Subcommittee on oversight. Were holding this hybrid hearing in compliance with House Resolution 965. Accordingly, im joined by members here in the hearing room as well as approximately ten members on the remote platform. Thats outstanding and i want to thank them for joining us. Before we turn to todays important topic, i want to remind the members of a few procedures to help us navigate the terrain here. First, consistent with regulations, the committee will keep microphones muted for those participating virtually to limit background noise. Pause for one moment. The committee will pause. We will pause for one moment. Members are responsible for unmuting themselves, unmuting themselves when they seek recognition or when recognized for their five minutes. Members in the hearing room are reminded to keep your microphones muted when youre not recognized. Second, for the members participating virtually, you must have your cameras on at all time. If you need to step away from the proceeding, please leave your camera on rather than logging out. Third, we will dispense with our practice of observing the gibbons rule and go in order of seniority for questioning alternating between majority and minority. I thank you all for troubleshooting a quick technical issue. Trying to get the streaming from 1100 to show. The audio is streaming on youtube already. The video will be going live as well. Once we get the chairman on. I thank you all for your continued patience as we navigate these new procedures. I will turn to the important topic of todays hearing, a conversation with the commissioner of the Internal Revenue service. Thats why were here. Good morning. I welcome my colleagues and our only witness. Today, the commissioner of the Internal Revenue service will join us and i appreciate that personally and professionally. Mr. Rettig this committee has waited a long time for you to join us and for were looking anxiously awaiting anxiously, nearly two years. It is astonishing, this is the first time youre appears before the chief Tax Writing Committee in the house. Were trying to do our job. Youre trying to do your job. And we have very little communication. With the brandnew administration on the horizon, this may be your first or your last appearance before us. Im not suggesting either. The point of the matter is, were glad youre here. Im disappointed you refused to join us for an important hearing on taxpayer fairness a few weeks ago. The United States has had an excellent record of compliance with our tax laws. Americans dutifully paid their taxes, assuming the system is fair for all. Whether youre as rich as rockefeller or a regular joe, because of that, our volunteary tax system has been a model for the world. At least until recently. Our hearing demonstrated how our system of voluntary compliance has come under assault by the president. And members of his government. For five years, the president refused to disclose his tax returns. The president broke with a history of every president since president nixon. In so doing, he sabotaged public faith in our tax system. You have aided and abetted him. As is your job, i guess. Since 2017 ive led congresss efforts to request mr. Trumps business and personal tax returns. Not because im a snoop. Im far from it. Just the opposite. The law is clear, though. Under 26 United States code section 6103f, our committee is legally and absolutely entitled, our committee is legally and absolutely entitled to review anyone within the executive branch of government, the law is very clear. And for 591 days you and secretary mnuchin have broken the law to keep that hidden. I dont know what were hiding. But we have not known we have not found out yet. It is our responsibility to restore the Publics Trust in our tax system. The president s business and personal returns must be audited impartially and without political interference. Yet, every time we ask a question, were reminded, its still being audited since 2016. Before 2016. So we have some questions. The American People have a right to know whether thats whats going on. Time is of the essence. Just last month, the New York Times reported that selfproclaimed billionaire mr. Trump paid only 750 in taxes in 2017 and 2018. 750. In 10 of the last 15 years, he reportedly paid no taxes. When you listen to the explanation on why that happened, having nothing to do with you, but when you listen to it, you have to wonder, is this reading out of a cartoon magazine or is this really happening . Is this a fantasy or a realty . The teachers and firefighters, police officers, the people collect our garbage in our districts are paying a heck of a lot more. The taxpayer fairness issue manifests itself in many other ways, mr. Commissioner. We hear over and over from our constituents who have failed to receive their Economic Impact payments. Im very angry over that and im sure you are too. Time and time again, i look forward to discussing how the irs is rectifying these dire situations. No one who is eligible should have to wait for their check, especially during a pandemic. We are hearing similar complaints about 2019 refunds. Our constituents have waited for months to get their refunds and their records straight. I have a constituent who was told not to respect a response from the irs on her 2019 return until january. January . I want to know if that is acceptable to you. I hope you will bring us up to date on your efforts to get through the backlog in returns and collecting dust at irs. Mr. Commissioner, well be following up on my question at the oversight and Government Reform Committee hearing. Are you not auditing wealthy taxpayers and corporations more extensively than lowincome americans . Let me now yield to my good friend, the gentle lady from indiana. Thank you for holding were honored that youre here. Thank you, mr. Chairman. You have five minutes. Im thrilled to be here. I would like to thank you, commissioner, for being here and for your hard work and leadership at the irs during an incredibly challenging time. I also want to thank the dedicated men and women of the irs around the country who have worked so hard during the pandemic to keep the agency up and running, to provide services to our fellow american taxpayers. Congress has asked the irs to go above and beyond this year in response to the coronavirus crisis. The c. A. R. E. S. Act required that the irs take on a number of tasks. But none was greater than finding a way to send the Economic Impact payments to more than 160 million americans. That was a huge undertaking and we should acknowledge that the irs got most of those payments out the door in just a matter of weeks. So we thank you for that commissioner. With that said, i think you would acknowledge that the irs still faces a number of challenging things Going Forward and i have concerns about how the agency plans to meet those challenges. There are just a few main issues i think the agency needs to address. I hope youll be able to provide the committee some answers on how the agency plans to do so. Im concerned about the current backlog of mail and unprocessed returns that has built up since the initial lockdown in march and april. My understanding is that the irs has millions of pieces of unopened mail and even a greater number of unprocessed tax returns. Millions of taxpayers are waiting on refunds for tax refunds they filed as far back as march and april. Given this come back log may not be resolved into 2021, im concerned about the agencies ability to prepare for what is likely to be another major difficult Filing Season. Third, on economic on the eip payments, ill say that the number of payments you sent out and how quickly you do so was incredible. But i have heard from a lot of our constituents that and i know my colleagues have as well, about the situations where folks are still eligible but have not received anything. I would appreciate hearing more about what the irs has done and will do to make sure everyone who is eligible for an eip receives their payment. And then i also want to acknowledge that the irs this week released guidance on the Paycheck Protection Program related to the tax treatment of expenses paid with a ppp loan that has not been forgiven. Many Small Businesses are struggling to stay afloat right now. We need to pull together to ensure these Small Businesses have relief, especially those forced to close their doors due to state and local covid restrictions. I would like an update on the implementation of the bipartisan Taxpayer First act. As you know, we enacted this important law last year as a result of a bipartisan work on this committee. This historic overhaul of the irs requires implementation work on the part of the agency and i would appreciate an update on your progress and what challenges youre facing. I want to make sure we dont let our response to the pandemic hinder the longterm work that still needs to be done to modernize the irs. I thank the commissioner for his testimony and i yield back, mr. Chairman. I want to thank you we will dismisses mr. Kelly. Well next hear from our only witness, that is commissioner retti girk rettig. Your Opening Statement will be made part of the record in its entirety. I ask that you summarize your testimony, five minutes or less. To help you with that time, please keep an eye on the clock and the lights in front of you. If yo do go over your time, i will tap my gavel. But were here to listen to you. Commissioner, you may begin. Thank you, chairman, Ranking Member, and the rest of the members who are here. I appreciate the opportunity to discuss irs operations and our efforts to help taxpayers during the covid19 situation. Initially, mr. Chairman, respectfully, i would like to indicate that i disagree and take exception to the