Do you have any thoughts about what treasury is telling people about buying back preferred stock and the regulators kind of might view actions on the . Senator, from the treasure perspective weve been working our way through the tarp assets trying to resolve them so that we can recover taxpayers investments fully, whenever possible. And we have worked with Community Institutions and have no objection when Committee Institutions are able to do that. Im not sure what the regulatory issue is what youre describing but id be happy to look into. We dont have any authority over that decision. How the fed does have to coordinate with treasure. Id like to get you a formal letter on this i would be happy to look into the. Two other points that are very specific to the maryland d. C. Area, just bring your attention and ask you to look into them and then i have a pretty big question. One of which is that the entire retired d. C. Firefighters have called my office along with alan Holmes Norton that there is an accounting and old accounting error was discovered in several retirees are getting notification that their benefits might be reduced. These are the pensions that you are responsible for sadr like to get your letter on the and the letter from eleanor Holmes Norton. Thats a lesson that many. About asking for response there. The other is the treasury i know is merging Financial Management service with the bureau of public debt. The Financial Management services is i was able to negotiate a five year delay with treasury in terms of this move but we hear that there are in place at employees so grouchy about what he did to protect those people so we could search this out. Theyre being demoted intimidated and pushed out. Would you take a look at the . I will take a look at it. It would be unacceptable if that were true. I think the merger has been effective, but there should be no kind of treatment like you have described. Well, you know, they were looking for 8 an hour accounts in west virginia. I dont think any account is 8 an hour but im not going to get into the legacy. I can assure you i will have many legacies of Barbara Mikulski as i can. The other is a larger question. You and i have lived through two appropriations together when i was the chair now the vice chair. Could you tell me the impact of the crisis driven appropriations with a last minute agreements to an omnibus very well organized . I have nothing but excellent work you said that my congressman and congressman Harold Rogers but it was a hell of a time and as i wonder as you as the second treasury, domestic economy and our Global Economy what is the impact of crisis driven appropriations just what i would like to raise, and just as colleague jerry moran has raised by getting back to regular order. Senator i think thats exporting no important question, and i commend you for the work you did last year to put together an omnibus appropriation bill with funding levels were designed to meet current needs which is so important in terms of having our system maintain its responsiveness and its agility. Continuing resolutions dont have that ability. I think when you look at the deadline driven crisis driven funding decisions made over the last number of years its caused substantial anxiety. Not just in the United States but around the world. I think when one looks at the Business Investment environment it is psychology. Psychology is about confidence. This since government is behaving in a way a reasonable set of institutions should behave as confidence. The since were hurtling off of a cliff destroys that sense of confidence. Ive detected considerable improvements in both the United States and internationally in confidence in u. S. As a system and as an economy since we have seen a return to something that approaches regular order. I think maintaining regular order is extraordinarily important, keeping to recover we going and having the Investment Decisions that depend on people thinking will things be going in the right direction in a year, two years, three years, not just in the week month or for maybe part of this year. I applaud the efforts of touch with you to put an omnibus together, and if congress can meet the requirements to fund the government to make sure that our debt doesnt become an issue at anxiety again, that would be very important. Mr. Chairman i know my time is up but ive got latebreaking news. This is good news. The Senate Version of the Homeland Security bill cleared the house 257167 so it is on its way to the president. So that means we on the Appropriations Committee, we now have past 12 bills and weve completed now today our fiscal 15 work. Congratulations. Thank you, mr. Secretary, for being here. We appreciate you coming in testifying. I think that weve got some really valuable information. We will follow up with additional questions for the record, that our members may have been a future. We would appreciate your time and responses as always. In order to move to the witnesses today, the next therell thank you very much, mr. Chairman. So thank you again for being here. [inaudible conversations] commissioner koskinen, i now invite you to present your testimony on behalf of the Internal Revenue service. Chairman boozman, Ranking Member coons and members of the subcommittee. Thank you for the opportunity to discuss the irs budget and current operations. I remain deeply concerned that the significant reductions in our budget over the last five years are undermining the agencys ability to continue to deliver on its missions both this filing system in the future. As you know i or someone has been reduced by 1. 