Payer advocate, it is been nearly 20 years since Congress Seriously considered reforms to the irs. I am hopeful we embark on a new effort to improve the agency that can work handinhand our members on both sides of the aisle, working together confident will find Common Ground and make progress. Its important to emphasize that our effort to reform the irs is not seen as a punishment of the employee. Instead we need to recognize the irs mission is very important. Every Government Entity whether private companies can benefit from a thorough review of thoughtful longterm planning and action. That is what were here today for a period of a business background is started my business many years ago. My experience tells me we are say to look for ways to improve. Continuous improvement has been part of my philosophy over many years. When i was find a way to get better and more efficient. When evaluating entities i always ask myself the reason for improving. The big goal is to have Continuous Improvement is your organization has. The task before us as tough questions and look for solutions. Taxpayers need to be able to trust the entity administering texaco. 98 of our tax revenue come to the irs voluntarily. Only 2 is corrected through the iris of horseman action. Trust is a component of voluntary compliance. The taxpayer bill of rights contains the right, and Quality Service and i think thats a big focus that second on the list. An irs publication describes it as a right to receive prompt courteous and assistance in dealings with irs as we consider reforms we should keep this right as well as well as the other nine of mine. I look forward to working with the Ranking Member and other members of the committee to make the irs or 21st century agency. I think our witness for being here today, shes been a champion for taxpayers for many years and her insight will be very valuable. I look forward to her testimony. I now yield to the Ranking Member mr. Lewis for opening statement. Good morning mr. Chairman. Thank you for holding this hearing. I want to thank this olson for being here and for her many years of service. Also like to thank our members for being here i know some of us this is a little early. [laughter] i agree. But we are here. Mr. Chairman, we must approach the important manner of informing the Internet Service with a great deal of care. We must remain focused on doing what is right and what is just for the interest of every american taxpayer. Who stay on a bipartisan path together, we help the irs become a model for constituent services. We are large and complex organization that is suffer from a lack of resources for many years. , congress cut the Agency Budget to almost 1 billion in 2010. These cuts harmed Taxpayer Services and Tax Compliance of the irs need technology, infrastructure and employees to provide for Quality Customer service. For these reasons responsible reform must include strong robust funding. As we study the structure and service we must consider how much the world has changed since congress enacted on this matter. Over the last 20 years Internet Access creates opportunity for summer barriers for others. Both taxpayers and those are serve them struggle with increased Identity Theft, fraud, and scam unfortunately a program like a private Debt Collection which has been tried and failed plans to more confusion. I believe we agree on the importance of an agency that will provide taxpayer with greater access to Customer Service online, over the phone and in person. I believe we can help build a Tax Administration system that would take advantage of new technology while enhancing the security of the taxpayer data. I believe we must do better and if we Work Together we can do better i look forward to hearing from the national advocate today in learning more from her experience with taxpayers in the agencies. I think you are holding this hearing today and i thank you for your service. Thank you and i look forward to working with you on irs reforms. Other members Opening Statements will be made part part of the record. Nina olson, from the irs is here. I mentioned to her earlier i met with a group of cpas from florida. Your organization was well thought of. Also last week prepares here in washington i asked about your organization. They give you high marks. I dont want to to get a big head but we do believe in Continuous Improvement. We appreciate you being here today, the subcommittee will receive your written statement made part of the formal hearing record. You have five minutes to deliver your oral remarks. You may begin. Chairman, Ranking Member and members of the subcommittee, thank you for inviting me to testify today regarding the operations of the Internal Revenue service and offer suggestions to improve the responsiveness of the agency to u. S. Taxpayer. Spend nearly two decades since Congress Last reviewed and updated the laws governing irs operations. Touch is changed and Tax Administration would benefit from a fresh review of the laws. My written statement i make the following point. First, reforms irs operations will be most successful if congress can focus widely in the proposal and engage irs employees and external stakeholders and provide irs with Adequate Funding to 60. Second, some Tax Administration should be predicated on foundational principles. The most important principles respect for taxpayer