The irs. A National Taxpayer advocate will testify before the house ways and means subcommittee. Consider reforms to the irs and hopeful we embark on a new effort to improve the agency that can work handinhand with members of both sides of the aisle, working together im calm that we can find Common Ground and make progress. Its important to emphasize our efforts to reform the irs should not be seen as punishment or criticism of the average agency. The mission is very important in every Government Entity whether its private companies can benefit from a thorough review and thoughtful longterm planning and action. The irs voluntarily, only 50 percent collected through the irs enforcement. The taxpayer bill of rights contains the right to Quality Service and i think thats one of our biggest focuses. As second on the list and irs publication describes the right is the right to receive prompt, courteous and professional assistance and taxpayers dealing with the irs. As we consider reforms we should keep this right as well as well as the other night in mind. I look forward to working with the Ranking Member mister lewis and other members of the committee to make the irs on 21st century agency. I want to thank our witness for being here today, hes been a champion for taxpayers for many years and her insight on this topic will be valuable. I look forward to her testimony, and now yield to the distinguished Ranking Member mister lewis for the purpose of our opening statement. Good morning mister chairman, thank you very much for this hearing. Its the National Taxpayer advocate. And i wanted to thank for being here and for her many years of service. I also like to thank our members for being here. I know for some of us, this is a little early. I agree. But we are here. Mister chairman, we must approach this important matter of reforming and improving the Revenue Service was a great deal of care. We must remain focused on doing what is right and what is just for the interests of every american taxpayer. We stay on the bipartisan path together, we help the rf to become a model of success. The raf is a large and complex organization. It has suffered from a lack of resources for many years. Congress cut the agencys budget by almost 1 billion. When they can. These cuts harm Taxpayer Services. And Tax Compliance. And the irs needs technology, infrastructure and employees to provide and procure Customer Service. For those reasons, responsible reform must include strong, robust funding. As we study the rf structure and service, we must also consider how much the world has changed. Under Congress Acting on this matter. Over the last 20 years, Internet Access creates opportunities for some and barriers for others. Both taxpayers and those who serve them deal with increased Identity Theft, fraud and scams. Unfortunately, a program like private Debt Collection has been tried and repeatedly failed which led to more confusion. Mister chairman, i believe we agree on the importance of an agency that will provide taxpayers greater access to Customer Service online and in person. I believe we can help build a Tax Administration system that would take advantage of new technology by enhancing the security of taxpayers data. I believe that we must do better, but if we Work Together we can do better. I look forward to hearing from the National Taxpayer advocates today and learning more on her experience of taxpayers and agents. And again, thank you mister chairman for holding this hearing today. Thank you for your service. Thank you Mister Willis and i look forward to working with you on irs reforms without objection other members, Opening Statements will be part of the record. This includes one expert , lena olson, National Taxpayer advocate or Taxpayer Advocate services at the irs, we mentioned toher earlier i met with a group of cpas from florida and your organization was well above. And also last week preparers here in washington i asked them about your organization and they gave you high marks. I dont want you to get a big head but the point is we believe in continuous improvement. Ms. Olson, we appreciate you being here today. The subcommittee will receive your written statement which will be made part of the formal record. I now have five minutes to deliver your oral oral remarks, begin when you are ready. Members of the subcommittee, thank you for inviting me to testify today regarding the operations of the internal Revenue Service and to offer suggestions to improve the responsiveness of the agency to us taxpayers. It has been nearly 2 decades since Congress Last reviewed and updated the laws governing irs operations. A lot has changed during that time. The taxi ministration would benefit from a fresh review of those laws. In my written statement i make the following points, worst, forms to irs operations will be most successful if risk is widely on his proposal engages irs employees and external stakeholders and provide the irs with Adequate Funding to succeed. Second, sound Tax Administration should be predicated on foundational principles and the most important principle is respect fortaxpayer rights. Not only is respecting the rights of the taxpayers who pay our nations bills , the right thing to do but there is significant and very cold data that suggests Building Trust with taxpayers which requires respecting the rights enhances voluntary compliance as well. 2015, congress