Force and Health Care Committee will come to order. Without objection, the chair may declare a recess at any time. I recognize myself for the purpose of making an opening statement. Ms. Mcclain first and foremost, thank you all for being here in this crazy bit of times were in. What were talking about is extremely important. The i. R. S. Has been plagued really with dysfunction for decades. From data breaches, leak, Identity Theft, slow audits, backlogs and horrific Customer Service at least from my constituents. Despite years of oversight and government watchdog warnings not a lot has changed. My colleague on the other side of the aisle believe more money and more power is the solution. In fact in last years Inflation Reduction Act, Congressional Democrats dumped 80 billion 80 billion into the i. R. S. With this influx of cash the inch r. S. Plans to ramp up audits on all americans. This funding spree prioritizes enforcement over improving Taxpayer Services. Taxpayer Services Like processing taxpayer returns, receive a 9 funding boost. With enforcement receiving a 69 funding boost. The i. R. S. Needs stronger leadership, not more money and not more audits. The i. R. S. Needs to work on getting the American People their money back in a timely fashion, not auditing the lower and middle class americans. The i. R. S. In my opinion needs to invest in highly skilled experts, not simply hire more employees, but hire quality, not so much quantity. Put simply, the inch r. S. Just needs to do a better job. There needs to be consequences for their inaction. If a private business did what the i. R. S. Does on a daily basis it would quickly go out of business. If a private business repeatedly left you on hold for hours as my constituents and actually myself has even experienced, at a time where they didnt answer the phone call, it would go out of business, the customer complaints would go through the roof. If a private business repeatedly left sensitive Tax Information unsee cured lost it entirely, it would face criminal penalties and go out of business. But since the government is involved theres no accountability or yet any accountability that i have seen. For its poor performance. And thats one of the things i would like to talk about is, who owns it. Whats the accountability . But also what are we doing to improve it . Right . So even if we did give more money, what would the Solutions Look Like . We can sit here and complain but we also have to focus on some solutions. Why do we have to accept this . Hardworking americans accept this because they follow the law and they know they face consequences like penalties and fines if they dont. And those penalties and fines are their money. It comes out of their pockets. If we make a mistake on our tax returns it costs us. Right . In contrast, when the i. R. S. Makes a mistake, there are really no consequences. Or if there are, id like to talk about what those consequences are. Do people lose their job . Are they put on action plans . Do they get demoted . What are the consequences . And i really dont think its too much to ask to have a the federal agencies play by the same rules as we expect the American People to play by. In the i. R. S. When the i. R. S. Asks for more money to fund more mistakes, my data breaches, more ineptness, it shouldnt be acceptable. And we have to hold our Government Agencies to the at least the same standards that we hold the American People to with their tax dollars. Instead of doing the job the i. R. S. Is struggling to complete its basic functions. Instead of processing tax returns in a timely manner, americans are waiting months and sometimes years for money that is rightly theirs. The issue is, yes, we pay them, you know, interest on that money but a lot of the businesses are going to go out of business by the time they get their rightly deserved money. The i. R. S. Could do something as simple as answering the phone. Instead the i. R. S. Leaves Sensitive Information unsecure and vulnerable to leak, fraud frawd and Identity Theft. Frankly the i. R. S. Is the perfect example of bureaucracy failure. And there has not been a lot of accountability, any accountability, for it. We talk about these issues today. We need to remember that these are real problems that impact real people with real money, their money. So since i entered congress countless constituents have approached my Office Asking for help with the i. R. S. I have constituents that filed rather returns on time in prail and yet to receive their refunds. When they seek help if the i. R. S. They cant get hold of anyone on the phone even to get an update. Ill cover those later but often they wait hours to reach Customer Service representatives, only to get disconnected due to an overloaded switchboard. Which i you can imagine incenses them and the frustration goes through the roof. I have constituents who are Business Owners who have outstanding applications for the Employee Retention tax credit. One of these cases has been pending since february. These wait times are unacceptable for Small Businesses because they depend on those dollars, especially through the pandemic. Were here this afternoon to demand answers and accountability on behalf of the American People. Mr. Werfel thank you for being here with the subcommittee today. I look forward to your fruitful discussion. I recognize the ranking men, mrf making an opening statement. Mr. Mfume thank you, madam chair. Good morning doctor or good afternoon. Im living in that other universe. Welcome, everyone, and thank you very much, madam chair. Paying ones fair share is an important obligation in whats known as the American Social contract. With an estimated 168 billion individual taxpayers who file returns this year alone, processing high returns of volume and high returns of paper, requires sufficient personnel, moarndized technology and streamlined systems. A little over a year ago, President Biden signed the induction Inflation Reduction Act or the i. R. A. , into law. As most of you know this Ground Breaking legislation reached the i. R. S. At a critical time, right before the 2023 tax Filing Season. And it delivered 80 billion to the i. R. S. Over the next 10 years. The funds allow the i. R. S. To hire new staff, to modernize all of its technology, and to audit wealthy tax cheats who have been getting away with murder. The posterboard behind me illustrates that this is a win for low and middle class americans. These i. R. A. Backed improvements, as you can see, achieved 87 peak levels of performance and success as a result of their implementation. 