right. Not only is respecting the taxpayer those who pair nations built the right thing to do theres significant data that suggest Building Trust with taxpayers which requires respecting their rights enhances voluntary compliance as well. In 2015 congress codified the provisions of the bill of rights as part of a Provision Requiring the commissioner insurer irs employees receive training and act in accord with those rights. The challenge to is to ensure that it is not merely aspirational but isnt incorporated into the ether those of the irs and exclusively into business practices. A clear statement that taxpayers actually have the ten fundamental rights would provide a Stronger Foundation for effective Tax Administration. I recommend congress and at the taxpayer bill of rights is a freestanding provision in the Internal Revenue code. There, to become an effective tax demonstration the iris was placed greater emphasis on Taxpayer Service. In my view theres no conflict between providing highquality Taxpayer Service and taking actions to ensure Tax Compliance, particularly on the part of persons actively seeking to have a tax. Should not be in either or proposition. To create an environment to encourage taxpayer trust and encouragement the irs must change the culture from one enforcement oriented to one that serviceoriented. Of the current appropriated budget of 11. 2 billion, 43 is allocated to enforcement while only 4 is allocated to taxpayer outreach and in activities. According to data the agency only dedicates 98 employees to conduct outreach and education to 62 million Small Business and selfemployed taxpayers and only 376 employees to conduct outreach and education to the 125 million wage and investment taxpayers. Meanwhile, the irs has over 3000 officers who collect field information and field audits. Congress directed the iris to place greater emphasis on serving the public a meeting taxpayer needs. In response they adopted the following Mission Statement. Provide americans taxpayers topQuality Service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. In 2009 with no public discussion notice to congress or to myself they quietly change its Mission Statement to read, and enforce the tax for with integrity and fairness 12. The shift in tone and emphasis from applying to enforcing the law suggest iris leadership disagreed with congressional directive and decided to place greater emphasis on enforcement on that Mission Statement. Accordingly i recommend congress require the iris to revise its Mission Statement to reemphasize an approach and explicitly informed the role of taxpayer rights as a guiding principle for Tax Administration. Fourth, congress has passed important rights bills and in my testimony to highlight provisions that congress has enacted that the irs is either not implemented, to find a way through guidance or only done a partial job. Fifth, ra 98 showing oversight hearings would give Congress Better insight into the strategic and operational plans to promote dialogue between congress, irs and interested stakeholders to help ensure the tax rating and appropriation committees coordinate tour the iris operation. Thank you. I look for to answering questions. We will now proceed to questionandanswer session. We will have to limit the questioning to four minutes instead of five because we have a briefing at 10 00 oclock. As is custom and i will hold my question to the end. I recognize the gentleman from arizona for any question. This is unique for us because we are used to having witness for the irs. Where we have a series of stories and is frustrating and when we researchers on we had people say nice things about your organization. A little concern about speed but actually said nice things. You win a prize for having a unique conversation with us today can i start with one thing that did come up in the conversations about the hearing that was without reach to our office in your office of individuals who are in the gig economy. The cooper driver, the person who crowd sources their work through the internet and the discussion of how they access information to say here there rules for me to pay for my retirement and what must be set aside. First as an advocate to believe your organization is doing enough to make it easy to access that information . Where is posted on the website, and the same thing as he observed the irs . Im very concerned about this population as its a very fastgrowing im concerned they would get into trouble with selfemployment tax. One thing my office is working on that we receive suggested font from other sectors is to develop a wizard where people who are starting in the gig economy king go toward taxpayer toolkit online and see the steps they need to do and get to the different places get an employer identification number, understand calculating selfemployment tax and when they need to make it, calculate and learn about the different forms of retirement saving. Most importantly they have problems how they can resolve them including getting to the Taxpayer Advocate service. We are developing that now. And i may have chartered and never get but sometimes advocate may be proactive this is something we need to deal with no dissociated Mother Organization you know you can save for your retirement they may have just sent off be in every employee and no longer an independent contractor. Well have to