He discussed efforts to the payments owed to individuals and Small Businesses provided by the cares act and addressed the 2020 tax filing deadline which had been extended to july 15. This is about two hours. Thank you for agreeing to testify in the 2020 season and the irs handling of challenges that used because of the pandemic, the 2020 Filing Season got off to a difficult start at the end of january. However, since then this Filing Season has been anything but typical as the 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 corporate and the deadlines pushed back from the normal april 15 to july 15 and there are some rumors that they might be extended again. I dont know. I have heard that at least once. Despite the exton to deadlines, the Filing Season continues with many still filing their taxes as usual ticket to the tax refund. At the same time, consistent with Government Shutdown orders and the cdc guidance, the irs limits much of its work to the essential services, closed a number of facilities and instituted the policy is where practical. The last shortstaffed during the busiest time of the here. Understandably, that meant it. Longer wait times ticket their tax questions answered. When the unanswered. The the irs and treasury have worked nonstop to put out the guidance to navigate important provisions to make ends meet and provide the business is with needed liquidity but even more daunting is the end of the mentation of the rebates for the individuals often referred to as Economic Impact came in. Irs and treasury to get the payments out the door and hand the individuals and families to stay home due to the pandemic. The irs established an online tool to register for the payments. Over 6 million individuals families took advantage of the two oh. Commissioner you want to be thanked and i thank you and your staff for working around the clock to get this much needed assistance in the hands of taxpayers during difficult times no fault of their own because for the first time in 244 years the government took the step two shut down the economy. When you consider all this when you are processing 260 million payments there will always be monday morning quarterbacks. Were interested to get your perspective has the prospect has worked and then to task for those stimulus payments. Beyond the current filing citizen one season the irs has been working to implement the taxpayers first act enacted last year with the taxpayer protections the Taxpayer First act calls for the irs to institute comprehensive Service Strategy to modernize the structure to implement Information Technology strategy. I would like to know how they proceed with those reforms. Thank you once again and a turn to senator wyden. Thank you very much. And on behalf of the chairman and i i do have some sad news to begin this mornings hearing. The chief of staff for the joint committee on taxation has passed away. He was a truly extraordinary person. He accomplish the rare trifecta to make his mark as i respected expert in tax law and business and government and the economic world. Senator thune remembers always their professional to both sides and became a personal friend of mine i was thought of him as a man with exceptional character i just wanted to make those remarks and the chairman said i should express our sorrow on behalf of both of us for the day on for today. It is intertwined with the covid19 response the chairman mentioned. I want to start with covid19 because we are all seeing spikes now across the country with tens of thousands newly identified cases every day. Icu beds and hotspots running dangerously low the president set out in the open that he wanted less testing now he has gone weeks without speaking to Top Public Health officials. That causes americans to say the elected leaders have given up if it is an absolute certainty jobs in the economy cannot come to full strength as long as the pandemic continues with the spikes and to be in the see center key discussions i strongly feel as my colleagues here know that top priority as long as it takes to get the economy back to normal. What this means is you have to have these benefits so people can pay rent and groceries and that is unemployment goes down the senator from south dakota calls it tapering off. That we cannot leave people on t not being able to pay their rent. And then to be in a position where we will have a sunol me of evictions and people who would just be desperate. More and more that temporary furloughs are permanent layoffs. With the supercharge benefits tied to conditions on the ground. s on the subject of irs oversight. Leading to those getting off scott free. The irs failed to audit 900,000 wealthy taxpayers for filing tax returns. These wealthy taxpayers owed nearly 46 billion in taxes. Think of what we could do for hardhit communities of you are talking about having that many if it was owed to the American People. 