abetted. I cannot exception since those matters are in litigation as well as those matters involve specific taxpayer information which i am not able to discuss, but i respectfully wanted to make the record on that for you, sir. Now more than two years into my term i remain extremely proud to be working with the irs and the employees of the Internal Revenue service. Knowing that 96 of the gross receipts of the fucountry flow through the irs that a functional irs is critical to the overall success and wellbeing of our country. The importance of the irs to every american has become especially apparent since the spring as our nation has faced unprecedented challenges. The irs has been at the forefront of successfully providing rapid, Economic Relief to taxpayers during covid19. The irs responds serves to illustrate how critical it is for the agency to receive consistent, timely and adequate multiyear funding such that we can succeed in providing the services that our country and our citizens so rightly deserve. Irs employees have worked since midmarch to implement major provisions of the cares act. Especially the Economic Impact payment which is have helped millions of americans during these challenging times. So far approximately 160 million Economic Impact patients have been issued totaling 270 billion. Many of these payments recognize more than two people in a family. Delivering the Economic Impact payments the Internal RevenueService Employees balanced the statutory requirement to deliver these payments, quote, as rapidly as possible as dictated b by the cares act with the need for accuracy and concern for the need for potential fraud. The irs correctly computed the amount of the payments of the first 157 million payments according to our Inspector General 97 of the time. I think thats miraculous and thats a tribute to the strength of our employees and the dedication of our employees. However, we readily acknowledge that there is more to do, although the strength of our agency is the employees, the interaction of our employees and the communities in which they reside is equally important. During this period of time our employees have been out and involved in and engaged with local community organizations, trying to generate Economic Impact payments for people who are needy and were essentially into the point of interacting with the unsheltered communities. We have interacted directly with more than 4,000 homeless shelters, numerous different organizations around the count rye, all as more specifically set forth in my more lengthy, written testimony. Tomorrow is the deadline for the registration of the Economic Impact payments on the nonfilers portal and i would like to encourage people who have not yet provided information through the portal to do so. During the pandemic, within a matter of days we initiated the People First Initiative which postponed the deadline for filing to july 15th. The latest time in the history of the country and we temporarily adjusted numerous processes to help people in businesses during these uncertain times. As we will discuss, we have also delivered a historic Filing Season 2020, not only in terms of the volume of the tax returns that have been processed and refunds that have been processed and also in terms of the number of tax returns processed per minute and per second. We have importantly and one of the matters this im as proud of as anything else and we have a lot to be proud of and i do want to extend the opportunity to meet with you collectively at your leisure, when you ask, we will be there, but importantly for the first time in the history of the Internal Revenue service, we will be delivering the form 1040 this year in both english and spanish. Taxpayers will have the opportunity to check a box to indicate the language they wish us to interact with them. Taxpayers who call on our phone lines will have the option to receive Translation Services in more than 350 languages. So when i got onboard, these numbers were between 6 00 and 9 00 and this all came together by the i opened the doors for our employees, proudly walked through these doors to provide services in the underserved communities of our country, our phased in reopening was in terms of trying to maintain the health and safety of our employees and balancing that with our responsibilities to this country which we take seriously and before i turn it back over to you, i would be remiss if i didnt call attention to somebody who has been by my side since i came onboard two years ago who has been at every hearing that ive testified in the house as well as the senate and respectfully is per than my right hand, a person that i look up to probably than anybody else in the Internal Revenue service who is want only a sounding board, but is sitting right behind me. Dianne grant, on december 1 of this year, we are celebrating her 50th anniversary with the Internal Revenue service, and i do appreciate, sir, your acknowledgement of her. Shes an amazing individual. So now that ive embarrassed her, sir, i will turn it back to the committee. I am glad, commissioner, to hear someone in our administration saying something nice about our employees. Sir, i came on for the employees, taxpayers and you guys. Thank you for bringing that to our attention and congratulations, miss grant. I will open the hearing for questions, without objection, each member will be recognized and we are joined by my good friend, mr. Kelly from pennsylvania. He walked all of the way from pennsylvania to get here this morning. Each member will be recognized for five minutes to question a witness. If the witness will respond with short and concise answers, and if the congressman will ask questions short and concise. Thats unusual, but well try. All members should be able to ask questions. As mentioned earlier, we will not observe the rule and we will go into the order of seniority for questioning, alternating between minority and majority and with the oversight committee. Members attending remotely are reminded to unmute yourselves when you are recognized for your five minutes and i will begin by recognizing myself for questions, mr. Commissioner. Mr. Redick when President Trump took Office Former commissioner coskonin, volunteered to resign before his term ended. You stated this week that you plan to finish your term. That term ends in 2022 if im not mistaken. Do you agree that you serve at the pleasure of the president , yes or no . Yes. If mr. Redick says yes, i want to thank the commissioner. Im glad we agree. Will you offer your resignation to president elect biden . Yes or no . No. If redick you are saying no to that particular question, right . Im asking you, mr. Commissioner, to put off your resing nation to the incoming president to facilitate the transition to the new administration and i would recommend that it be accepted. Mr. Commissioner, under a new administration, if you are asked to provide soontobe former President Trumps tax returns to the committee, will you comply . As you are aware i cannot discuss issues pertaining to the tax returns since they are involved in the litigation. So you are not answering that question. I cant. I am not asking you anything but will you provide if you asked. Im not going to speculate and i cannot address the question. I cannot answer the question, sir. Mr. Commissioner, Internal Revenue code 6103f. You are familiar with that by now, correct . Correct. Gives the committee clear and unambiguous authority to obtain anyones tax returns. In fact, the irs has never before denied the Committee Access to any tax returns requested under this particular authority. Mr. Commissioner, with the current backlogs, the 2021 tax Filing Season start in january. If not, what month do you expect it will begin . We are currently we actually accelerated our programming testing. Weve gone through health tests for our equipment and our technology and what not. We accelerated that for more than a month since we were not aware of what might happen with respect to continuing resolution or a lapse. So we are on schedule and per our acting chief Information Officer we are cautiously optimistic which is for a riskaverse agency the highest level of assurance that we can give you that we will open on time. We do not make the time determination and has never made a timed determination until midapril once we have gone through our programming, testing and development, and we would actually test, i think the number is more than a million returns, before we indicate we are ready to go. Historically tax season has opened in the end of january. On occasion it has happened early in february, and we have no reason to believe that it will be later than that timeframe than now, but we will advise you if there is something that causes that to change. Mr. Commissioner, do you intend to tell the president elect before he raises his hand on january 20th, whether or not where we are in the schedule, anyway . Do you think the next administration, regardless of who it is, deserves to know beforehand and at that transitional point, will you tell them and give them the information . Sir, my interactions are not with the white house. My interactions are with treasury and so that would be the course of conduct and discussions that i would have with people. I mentioned in my Opening Statement im extremely concern in the irs audit priorities. With many lowincome taxpayers especially eitc recipients being ordered with more wealthy individuals, thats on the record. While i do not have a specific record for you at this time i want you to know that ive asked the ga, o to look at the congres and its important enough to look into. Mr. Commissioner, i am concerned by the recent executive order that would reclassify what you would call that