codified provisions of the taxpayer bill of rights or keyboard as part of a Provision Requiring the commissioner ensure irs employees receive and act in accord with those rights. The challenge now is to ensure that keyboard is not merely aspirational but incorporated into the very egos of the irs. And explicitly into his business practices. I believe a clear statement that taxpayers actually have the 10 fundamental rights would provide a Stronger Foundation for effective Tax Administration and therefore i recommend congress enacted the taxpayer bill of rights as a freestanding provision in the Internal Revenue code. Third, to become an effective 21stcentury taxi ministration, the irs must place greater emphasis on Taxpayer Services. There is no conflict whatsoever between providing highquality Taxpayer Service and to ensure Tax Compliance, particularly on the part of persons actively seeking to evade tax. It should not be in either or proposition. To create an environment that encourages taxpayer trust and confidence, the irs must change its culture, one that is enforcement oriented to one that is service oriented. Of the irs for appropriated budget of 11. 2 billion, 43 percent allocated to enforcement while only four percent, only four percent is allocated to taxpayer outreach and education activity. According to irs data, the agency dedicates 90 employees to conduct outreach and education to the roughly 62 million mall business and selfemployed taxpayers and only 376 employees conduct outreach and education to the hundred 25 million wage and investment taxpayers. Meanwhile, the irs is over 3000 revenue officers who collect Field Collection activities and 8800 revenue agents who conduct field audits. In ra 98 congress directed the congress irs to place a greater emphasis on serving the public and meeting taxpayer needs. In response the irs adopted the following mission. Five americas taxpayers top Quality Service by helping them understand and meet their tax responsibilities and by applying the tax rule with integrity and fairness. In 2009 no public discussion or notice to congress or to myself, the irs quietly changed its Mission Statement to read and enforce the tax law which integrity and fairness to all. The shift in tone and emphasis from applying to enforcing the law suggest irs leadership has agreed with the congressional directive and decided to place greater emphasis on enforcement in the Mission Statement. Accordingly i recommend congress require the irs to provide positions to reemphasize a noncoercive approach to Tax Administration and explicitly affirm the role of taxpayer rights in the guiding principle for Tax Administration. Of Course Congress has passed three important taxpayer rights bills including ra 98 and in my testimony i highlight provisions that irs has congress has enacted that the irs is either not implemented , or find a way through guidance or only done a partial job. Fifth, ra 98 joint oversight hearings would give Congress Better insight into the irs strategic and Operational Plan to promote dialogue between congress, and interested stakeholders and help ensure the tax rating and appropriations committee, coordinate their expectations and approach the irs operations, thank you for this opportunity and i look forward to answering any questions. Thank you very much, at this time we will proceed to the questions and answer session. I wear going to have to limit the questioning to four minutes instead of five because we have a meeting at 10 00 so asked all numbers to hear. But as is my custom ill hold my question till the end and now recognize the gentleman from arizona or any question you might have thank you and this is unique for a couple of us because were so used to having witnessed in the irs, where we have a series of dodging stories and things are frustrating and when we reached out to arizona, they said nice things about the organization. We got a little concerned but with a said nice things so if you win a prize for having a unique conversation with us today. Can i start with one thing though that did come up in the conversation in arizona about his hearing, and that was with outreach to our office and also to your office. Individuals who are called in the gate economy, the uber driver, the person who crowd sources their work on the internet. And the discussion of how they access information saying hey, heres the rules for me to say for my retirement, your my rules on what must be set aside. First as the advocate, do you believe your organization is doing enough to make it easy to access that information, the way you posted up on your website. The way you deliver that information and the same thing for as you observe the irs, to deliver that information to those folks as part of our economy . Im concerned about this population and the fastgrowing part of it and im concerned they will get into trouble with selfemployment not entirely, etc. One thing my office is working on right now and you receive suggestions about from other sectors is to develop a wizard where people who are starting in the gate economy and go on to our taxpayer toolkit online and see all the steps that they need to do and get to the different places, get an employer identification number, understandable captivating selfemployment tax and when they need to make it. To the place where they can calculate or learn about the different forms of