figure out what well do to help this population to have that future. On the irs side to see the agency itself doing enough as a public access, you cannot get it from the organization your contracted with, where does that person go . The irs did create a webpage last year to address some of the issues for the gig economy. As always i think 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 states that do not have one of those employees located in the. I know where the last 30 seconds, i have a fixation that the use of technology as a way to direct folks were having difficulties with the irs. As the advocate do you publish saying this is a problem that comes to us quite often heres how its been resolved, heres the four meaning what are you doing proactive in that . We identified the needs of the gig economy and made recommendations. We have created materials from my local taxpayer advocacy in each state conducting outreach proactively. That is an assignment to identify stakeholders in their communities. Thank you. I recognize mr. Lewis for questions. Thank you. Its my understanding you held a dozen Public Meetings around the country, what did you learn . We learned how hard people are trying to communicate and how much they actually want to. We learn people thought having Digital Online tools would be very helpful but they were no replacement for talking to the irs. There is a strong desire for the irs to hear for them and listen to them. We learn from different populations concerns about Identity Theft and scams going on. Those were strong issues. We learned about issues of Payroll Service providers ripping off taxpayers who are securing their services. We heard from experts about how to design Digital Services to make them usable by people but not replace the communication with us on the phone or in person. I was a very strong message. As a taxpayer you believe the Quality Service can be provided on the cheap. I think Taxpayer Service to me is the key way that you build trust with taxpayers. You can do Taxpayer Service whether trying to do outreach and education are within an audit or collection activities. If you take the approach they are trying to bring it into voluntary compliance and understand why you having compliance difficulties in listening, then that is how you bring Taxpayer Service and rights into the egos of the organization. Theres no conflict with exercise in the compliance tools that you have. Providing Taxpayer Service that you have doesnt eliminate any power the irs has when they need to use them. To think the 1998 reform was successful . I think it was very successful. I think what we need to do is go back and thats probably why i give you the list of some of the provisions that i saw were not successfully implemented. The congress focused on a 98 was very key and we need to make sure the irs does what you directed or learn why they couldnt do it and revise it so it fits into 21st century Tax Administration. Has it achieved its goals . It made the irs focus on Taxpayer Service but it sort of moved away from that is a primary focus. Its moving away from persontoperson contact. I keep saying people are giving up their money, were 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 we cant solve the problem in the way they want area but by listening we gain trust. And we need to do that. Thank you for being here and for your service. I recognize the lady from indiana. Thank you. Many thanks to my constituents in indiana. You have helped the five years ive been here you have been able to mitigate and help over 90 of the questions weve had. Im very grateful. You probably seen everything is 16 years so i want to pick up on what you learn from the hearings on the issue of id theft and thats what we get burdened by folks my question is on the return review program that started in 2009, i wanted to hear from you on the success in 2010 the irs said it was too risky to maintain upgrade and here we are and it is still the principal fraud detection system because its still not ready for prime time. In fact no estimated date of full implementation. They estimate that it has incurred over 86 million. When it has run as a pilot that yielded a high false positive rate missed 313 in fraudulent filings. So lets talk about the number behind them. You documented what taxpayers go through in your annual report. Can you walk us through what happens to a single month, Small Business owner, a person who gets flagged as a false positive . How do you find out what hoops they go through and what this means to the people. Depending on what system triggers them as a fraudulent return to either get a letter or their refund is held up and they have to call and they have to verify themselves online i might have to go into a walk inside to do that they cant just walk in the have to make an appointment sometimes it could take weeks to get an appointment annual bill gave refund before you do that. Even if you go through the your return could be stop by some other filter once it goes back to the processing. Then he have to go through it again. Identity theft and fraud have been the top two receipts Taxpayer Advocate service for the last five years. They really are significant part of the inventory its devastating. Aside from the time element frustration doesnt that cost taxpayers money if they need to seek professional services. Absolutely.