your confirmation hearing and absolutely world class, career irs workers as political appointees and this would undermine the impartiality of the irs. How has the irs taken any steps on this executive order and how many employees do you expect to reclassify . The executive order is under review. As i understand it, it requires a response on january 19, and i would support the comment that i made before, and i think that you endorse that we do have world class employees and we have demonstrated that every single day during my two years and before i came onboard. Yeah. I have no problems with the employees, as you well know. My problem is before you got here, too. How they are how we operate day to day, how we put a budget dth and since youre part of the administration is your idea of the budget the same as the president s . You were talking about the subject, i didnt, of funding. Are you satisfied on the funding . You dont have to answer this question . Rhetorical question, are you satisfied that the funding of the irs at this particular time . Including personnel. I know what the numbers are, every year since 2010, and i know which each president submits his budget as every other congressman does and i know what we finally vote on. Can i respond, sir . I didnt ask a question. I know that. I now recognize miss malorski for five minutes to ask her questions and thank you for staying. Thank you, mr. Chairman. Commissioner i want to switch gears, my office is experiencing some difficulty in resolving case work with the backlog with the kansas city error resolution operation. My understanding is the current backlog is close to 60 dayis and know my office isnt alone with the concern with the backlog of 3 million pieces of unopened mail and 7. 6 million unprocessed tax returns. Im fully aware of whats going on during the pandemic and has taken a significant toll in the operations and i r hardworking hoosiers in my district and they need a swift resolution in my cases soy they can continue to put food on the table, have been on covidrelated leave for months. Can you give us a quick update on the Kansas City Center and how we plan to get through this backlog . Let me clarify that the unprocessed return is one million. The mail backlog is 3 million. Okay. The returns in process means theyve gone through the system and are about to be posted in 6. 8 million and as weve carried into fiscal 21 and theyre a little bit higher on the carryover from fiscal 20 to pick fiscal 21 and in terms of kansas city and similarly, the other three submission processing sites. Kansas city is about six weeks behind and they have transshipped paper to austin and one of the sites that we made was processing receipts that came in on november 6 ath and t third one, i think is about october 20 on november 7. They were that caught up and kansas city was at october 2nd. We are actually working split shifts and are obviously socially distanced and given the fact that weve had so many people teleworking and we hit our high this week of 59,000 with teleworking which is definitely a record for us. They have given us more space and we can socially distance where weve had employees sitting doing something else. So we have really done all that we could do. Weve offered the processing employees over time and weekend work and what i can say is on behalf of the Internal Revenue service and every employee for literally every american, we appreciate the patience and understanding they have had with us. This is not an excuse, but i will say that our employees went through the same, exact thing as every other american during covid with respect to the health and safety concerns for themselves, for their family and their neighborhood and their communities, and it was a highly uncertain thing, to the extent its created significant hardships and we were our best, i was doing my best and i was with one of my idols behind me and we were trying to figure out everything we can do on a daily basis to lessen the burden on people. I do think as far as a federal agency that we did at least as well with the agency given the Monumental Task with the Business Issues and we took on iep programming for the veterans administration, and it is highrisk visible, but at the end of the day i am the person who shut down about 511 facilities in the end of march based on health and safety concerns for our employees and i was the person in being instrumental in how to figure out how to do a phased in reopening and we do that in coordination with local authorities and we have a covid czar, if you will, who not only interacted with all other federal agency, but interacted with tax authorities throughout the world as to what they were doing to lessen the burden on their people and letting them know what we were doing similarly. So i will say we tried our best, and an example of where you all have a right to complain is we did the congressional mailbox. That was an effort for us to be able to work the inbounds overnight rather than a phone situation where we would not be able to answer the volume of phones coming in. That was one of our bright ideas and lets put it in the congressional mailbox and it got overrun and creating a series of problems and we all have questions about and we now have a webbased scenario so you dont have to go into an, mail inbox. We have Lessons Learned as you would hope. Thank you, mr. Chairman. I yield back. Just on the members in attendance and consistent with the Committee Guidance and practice, we will move to two to one questioning. The chair now recognizes miss delbany for five minutes. Thank you, mr. Chairman. Youre welcome. Thank you, mr. Chairman and thank you, commissioner, for joining us today. In july i led a bipartisan letter with 111 of my colleagues detailing concerns that our constituents have raised regarding the Economic Impact payments. Since the cares act was signed into law weve had some reach out due to the covid19 pandemic and theyre still waiting for their Economic Impact payment or are waiting for an error in their eip to be resolved. In your response to our letter and you referred to this a little bit ago, you cited technical challenges with the eip mailbox. You set up saying those challenges are, quote, attributable to the capacity of the email system being used for the mailbox and the challenges posed by the management tools on the platform, end quote. You talked a little bit about what youd do differently. What do we need to do and what technical challenges do you face and the systems modernization is a very important issue at the irs. I wonder if you can address what needs to happen in order to make sure you can respond better to issues like this in the future. Thank you. As i indicated i am the person who made the decision on the mailbox. We up mremented that within a matter of days. It seemed like the right decision at the time and it did get overrun and i think i have and i will continue to apologize in terms of modernization. In april 2019 the irs issued its integrated business modernization plan which is a sixyear plan with the funding requirement with 2. 3 and 2. 7 billion and the first two years of the plan and the funding thats been allocated has been about half of what was requested and therefore, obviously, its extended beyond a sixyear timeframe. So we have and would certainly welcome the opportunity to sit with you to go through what we were planning for modernization, both under our modernization plan as well as youre aware that youre implementing a plan which we will deliver soon up on the hill for the Taxpayer First act which has its First Independent set of modernization features and what not, but the last part of your comment, i think is what can you expect from us Going Forward. What you can expect from us Going Forward is we have Lessons Learned and we have a lot of partnerships and a lot of industry specialists on the outside that we contract with and so its not an irs alone project in terms of modernization and i would include congress in the same feature as were in it together and we have done a lot of briefings on the hill. We would continue to do so, so if invited we will come up to the hill to do briefings with where we are with respect to modernization and you are going receive briefings depending on calendar. In sdchl december or early january with the independent set of significant modernization features into it. Mr. Commissioner, how would your irs plans for fiscal year 21 be cut back if funding has not increased over the fiscal year 20 levels and we know that Senate Appropriators have not increased irs funding. So what would happen if that funding has not increased in fiscal year 2021 . The industry has a history of reacting to funding challenge e lets say that and we operate through a variety of ways. I think youre aware that 70 of the budget is staffing and we have significant rates of attrition and not by choice, but that tends to be one of the first issues that goes. We do not cut funding for our Mission Critical core, nor would we, and we will adjust as the agency has done throughout. I would like to make one quick point in addition to all of that. I believe that every Administration Since 2010 has made a request in the administrations budget for a Program Integrity cap which is specialized funding specifically addressing and appropriated for enforcement activities and i believe that since 2010 that has never been approved or funded, and so as long as im here, if i can take that opportunity to make a pitch that it would help for folks to look in that. It is also critically important and those cutbacks are having an impact on our constituents and i appreciate you raising how critical they are to have those available. I yield back. Thank you. Has expired and well continue