Hello and welcome the American University. My name is caroline and i am a tax professor and managing director at the tax policy of business. I wanted to take a quick moment to introduce you to the Tax Policy Center for thoseont knoa nonpartisan Research Center housed in the school of business and we put out research on business literacy and education to Tax Compliance challenges the independent workforce, access to jcapital challenges of Business Owners and importantly for today, Tax Administration challenges. Broadly, we are experts on aia analytics and Digital Transformations and we build this expertise into the researce Research Center earlier this year together with ibm center of the business of Government Produced research on agencies can effectively adopt and deploy aai. The research reflects challenges for those using ai and we were able to draw on comments from the mmissioner, folks into tax agency administrations from around the world to talk about how aia has the potential to improve tand outreach, how an facilitate the compliance enforcement activities and how it needs to be rolled out alongside the r strategies and government structures. What we are here to talk about is the irs Digital Transformation plan which will be introduced by the irs commissioner who is marking his one Year Anniversary with the irs this week, and he will be presenting a presentation for 20 minutes and then be in conversation with our very own david. They Work Together about the 2020 president ial transition so it will be great to hear them recap and shed some light. So thank you for joining us. [applause]■ one Year Anniversary as commissioner it is an honor to be here at this historic university. The irs is an agency that affects all americans and a university is a fitting place to talk about the future irs because you are at the start of a journey where you will be filing your taxes with of irs for many, many years to come. ÷ n the fall of 2022, i take a phone call from the bite administration asking if i would be able to serve as irs commissioner. Once i could get my jaw off the floor it was a great honor. My first question tohet leadership what are you hoping i or any irs commissioner would time . Ve in this role at this the answer they gave me encapsulates the once in a generaon next commissioner will lead the irs through the most important transformation in a government. So again it might draw it dropped to the floor and i wille suspected of hyperbole. Something of a sales pitch to get my hat in the ring for the job. This was no exaggeration. Do it digitally on your phone and tablet without paper wherever you are in the world the modernization of the irs is a generational imperative. Evidil is just part of the imperative. Our race to catch up with the modern economy three critical results. To ensure access, engage in makes Administration Work better. Increasing accountability for those inappropriately exploit the tax system. And third and unlocks our ability to restore trust and irj the taxes. So lets dive in and explore where the work being done to transform the irs is so rightn in beneficial our family and our community. I will tell you about the momentum we have today and where the momentum can take us. I remember the moment i realized that thise or in exaggeration. Our morning staff meeting last fall. The nighteen at the service for america award at the kennedy center, the oscs for ■govement i w excited i challenge the irs team to win on his big awards next year. They asked me fmple of an award winner i immediately shared with them my Favorite Award from the night before. It was a nasa scientists who sent a rocket into space both light and asteroid 7 million bales away going 4000. These nasa scientists hit the asteroid dead center not only did they hit a bullseye, it changed its trajectory. For the first time nasa if an asteroid were ever headed for earth they could deflect it and save humanity. Ooked at me sy and said commissioner that is going to be tough to beat. Shrewd member of my chimed in and said but where did nasa get the money for the rocket . It is collected by the that is the moment i fully appreciated how important the irs is and how monumental this it is not just ensuring we have the funds of nasa scientists to save the planet from an asteroid its ensuring the governmenas the funds to keep our food safe our skies safe our roads safe. If we are essential toany of the life in america possible i am left with one burning question. . Why did Homer Simpson not like us . Theyre supposed to be a video here. Lets see if it pops on. I dont think were going have the video. In that video probably pop on one telling the story. In that video probably pop on one telling the story. Homer drives oh boo your self. So what does Homer Simpson not like us . Maybe he thanks hes paying too much in taxes. It may be he■f thanks his taxes are far too complicated. Its outside the control we d we the tax code. But if homer and other taxpaying americans are upset we are not answering the phone, we are taking too long to send a refund or otherwise increase stress and frustration as they navigate thei decreasing it that we can and should turn things around. We have a large mountain to climb. These are snapshots of the irs just a few years ago. Paper returns piled up in hallways and shuttered Tax Assistance Center so people cannot get help. So i suppose i could undstandy n or other cartoon americans are being frustrated how do we get to this point . When the rest of the world had ■ moved beyond paper deterioratg customer service, anemic audit rates stagnant technology, it was the result of two trends over the■b last couple of decad. The first trend the irs had been underfunded for far too long. From 2010 until 2020 when the irs budget was slashed by more than 22 . During this decade of budget cuts the