated. As we get closer and closer to the july 15 deadline, there is more and more pressure for answers and solutions. They are feeling the weight of that as well. We definitely appreciate the work and hope that we can provide this. On Charitable Giving a lot to give you a heads up. You and i both know that when you alter tax code, it alters behavior in multiple ways. There are three republicans and three democrats working together. To try to resolve some of the issues on Charitable Giving. Its something we will come back and have more of a conversation about for how we can continue to encourage Charitable Giving in the future. Thank you for the service. Chm. Grassley senator cortez by remote, if you are available. Thank you chairman grassley and to the Ranking Member for being here today. Commissioner, thank you for joining us. I want to associate myself with senator lankford. The workers and employees at the irs are truly heroes in the sense that they are working all the time and trying to get payments out and doing everything they can. And like my colleagues, i support them. Whatever resources, please make them aware of it. I know it is a challenging time right now. I do want to address some things i am hearing in my state and across the country. I talked quite often and have worked in Domestic Violence prevention areas for a good part of my career and i have worked at our legal aid centers. Im hearing from survivors of Domestic Violence who have fled their abusers, but whose abusers have walked away with their Economic Impact payment. In other words the survivors are , not getting this. Irs is instances, the issuing Economic Impact payments based on jointly filed tax returns, but it is not following to split theforms Economic Impact payments in the same manner that refunds were split. I sent to you a letter along with secretary mnuchin about this a couple of weeks ago. It was joined by 35 of my senate colleagues. I have not received a response yet. Since i have you here, i would love to ask you what is the irs doing to get replacement checks out to victims of Domestic Violence who are in desperate need right now because they are not getting their eip . How do we get them those payments and take into consideration their safety and Financial Stability as well . Mr. Rettig your letter is on my desk. The process of getting a response back to you is in process. I think your letter had some actually really great suggestions. I think there were listed under a request section you the back of the letter. Things that we are taking under consideration. We take advice from everybody and we take good advice from everybody as well. The individuals who filed an injured spouse claim, i indicated earlier that we are going to process those separately. I would like to say thats going to happen in july. If its later than july, i will reach out to you and give you the timeline. I think every person at the Internal Revenue service is very sympathetic, understanding, and would like to assist any victim of Domestic Violence. And our people care, and they care a lot, and this is a particular type of arena where we can provide significant assistance. To have a victim of Domestic Violence also not be able to receive the payment, particularly at this time of need, does not bode well with us. It is a priority and a focus for us. I would like to thank you for your letter, and particularly, the suggestions in your letter were quite helpful. Thank you. Those suggestions were put together by many who worked to really help and support and get resources to our survivors of Domestic Violence. As you look at that list, it is really common sense and also i think not only helpful during this pandemic, but in the future. And how the irs can work with to support to make sure our survivors of Domestic Violence are accessing the funds that they are entitled to. As you look through this, because i know the recommendations are dedicated and online pins, utilizing prepaid cards, which is a great suggestion, if you need resourcing to implement these is suggestions, i would hope he would also let us know. I have been told that senator brown is remote and would be the next one for me to call . Thank you, mr. Chairman. Im here. Thank you very much, mr. Chairman, senator wyden, thank you for this hearing. Commissioner, thanks for your Public Service. In the midst of a pandemic, our country reckons with the murders of mr. Floyd and miss taylor, and too many other black americans at the hands of police. Communities across the country are calling for justice, a reinvestment of resources to end systemic racism. Many of us examine the way racism is baked into almost every facet of public policy. We must do better. One area that has not been examined closely is our tax policy. Over 1 trillion moves through the irs each year. 150 million households file taxes. The American People deserve to know that taxpayers are treated fairly by our tax laws and tax enforcement agencies. Laws. Ss writes the tax if it exacerbates racial inequity, then it is our job to fix it. It is your job to enforce the tax laws we write. So you and congress, all of us around this table, virtually or in person, are responsible and partners in this. Will you work with congress and have your staff with the statistics of Income Division help us determine ways in which our tax code contributes to racial wealth disparities . Sure. Sure. I think you are aware, im a huge proponent of inclusiveness, diversity, and i think you are aware of the fact that im the first commissioner who came to this country as a refugee. Spouse came to this refugee. S a i understand how people are treated in different arenas. Thank you. Research shows that employers discriminate against job applicants based on their first or last names. It asks for first and last names. The Agency Responsible for tax enforcement, it has access to first and last names to carry out its enforcement responsibilities. Do you have safeguards in place to ensure that Enforcement Actions do not target filers based on first or last names . Thats correct, we do. Does the irs study Racial Disparities in its Enforcement Efforts . There is no race or geographic issues that come up with respect to audit selection, which is what most people consider to be the enforcement side of the Internal Revenue service. Sen. Brown i understand that. Im glad to hear that. But can you assure me and assure the American People that the audit rates dont disproportionately, not by intention, but by commission