370,000 taxpayers have failed to respond from one delinquency notice to the irs they owed nearly 21 billion and lets be clear this isnt about shadowing networks of hard to trace Shell Companies wouldnt take complicated Forensic Accounting to crack down on the tax cheats talking about people who simply would not file the return. To issue stick out first donald trump said why enforcement the administration has not taken any action to crack down on those cheats who stole tens of billions of dollars of american taxpayers after getting the irs audits of wealthy taxpayers are way down maybe doesnt come as a surprise if he is doing anything about it and in my view its past time for congress to reconsider how the federal government with tax cheating the irs has lost one third of the enforcement personnel and half of the revenue officers it shows how easy it is for them to get away with cheating and if they dont bother to file their tax return the tax audits have been shifted onto those hardworking americans so years of public budget cuts have made this a good time to be a tax cheat if you dont believe in law and order to allow wealthy tax cheats to get away with breaking the law. Thank you for joining us this morning to our question and answers. Before i gave the introduction there was something i was wondering about wondering if we could increase extend the time beyond july 15 for filing. Just been informed that last night secretary the nguyen announced they would not be extending that filing and he has the authority under law to do that. Now to introduce our witness the commissioner of the irs. Prior to his present position he was a highly respected law firm. And partner in california for more than 36 years. There he represented thousands of individuals and businesses and corporate taxpayers before the irs with the department of Justice Tax Division federal and state courts state taxing authorities and served as a member and chair of the irs Advisory Council 2008 through 2011 chaired the taxation section of the bar of california and on the Advisory Board the Franchise Tax board and the board of equalization to receive professional honors i will not go through the list featured speaker at many tax conferences domestically and internationally and authored numerous tax related articles the ba in economics from ucla as well as with honors from Pepperdine University we are pleased to have you here and we will have your Opening Statement and then question. Chairman grassley and Ranking Member and members of the committee thank you for the opportunity to discuss the Filing Season in the irs efforts to help taxpayers during the covid19 pandemic. Would like to extend my personal sympathy on behalf of the irs to the family and friends i was familiar with ed through los angeles and our better person did not exist with guidance we are equally saddened to learn of his passing. Im extremely proud to work with the irs in my second year as commissioner. Knowing 96 percent of gross receipts of country flow through has strengthened a healthy and functional irs is critical to the success and wellbeing of our country and our people. The irs Rapid Response to the pandemic serves to illustrate how critical it is to put agency to have consistent and timely inadequate multiyear funding so we can succeed to provide the services our country deserves irs employees working around the clock to implement major provisions of the cares act especially the Economic Impact payments to help millions of americans during this challenging time so far approximately 160 million payments have been distributed approximately 270 billion however there is more to do the irs remains focused to make sure every eligible american receives a payment we are focused to get out that historically underserved communities such as individuals experiencing homelessness. We realize how difficult the pandemic has been. For that reason the irs is providing important administrative relief postponing dead payment deadline through july 15 will not be extended beyond that but yesterday we issued a notice that had a variety of payment related options we temporarily adjusted the process to help people and businesses during these Uncertain Times under the irs people first initiative. With respect to Filing Season we have to adjust and re deploy resources during the pandemic employees have remained dedicated to the 2020 Filing Season as we continue to process Electronic Payments and issue direct deposit refunds and accept Electronic Payments during the pandemic we have processed more than 126 million individual returns and issued more than 93 million refunds totaling 257 billion. Were in the process to reopen some operations when and where it is safe to do so. In this regard we are processing paper returns tackling the backlog of mail and prioritizing Customer Service operations as well as health and safety of employees and everyone we interact with. We will follow and exceed majors to deliver on the promise of the new irs we are extremely grateful to congress for the strong bipartisan support to put forth comprehensive strategies for a newly envisioned Taxpayer Service operating to the eyes of the taxpayer. With respect to enforcement the irs is committed to having a strong visible presence we have shifted significant Examination Resources and technology to increase focus especially those who failed to file returns engaging in certain types of questionable transactions. Do by providing Adequate Funding we can deliver on its mission to build a stronger irs for taxpayers as required by the Taxpayer First act the 2021 budget request appropriation of 12 billion as well as a Program Integrity cap we also asking for Congress Help legislatively to allow the irs greater flexibility to address correctable errors to address oversight of paid preparers this concludes my statement im happy to take questions. Thank you. It looks to me what i got from the clerk most people will be remote and if they have the time or or not if you do then you know when you need to stop but if you dont finish your question and then we will quickly move on because i cannot see you facetoface thats the best way i can do it to keep things on time. Commissioner, last week the office put out a report discussing the federal governments response to the covid19 crisis that had a review of the irs to get stimulus payments out to americans. One issue raised was due to a glitch with a non filer to all sums stimulus recipients did not receive the additional 