population grew and ana returns increase by more than 15 million along with countless increasingly complicated financial environments, globalization, additional currencies, exponential growth and other factors that increase the size and complexity of the american tax system. As o bter plate of responsibilities grew irs employees work through it. Long hours and sweat equ done because Innovative Technologies were not available. Enter the pandemic. The iris workforce including running the tax system and successfully getting emergencyps of americans on Small Businesses across the country. But eventually the bottom fell coming out of the pandemic we are so varied understaffed and hobbled by stagnant technology we literally could no longer answer the phones or keep our walkin centers open. Enter the Inflation Reduction Act in 2022. Finally we had new funding to build the irs back to par performance but builds it for the future. Even though this new law provides a 10 year runway for the irs to it has been clear since day one that we needed to show results immediately. Funds from the new law will allow us to dig out of a deep hole. Get back to Better Service standards and for the transformation to come. Irs. Lyzing a new era for the hallways and cafeterias has ended. Phone center is back all the walkin centers are open fully staffed and expanding around the country and we have new tools on irs. Gov and if suit record traffic to the site. We have much more Digital Tools of the last two years that we were able to■i launch the last. Sometimes it is the Little Things this we get a call back option texture is required to stay on hold to listen to elevator■c when you are funded you can make these types of improvements. If not your operations remain in the past. Now we have an opportunity to move beyond just base a performance and build a 21st century tax agency to serve the american manner they expect and the level they deserve. Our vision for the irs is truly in easing the stress caused by our complex tax laws. Simpler forms, more intuitive processes when a staff trained drug empathy, understanding who have the tools to help taxpayers meet their obligations easily and fairly. But let me make it even more real for you. My parents are in tir 80s have never use an atm. They go to bank come talk to a teller and get cash. My children on the other hand are in their 20s have never set foot in a bank appeared to open an account and certainly not get think about how you interact with your bank. When you buy something with a debit card, that transaction shows up on your onlinecc before you even leave the store. When yr fraud it will text you d let you sort it out equally from your smart may be fraud with your account we send you a letter. We are working to change that. Trap form to be ready■k for the new digital economy. With historic funding through the new law building irs were all tpa can be all of their responsibilities including all interaction with the irs. No questions, payments and a completely digital manner that they choose. Most taxpayers want to interact with us onansformation is also e keystone that helps unlock the True Potential of the irs. Heres how. When financial and travel companies moved everything online which accelerated during covid the number of people calling drop precipitously. As did the number of people strapped to bricks and mortar locations. Were you can deliver for taxpayers online it is one or we redeploy capacity and absolute still need our employees who will now have the time and tools to focus on helping people who need it most increasing scrutiny on bad actors and purposeful tax evaders. In terms of unlocking capacity to help the people■ help the most, less time on phones means more time means our employees can spend more time engaging in communitiesnd mama and volunteer tax clinics that assist low income filers helping taxpayers who cannot afford to hire an accountant to get it right the first time. processing paper returns employees can spend more time helping every taxpayer regardless of income claim credit for like the earned income tax credit which is an economic lifeline for so many. Never claim the credit. We could unlock our potential to do more to help them. Digital irs does not mean we are walking away from service. It means we can do more t help. Digital transformation to unlock new capacity is already begun. Ft upgrades to wheres my refund tool. Also this Filing Season we launched direct file a system of taxpayers file tax returns online directly with the irs for free. Direct file is almost tailormade for students its a simple tax situation. Check it out go to direct file. Irs. Gov to see if you qualify. Here is an example of what fut. A clear way to communicate with the irs and protects taxpayers. We will have a screen on your online account like this letting you know if the irs is trying to contact you. Why is this we have too many bad actors calling and texting, pretending to be the ir pulling out their t card and paying them a fake tax debt. In the future if you get such a call or text you will just t5 if it shows a green banner like this actual irs is not trying to reach you. It is not us. Hang up, ignore the text and if you are willing to report this to us online so we can investigate it. You can seat right there at the Digital Transformation frees up capacity to better crackdown it also unlocks capacity for the irs for scrutiny evade the tax responsibility. Most significantly cuts down on basic mistakes and our employeeo focus on the more complex issues. Noncompliance overwhelmingly occur among our highest wealth and largest taxpayers. Many wealthy and large taxpayers are doing the right thing to many are using complexities. Too inappropriately shield their income. Returns means more resources such as Artificial Intelligence appears through this