retirement saving, etc. And most importantly if they have problems, how they can resolve and including getting to the Taxpayer Advocate service. Thats something were developing now i know slightly differentthan you viewed your charter , sometimes the advocate may be proactive because in this is something we allas Committee Members will have to deal with now , that associated mother organizations if they were to give advice and you know you can pay for your retirement, they may have sent them off as an employee and no longerbeing in that contract. Its going to have to figure out what are we going to do to help the population be able to have that. Now, on the irs side, arent we, do we see the agency itself doing enough as the public asset access that says you cant get it from the organization you are contracting with. Where does that person go right now to get back . The irs did rid create a webpage in response to a Small Business hearing to address some of the issues for the gate economy. I think as always we can all do more. This goes back to the fact there are only 98 employees conducting outreach and education to the selfemployed population in the United States and 14 state that do not have one of those employees located in them. I know in our last 30 seconds, i have a fixation that the use of technology as a way to direct folks having difficulties. You actually as the advocate, almost published saying this is a problem that comes to us quite often, heres how its been is old, heres the form you need. What are you doing proactive in that part of the world . We identify the needs of the gate economy as the most serious problem in my annual report and we made recommendations and we have created materials from my local Taxpayer Advocates in each state to conduct outreach proactively to groups and thats one of their assignments to identify a colder in their community. Thank you mister chairman, i deal. I recognize the distinguished Ranking Member mister lewis for any questions you might have. You. Its my understanding that you held Public Meetings around the country, what did you learn . It was remarkable, we learned a number of things. One was how hard people are trying to communicate with the irs andhow much they want. We learned that people taught that having Digital Online tools would be very helpful they were no replacement for talking to the irs. And that thats a very strong desire for the irs to hear from them and listen to them. We learned that from all sorts of different people the concern about Identity Theft and the stands going on out there. With very strong issues, we learned issues about Payroll Service providers being off taxpayers who are procuring their services. Then we heard from experts about how best to design Judicial Services to make them usable by people but not replace the communication, the persontoperson communication with us on the phone or in person. And that was a very mall message. I know as the Taxpayer Advocate, you dont believe that Quality Service can be provided on the cheap. The Taxpayer Service is to me that the way you build trust with taxpayers. And you can do Taxpayer Service whether youre trying to do outreach and education or within an audit or within collection activity. You take that approach that youre trying to bring the tax payer into voluntary compliance and understand why youre having compliance difficulties and youre listening to the taxpayer. Then that is how you bring Taxpayer Service and taxpayer rights into what i call the egos of the organization and theres no conflict with exercising the enforcement and compliance tools that you have. Providing Taxpayer Service doesnt eliminate a single one of those powers that the irs has when the need to use them. You think that 1998 of reform type was successful . I think the reform was very successful. I think what we need to do is go back and thats why i gave you all the list of some of the provisions i saw that art successfully implemented from the irs. I think what congress focused on a 98 was very key and we need to make sure the irs does what you all directed them to do or learn why they couldnt do it and then revise it so that it fits into 21stcentury Tax Administration. It is one of the chief goals . I think it achieved it. It made the irs focus on Taxpayer Service but sort of move away from that as a primary focus and its really moving away from that persontoperson contact and i keep saying to people in the irs, people are giving up their money. We are taking their money for the greater good. Why would we not want to talk to them and hear from them and listen to their concerns, even if we have to tell them you cant solve your problem in the way you want, this is the law but by listening to them, we gain trust and thats what we need to do and weve gotten away from that. Thank you for being here, you for your years of service now i recognize the gentle lady in indiana. Thank you mister chairman, thanks miss olson. Many things to my constituents in the second district, youve helped in the five years ive been here youve been able to mitigate and help over 90 percent of the questions that we had and im grateful to you for what youve done. You see everything in 16 years so i want to pick up on what you said from the hearings that you guys had. On the issue of id that and scam, thats what we get burdened by folks in our district have gotten caught in these issu