500 for the children claimed on the form 450,000 recipients did not receive the correct amount. Understand the irs now intends to send these filers any additional amount. So when can these tax filers expect to see thes additional amounts . Before you answer that let me refer to a second part of the same subject senator collins sent a letter of similar concerns of those on Social Security missing out on additional per child amount for the deadline to use the non filer tool. If you go back for other non filer accounts does the irs intend to similarly send additional amounts to many seniors who filled out the non filer tool after the aprild deadline . With respect to the first group the 500dollar payments were missed i think it was 365,000 but in any event we will reissue those 500dollar payments this summer. Similarly we have an issue with respect to individuals who filed injured spouse claims we are taking a look at those and we anticipate to reissue those in the summer. We can verify that separately. With respect to the Social Security information folks taking a look at that we had some limitations on ability and capacity to move things through we are sympathetic to get as much funds out to as many people as possible as quickly as possible. We are taking a look at it. For much of the Filing Season irs has operated on short staff due to this emergency as a result of a backlog. We have the irs resolution system waiting to be addressed many of returns filed by low income taxpayers by the eitc what steps is the irs taking to clear the backlog and how are they flagged for error resolutions . The eitc returns have the extreme priority you are aware we brought employees back on a voluntary basis to bring in the back week by week with a full staffing under the new procedures by july 15 and we expect to move to the eitc claim as quickly as we can but they have priority we have allocated priority to refunds with Customer Service calls and representatives and Taxpayer Service side is what we are trying to address. There is a backlog for the same reason they couldnt come to the office. Even heard reports you had to bring in tractortrailers and rent extra Storage Space to store the mail. How long do you expect to take for the irs to address the backlog . Are there procedures in place to prioritize certain types of correspondence such as talks on tax returns and audit request . They are prioritized with the inventory that is 12. 3 million pieces that includes paper returns and other correspondence. Focusing on the paper returns many will have the eitc refund and otherwise. The reason for not screening out payments from the deceased from the start as well as we cover those that went out . It followed with respect to the payments that went out 2008 for the stimulus payments. After three weeks of issuing payments treasury issued guidance indicated they should not be receiving those payments so irs change the process because there was no clarity in the cares act they should not be receiving payments they administer the cares act as written and then treasury came to the conclusion with counsel they should not be receiving the payments so we adjusted after the third day and then and put that into the file. Commissioner lets go to this infuriating new report from the Inspector General that found millionaires are getting away without paying the taxes they owe. Between 2014 and 2016 nearly 5000 taxpayers who owed at least 500,000 of unpaid taxes did not file a return and were not audited by the irs. Owing a cumulative 15. 7 billion and they got away with it. The report found overall hundreds of thousands of taxpayers with significant incomes were skipping out to file tax returns to pay accumulative 45. 7 billion in taxes over three years with the irs doing nothing about it. This is infuriating. I hope you are as angry about this to. My question is we confirmed you in this room almost two years ago. I have got to assume you learned about this outrage and outbreak of lawlessness i describe why didnt you then call chairman hatch and i up to say this is what happened. It is outrageous i want to stop it now here is what i need from the finance committee. We never got such a call. That is before i was confirmed as you are aware. I understand that. But when you learned about it why didnt you call the chairman and i and say lets stop this . We are stopping it. No. You are doing various things with budgets and the like and im interested to hear it but a specific question. When you learned about this , it seems to me it is priority business. Billions and billions of dollars and you wont find time to go after folks of the earned income tax credit . Why didnt you call up chairman hatch and i to say we have to do something about it now . In my view this should have been a call made almost two years ago. Why didnt you do that . And i tell you what we are doing. I will call you. Commissioner, first i want to know, why when you saw this going on shortly after you were confirmed why you didnt stay to this committee and a bipartisan basis i have to stop this. Answer that person tell me what you are doing now. Shortly after i was confirmed this is not brought to my attention. We will stop right there. Are you saying you and your staff did not know that 900,000 individuals skipped out on filing the return and paying the 46 billion they owed . That report is 14, 15, 16. So wet i got on board. Absolutely want to know what you did when you learned about that. When i learned about that , we changed certain folks with certain positions within the irs we move somebody from the criminal vision to a commissioners Small Business of employee now the commissioners Small Business and created a fraud