two to one questioning, and im going to call on in a second miss safrnes sanchez fro california, the gentle lady. I want to say this, commissioner. Since 1910 and in the last years leading up until now, in the enforcement area which is under your guidance and responsibility weve been from 50,524 employees to you know these figures better than i to 33,529. Thats down 17,000 employees. Its all wonderful and we all agree to praise the workers because they did it because they very seldom get it, but these are our numbers. Employees did not vote for this and in the Taxpayer Service it went from its less of a hit, went from 32,029 and thats from 3,000 a difference. You cannot enforce the law, i would say and you may disagree with me with 17,000 less employees than you had nine or ten years ago. Sir, im not only going to disagree with you, but i will i think its appropriate at this time to indicate from 2011 to 2018 we had a hiring freeze, as well and with attrition and with a hiring freed, i will say two commissioners ago made comments that well do more with less and the last commissioner will do less with less, and i have not said that because that puts the burden on our employees and those with us are working hard that get it and they want to do it and what ive said with my two years is we want to do more. We dont vote for funding. We will work within the funding that we receive. Its my job and the job of the Leadership Team to allocate that funding as best we can and as appropriate as we can and weve heard us or you should have heard us talk about being in every neighborhood. We will not only be in the more visible areas, but we need to provide services across the board and sometimes we need to take funding appropriations from one issue to another issue which lowers the level of service or lowers the level of enforcement. All right. Reclaiming my time. Thank you, mr. Commissioner. I want to thank you and we turn to our regular order. And thank mr. Kelly, and now ask the gentle lady from california, miss sanchez, the floor is yours for five minutes. Thank you, mr. Chairman, mr. Commissioner, thank you for joining us today. Id like to start with an issue that we raised at the previous meeting the extent to which the irs has unfairly been focusing on the wrong population for audits. All taxpayers need to follow the law that the current tale of two tax systems is unacceptable. Specifically, im speaking of the audit rate for taxpayers earning over 1 million per year, as im sure you likely know, mr. Commissioner, the audit rate for those taxpayers has been cut in half, but the automatic eight Automated Program is chugging along at higher rates. We heard from expert how that impacts and deters cheating . Do you think it impacts compliance and deters cheating . Do i agree that i missed the last part, maam . Do you agree that audits impact compliance and deter cheating . Correct. I agree. Okay. Then why is your agency choosing to go after the low of the return amounts at far higher rates while leaving the wealthy nearly unchecked . I believe you are referring to the earned income tax credit examinations which is the correspondence examinations that we perform. There is a 25 mr. Commissioner, i am referring to audits overall. Overall, taxpayers that make over 1 million their audit rates have been cut in half and audit rates for lowincome americans have continued to increase. Why are you not equally enforcing our tax laws across income levels . We are enforcing it. Id be willing to sit with you to walk you through the statistics on that as well as also the staffing that we have on that. I can tell you that substantially every experienced revenue agent which are our top end examiners are focused on the highincome taxpayers and are not focused on the middleincome taxpayers. I would appreciate the opportunity to sit with you. I welcome that opportunity because i think most american, nobody loves to pay taxes, but most americans feel like theyre paying their fair share so long as everyone is paying their fair share. We will sit at a greater day and i will speak to wealthy americans are not being scrutinized and very low income americans are, and its no wonder that they feel frustrated that, you know, theyre being targeted when wealthy americans seem to have a different irs experience altogether, but we will sit down at a future date because i absolutely will tack you up on that because i absolutely know for a fact that that is true. Im wanot looking to debate e issue. I want to move on to another issue that is important that reports that suggest that the irs backlogs may be preventing some americans from receiving the advanced payments for the tax credit for the 2021 Marketplace Health coverage. That delay could lead them to become uninsured. I want to know if the irs and you will commit to working with others in the administration such as cms to fix that issue during an ongoing pandemic because unless you disagree, i think its pretty important for people to have their Health Care Coverage during a pandemic. So could you provide an update in writing on resolving the backlog as well as an assessment of how many people eligible for aptc are potentially impacted. Do you have your commitment on that . Yes, can i give you one real brief comment . Individuals selfattest to that as of january 1, and the cms actually comes back in march to reconcile that and so theres no lack of involvement in the Internal Revenue service that would preclude anyone from this country from receiving that insurance, and we can certainly go through that, and i would be available to discuss that with you later today or next week or at your convenience to provide that information. I did read the same thing. I would i would appreciate your cooperation with that. I have no further questions and mr. Chairman, i yield back the balance of my time. Is expired and im glad we agree that this is a critical issue that ms. Sanchez has featured and ive seen numbers of where the audits are happening and over the years, how theyve changed and wed like to have some solid numbers from you that you would verify and give to all the members of not only this committee, but perhaps everybody should know. Its no secret here, and i want to thank the gentle lady for bringing that issue, as i mentioned earlier that issue and you were very explicit and i thank you. The chair now recognizes for five minutes the gentleman from pennsylvania, mr. Kelly. Thank you, chairman. Thanks for having this hearing. Mr. Commissioner, thank you for being here today. I want to hand you a piece of legislation that installed the personal Health Investment act or f. I. T. In this world of acronyms and it would amount for physical expenses using pretax dollars and use the money and Health Savings accounts and we propose the definition of medical expenses to improve qualified physical activities like sports leagues, health club dues and classes as a form of disease prevention and to have someone these expenses would go a long way toward encouraging people to engage in physical exercises and the healthy lifestyle. One other thing i would like to mention, because this was a big day for all of us, we did the Taxpayer First implementation act with mr. Lewis. That was a great day for us, and i think that one of the things we look fondly back at the time we spent with mr. Lewis and that act does require long term implementation work by the agency. Is the challenges youre facing with that is there anything you need from congress to help out with that . Funding. Funding . Yeah. That act passed with no funding attached to it. We asked you to do something with no money to do it. We are good at doing things like that. My kids tell me that all of the time, too. I want to bring up this audit rate thing because i think that somehow we keep getting this thing rolled around and rolled around and if you say it loud enough it actually does, some people say there must be some truth to it, miss sanchez brought up a good point and when it comes to the earned income tax credit, the fact that somehow we are really going after these folks at a much higher rate than we would people that are higher being in, so just to reiterate what you said, back in october for taxpayers over with an income over 1 million, it is 1. 6 . For taxpayers with an income between 1 and 4 million the audit rate is 3 and for eitc the audit is 1. 129 . Now, i dont have a degree in math, but i do have the ability to look at these numbers and if anybody can tell me that somehow eitc recipients are being audited more than anybody else, you cant the figures dont lie. Its not magic, its math. Would you reiterate that and we can clear this up and not have to keep rolling this around because the truth is that it doesnt really exist. Yes. The chairman asked about the numbers as well. The last published data book is the 2019 data book which we will make available to every member of your subcommittee. Our 2020 data book will come out some time in march or april of next year and the individual is 8. 16 and 4. 39 and individuals between 1 and 5 million is 2. 39 and for eitc claimants the audit rate is 1. 9 and i would like to understand kate that there is no focus on lower income taxpayers and theres definitely no focus from the Internal Revenue service on any of our systems with respect to the individuals who make up any of these taxpayer groups, but to the extent, eitc is focused on lower income individuals and whoever is in that population is in the audit Selection Process that we dont look to any characteristics other than what is or should be in the return and things like that in an audit selection and annually and the last one, fiscal 19 in the eitc world there were about 25 Million People claiming 63 billion of eitcs and there was a 25 improper payment rate which means that the Internal Revenue service paid for fiscal 19, 7. 