965. Accordingly, am joined by members here as well as approximately ten members on a remote platform. Thats outstanding and i want to thank everyone for joining us. Before we turn to todays important topic, want to remind the members of a few procedures to help us navigate this arrangement here. [inaudible]. For those participating virtually, to eliminate background noise. [inaudible]. So we will pause for one moment. Members are responsible for using themselves and getting themselv or when recognized for the five minutes. Membs here in the hearing room alsoeminded to keep your microphones. When you are not recognized. Second, a members participating virtually, you must have amazon at allimes. If you need step away from the proceedings, please leave your cameras on. Rather than logging out. And 30, we will dispense wh our practices of observing the gibbons role and go in order of seniority for questioning. Alternating between the minority and majority beginning with members of the oversight subcommittee. I think you all. And troubleshooting a quick chnical issue. Iust need another minute. Just so youre aware that the audio is sitting on youtube already. So the video will be going lives well. Once we get this on. Thank you a for t you continued patience as we navigate these n procedures in order to sever country together ane. With that i will now turn to the important topic of todays hearing. Conversation with the commissier, on the Internal Revenue services. That is why we are here. So good morning. I welcome my colleagues, and our only witness. Today t commissioner of the Internal Revenue service mr. Charles reddick will join us. I appreciate that personally and professionally. This committee has waited a long time for you to join us. And we are looking are waiting anxiously. Nearly two years. It is astonishing that this is the first time youre appearing before the cef taxwriting committee in the house. Put yourself in our shoes. We our job tryg to do your job freighted with very little communicati. The brandnew administration on th horizon, this may be your first, or last appearance before us. Im not suggesting either. But, the point of the matte is glad youre here. Im disappointed you refuse to join us for our important hearing on taxpayer fairness a few weeks ago. We had an excellent record o compliance with our tax laws. Americans dutifully pay their taxes assuming the system is fair for a. Whher your britches rockefeller just a regular joe, because of that, military System Access has been a model for the world. Reallys. Us. At least until recently. Our hearing demonstrating how our system of voltary compliances has come under assault by the president. Andembers of his government, for five years president efused to disclose his tax retur. The president broke with a history ofde every president sie presidtixon. In so doing, he sabotaged public faith in our tax history. You have aided and invented him. As is your job i guess. Since 2017, unlike Congress Efforts to request mr. Trumps busine and personal tax returns. Because i must note. Im far from it, just the opposite. The law is clear. The 26 United States code, section 61 oh 3f. Our company is legally absolutely entitled, to review anyoneith an executive branch of government the laws very clear. And 4591ays 591 days, you and secretary mission broken the law to keep that hidden. I dont know what were hiding kbut we have not found out yet. It is our responsibility to restore the Publics Trust in our tax system. The president s of business andt personal returns must be ordered impartially. And without political interference. Yes, every time we ask a question, we are reminded that is still being ordered. Since 2016. Before that. So, have questions. There are two people in the right to know if that is what is going on. Time is of the essence. Just last month, the New York Times reported the selfproclaimed billionaire, mrn taxes in 2017 2018. 750. And intent of the last 15 years, he reportedly paid no taxes. And when we asked him the explanation, had 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 reality. Teachers and Firefighters Police officers, of people who collect our garbage in our districts are paying a heckuva lot more. Taxpayer fairness issue manifests itself in any other ways. We hear over and over from our constituents who failed to receive their Economic Impact checks, either under and over that im sure your are two. On time and time again, or even at all, i look forward to discussing how the irs is rectifying these dire situations. No one was eligible should have to wait for the check. Especially during a pandemic. Your hearing similar complaints about 2019 refund01 us. Our constituents have waited for months to get there refund this in the record straight. Other constituents was told, not to expect a response from the irs. Voter 2019 returns until january. January. I want to know if that is acceptable to you. I hope you will bring us uptodate on your efforts to get through the backlog and the returns and clecting dust at the irs following up at the oversight committee. Are you not ordering theealthy taayers more expensively than low Income America preliminary yield to my good friend. Generally from indiana. Thank you. Where honored that youre here. Youou mr. Chairman. I am thrilled to be here and also i would like to thank you commissioner reddick, for being here for your hard work and leadership of the irs during an incredibly challenging times. Also want to thank the dedicated men and women of the irs from the country who worked so hard during the pandemic to keep the agency up and running to provide services to her fellow american taxpayers. Congress is srs to go get above andre beyond. The cares act requires that the irs saved on a number of taxes, but none was greater than finding a way to send an Economic Impact team to more than 160 million americans. A huge undertaking and we should acknowledge that the irs got most of those