On cspan, online at cspan. Org and listen live on the free cspan radio app. The commissioner of the irs testified before the Senate Finance committee on the impact of the coronavirus on the 2020 taxis and including efforts season including efforts to help taxpayers and Small Business. This is just over two hours. [gavel] sen. Grassley commissioner rettig, thank you for agreeing to testify on 2020 tax Filing Season and the irs handling of challenges that are posed because of the pandemic. The 2020 Filing Season got off to its typical start at the end of january. However since then, this Filing Season has been anything but typical. As 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 is some rumors it might be extended again. I dont know. I have heard that at least once. Despite these extended deadlines, the tax Filing Season continued with many still filing taxes as usual. At the same time consistent with 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. This left the irs shortstaffed during the busiest time of the year. Understandably that meant , taxpayers experience longer wait times to get their tax questions answered. It meant more calls unusual went unanswered and mail including paper returns went on processed. Over the last couple of weeks 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 while the 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. Irs and treasury have worked nonstop to put out necessary guidance to taxpayers, navigate provisions to help families make ends meet and provide businesses with new the cash needed liquidity to keep lights on and and employees on the payroll. Even more daunting was the rebates for individuals often referred to as Economic Impact payments. Irs and treasury worked in unprecedented speed to get the payments out the door and to hand the individuals and families forced to stay home because of the pandemic over about a twomonth span, 160 million stimulus payments totaling 267 billion were delivered by direct deposit check or prepaid debit cards. The irs took steps to get payments to as many eligible individuals as possible. This included working with the Social SecurityAdministration Department of Veterans Affairs to get payments for seniors, veterans and individuals receiving certain benefits. Those same people having no need to file a tax return. For others who typically dont file a tax return, the irs established an online tool to register for the payments. Over 6 million families and individuals took advantage of that. Commissioner rettig, you ought to be thanked and i thank you and your staff are 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, because for the first time in 244 years our government took the step of shutting down the economy. People needed that, being unemployed. I would say the irs performed exceptionally well under the circumstances. When you are tasked with processing 160 million payments in expedited fashion, there are bound to be some hiccups. There will always be monday morning quarterbacks ready to criticize even though we know they could not have done it any better. Im interested in getting your perspective on how the process has worked, what the irs has learned, and what improvements could be made should this or future congress once again task the irs with administering stimulus payments. Beyond the current Filing Season, the challenges posed by the pandemic, the irs has been working to implement the taxpayers first act, which was implemented last year to modernize the irs and beef up protections. This calls for the irs to institute comprehensive service strategy, modernizes Organization Structure and implemented Information Technology strategy. I look forward to hearing how the irs has proceeded with those reforms. We thank you once again. Now i turn to senator wyden. Sen. Wyden thank you very much, mr. Chairman. I do have some sad news to begin this mornings hearing with. And klein barred, who was the chief of staff on the committee of 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. I see my friend senator thune, we all remember him, always professional and fair to both sides. He became a personal friend of mine, a manofwar and good humor. I thought of him as a mensch, a man with exceptional character. I wanted to make those remarks and the chairman said i should express our sorrow on behalf of those of us today for the passing of ed. Noted, we need to look at the 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 day, icu beds in hot running low. The president said out in the open he wanted less testing and has gone weeks not speaking to our Top Public Health officials. It is unfortunate because i think what happens is it causes americans 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 th