87 higher than any other time. It was a dramatic inkreets from the previous tax filing year alone. I. R. S. Answered 6. 5 million more calls than last year, cutting the wait time by 86 . Which i think is phenomenal. It serves more than 140,000 additional taxpayers and cleared the backlog of unprosesessed 2022 individual tax returns with no errors. Youve got to be doing something right to have those kinds of numbers that are certifiable and verifiable. So these are real and tangible and immediate results that show that investment in the i. R. S. Improves Taxpayer Services. Dont take my word for it. The i. R. S. Pointed out in a sweeping release that, by the way, i would ask unanimous consent be entered into the record, showing that the agency will continue to prioritize efforts of high income individuals and companies without running away, turning a blind eye or refusing to do what they should in fact do. So these are real, as i said before, they are tangible. Theyre immediate results that show that investment in the i. R. S. Improves Taxpayer Services. Unfortunately, after this years tax Filing Season, in the budget negotiations, the nation was forced to heed the republicans persistent call for rescinding the i. R. S. Funding. There were a lot of bookieman stories that took place all over the floor of the congress about what was going to happen to almost virtually scare the american tax pay entire believing something that was not true. Reality is, the agency kept its promise, its commitment to the nation and its stated goal of cracking down on delinquent tax evading millionaires. Who had been getting away, as i said before, with robbery. The agency kept its commitment and so despite cuts to its funding and the persistent and dangerous mischaracterizations of i. R. S. Agents as sort of an army of boogiemen waiting to kick in your door and lock you up, weve got to stop playing games like that and weve got to make sure that middle class americans know what the facts are, what the intentions were, and more importantly, what the goals have been and the conclusions that bear those goals out in this. To the extent that i. R. S. Has collected nearly 160 million in back taxes from individuals earning over 1 million speaks volumes about who they are trying to help and who are they trying to keep us from being taken advantage by. These millions of dollars in missing tax payments were not an accident. It was not mana from heaven. It was a clear, deliberate effort to make sure that enforcement wuss the way it should be by that agency and to make sure that tax cheats, particularly the wealthy, wealthy, wealthy ones, did not have a safe haven. For example, the i. R. S. Identified one individual who just last month was ordered to pay 15 million in restitution for falsifying personal expenses as deductible business expenses. I dont know what kind of neighborhood that person lives in, but when you can get that kind of that shows hes getting away with one serious kraim and was caught. These efforts to defraud the federal government included financing of a 51,000 square feet mansion. Im glad whoever the hell it was got caught. I really am. Thats the affront and thats the tragedy here. And thats why weve got to find a way to make the i. R. S. Protect middle income people by going after the high income abusers. These sorts of greedy tax cheats exacerbate the 688 billion tax gap highlighting the stark contrast between the amount of money owed and the amount of collected by the i. R. S. On time. In other words, the more millionaires and billionaires who skirt around and play around with paying their fair share, the larger the burden that falls on hardwork, Everyday Americans who pay their fair share every year on time. The i. R. S. Reports that even small declines in taxpayer compliance can cause the nations billion can cost the nation billions of dollars in lost revenue, underscoring the need for simplicity and efficiency during the tax Filing Season. Thats why i coled with my colleague here, ms. Porter and with mr. Connolly of virginia, the trust in Government Act which directs the department of treasury to expand electronic tax filing and other Customer Support via email. We also led the streamlining i. R. S. Operations act which requires that tax returns filed on paper can be readily digitized. The i. R. S. Heeded that task and that request by expanding, not reduce, by expanding its digital scanning efforts this tax season. So Congress Must continue to ensure that the i. R. S. Has the funding and the resources necessary to maintain its remarkable progress since i. R. A. Became law. Progress that is unheralded in many respects, and unnoticed by others who hide mind these fake characterizations. Make no mistake, further cuts will hamper the i. R. S. s ability to execute transformative change. And so i urge my colleagues on both sides of the aisle to preserve i. R. S. Funding as we move forward from our current stalemate and get back to the business