complexity and find hidden income. In fact we are already using use of ai the lst i world for hiding income behind complexity that same with the precision partnerships playing by the rules and doing the rightew ai models audits on 76 hyatt risk complex partnerships includingfunds andd partnerships. Unlocks new capacity toinize a e high risk complex filers that we previously could. At unlocks to focus our enforcement efforts on the high income groups that for too long have fallen under the radar. Served notices to 125,000 high income taxpayers who fail to file a federal income tax return since 2017. Including 25000 people with incomes over 1 million. These nonviolence represent more than 100 billion in financial activity. We are cracking down on 1 billie will not allow higher income individuals tail, through their basic civic duty of filing a more digital irs unlocks ouro. Ability to audit inappropriate writeoffs for personal use of corporate assets such as corporate jets. In my first year here the irs team has already collected nearly 500 million millionaires and fairness in our tax system. And we are just getting started. So, this is how taxpayers will unlock our employees capacity to help people in need and to increase scrutiny where it is most critical is new funding inner transformation to unlock our ability to ensure ■x■feyor everyone who plays by the rules and helps restore trust in the system. No issue is more important than fair year ago, in fact in the days leading up to my Senate Confirmation hearing, researchers at several universities and the u. S. Study that black taxpayers three times more likely to be audited than other taxpayers. Our processes were impacts on black taxpayers. Not only committed to fixing this top priority confirmed but i became more motivated to become the irs commissioner. I wanted to fix this. Any indication of racial bias in our work is unacceptable. I immediately met with the irs team setting the issue. Too quickly evaluate the extent to which art prioritiess in they contributed to the spit disparity paid since ive been commissioner ive been meeting with communities that were impacted, hearing their concerns, sharing our regrets and outlining the actions we are ta or they were identified. Making changes tour algorithms specifically intended to address the disparities. We are now ready to invest new resources to help idey disparities age, gender and geography. Research to continuously refine our approaches across compliance efforts. Were trying to rebuild trust for overhauling appliance and hold ourselves accountable for the taxpayers we serve. For one or 50 years dating back to president lincoln but more tax laws are increasinglyved. Playing a larger role in addressing the most pressing challenges of our time. On programs to cut child poverty. Programs to expand Healthcare Access until age 26 the Affordable Care act. As to the irs and taxes. To address the threat of Climate Change because the hundreds of billions of dollars tax credits. With defendant we can support policies to improve the lives of all americans. To meet this critical moment in tax collection and but to succeed and truly build building irs for the 21st century we need you. We need t count lawyers and finance experts. We also need data scientists, engineers, experts and ai in human behavior. No matter what you are your expertise and most importantly your passion for change ino6vice. The summer of 1963 john f. Kennedy came heremericans University Commencement where he called for the First NuclearTest Ban Treaty with the soviet union. It was the start of a historic effort that led to greater stability and peace in the world. President kennedy enjoyed esident. I pass a photo of his speech in our building every day. President kennedy told graduates in 1 human destiny is beyond human beings. Mans reason and spirit the seeminglunle. We believe we can do it again. Thankfully Tax Administration is a far cry from nuclear diplomacy. The decisions the action of the irs affect the lives of every americ■s indirectly. Those are in this effort to solve what has for too long been unsolvable. To undertake the most transformation of a Government Agency in u. S. Catalyzed by historic funding, guided we can transform the irs for the 21st can meet taxpayers where they are paid support them to meet their obligations and make Tax Administration work better. n to try to exploit the tax system. Restore trust and increase fairness. We can betterer the c■ant our te years and decades to come. ■ clicks they are handing out over their i need one of them. Quickly first think the irs team n together. Theyre working over the weekend let me say thats extraordi■ury speech. I have been for 33 years. Ive never seen aovnm that. Its usually looking at a net wood podium looking through notes with eight part plan and subparts. It was a metaphor for what youre trying to do is open up the irs, be transformational i got the compliment you on that. Thank you. Quickly talk about your person ive known you for a peet the boston consulting group. Nn money. One of the hardest jobs in government. Why did you do that . It is a passion and a calling for Public Service. ■< at the of the acting irs commissioner very challengingmo. The first few days is doing meet and greets with senators and senators andmembers of congress. I met with senator john mccain. They were news and protests outside of the irs building. Senator mccains that you must be someone who likes to run toward the gunfire. And i thought i aspire to be pe . That such a big heavy complement to receive such a motivatingto a lot. Especially from senator mccain. For me a sudden inspiration■ t be that type of person. From that moment forward i dont know if i am but i want to be. If i get asked for the to do something hard and challenging but important i want to be the pers