Thank you, mr. Chair been spent as long as time has expired. Thank you, mr. Chairman. Mr. Commissioner, i want to thank you for your incredible patience and your testimony here today. Mr. Commissioner, what you are seeing is an expected reaction from an overzealous committee that is so desperate to find any type of evidence in any type of fact that may point to a coverup that does not exist. Point to a conspiracy that does not exist and have instead chosen to go after a Public Servant who by all accounts is a model of integrity, honesty and professionalism. I think you are the right person, the right place at the right time to turn around a troubled agency. This committee and this congress should be working with you. Mr. Chairman, i also want to ask unanimous consent to get to articles inserted in todays record, one dated july 20, 2011, New York Times article thats titled three groups denied break by irs are named. And another one by the center for Public Integrity titled irs liberal group to political or social welfare status. Without objections ordered. The reason i want those answers today is to point out the extreme irony of this investigation. The only organization that were applying for 501 c 4 status with the irs that was denied the application were organizations that were affiliated with Democratic Candidates for office. Not conservative organizations. In the case of the three groups that were denied status they were emerging about it, emerge me, emerge messages that only supported Democratic Candidates for almost 30 of the article it was subtitle is agency rejects taxexempt application of a problanche lincoln arkansas to commonsense. They were denied application because they reviewed its two political. And theres no evidence at all the rsa denied any conservative group applying for c 4 status during the entire course of this investigation. So the state raged across from the other side is just that. Going after an irs because of political fodder there brings to the base and its unfortunate that were having to conduct yet another witchhunt here today. Mr. Commissioner, let me ask you some quick questions with many time to guess you are under oath and we want to make this explicitly clear with your testimony. To your knowledge, has anyone at the irs to liberally withheld in emails requested by this committee . No. Has anyone had irs withheld any information specifically requested by this committee . No, no. I wouldnt we have a produce all the information we have because its luminous but we have withheld no information. Any attempt with an irs to to destroy any evidence to your knowledge of . No attempt by anyone during the course of this investigation to destroy any evidence. As noted in the past emails were retained for six months. To your knowledge has been any attempt to data with any evidence or information requested by this committee . No,. Since you been acting commission have you seen any evidence of any attempt to cover up information pertinent to this committees investigation of . No. What about any information requested by the other investigations . I think you testified to six investigations that are still pending with the irs. Were providing the same information to all investigators. The tax writing committees get unredacted information to the nontax writing committees get redacted information so they have about 170,000 pages fewer than information in this committee and senate finance. Have you seen any evidence of any direct involvement by the white house in the screening of c 4 applications that are the subject and evolve in this investigation . I have seen none. Has been any evidence of any white house involvement in the irs is responses to the information requested by this committee . I have seen none. Could you just give us a quick status update on the Computer System at the irs, that you encountered when you took over as commissioner of . Our Computer System as i said is somewhat antiquated. Weve been updating as much as we can. As noted we have about a billion dollar infrastructure as a result of the budget constraint. We are spinning minimal amounts on that as i noted. We still can get all of the employers on the window seven. I heard a reference earlier someone going to windows 10. We should be so fortunate to get everyone on window seven. We are constrained. Our budget has been significantly underfunded on a declining basis on the less for your. In regards to what we can do to assist the irs, and updated more modern functioning Computer System, what would that be . We have given you the president s budget would allow us to continue to make progress in that regard. We have at this. 4 to 500 million of modernization and improvement activity that we would undertake. Thank you. Mr. Smiths. Thank you, mr. Chairman. And or witness here for your time today, thank you. I realize i think we have a large issue. I know its been dismissed as an overzealous reach of the committee or a conspiracy similar to various others over history. Political theater. I think you agree that this is a serious issue and i think that moving forward i would ask for full cooperation. Its been frustrating with the various responses that have been offered over the last i think 13, 14 months now. You mentioned contemporary documentation. Could you expound on that . Ive an idea what that is but i would like you im sorry speak with contemporaneous documentation that you referenced earlier. Spent hours talking about, if you wouldnt mind, in the middle of this to our glasgow giants at about what we knew when. As i know to time is limited. If you would answer my question. Contemporaneous means that the email traffic that we found in our search about the crash was email traffic at the time of the crash in the time of attempted restoration three years ago. Okay. And various documentation is recommended by the irs with tax filers, documentation is required to be retained how long . Generally come as a general matter people are subject to audit for three years unless theres criminal activity and then we can go back actually in some cases a limited amount but as a general matter unless youre a willful evader, we limit our audit to three years. Now, shifting gears just a bit here. When you look at the size of the irs, 90,000 people, that we reminded 2. 