8 labelers over the last five years dropping to 10. 9 billion for fiscal 15. At the same time the number of taxpayers has increased by over 7 million the irs has been given significant additional responsibility of these include implementation of the form Tax Compliance act and the Affordable Care act. The disconnect between our funding levels and our responsibilities is illustrated in some way by the fact that just three days after getting our budget by about 350 Million Congress passed legislation requiring the irs to design and implement two new programs by july 1. Implementation of the able act and the certification requirement for professional Employer Organizations is accrual we are in the of our most complicated Filing Season in years. In discussing our need for Adequate Funding i understand we have an obligation to be careful stewards of the taxpayer dollars we receive. We must be as efficient as possible. The irs has in fact, made considerable efforts for several years to find efficiencies in our operation. Both in regard to personnel and nonlabor spending. Through cuts in office space contracts, printings and mailings we are sitting over 200 million a year. We have made significant progress over the past few years and moving millions of taxpayer inquiries from our call centers and walk insights to our significant updated and improved website. Already this Filing Season there been more than 150 million visits to irs. Gov, and more than 2. 7 million visits to the section devoted to the Affordable Care act. Weve got over 125 million hits on our or is my refund site, the electronic tracking on irs. Gov. Also more than 11 million copies of previously filed Tax Information have been obtained online with our get transcript application. In the past all of these inquiries wouldve been inundated our phone lines and resulted in even longer lines at our walk insights. I would also emphasize weve taken seriously issues raised about inappropriate actions and activities in the past by making this is a changes and improvements in our policies and procedures to ensure that the situations do not recur. Woodcut conference spending by 80 weve established review board for Video Productions and training expenses. We have ensured that those who willfully fail to meet their Tax Obligations are not eligible for performance awards. We are reviewing our hiring process to ensure the extent possible by law the former employees with a series prior conduct issues are not retired. We now require that all contractors maintain the same high standards for Tax Compliance is. We have implement the recommendations of the Inspector General with regard to the serious management failures surrounding the review of applications by organizations seeking to achieve social welfare status. But does theres a limit to how much we can do. This year we reached the point of having to make very critical performance tradeoffs. There was simply no way around the severity of the budget cuts without taking difficult steps which that negative impacts on Service Enforcement and Information Technology. The funding cuts have also limited our ability to work toward giving taxpayers a more complete Online Filing experience. Taxpayers and are the odds of the same level of service from the irs that they have no from the Financial Institutions whether it is a Bank Mortgage company, or brokerage firm. The president s fiscal 2016 budget request for the irs which totaled 12. 9 billion would help the agency move ahead in these critical areas. For example we be able to bring our phone level of service up from the current 43 to 80 . We would also the significant increase enforcement and collection activities generating over 2 billion more in increased government revenues every year. And we would be able to take steps toward building a more modern interface between the agency and taxpayers. I understand and appreciate the concerns raised over the past few years the activities of the agency that i took this job 15 months ago because also understand the Critical Role the irs place in the lives of taxpayers and in the collection of the revenues that fund the government. I know i speak for the thousands of professional, experienced and dedicated employees of the agency when i say that we are committed to working with you and the other members of congress to lead the agency effectively and appropriately into the future. But we need your help and support if we are going to be successful. This concludes my statement and i would be happy to take your questions. What id like to do is go ahead and go to you [inaudible] go ahead and then i will come in. Okay thank you very much. Thank you again for being here today, and i appreciate your testimony. The problem is this lack of confidence. And we can go all through these things but irs targeting hiring people that had left we hiring people who had left with bad records, some of them actually having marks on their file dont hire. Tax refunds for prisoners, 25 earned income tax credit fraud the ig no safeguards am not no safeguards, but not enough safeguards in Sensitive Information you want employee taking home over 1 million over a million not dollars a million records, and the list goes on and on. This program is in shambles. Cybersecurity licensors, wasting billions of dollars, bonuses for people for poor performance record, taking Bank Accounts for people come from people with little evidence of wrongdoing. Still having tax entities that are waiting for tax literature literally for years. And still no execution plan on how to implement the aca that we have been aware. So again the problem is is accountability and getting some confidence back. So in your budget request are asking for almost 12. 