of funding the governments operations. I want to thank our witnesses, commissioner werfel and director lucas judy for your participation in todays hearing, and im particularly looking forward to hearing from commissioner werfel about the status of the i. R. S. s upcoming tax Filing Program known as direct file. We have the duty and the obligation in this committee to ensure that the government operates at a toptier level for all americans. And i look forward to discussing as members of congress how we can work to support those efforts. I yield back, madam chair. Ms. Mcclain thank you. I recognize chairman for an opening statement. Mr. Sessions im sorry to each of you for being late. We had business in another part of the complex. Commissioner werfel, thank you for being here, ms. Judy, thank you very much. The opportunity for us to meet today that we spoke about yesterday, commissioner, is one of natural inquiry that this committee has. Its about the effectiveness of the Internal Revenue service as it relates to their ongoing business that this subcommittee believes is very important. But perhaps it goes into much deeper points, and that is why we are also here today. We need to make sure that the i. R. S. In its performance does do its job, as mr. Mfume says. We need to make sure theyre properly funded. We knead to make sure they treat all people fairly, not just some that they would choose to. We believe that there have been reasons why you were brought on board the first time as commissioner, acting commissioner. We believe there are reasons why youre there today. Theres a lot of things that we will want to get into. But, perhaps its most important for me to say this, that i believe confidence in the i. R. S. Is what we are after. I spoke to you about this yesterday. About the sizing models, about the professional. I, about their ability to attention to detail. For the American People. To be able to get it not to get not just a good answer but to be able to get through on the phone without having to wait for hours. The effectiveness of the i. R. S. s ability to get their job done is important. We know that the i. R. S. Is going to cooperate with us. Because you told me that yesterday on sensitive matters. You and i spoke about that you actually did not want to get into actual information today and i con curd. But we are going to talk today to get an idea that you will cooperate and youll cooperate fully with us, that youll make sure that the questions that we ask while you do not have to go into the specifics about those, certainly not names, certainly not times, certainly not about the investigation. But about your agreement that you will cooperate with this committee and with congress in those regards. So, we know that youve been given some extra 80 billion. Were going to want to talk about that. The deployment of that. And how thats going to aid and do the things that would be necessary. I think its important that you know that the i. R. S. Touches almost every single american. So the information we get back, the things we hear back, comes at a time that youve got to depend a lot of defend a lot of ground. I want to thank you for being here today. I want to thank mr. Mfume, i want to thank chairwoman mcclain for allowing us to start this meeting without me. Madam chairman, i yield back my time so we can go to opening statements. Ms. Mcclain i recognize Ranking Member porter for the purpose of making an opening statement. Ms. Porter have you heard of death by a thousand paper cuts . Its how to get rid of something by southerly attacking it over and over until it is finally gone. Death by a thousand cuts. For too many years, washington politicians have worked to gut the Internal Revenue service. And they found creative ways to cut the i. R. S. Time and time again. How do they do that . Phase one. They start by attacking its credibility. Look, i know that the agency that collects our taxes isnt easy to love. Believe me, offering this opportunistic politicians know that too. They go on tv and they give the i. R. S. A verbal slash, falsely suggesting to the American People that the i. R. S. Sy spying on us, targeting us for our political beliefs or going after us to pay more money than we owe. What a bunch of b. S. But even though those claims lack any evidence, we might be inclined to believe negative things about an agency that collects taxes. Look, even the bible isnt that kind to Tax Collectors. These politicians easily succeed in creating hostility, making it even easier to slash the i. R. S. Again. Cue phase two. Fullon partisan investigations and attacks on the hardworking employees of the i. R. S. Look no further than the last time the Committee Republicans went hard for the i. R. S. Under the obama administration, republicans falsely claimed the i. R. S. Was unfairly targeting conservative organizations more than progressive organizations applying for tax exempt status. The i. R. S. Sent spent 20 million and produced one million pages of documents in response. Ultimately republicans didnt prove anything. They instead used it to justify divert regular sources from i. R. S. Customer service, i. T. And enforcement. But thats what opportunistic politicians wanted. To turn people against the i. R. S. To divert resources so the agency cant do its job and then to take one last slash. That brings us to stage three. Budget cuts. When politicians tell us that our Tax Collector is after us, no one wants to fund the collector. And thats exactly whats happened. Opportunistic politicians succeeded in cutting inch r. S. Staffing 20 lower than it was in 2010. Even though the country has grown by 7 since then. The agency has been so battered that well need 52,000 new i. R. S. Employees just to meet the agencys needs. That is how bad