perhaps, that the irs audit rates dont disproportionately hit black and brown people . Can you assure us of that . Commissioner rettif yes. Sen. Brown i want to ask you about the tool, and thank you for that. I would like to add, we have a zerotolerance in the Internal Revenue service for issues of discrimination. And that comes from me and every employee at the international Revenue Service has heard that. And i also would like to say that the fact that we have a quite diverse Employee Base, we are stronger because we come into the room from different doors and we Work Together and we care about each other and we care about the country. Sen. Brown as my office does and as Committee Staff does, in terms of racial diversity and making us better, there is implicit racism. Of course, as you know, in the system. Thats what im trying to dig down. There are no accusations against you. I want to ask you about the tool the irs developed to help people who dont normally file a return get their stimulus check. You called it the nonfiler tool. One in five people dont get it. This is a key antipoverty tool for putting money directly into peoples pockets. Another chairman supports it, i know senator wyden supports it. Too many filers leave that money on the table. 80 take up as a place to start but we can do better. Thats why i wrote to you asking you to act on a recommendation to implement automatic eitc for child and adults. I appreciated your response. You said you cannot make automatic eitc work, even for childless adults, because you are missing information. It seems to me the irs can repurpose the tool you have already developed and turn it into a get my eitc tool. The response sent said there was missing information stopping you from sending automatic returns. You can easily ask for this information using the nonfiler tool. My question is, my last question, will irs use this tool to increase eitc take up moving forward . Commissioner rettif i think you are going to see a replication of a couple of the tools that came out during this. You should know that they get my payment tool is a replication of the where is my refund tool that allowed us to give these tools up with one within 10 days, one within two weeks. We are looking at this is the future of the Internal Revenue service. Sen. Brown automatic tool. Commissioner rettif we are looking at that, yes. Sen. Brown we will work with you. We really appreciate it. Mr. Chairman, think you for this hearing. Thank you. Senator daines. Sen. Daines much appreciated. These are tough times and ive worked hard to provide relief to help the many struggling montana families, workers, Small Businesses, who are facing economic hardships as a result of this pandemic. Much of that relief getting to montana has been to the tax code. I want to thank you for all you and your agency have done to facilitate that. I look forward to continuing to work to provide relief to montanans as our economy continues to recover. In the past three months, congress has approved trillions of dollars really for the American People. Unfortunately, pushing out huge amounts of money, so quickly, can present opportunities for criminals to prey on the most vulnerable who are often our Senior Citizens. My question is, could you discuss the actions the irs has taken to uncover and combat criminal activity targeting our Senior Citizens and other vulnerable populations . Commissioner rettif Senior Citizens and vulnerable populations tend to get the terminology used in the field as scams and its people either impersonating or i can help you with respect to eitc payment, pay me a fee. Both irs criminal investigation and folks on the civil side, as well as treasury Inspector Generals office, have been extremely aggressive in those arenas. We think we have been quite successful. You only know your successes based on ones we find, not the ones we dont find. There are numerous criminal prosecutions that have been pursued. What we do is we investigate it and turn it over to the department of justice for prosecution. We are very active there. If you look at the data book, you will see the Internal Revenue service, a high degree of focus in the arena, particularly for vulnerable individuals. And that will continue. Sen. Daines its much appreciated, mr. Commissioner. Im going to shift gears and talk about conservation easements. I want to applaud the work that you and the Internal Revenue service have done of stepping up Enforcement Efforts on these abusive, syndicated easements. I also want to applaud chairman grassley and Ranking Member wyden for their investigation of these transactions. I look forward to reviewing the findings of that investigation very soon. The decisions by the u. S. Tax court demonstrate what we have long known. That abusive, syndicated conservation easement deals are costing taxpayers billions in tarnishing the reputation of this very valuable conservation tool. In fact, in one recent case, the court noted that property valued at 30 million had within three days an easement with a clean devalue of 155 million. Honest, charitably motivated actors deserve strong rules to protect against this clear abuse and taxpayers should not have to foot the bill for profit motivated tax shelters. This is why i introduced the charitable conservation easement program. With senator stabenow which would help to weed out the worst actors in this space by denying the tax deduction. When investors claim a tax benefit that is more than 2. 5 times their investment. My question is, does the irs have the time, the personnel and resources to prosecute all known abusive syndication cases . Commissioner rettif the irs would welcome legislation with respect to syndicated conservation easements, the abusive transactions. Under this commissioner, the irs will aggressively go after everybody involved. I think the people who are in compliance need to know that the folks who take advantage in that manner are at risk. We intend to maintain the presence in that neighborhood. I think the tax court has gone in our favor, even at a 40 penalty. We had three cases last week. I think you will see a number of compliance actions surface over the course of the next month or so. Sen. Daines so given the amount of taxpayer resources put to use on this, how helpful would it be to have this bill enacted into law . Commissioner rettif it would help us significantly. Sen. Daines thank you. I want to note my support for modifying and expanding the employer retention tax credit, for which we