4 trillion revenue, many would say that the core of power in washington, d. C. Is the tax code, 10,000 pages in length, various other descriptions, and it was noted earlier that a budget cut of 1 dollar in the operating costs of the irs results in costing revenues 7. Would you agree with that assessment . Could i what . That a 1 dollar budget cut would result in a 7 cost to reverend . It depends on who you ask of two of its four, six, 8 a dollar. But its clear as i said, if with a greasy question 500 knowing that we were denied we were provided back over 2 billion of revenue. So we do provide, we collect in our personal activities over four or five times the entire budget of the agency. Obviously there are many opinions here, and i have to tell you that given the complexity of the tax code, and i think thats the main reason why were trying to reform the tax code to come up with a simpler approach. My question i question how possible it is to either these issues out, that some dismissed, others find very serious. And i would hope that we could have the full cooperation as we do move forward. I would hope that you agree that this is not a finished case. Would you agree with that . No. And where inches and delighted to operate. I think its important for the record without a Good Relationship with your staff and we have followed leads they wanted us to follow and its been a productive and we continued to help to do that and we will be as responsive as we can to requests of the committee. I think its important for us to do that. Well, thank you i certainly hope we can continue to get this result. Resolved. I know there are various characterizations here. Its disappointing that some have dismissed the situation today. I hope we can move forward. Thank you. Thank you. Thank you, mr. Chairman. Mr. Koskinen, i will go down the same length down the same unquestioned but if you want to highlight in a sample of a case in my district as well, small businessperson who went out on in minnesota, this individual small businessperson at the company have been involved and subject to for different irs audits over the past 10 years. Most, the most recent is still going on. So for each of these audits has resulted in minimal or zero, zero changes to the compass income tax returns. The most recent audit is going on right now, has been going on for 18 months. The cost to the company about 110,000. Its an audit that is done to help train iraqs employees, ironically at the cost of the company. The agency is asked the company to produce an inordinate amount of information even requesting a receipt or a 10 cab fare that occurred months ago. Im curious, commissioner, if the company came forward tomorrow and said this information has been lost, 10 cab fare, we cannot find it, similar to the hard drives being undiscoverable, you would understand that, right . Yes. You would understand that and you would hold him accountable. They would have to produce that record . Im not an exam agent but if as in this case he said i dont have the receipt but i can, by other information, demonstrate pretty close to 10 is what i spent, that would be allowed just as our providing 24,000 lowslung in those from the time of the crash. If they had a system of hard drive crashes that went forward and taking for and said theres nothing we can do, the servers are down, the hard drives argonne, we can retrieve the data, which ended the audit . As i say im not an exam auditor expert. I can tell you that trying to become compliant whether individuals or businesses we rejected him and trying and anxious to work with taxpayers trying to become a part. The ones we consider of the people willingly and consciously avoiding taxes especially those offshore. Im happy to chase the end of the art and throw in jail but the people trying to become compliant we reach out to into the best we can do in fact work with them. This is following on the same situation mr. Deberry identified with individual cases in the district but our constituents look to the irs for impartial judgment and understand but let me ask you, if an employee at the irs has a computer problem i,is there way to track when the employee called regarding the computer problem . Yes. There are tickets which is how we actually in favor discovered that there had been a computer crash. I misspoke the last questioner i said we didnt about the crash until the end of april. We do know about the ramifications of the crash assess it in my organist testament. It was the ticket in fact information from i. T. That said there was a crash which caused us to then take the time to figure out what to get me come after emails been lost. Thats when we been discovered in the production of emails the track of the emails that confirm that, in fact, there had been a crash, there been a significant ever try to deliver the most. With the ticket with the irs be able to track with the issue was that was being have a . I dont know the details of the ticket are but i know from the correspondence in emails that it was a hard drive crash and from some of ms. Lerners emails that she was unable to get to her emails. Could you check based on the ticket who handled that particular id issue and how it was resolved, tracking mechanism within the irs of . I dont know what the ticket would show but well be happy to make sure you have the ticket and any information related. Can you tell me who at the irs in the i. T. Area handled ms. Lerners computer crashed issued in 2011 . Yes. It was a frontline, corresponds with within a frontline i. T. Manager. What was not ordinary was when it could be retrieved by the normal i. T. Experts to have scented expert at the criminal Investigation Division which was an additional step taken could you tell me what caused the crash itself . I do not know what caused the crash. In fact, my understanding, computers, three to 5 of them crashed as a general Industry Standard and theres no way to know why. Can you rule out what you know are based on these tickets can you rule out that lois lerner destroyed her own computer . Can you rule that out . Theres no evidence that she did. If she had can you rule that out . You can never rule a something you dont know but at this point theyre so evidenced the evidence issue worked very hard to restore her email. Can you answer the questions about hard drive crashes for the other six