discrimination at the fdic. watch live before the senate banking committee beginning at 10:00 a.m. eastern on cpn -- c-span three, c-span now, our free mobile video app or online at c- span.org. >> now they've wrecked their country so they want to come here and collect our welfare instead. so no asylum cases. >> most people come here to make a better life, if not for them, for their kids. my italian grandparents never spoke english. i never had a conversation with them and yet they made america great. >> this friday, author ann coulter and columnist saw rabbi murray delete recent magazine's nick lesbian the young turks for euchre over the question should the u.s. shut its borders. the debate is moderated by barry weiss. watch it friday at 9:00 p.m. eastern on c-span and online at c-span.org. >> c-span is your unfiltered view of government. we are feared and did by these television companies and more

including wow. >> the world has changed. today a fast reliable internet connection is something that one can live without so wow is there for our customers with speed, reliability, value and choice. now more than ever it all starts with great internet. >> wow supports c-span as a public service, along with these other television providers, giving you a front row seat to democracy. coming up, irs commissioner danny warfel testifies on the 2024 tax filing season and president biden's 2425 budget request for the industry. during the hearing commissioner warfel fields question from the senate finance committee on modernization efforts and improving taxpayer services. t. the hearing is two hours and 20. minutes.

chair wyden: finance committee will come to order >> finance committee will come to order. today the committee meets to discuss the irs budget and tax filing season, which closed yesterday. i want to thank commissioner werfel for being here at a very busy time for everybody at the agency. there are lots of issues to discuss and one that certainly is important to the american people is direct file. anyone who denies that the direct file pilot was a huge success, my guess is just living in another universe. it's open to a fairly small percentage of taxpayers but the reviews it got from its initial

users were overwhelmingly positive. it seems like a whole lot of people were very stunned that a federal agency, particularly one as frequently vilified as the irs, is able to build a helpful website who works. the taxpayers who used direct file this year collectively saved millions in fees that they would've paid to one of the tax software giants. the website was user-friendly. it was quick and easy to use. it didn't hassle users without charges for add on services they did need. direct file showed that the irs could build a good tool that people like because it saves americans time and money. no surprise then the people who oppose it are absolute be furious and once again are doing everything they can to stop it from growing. the detractors said it didn't

attract enough users but tens of thousands of new users came in over the last week. the iris hit its goal of 100,000 taxpayers using the system. there is no doubt in my mind that this will be more popular every year. others have said the cost estimates were too vague but the fact is there's always challenges with pilot programs. now that the irs has tested the system instead of baseline, costs are going to be clear going forward. finally there are some who said the whole project was unnecessary. they've said that taxpayers have the option of using free filesystems through the big tax prep companies. they may have had a valid argument years ago because, before the tax prep giants got caught hiding free file options from eligible taxpayers, they were conning people into forking over hundreds of dollars they didn't need to spend. congress simply cannot go around trusting the big tax prep companies to do the right thing. for some of them, their version

of free file is the freedom for americans to pay them even more . bottom line, direct file is long overdue and it's the kind of public service the federal government ought to be providing to americans whenever it can. i understand the irs and treasury department are now evaluating how the pilot program went over the last two months. personally i believe that this program should be expanded. i'm looking forward to the day when oregonians come up to me in one of our 51 fred meyer grocery stores, i have been to every single one of them, and they had a chicken in each one, to tell me how thrilled they were to save time and money with direct file. on the topic of vastly improved federal programs i'll turn now to the irs that's continued success in improving customer service during the filing season. the rs answered 1 million more calls with live assistance than it did last year's filing system. it got call waiting times down to three minutes.

it saved taxpayers 1.4 million hours of time and in previous years they would've spent basically listening to all the music and just being on hold. it smashed its goals for in person service. despite the success, apparently there have been some complaints from the other side of the aisle, the administration is asking for money to sustain this progress. i'm not sure what's behind that. maybe they want to go back to the battle of days when taxpayer sat on hold for hours and couldn't get timely refunds. doesn't make any sense to me. for the second filing season in a row the irs is proving it can provide a top-notch level of taxpayer service when congress gives it the resources. just a few words to close on enforcement. the irs has announced some major enforcement efforts in the last few months. this includes cracking down on 125,000 cases where wealthy individuals, many of them bring in more than $1 million a year, never even filed a tax return.