payments out the door in just a matter of weeks away thank you for that commissioner. With us and i think you would acknowledge the irs still faces a number of challenging things Going Forward that concerns about how the agency plans to meet those challenges. Theres a few main issues that i think the agency needs to address. Of your be able tope provide the Committee Without t the agency plans to do so for some concern about the c current backlog. Buildup since the initial lockdown in mar and april my undersnding is that the irss millions of pieces of unopened mail and even greater number of unprocessed tax returns. That means millions of taxpayers are still waiting on refunds protect returns they filed has farack as march and april. A secon given thehi smell backlg may not resolve into 21 am concerned about the agencys abity to pay what is likely to be another major difficult Filing Season. And third uneconomic ent payments, the number of payments you sent out howuickly you did so was incredible. It but i have heard from lot of our constituents and i know my colleagues hav as well. About the situation, still eligible for eip, but still have not reived anything. So i would appreciateou hearing more about what the irs is doing. Wil do to make sure that everyone who is eligible for the receiv the payment. I also acknowledge that the irs release guidancen the paycheck protection programs related to the tax treatment to expenses paid with the ppe loans does not been forgiven. All over this country. Businesss are struggling to stay open. We need to pull together to sure the Small Businesses have relief, especiallyhose forced to close their doors due to state and local covid19 frictions. I also like an update on the bipartisan Taxpayer First act. As you know, we enacted this and for a lot as a result of a bipartisan work on this committee. This historic overall the irs requires implementation or other for hundred part of the agency night appreciate and update. On make sure we know what her response to the pandemic and or the longterm work that still needs to be done to improve and modernize the irs played with that i think this commissioner for his testimony in a go back mr. Chairman. We will dismiss that mr. Kelly. Will hear from her only wn is next. This commissioner. I think him for appearing before us today. Your opening statement. It will be made for the director in its entirety. Ask that you summarizeri your testimony five minutes or less. To hel you with that time, plea keep an eye on the clock. And the lights in front of you. If you do go over your time, we are here to listen to you. Commissioner, you may begin. Retting thank you. I appreciate the opportunity to discuss the irs operations. Initially, mr. Chairman respectfully, would like to indicate that i disagree and take exception to the terminology aided and embedded. But i cannot speak to any matters associated with that since those matters are in litigation as well as those matters involved in the taxpayer information which i am not able to discuss. I respectfully wanted to make the record on that for you sir. Now more than two years into my term as commissioner of the irs i remain extremely proud to be working with the irs and the exceptional employeesl of the inter Internal Revenue service. They flow through the irs, strengthened that i believe, that is healthy functional irs is critical to the overall success and wellbeing of our country. Importance of the irs to be every american has becomee especially. Since the spring is our nation is facing unprecedented challenges. Aris has been at the forefront of successfully providing rapid Economic Relief to taxpayers during covid19. The irs response serves to illustrate how critical it is for the agency to receive consistent timely and adequate wanting your funding such that we can succeed in providing the services tha our countrysu and citizens rightly deserve. They have implemented permissions of the t cares act especial the Economic Impact yments which have helped millions ofmericans during these challenng times. So far fm clink 160 million Economic Impact payments haveme been issd telling about 270 billion. Any lease yments recognized within two peoplen the family. Delivering the economic payme, the employees balance the statutory requirements to deliver theseayments and up as rapidly as possible the need for accuracy and concern about pontial fraud. Irs correctly computed the amount of the payment of the first 157 milon payments cording to our inspector general. 98 percent of the time. I think that is miraculous and tribute tohe strength of our employees t dedication of our employees. However, we readily acknowled there is more to do. Although the strength of our employees andrrange and seeks employees, t interaction of our employees and the communities in which they reside is equally important. Duri this period of time our employees have been out invold in an engaged with, community and local community organizaons trying to genate Economic Impact payments for people for needy and were essentially to n the point of interactingesith the unsheltered communities. We have interacted directly with more than 4000 homeless shelters, numerous different organizations around the country, and more spefically setll forth in my more like the written testimony. Tomorrow, is the deadline for regiration in the Economic Impact payments on a non filers court and i would like to encourage people to not yet provide information through that portal to do so. During the pandemic, withi a matter of days, they initiated the peoplesirst initiative. Which postponed the deadle for fing for july 15th through the greatest time in t history of our cntry we also temporarily adjusted numerous processes to help people and businesses during these lnrtain times. Sband will discuss, it also just delivered a historic Filing Season 2020, not only in tms of the volume of tax returns that have been proceed, refunds is been processed but