4 billion to the group that we were unable to verify that they were entitled to it. I agree with every member with this committee that this is important money for important people. By and large its getting to the right people and it is a subsidy that is characterized in the Internal Revenue code and given the responsibility to the tax administrator on some things that are very complex. The code itself for eitc needs to be addressed by congress at the appropriate time. I appreciate that. This committee in particular is responsible for oversight and what were talking about the hard earned dollars of hardworking american taxpayers. Anyone that has a 25 improper payment rate, no one would run a private business like that and think things are okay. I appreciate the time you put in and your dedication. Mr. Chairman, i yield back. We need to take a look at this, mr. Chairman. You see the numbers and percentages, and i think that is very important to look into. Weave only concentrated on the one aspect and we havent concentrated on the fact that affluent people and theres nothing wrong with affluency, thats for sure, have corpses of lawyers which other people do not have and this is not your fault or problem and the fact is that we have two systems of taxes because those that have lawyers and those dont, and if you want to challenge and you want your lawyers to look up loopholes and you have no lawyers you have no choice, either. I think all parties are right here, and i think that we need to take a very close look at this because people feel theyre being ripped off and in thats not true we have to clarify it. I want to please go to mr. Swazi. Thank you, mr. Chairman. Commissioner, thank you very much for being here today. Its good to have you testify before the committee and youre in a tough spot. The irs is always a punching bag as it is and youve lost so many resources as an agency since 2010. I know youre a dedicated professional. Youve got a great background and youre a committed Public Servant and youre in a tough spot and on top of that weve got the whole issue with the president s taxes which i would hope that the treasury secretary, and the future treasury secretary doesnt direct you to talk about it and we need to demonstrate once and for all the power of this committee to review the issue of auditing the irs own regulations that say you must audit the president and the Vice President and we need to review how thats been done and i think the court case will be very, very important for us to go through. Anyway, so youre in a tough position. You agree that the irs has had 17,000 employees cut since 2010. Do you agree with that . Those are the statistics . Do you agree with the staff reductions are 22 overall . Thats correct. And revenue agents are down by 35 since 2010 . Thats correct. As a result, the audits that have taken place are down 45 since 2010 . Thats correct. We should i hesitate to say this because the audits are down. We do have technological advances and we that does wanot make up for e drop in staffing. We need to spend at least 3 billion to update the technology at the irs, is that correct . Its significantly more than 3 billion. How much do you think we need to improve the irs . It depends if we want to we want to be the best we can be. What the American People deserve, it will be between 6 or 7 billion. To frame that. Theyre spending 10 to 12 billion. We need 6 or 7 billion. How much goes into the systems . Its at least a third. We spend billions just for ops and maintenance and just for tape and bubble gum to hold it together. We need to modernize the irs with Better Technology and we need the money to do that, correct . I agree. We need more employees for the irs and we need money to do that, right . And we need to train our employees. And we need money to do that. They deserve to be trained. The money we invest in Getting Better employees, well make more money, and is that correct . The raeshio is and everybodys come up before me and said the same thing. Its between 5 and 7 return. That doesnt take into account which is rid now corporations that have over 1 billion in assets, their audits are down 51 since 2010, is that correct . I dont have that statistic in front of me, but i would not be surprised by that. For people who make a million strike that, for people that make a million in assets or more their audit is down 61 since 2010. I think thats an income number. Okay. For people who make a million or more their audits are down 61 since 2010. Were down across the board so ill go with you with the 61 . The bottom line is you need more money for technology upgrading. You need more money for employees, if you had more, Better Technology, you could do a better job auditing all different kinds of people including those with the most assets and more money and youd bring in more money, youd bring in five to seven times more than investing. And we would provide a Better Service for every american. Thank you, commissioner. I yield back. The chair now recognizes for five minutes the gentle lady from california, mrs. Cho. I am glad they closed operations during the initial weeks of the pandemic this spring and recognized it created a huge backlog of mail that the irs is still working through, but i am disturbed that the irs is continuing to issue levy and lean notices while processing that backlog of mail. Taxpayers and businesses who have filed on time are being penalized because the irs still has not processed their filings. So i request unanimous consent to submit a letter to commissioner redick from the American Institute of Certified Public Accountants dated november 5th, detailing some commonsense options that the irs can implement to alleviate the Financial Difficulties for these tens of thousands of taxpayers. Commissioner redick, my understanding is the irs has not extended an expedited phone service to dispute the lean and levy notices being sent to taxpayers despite the backlog. Do you have a current estimate of how large the mail backlog is and would you also provide some rationale for not setting up such a process to date and whether we can have such a process . I did go through the mail backlog figures. We have an aggregate of 3 million pieces of backlog of which a million are tax returns which is not unusual and as to the aicp alert and i know your background, and im in touch with thousand of practitioners on the outside and what they were asking for was for us to go beyond reasonable cause for individuals with a comment saying first time for the failure to pay, failure to file and failure to estimate penalty you get an automatic abatement and some of the comments was somebodial read h somebody already has one of those and they default to reasonable cause, we have defaults in place. They were not career employees who looked at this and more than 10 Million People who came aboard and similar to mine looked at this, as well, and were not able to provide for people and professionals who might not be addressing their responsibilities and we took a hard look at that and aicpa is aware of the practitioners. They understand their objection to the blanket type of approval and what theyre talking about is an expedited phones is for Tax Professionals to make their case. We do have a practitioner priority line that is staffed and so ill go back, and i have personal friends they dont run the aicpa and these are not conversations that happen in isolation. We have talked quite a bit about your tighter annual budgets and the hiring freezes and the decreased workforce that is able to conduct audits, and i believe that congress has to provide irs the resources it needs to effectively and fairly enforce our tax code against tax dodgers and fraudsters, the high income individuals who are avoiding taxes altogether and its estimated if there was proper funding the irs could bring in 1. 3 million by 2030. So i know you have had recent calls for a multiyear budget for their irs. In your opinion, are there parts of the irs budget that should be prioritized for mandatory multiyear spending and if so, what should they be . Should enforcement be a priority . Enforcement is a component to Taxpayer Service. Employees who are compliant know the taxpayers that arent at risk go together. They look at the ability to provide Better Services, whether its chatbots or online and this and that, but you know, enforcement is one of our corecomm bonents and one of our Core Missions and a visible Enforcement Effort is significant in terms of creating deterrents on the outside. So ive used the terminology, maam, that we need to be in every neighborhood. Unfortunately, we have had, say, 15 priorities each of which costs a dollar to get off the ground and we have one dollar. Mr. Redick, what about the issue of the multiyear spending . The multiyear spending is for modernization as much as anything else for us and what it does, our i. T. Side of the house we give knowledge of a number and we cant implement the number and we have to deal with the funding and we start over again next year and the year after. It is very difficult for us and thats why the multiyear component so we can plan accordingly and we can acquire product accordingly. Having to do it annually is just not the way it should be done. Right. And i still hope that it would be for enforcement. Yeah. I yield back. Im an enforcement guy, maam. Well, thank you, mr. Chairman and i want to thank Ranking Member walorski and commissioner redick for being here today. I appreciate you taking time out of your busy schedule to address and discuss irs efforts. First, id like to comment you and your staff and all of the irs employees and how the agency