let me repeat this. this is not people who figure out how to gain the system. they are sufficiently contemptuous of the rules that they never even filed a tax return. there is also a new effort to root out the abuse of tax breaks for corporate jets, highflying executives who takes tax write-offs for personal travel, for example, and in my view the iris ought to look at similar abuses of corporate owned yachts. when it comes to yachts the abuses seem to me to be more blatant. the odds produce big write-offs but i find it hard to believe that anybody is yawning to a board meeting. congress cuts the funding or the inflation reduction act funding expires and congress doesn't add more, we know exactly what will happen. wealthy tax cheats will have an easier time getting away with breaking the law and that means misery for typical americans who are just trying to do their

civic duty when tax filing season comes around every spring. that's an outcome that the vast majority of the american people oppose. lots to discuss this morning, colleagues. i want to thank commissioner werfel for joining us. i look forward to the question and answer. >> thank you mr. chairman and welcome again commissioner werfel. i agree and appreciate the work you are doing and the progress that you have made. there are going to be issues that i raised today, however. the irs needs to be accountable for the choices it makes. become more efficient. rigorously plan. provide full transparency and timely solicit real feedback from informed stakeholders like congress before acting. despite claims that the $80 billion in new funding would transform the irs into a 21st century agency, the president's budget request indicates otherwise. while modest progress has been made, there are other areas where the agency continues to miss the mark. for example, last year i raised concerns with the irs strategic

operating plan including its vagueness and missing line item cost projections. a year later we are still missing important details yet this year's budget asks for even more unprecedented irs funding, more than $104 billion. this underscores that the initial windfall was not a cure. the irs has not transformed and the president believes the only way that that vision can be achieved is to spend more. while i support the transformed irs, this approach is not a solution. for $80 billion, one would expect the transformational customer service changes and fully modern front-end and backend i.t. instead it seems that taxpayers have paid for mail to actually be opened and a decline in the phone wait times. meanwhile, several billion

items of taxpayer correspondence remain unanswered and half a million i.d. theft cases remain unresolved. on average, years later. i.t. modernization funding is also scheduled to run out years before the irs finishes updating its systems. i assume that this is due in part to the bulk of the ira funding being directed to enforcement. i don't disagree with the enforcement needs that my colleague the chairman has identified. an emblematic example of the just spend more, no questions asked approach, though, is the direct file program. despite their already being multiple free filing programs that i say that again, multiple free filing programs offered by the irs, the agency embarked on a redundant government run tax- preparation project complete with all attended inefficiencies and conflicts of

interest. just last week the government accountability office reported a highlight of many ways the supposed pilot program has not followed best practices, including key planning, budgeting, and accountability failures. the report noted that while gao could not determine how much the program has and will cost to operate, the irs having not provided sufficient information to do this, the current tab far exceeds $100 million, just through fiscal year 2024. for an option that might only serve 100,000 taxpayers this year. in contrast, the federal government spends less than $5 million a year to add 2 to 3 million taxpayers served in one of its free income tax

preparation programs. were the irs to use this year's direct file spending to pay third-party providers to prepare and file returns instead, literally hundreds of times the number of taxpayers could file for free. the irs spending hundreds of millions of its finite funding to simply test the utility of doing something that can already be done more efficiently with better outcomes and without the very real conflicts while simultaneously pleading for more funding calls for more oversight. direct file is not my only concern with the irs's current path. other serious concerns include the continued irs use of biased data and post factor metrics to plan and justify its actions. indiscriminate irs enforcement campaigns that pressure honest taxpayers and waste government resources.