al in terms of the number of tax returns proce permitted in perspective. And importantly in one of the matters that are probably as proud as anything else. We have a lot to be proudf, i doty want t extend the opportunity to meet with eachea one of you. At your leisure we will be a bright imported the first time in the history of the Internal Revenue service, we will be delivering the form 1040 both english and spanish. Taayers will have the opportunity to checkboxo indicate the language that we shot to interact with them. Taxpayers who called her phone lines will have the options to have Translation Services and more than 350 languages present when i,hese numbers were about between six9, and nine. This al came together by the i opened the doorsor the employees but ourlo employees proudly walk rough the stores to provide services in thent underserved communities of our country. It our phase and reopeng in terms of trying to maintain the health and safety of our employees, balanng that was our responsibility to thi country which we take seriously andefore i turn it back over to you sir, i would be remiss if i dnt callttention to somebody is been by my side since i came on board t years ago. Who has been in every hearing, and testified in the houses well as the senate. Resptfully, is more than my right hand afraid to prison i look up to more than probably anybody else in the Internal Revenue service is not oy pending board but also sitting right behind me, diane grant. On december 1, of this year. We are celebrating her 50th anniversary with the Internal Revenue service. And i do appreciate sir, her acknowledgment. An amazing individual. Netherton barrister sir, i will turn it back to the committee. It. Glad to hear somody in the Administration Says something nice abo the employees. You hav targeted. I came on board for the employees taxpayers and you guys. Take you for bringing that to our attention and congratulations this plant. I will open the hearing for questions without objection each member will be recognized and then will have joined by good friend mr. Kelly. Who walked all the way from pennsylvania to get here this morning for each member will be recognized for five minutes of questioning our witness and if the witness will respond with short and concise answer. s i will recommend that it be accepted the commissioner under the new administration of your asked to provide the tax returns to the committee will you comply . As you are aware i cannot discuss issues pertaining to tax returns since they are involved in litigation. You in answering my question. Not asking anything but will you provide if you areour asked you answered no. I willl not speculate. You said you will the answer at this time. I cannot answer the question. Internal revenue code section 6103 with a clear unambiguous authority to obtain anyones tax returns. Factory irises never before denied the Committee Access to any taxet returns with this particular authority. With the 2021 tax Filing Season start in january . If not what months you expect it will begin . The technology and the accelerated that by more than a month and with that continuing resolution and the acting chief Information Officer with the first agency the highest level they do not make that determination until mid april once we have gone through the programming the development and more than 1 million returns before we indicate we are ready to go. Historically tax season opens and of january and on occasion it happened early february we have no reason to believe it would be later thathat timeframee but we will adve you if there is something that causeshat to change to make do you intend to tell the president elecbefore he raises his hand on january 20th whether or not where we are in the schedule . Trendous is to know before i had that that is i no point. My interactions are not the white house but with treasury. Those interactionson with peopl. I am extremely concerned of the audit priorities and the eitc recipients more than wealthy individuals i do not have the specific question atci this time i have asked the gao to income groups to the congress mr. Commissioner im concerned by the recent executive order to reclassify your confirmation hearing that is worldclass irs workers the and partiality of the irs. How has the irs taken any steps e on this and to reclassify. It is under riew as i understand it and requires a response jerry 19 and support the comment i m made before to endorse worldclass employees who have demonstrated that every single day and then before i got here and to operate day to day and how we put a budget together and part of the administration is your idea of the budget the same ideas the president s . Are you satisfied with the funding . A rhetorical question are you satisfied with the funding at this particular time . Including personnel. Know the numbers every year since 2010. And when each president s images budget like every congressman does and what we finally vote on. My reon . I ask a question. I know that. I recogze for five minutesnd thank you for staying. Want to switch gears here for a second my office has experienced some difficulty in a timely manner due to the backlog of the kansas city area revolution operation. My understanding is the current backlog is 60 days i know is no longer concerned of has a backlog of 3 million pieces of unopened mail seven. 6 million tax returns im aware of whats going on of the pandemic taking a significant toll and they need a swift resolution to their cases so they can continue to put food on thehe table. Was handled that paper returns for the Kansas City Center and the unprocessed return is 1 million. And i am process and then to be posted six. 8 million and then a little bit higher on the carryover and in terms of kansas city and similarly the other processing sites it is about six weeks behind and one of those on november 7 the other was processing receipts coming in november 2nd the third line was