has confronted the coronavirus pandemic. It is a true testament to the irs dedication and commitment to delivering quick, meaningful guidance to taxpayers. Commissioner redick, after weeks of the passage of the cares act, they were sending money to taxpayers, they were for constituents across the country through the most challenging months that they faced and the country faced. This money went to other necessities. Moving forward, those who did not receive an Economic Impact payment, they would have the 2020 Filing Season. Commissioner redick, many of my constituents are interested in claiming next year. Will it be as simple as checking a box on the tax form . There is a schedule worksheet that will be included with the 2020 return that provides for individuals to not only claim the credit, but if they received an amount of a credit that they disagreed with, they can put the worksheet together that they believed they were entitled to, and we would obviously check that, but it would be part of a return. And that worksheet that you referenced, is that something thats been distributed already . Id have to get back to you on that. Im not sure its public yet, but thats certainly the concept. Okay. Changing topics, and id like to discuss with you and i know its been mentioned previously, the irs modernization efforts and they faced challenges interacting with the irs with the Taxpayer Assistance Centers and long wait times for the tax centers and further complicating this was the ability to process paper while Service Centers were chosed. The Senate Republican heals act was for funding to help address some of these challenges, and could those improvements from facing similar challenges in the future . That figure was carefully determined and that would be a game changer for every american from the perspective of eips and otherwise and specifically appropriated the 2 billion would be appropriated for i. T. And technology and would literally be a game changer and assure every american that weir able to provide the Services Including if we get another round of eips or similar. So its the significance of that certainly cannot be understated, sir. Thank you, commissioner. Appreciate it. Thanks for your service. Those are all my questions. Thank the gentleman from illinois. The chair recognizes for five minutes the gentle lady from wisconsin, miss moore. Thank you, commissioner, for your appearance here today and i want to join the rest of my colleagues in thanking hardworking people at the irs for all that they do. I just want to commend them on standing up on some outstanding interventions with the Economic Impact payments and putting together the portal and ill discuss that in a minute to identify those taxpayers that were nonfiling taxpayers that really, really we needed to redress their extreme poverty during this time. Many of my colleagues, most of my colleagues on both sides of the aisle have really left me a really clear path to ask this next question. It seems like what was in common with all of the questions whether they were from chairman pascal or from Ranking Member walorski with the backlogs and those people who have not gotten the Economic Impact pages so far and the disparity between those people who are audited and those who are not, you did talks about the 66 billion burden that the earned income taxpayers provide on an annual basis, but i just want to note that the tax gap is Something Like 446 million a month so its really worthy of that. So my question is real simple. Just say, for example, that you are reappointed or that you continue your reappointment as commissioner of the irs, what would you provide in way of a budget submission to increase irs funding to sort of cover these clear gaps that we have in enforcement, in training, as you mentioned . What would be your increased budget request . On a top end . What i can say is i think the adjusted for inflation the 2010 budget figure today would be 14. 1 billion that would get us to the equivalent of 2010 which realistically might not take into account a hiring freeze from 2011 to 2018, patchwork on our systems to get us to where we are. The strength of our agency and to the extent that weve earned and continued to earn trust and respect of the American Public is attributable to our employees and the front line employees specifically as well as our approximately 7,000 employees in our i. T. Departments and our wage and Investment Departments you know, i agree with you so much, commissioner, the employees are just awesome, but you do need more money as you indicated and thats on the record. I wanted to talk a little bit about the problems of this pandemic which sometimes are not seen. I coauthored a letter along with congressman raskin and most of the members of the committee have signed on to it talking about the impact of covid19 and Domestic Violence. Weve seen a real huge uptick in Domestic Violence where staying at home has not been safer for people. One of the impact, as you know, we sent you a letter, one of the impacts is that victims have not gotten their payments and there has been a ruling on your part that that in fact, you cannot make replacement payments because of u. S. 31, but weve had some advice from nancy olsen. You know her. She used to be the Taxpayer Advocate who has said that in consultation with the gao, that you really do have the ability to book a category 4 payment that provide these desperately needed payments along with affidavits and Police Reports or something that and what do you plan to do in 2021 as this continues to tab a problem and i would yield to you to that answer. First on legislation such as this that the irs be a part of it in terms of what we can administer. Who is an eligible american and in context of Domestic Violence those pages were properly made in accordance with the income tax returns and if it was a direct deposit or a check, they were properly made with the cares act. I am axe wear ware of that. The gao has said that you have counsel has specifically how would you do that . We are, treatment extremely o victims of Domestic Violence. If we had discretion or believed we had discretion to do so we would do so. We cannot do something thats contrary to legal and statutory authorities. Thats why i will go forward and if there is another round with respect to Economic Impact payments we would appreciate the opportunity to be at the table to indicate not only with respect to that, but a couple of other provisions that we would make suggestions perhaps how we might be able to administer better for some people who really were sort of left in between. We are certainly underserved at the end of the day, but nina olsen is not counsel for the United States government for the Internal Revenue service, is chief counsel and then you have department of justice, treasury and what not. If i felt that i could actually, with the stroke of a pen make payments to people, i would do so, but the irs i am a tax administrator and the irs is required to follow statutory law, and mr. So we would like to work with you my time has expired, but i would ask unanimous consent to put nancy olsens analysis in the record pursuant to this testimony, and i will put that without objection, sir . Chairman . Without objection. Thank you, the chair now recognizes for five minutes the gentleman from pennsylvania, mr. Boyle. Thank you, mr. Chairman, and i appreciate you having this hearing. One of the benefits of doing hearings like this is not just the opportunity for members of congress to exercise oversight and take testimony from the witness, but its also for us to be able to listen to the experiences of other colleagues and ive been on this hearing since the beginning at 10 00 a. M. And ive really been struck by how remarkably similar the experiences of constituents in other districts have been to my own. Specifically, the very first republican member to speak, she said almost verbatim what i was going to read in terms of the 2019 tax refund backlogs. Commissioner, i appreciate you being here and when you reached out to me initially way back precovid to sit down and talk about how the irs can work better and more efficiently for all american taxpayers, i want to just reiterate my constituents in philadelphia, pennsylvania, are having the same exact issues with 2019 tax returns. Ive been in office six years now and this was by far the most irs constituent services issues that weve gotten. And then specifically the backlog at that kansas city site, as you probably know, from my constituents when they have an issue, its the kansas city, missouri, site of the irs that processes them. Our ability as a Congressional Office on the front lines dealing with constituents has really been impacted by the fact that its been so difficult to get information from them. I would also just, you know, point out as constructive criticism the way its been set up right now in the irs with the Congressional Liaison office, they arent able to get us the information that we need to be able to relay to our constituents. And thats changing that is really important. Were the ones on the front lines dealing with people. I have four different district offices in my district because we prioritize constituent service. For a lot of our constituents, they dont even for a certain segment, they dont necessarily look at voting or policy, its the nuts and bolts of constituent service that matters. And so when i have someone who, you know, is waiting on a tax refund far larger than the eip and they havent been able to get it and get information and the Taxpayer Advocate office is so swamped that they cant hear anything, its enormously frustrating. And the folks in my office who also live in and around philadelphia have been doing an excellent job attempting to service them. I want to specifically recognize jim kennedy in my office who had developed a real exercipertise these issues. Its frustrating. I would pass along that as reiterating or underscoring what some of my colleagues have already talked about because weve been having the same experience. If we can reform that system with the Congressional Liaison office, it would be a better experience for our constituents. Moving on, let me speak about the eips, the Economic Impact payments. Again, my constituents having very similar experience to the issues that were raised by my colleague. Simple things like getting an eip for 6. 