enacted as part of the cares act. This worker focused designed credit, coupled with the requirement that a business has to have experienced impact to be eligible makes a good fit for the relief we are looking for to enact in this package. I hope my colleagues joined me and pushing to expand the tax credit as part of the next relief package. My question as im wrapping up here, for administrative perspectives, how has the advanced refund process using form 7200 worked so far . Commissioner rettif i think what we are seeing is that the process is working smoothly. I dealt with an issue about having to efax it as opposed to maybe getting an online portal or the ways we can streamline it. I would say overall, we think it is working smoothly. Sen. Daines any idea how long it takes for businesses claiming credit for reimbursable . Commissioner rettif about one third of the people who filed 7200 have received it. On that basis, we are probably talking six weeks, give or take. I dont know that we have the study. We will know more in terms of the program itself once the Second Quarter returns are final. We should be able to provide data based on that. Sen. Daines thank you mr. Chairman. Chairman grassley i think we are to a point where senator from oregon has one followup question. That will be the only second round we have. So if there is anybody, there is still a couple of people i have not marked off the list yet. If you want to ask questions after senator wyden, you better let me know very soon otherwise we will shut down. Senator wyden . Sen. Wyden do you want to see if there are people waiting before i go . Chairman grassley i think there would only be one if there is senator young. Sen. Wyden thank youm mr. Sen. Wyden thank you, mr. Chairman, and i will keep this to one question. Just a question with respect to Small Businesses. Because my state is overwhelmingly a Small Business state. These are people that are just walking an economic tight rope right now. Every single day, and they are maxing out their credit cards and the like. The question really that i want to get into is this question of the most efficient way to help them . And i have thought in particular, a concept of they ive been getting a rebate similar to the individual rebate as a constructive idea to look at. You all have been helpful. Thank you. Wouldnt it be easier for the taxpayer and irs to rely on previously filed information that the irs has in its system, rather than having these laborious processes that include massive influxes of new tax filings and using fax machines and the like, wouldnt it be better to use what you already have . Commissioner rettif we use what we already have with respect to the eips. We needed to come up with a different variation of that. One of the ideas with respect to the retention credits was that the funds essentially are already there in the possession of the business owner. As i know you are aware, i come from a Small Business family and i have members of my family involved in Small Businesses. Im very sensitive to the issues. We are certainly more than willing to work with you and your staff on processes and ideas. Sen. Wyden i will wrap up on this. We have a cleanup in terms of getting some followup materials. I think we do want to know, senator warner touched on this, what the irs needs to continue to fight fraud so that taxpayers can get those advanced credits electronically, instead of by fax. Lets say we would like that information within a week. And second, as we talk about talked about earlier, i am particularly concerned about millionaires skipping out on paying their taxes. Officials come, and we understand that this didnt happen on your watch, and we cant find out exactly what was done to followup. And then we hear that there will be changes made in the future. And then the cycle just repeats itself again and again and again, as the wealthiest taxpayers figure out how to just escape their obligation that those Small Business people have to comply with. I would like answers to the questions i asked earlier with respect to the millionaires skipping out within a week, and then this question that i think we agree on is a serious matter with respect to fraud associated with the advanced credits. I would like that within a week, too. Thank you. Chairman grassley i want to clear up something. I hope im not really asking a question, commissioner, but if im wrong on saying some of these statistics, i want you to correct me. It is in regard to appropriations because we have had some people on the committee claim that the irss Enforcement Efforts are not being funded sufficiently. I think thats not true. When the administration put out its budget request about 16 months ago for the current fiscal year, it. 1 bir congress funded irs enforcement by more than what it had asked for. 300 million more for a total of irs enforcement ended up getting 300 million more for a total of 5 billion. In its latest budget request, the irs is asking for 5. 1 billion, which is a 2 increase from what it is getting this year. Basically, the irs is asking for an enforcement budget that congress is giving to it. There is no shortfall in the funding of the irs enforcements efforts. You dont have to respond to that unless i said something that was wrong. So i will close with this. First of all, thank you for sitting here for two and a half hours to answer our questions. I appreciate the hard work you and your agency is doing during this tax season. A very difficult tax season. And we look forward to having you testify before the committee and the future. I will close by identifying that any written questions members may have for the record need to be submitted by the close of business on wednesday, the 14th. With that, we will adjourn. Thank you very much. [captions Copyright National cable satellite corp. 2020] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] asked during the summer, reach out to your elect officials, with cspans congressional directory. It gives you the information you need to stay in touch. Online today at cspan. Org. On tuesday, fbi director Christopher Wray responds discusses how his agency is responding to chinas influence in the united states. Then we will join up the House Financial Services subcommittee at noon. Then a look at global the poston in shaping covid world with dr. Deborah birx. House Committee Goes over security spending. Noon, a house education and workforce subcommittee looks at the impact of covid19. Freeman, ceo of National City and