in toys as well that were involved in the targeting . Similar situation. Can we make sure they were not intentionally we are investigating that right now. Will give you all of the information we are able to determine about Windows Computers crashed, whether in the nose were lost, whats been done with a hard drive should extent they are still available. They will be made available. [inaudible] thank you. Mr. Pascrell is recognized. Thank you, mr. Chairman. Let me give you 15, 20 seconds im over here. Spent you are behind the photographer. To answer one of the questions you were able to answer before, question, you wanted to correct the record. I started to correct the record, as i said in my testimony, written testimony, we knew with the i. T. Ticket in february there been a crash. What we didnt know until late april was what the implications were. Had the emails been lost . If so, whether other emails that were from lowest in that timeframe. So ive been consistent except fofor the one point i dont. Thank you. Do you agree when the irs grants a group exempts status, that means that theres an advantage of one group as compared to another group and how they are taxed x. Its important. And i do know what the number is of how much money the federal government doesnt take in because we do exempt, i me, the total amount of money. Thats not my question. Conveys a significant tax advantage to a group, whether theyre left, right, north, south, doesnt matter. A significant tax advantage to that group. And its operations are being implicitly subsidized by you and me. You and i. Thats correct. Okay. Is that correct of . That is correct. Im not using hyperbole here, am i . Thats exactly what happens. Right. You actually think im going to ask your opinion. Do you actually think they understand about what this is all about . I mean, this is not about what happened to the black box. This is about protecting the coverage that we have decided in our infinite wisdom to provide certain groups that are social groups but not political groups. Now, do you believe the irs has a responsibility to protect it the taxpayers of this country by ensuring that the groups that we allowed to operate as tax exempt are operating in a way that is consistent with the law . Ideal, and that applies to all 501 c 4 organizations. According to the law in this area, tax exempt 501 c 4 groups are required to operate exclusively for social welfare and that that must be their primary purpose. Am i correct or incorrect . That is correct. The regulation provides your primary purpose has to be social welfare. Let me ask you this. Can you describe the process that the irs currently uses to determine a 501 c 4 group is really a social welfare group, or is engaging in inappropriate amount of political activity . Is that an intensive process that requires a lot of money, requires a lot of manpower . Explained. It is a consultative process. We have 1,006,000 tax exempt organizations how many . 1,600,000 total of which somewhere in the range of 100 or one 50,000 rc for social welfare organizations. A lot of them, people of nothing to do that. Women were stationed applies for exempt and, the historic process has been their activities or proposed activities will be determined on a facts and circumstances test and then there are a long set of examples and complicated regulations that describe how to determine the amount of activity that is social welfare activity and what kinds of activities and the facts and circumstances are political activities. So it is a complicated process. But it is intensive . It is intensive. And it should be spent and it is what . It should be. Yes. We in the last four years how Many Organizations went from 501 c 4 s to like any other organization in the last four years . Answer quickly please. I dont know the answer but i will get that spent mr. Chairman . Yes. Parliamentary inquiry. Yes. Please take your parliamentary inquiry. Inquiry. Since were being summoned to vote and not all members will be given a chance to ask questions, i would like to know if those of us who do not have an opportunity to questio questione witness base of the comments and questions for the record speaks yes. And my plan is to recess and come back after votes, but some of us have travel plans. Yes, but members will be able to cement questions. Mr. Marchant. To submit questions. Microphone. I keep forgetting to turn mine on as well. This one is working. Im privileged to have a district that has a vast number of people that are very hightech, so mr. Chairman, id like is a bit for the record a letter from one of my hightech people that have some suggestions on how you may recover some of these emails that we are looking for. Without objection, so order ordered. Can i have a copy of the letter as well speak as i can provided to you. That would be great. This entire inventory was started because their constituents in our district that were harassed and treated differently by the irs, and whether we get all the emails, ever get all the emails involved in this, i think it has already been established that it this, this committee is dealing with this issue today not because its a witch hunt but because we, our citizens and our districts were discriminated against. And treated badly by the irs. So that is why we are here today. Do you believe its important for this committee to receive all of the emails from ms. Lerners email account and all of the emails from all the persons that have been identified of interest in this case the . Ive always thought that was important. Is the irs and its emails exempt from monitoring by the fbi or the nsa . I have no information about that, but i know indication that we are exempt from anybodys monitoring. So we dont know that the emails are not totally all recoverable in some process . If, if the nsa was monitoring all of our emails and collecting them and saving them someplace, then they might be there but im not aware that that was done. Have you, as the commissioner, partially contacted the white house, the treasury, the federal Elections Commission in any of the possible federal agency that lois lerner may have contacted by email . I have not contacted any of those agencies about any of the issues involved in this investigation, including her email. Would you be willing to commit to this committ