50 instead of 650 and waiting nine months for that to be corrected. Those are two areas that need to be addressed. I think they all point to the third point that i want to recognize, and im sorry i cant see the timer here. Forgive me, mr. Chairman. It looks like i have a minute left. Ill conclude with this and perhaps this is going to be something that we can work on on a bipartisan basis. The 35 reduction in staff since 2010 is clearly part of the problem. And if we can work on a bipartisan basis to restore the irs workforce, it would in the end of the day actually save far more taxpayer money than it costs. So, commissioner, i know i covered three different areas there. If theres anything that you wanted to address and i would certainly welcome it. Invite me back for another one on one and we can go into further details. I would indicate a pitch for people to file electronically. During the pandemic can i commissioner. Im sorry to interrupt. I just want to i should have mentioned this earlier. A lot of the constituents who were servicing, dont have the ability to do it online. That is part of the problem. I recall our meeting before. Generally, for the others, because theres theres resources here and there. Commissioner. I hear you. Can you by chance write something put something together for mr. Boyle. I want to give you the opportunity to respond to him. Could you write something to him within the next week or so. I will. Ive met with him before and well meet again. Is that okay with you, mr. Boyle . Yeah, great. Thank you, commissioner. And i appreciate that, chairman. Thank you. Before i call on mr. Wensturp, it just occurred to me, a couple of things, looking at some notes here. I think using percentages, mr. Commissioner, when we talk about audits, is very misleading. Ill tell you why i think. If you look at real numbers, taxpayers with incomes of over 10 million, 10 million or more, theres 1500 audits. And eit taxpayers which many of the members have brought up today, 380,000. I say, well, theres arent as many millionaires, obviously, or multimillionaires as there are people on eit. But, you know, were focusing on eit taxpayers. Were talking about individual taxpayers and the grief they have to go through. I dont think percentages are the whole answer. Thats all i would say to that. Can i comment . Sure. I agree with you. The questions that weve been fielding are at the audits at lower incomes are disproportion to the class of audits at higher incomes. Sir, im were not out of sync on this. We need what do we need, mr. Commissioner . We need the resources to do it better. The eitc should not be an issue for any american. We need to change that statute. We have been working this diane grant has been working this since 1975. We have ideas but it takes congressional action to change it so were not collectively in this situation and that we are not burdening the lower income taxpayers who need and deserve these funds. Thank you, mr. Commissioner. I recognize mr. Wensturp, the gentleman from ohio, and its good to see you here. Thank you, commissioner, for being here. I want to echo some of the sentiments of my staff on behalf of my staff who have taken on a lot of issues since this pandemic, as you all have as well, and particularly kelly from my office. But i appreciate the comment and your testimony, commissioner that you believe the irs has to operate in the taxpayers perspective. Thats who we end up taking the view of as members of congress. Two months ago one of my constituents reached out and asked for guidance regarding the use of their dependent and care flexible spending account. And she had been notified she wouldnt be able to use that to pay for virtual preschool. Unfortunately for Many Americans around the country, inperson school, is not being given to them as an option right now. So they face a situation and while i hope that all schools, not just some schools, can safely and smartly reopen. This is an issue that we face right now. Its a burden placed on a lot of families. And so as you know, many families say for their childrens education by putting funds into these accounts, recently i sent a letter to the irs requesting what i think is a reasonable accommodation to allow the account dollars to cover the cost associated with virtual dependent care services. So my first question is, commissioner, are you able to issue guidance on allowable uses for these accounts . Sir, i do recall your letter and i my recollection, it was also to treasury and my further recollection is that treasury responded to your letter. This would be a policy call. Were just tax not just, but were tax administrators on the irs side. The policy question about where to open that up to would be a treasury decision. Irs did issue an announcement im speculating on it was three, four, five, six months ago, indicating that it could be a problem for people who have the automatic with holdings going in but are not using the funds on the back end with the ability to actually stop making those with holdings and having said that, often at the government, were quick to say, we issued an announcement with the assumption that everybody reads our announcements and i understand thats not the case. So im saying it just to we did something, but im not saying as it solved the problem, sir. They can contemporarily use these dollars . The announcement was that they should stop contributing during the pandemic if theyre actually doing the homeschooling, stop contributing to the account. Treasury responded that to you, i believe and there were several others, to take it under consideration and i would suggest interactions with treasury. I dont have that and were doing that as well. Im just i was just asking if youre able to issue guidance on that and what your thoughts are if the policy decision maybe i dont go back to our building today. If the policy decision was made, i would hope that we could promptly issue that guidance. Not the other way around, i guess . I cant without the its guidance suggestion, whatever i think the suggestion has been made. Keep in mind, the people who review these things are also people with families. I get it. I know you do. One other question, one of my constituents who is a cpa reached out raising some concerns about penalties that would be leveled on tax preparers around the country for failing to meet the deadlines to submit returns due to some of the delays that are beyond their control. What advice do you give there . I personally know thousands, if not thousands and thousands, of accountants, cpas and others, and know more than 1,000 tax lawyers and have immediate family members who are in the practice. They have a first time abate and reasonable cause and under the guise of the pandemic, reasonable cause should be looked at liberally by everybody at the internal reserve service. I said that publicly. Thats very helpful. Thank you very much and i yield back. Doctor, pleasure, again, thank you for being here today. The chair now recognizes for five minutes my good friend the gentleman from illinois, mr. Davis. Thank you very much, mr. Chairman, for giving me the opportunity to participate. Though im not a member of this subcommittee. Commissioner, let me thank you for your service and thank you for being here with us and i also want to give a word of commendation to the Taxpayer Advocates in the Regional Office in chicago who have been steadfast in their helpful to my office during this period. The unlawful denial of eips to incarcerated individuals as well as their families during an historic economic crisis has illuminated further the pandemics disproportionate effects on communities of color and harmed africanamericans who are vastly overrepresented in the prison population. When ordered by the courts to stop denying eips to the incarcerated, the Internal Revenue service insisted that the incarcerated complete a complicated form knowing that they lack access to the technology to use the portal. Given that the Internal Revenue service has a prisoner file which it can validate status, familiar to create a similar form seems like an intentional effort to limit eip claims by the incarcerated. Which, again, disproportionately harms africanamericans. Commissioner, will you meet with the leadership of the Congressional Black Caucus to discuss our concerns about the racial implications of recent Internal Revenue decisions . Sir, i would be honored to meet with you and others. I met with john lewis on three occasions. I highlighted my personal and professional career. And i take we are proud of our Diverse Workforce and our respect for all people in this country and we reflect the people that we serve which includes incarcerated people. I have a workforce of 80,000 people. I absolutely guarantee you that we have thousands of family members who are incarcerated and who are entitled to these eips. Were no different than any other segment of the United States. But i would be honored to meet with you and others. Invite me. Thank you very much. And we look forward to that. Almost eight months after the c. A. R. E. S. Act became law, when are you going to