9 billion for the irs but even without the request for six under 67 million above current spending limits, youre so asking for a 1. 3 billion increase. For comparison under the budget control act, total nondefense Discretionary Spending for the entire federal government will increase by only 1. 1 billion. Given current Budget Constraints and past history, is it a clear it is clear that this request favors hope over reality. The question is are you developing contingency plans and had to carry out your Mission Based on a more realistic budget expectations by . First i would note the difference between irs and the other agencies is if you give us money, we give you more money back. So that in terms of deficit reduction which is a critical issue Going Forward in many ways its counterproductive that the more revenues and support for the irs get cut the greater the difficulty we have been collecting revenues. But i do take the point and we are continuing to assume that one of the options going into the future is that we will in fact, stay at the flat level. That was her assumption going into 2015 when we ended up with a budget cut of 350 million. The only major agency in the count with a cut. Were the only major agency in the cover that was not restored to the presequester level when this request was implement. So combined together we have in effect at the impact of two sequesters what ever else is waiting to see what happens for the next question. As i told omb we are two sequesters ahead of everybody else so to that extent we already have had to deal with the very difficult reality. A very good. So we are prepared. Allall i can to you last july testified i said if we did not get the increase in funding requested for Customer Service for example, the Customer Service level is going to drop by 50 and it is done the. To the extent we do not get additional revenues for enforcement, i configured the enforcement revenue is available will increase by six to eight times more. But we are prepared as i said we will play the hand you deal that is dealt to us. Whatever decisions you make we will abide with them. But i will tell you there are great threats to Taxpayer Service, on tax enforcement and Information Technology. Cybersecurity is a critical issue force. We get attacked 145 million times a year. Theres no database that is more attractive than our database coming yet we are dealing with less and less support for ig system than we think is appropriate. So we will deal with whatever you give us but i can tell you we are significantly underfunded at this point already. How much money did you waste and licensure . In where . And licensure last year. And licensure . Yes. I dont know in what sense. You mean in terms of i. T. Licensure . Theres an ig report that we had disagreed with in terms of use of licenses for software asked whether in fact we had lost money on those Software Licenses by not using them. It was an issue of how you measure but we have taken to this is over the past history taken actions to make sure because im a big supporter of ig when you raise an issue like that we deal with it. We will visit with the ig about that. During a hearing last month senator grassley asked you about the tax consequences of president s unilateral action on immigration what it would allow individuals to claim millions of dollars in tax benefits for unauthorized work. Your followup letter to him last week that individuals individual may claim up to three years of refunds on income even if theyre working off the books or never pay taxes, is truly startling. Why are you allowing individuals who cheated by not paying any taxes can have him a refund that would be financed by hardworking americans who have been paying taxes all of . It has to be clear you are eligible for the tax credit only if you had earnings, and earnings that meet the requirements of the statute. We have 700 us and undocumented residents who pay taxes every year. They use whats called and i can come Identification Number for them. They are paying even though theyre a document other already paid into the system. Anyone who now under the Provisions Program is provide a Social Security number with would be eligible for filing an amended return but after then demonstrate that they actually had earnings and have to pay taxes on those earnings are least filed a return and only then would they be eligible and the single employee at the low end of the scale without a family is eligible to less than 600 a year and earn income tax credit. So you have to have worked in those three years to get the file an amended return you to provide evidence and documentation documentation patchwork. That you worked. Said the statement than so the statement benefit individuals may claim up to three years of refunds on income even if theyre working off the books or never pay taxes is not true speak with no. They basically have to come if they want to file a committed return to have to file for the income they earned. I noted there are 700,000 undocumented residents on taxes every year with us. So to qualify the earned income tax revenue you had to work. If you file a return you have to provide us with the documentation that showed good earnings that year, you owed taxes and we factored into what if any tax credit youre entitled to. Theres not an automatic payment. The senator from maryland. Thank you, mr. Chairman. And thank you, mr. Koskinen. First of all i really appreciate someone of your caliber has decided to continue