pay the spouses of the incarcerated . Its my understanding that the all of the payments associated with prisonerrelated issues have gone out, keeping in mind that were getting information through our portal currently. But were current. When that information comes in, within a week or so, those payments go out. And i think the intention was that all prisonerrelated payments be made by the end of november. My time is going to run out. We would look forward to a review of that information. Mr. Scott, a colleague of mine from virginia, had a constituent who is a Social Security beneficiary who contacted the Internal Revenue service because he did not receive an eip. The irs told him he was deceased. Representative scott contacted this subcommittee for help and although the irs corrected his record, it refused to process his e irip this year because hed been considered for an eip when he was listed as deceased and making the gentleman wait until next year. Could he be paid immediately . First, the death master files maintained by the bureau of physical services. We get the information from them. And the way that the eips were issued, a marker was put on an account and so to undo one, we actually would have to undue all of them. We have not been able to work through those. But we are definitely aware of this issue, sir. Thank you very much. And can i ask i have a constituent that has taken more than two months to trace a check to reissue a payment. Is there reason this is taking so long . I would like to i would like to have the persons information. There could be a lot of reason. There could be fraud filters, i. D. Theft filters and whatnot. But we would be able to track quickly to find out what the issue is that held it up. It could be something unknown to the issue. I will have somebody reach out to the office this afternoon. I dont know if you have a power of attorney that we can get that information which would mean if you dont, we cannot speak to you. We could speak to the person. All right. Thank you very much. I appreciate your responses. Mr. Chairman, i ask unanimous consent to have two letters committed for the record from the Congressional Black Caucus. So ordered. Before mr. Davis leaves, you always stand for the voiceless and the most vulnerable. And i think thats what the main question is, to reduce perceptions that theres two tax systems in reality. I dont think thats political. And now, the chair now recognizes for five minutes, the gentleman from illinois, mr. Schneider. Thank you, mr. Chairman, and commissioner rettig. I want to say as others have said that many of the issues were hearing are issues im having in my district. Before i ask questions, first, ill commend you. Were seeing improvements in service. But my office has been in touch with a lot of constituents who have yet to receive their Economic Impact payments, like others you have heard today. Weve been working with these constituents who have the cases pending with the irs error resolution section. My first request is until these cases are resolved, our constituents arent able to enroll in aca, process their s fasfa. Can you commit today that you and your staff will ensure these cases are resolved as quickly as possible and let my team know how we can expedite that and give realistic time frames to our constituents . Some of our comments were a little i couldnt actually hear your comments. But i will commit to having somebody on my behalf contact your office this afternoon. We have so many people waiting so i would appreciate that. Can you hear me now . Can you speak again. When i had my button on, it seems that i heard you. Are you able to hear me . I can hear you now. All right. I would like to go through a couple of issues related to Nonprofit Organizations. Tax experiment Nonprofit Organizations benefit our communities. Theyre critical social service providers, communitybuilding. Because of their charitable and social welfare missions, taxpayers subsidize their organizations to provide tax exempt status. However, with this privilege status comes an expectation that these organizations work towards their mission and dont abuse this status. I would like to go through some different scenarios and get your take. I ask similar questions of treasury representative in may. First, Nonprofit Organization contracts with a company for millions of dollars for products and services. Companies run by one of the Board Members and the company regularly inflates prices for its goods and services. Would such a finding would you find such an entanglement troubling, please answer yes or no. Sir, i believe these questions are beyond a hypothetical. It might be related to a referral that we received. I would not want to speculate on any particular matter. I find areas of noncompliance for all taxpayers which includes tax exempts and nonprofits troubling. I can say that to you. Again, im not singling out any organization out at the moment. If an organization has a provider and theyre directing millions of dollars annually to that provider, but they have a stake in that company, would that be a source of concern to you . Theyre a provider but they have something a Nonprofit Organization has a financial interest in a provider to the organization, a vendor. And theyre directing business to that vendor. It appears i would argue, thats a conflict of interest. Would that cause a concern for you . Im not going to speculate, again. But i come back to the same thing, particularly in the nonprofit and tax exermt world, its not only compliance. Theyre supported by taxpayer dollars that have gone elsewhere. I think we its fair to say that we would want our Nonprofit Organizations who are getting this tax advantage status to hold up to the highest level of ethics, conflict of interest, personal selfdealing, all of these are issues that are restricted by nonprofits, is that correct . Theres a whole host of provisions specific to nonprofits that are there for a reason. And its not just, you know, in the ordinary sense for a taxable taxpayer. Its the tax dollars, interest and penalties here to use my term, its not a code term, but the appearance is i think at least equally important because they have benefits that other taxpayers do not. Right. So im about to run out of time. Obviously, you know im talking about the nra and the selfdealing that has been reported. I know you cant report on an investigation. But the level of concern related to the activities that have been reported are very disturbing and i just hope that the irs is taking all of the appropriate steps to make sure that we protect not just taxpayers but the donors to these organizations who are taking advantage. Theyre not making donations to subsidize peoples lifestyles or habits. With that, i yield back. I would like to thank our witnesses. In this case, one witness, the commissioner. For joining us today. Please be advised that members have two weeks to submit written questions to be answered later in the writing. Those questions and your answers will be made part of the formal hearing record. Mr. Commissioner, i believe that i adhere to the conditions of our meeting today, i kind of stayed away from the president s taxes with your direction. Kind of. Kind of. But i want you to know, to me, this is not a political issue. To me, this is, as i said on february the 19th, 2017, when i asked mr. Kevin brady, he was at that time the chairman of the ways and means committee. We ask these questions in a bipartisan manner so that we avoid which we did not avoid, it becoming, quote unquote, a partisan issue. Because i think the people out there are watching in terms of fairness the subject i did get into today in which you did answer and respond respectfully. But this is a bigger issue and i hope someday youll be able to come before us and talk about it and feel free to do that. But i want you to know, im not impugning your lack of response to this because you told me you were going to not respond. And thats where were at. Thank you for being here today. I hope that this begins a process of you being here once in a while. Invite us back. We didnt refuse your earlier letter. We declined to speak about the topics that you wanted to speak about, which i cannot speak about. We indicated that i would appear in november and i am here in november. I will come back, sir. Ill come back individually or to the committee we had debate over what we could discuss and whatnot. Im not going to question your response, but i would say this, its a very big issue. Its not going after anybody. Because it almost came up with mr. Schneiders questions, the question about who the irs investigates and who the irs audits. Because if you remember in the this is before you. This is prerettig. The irs investigated the irs commissioner, lois learner. And at the end of all of the questioning, they questioned ten people, quote unquote, called in some ways liberal, along with organizations. Those people were questioned and their names were made public because 6301 deals with privacy as well. They were questioned and they nothing was found after the names were made public and one has to there was no apology ever given to these people. So when people say keep politics out of it, i return to that issue all the time. Because those were the facts. And i can tell you one thing, you dont know anything about me and i know very little about you. But im not going to get off the issue regardless of whether i ask you the questions or not. But i do appreciate insincerely your coming today and making yourself available and im sure were going to meet again. We are adjourned. Youre watching cspan3. Your unfiltered view of government. Created by americas Television Cable companies and brought to you by your television provider. And dr