and the irs's continued and highly disproportionate focus on increasing enforcement over improving taxpayer services. commissioner werfel, while i appreciate the positive steps the irs has taken during your tenure, so much remains undone at the irs that any victory lap is unwarranted. i look forward to your testimony, commissioner werfel, and i thank you, mr. chairman. >> all right. our witness today is kissman or commissioner daniel i werfel, commissioner of the iris, previously a matting partner at the boston consulting group. before joining them he was nominated to be the controller of the office of management and budget, a post he served in for

four years before becoming acting commissioner of the irs in 2013. he began his career at the office of management and budget in 1997 as a policy analyst in the office of information and regulatory affairs. commissioner, and. please go ahead. >> chairman wyden, ranking member crapo and members of the committee, thank you for the opportunity to testify on the filing season and the irs budget. i'm pleased to report that the 2024 tax season opened on schedule on january 29 and we seen a historic filing season unfold since then. through april 6 the irs received more than 101.8 million individual income tax returns and issued nearly 66.8 million refunds from more than 201.1 billion dollars. inflation reduction act funding has enabled the irs to have one of its best filing seasons ever in terms of customer service. taxpayers are seeing a difference. we've answered over 1 million more taxpayer calls than we did a year ago and 3 million more calls than we did in 2022. wait times and level of service on our main phone lines have improved. we've dramatically expanded

service on our walk insights, increasing hours answering more taxpayers, and new and expanded tools on irs.gov are seen heavy use. employees worked hard to deliver. we committed to an 85% level of phone service on our main phone line during filing season as of early april. we exceeded that goal. is a huge improvement from 2022 when only 15% of callers could connect and receive support from a live assistant. we committed to an average wait time of five minutes or less on the agency's main taxpayer helpline. we exceeded that goal with our mainline phones being answered in about three minutes. these are some of the examples of how we are seeing historic improvements and the agency is rebounding from some very tough

years during the past decade. at the same time, the inflation reduction act funding has enabled us to begin making critical inroads in addressing tax evasion amongst the most complex and largest filers. this is a sharp turnaround from the past decade when we were hindered by a lack of resources. our compliance includes focusing on tax x delinquencies and non-filing from high-end individuals, areas we are particularly concerned about. we are also responsibly leveraging artificial intelligence and hiring subject matter experts to find tax evasion amongst the largest and most complex partnerships in the corporation. i want to be sure -- clear, despite improvements this tax season, the irs still has more work to do on many fronts. this includes closing remaining gaps on phone service,

expanding digital options for all taxpayers, further strengthening data security and supporting vulnerable populations by protecting them from scams and increasing access to the earned income tax credit and other refundable credits. our ongoing success hinges on a sustained investment to make sure we have the right size workforce with the right training and tools as well as modern technology infrastructure with increasingly modern web-enabled tools for taxpayers. these are needed to ensure the irs continues our transformation work to serve the nation today and in the future. helping us in these efforts is the administration's fiscal year 2025 budget proposal. it gives us flexibility and increases transfer authority to all available resources to be used efficiently and effectively. it will also help sustain a new

irs baseline of resources and avoid immediate funding costs that would dramatically degrade our ability in many different areas including the service improvement that taxpayers saw this filing season. the 2025 funding is necessary to build on our success this filing season and continue our work to make further phone service improvements and provide digital tools to help taxpayers. for the irs to be able to do all of these things and add discretionary funding and complementary long-term funding are both essential. finally, i want to publicly thank taxpayers for taking the time to file and pay their taxes this filing season. this is a critical component to support our great nation. please note that all of us at the irs deeply appreciate and respect the time and care taxpayers take to do this vital

civic duty and irs employees remain committed to helping taxpayers in any way that we can. chairman wyden, ranking members of the committee, that includes my statement. i would be happy to take your questions. >> commissioner, thank you. we appreciate your being here. you have experience in both the public and the private sector and it seems to me that launching something like direct file is a little bit like starting a startup company. tell us, from a business perspective, how has this project launch on? >> it has gone very well. i think of it as a product launch. we are putting a new product on the street, if you will, and our customers, taxpayers, will a let us know if the product is working effectively and if they think they would like to use the product in the future.

we started, like any private sector company would. we had the idea for the product and then we put it on the street with volunteers. we tested it. from january 29 to march 8, the direct file product had volunteered taxpayers who agreed to submit. we got very positive reviews but we are also able to make real-time fixes to the product based on taxpayer experience. on march 8, we were ready to go and that is when we made it publicly available for millions of taxpayers in 19 states that were eligible this year. the feedback has been great. d people are telling us that it is easy to use. it is simple. of course, they like the price tag that is free. you mentioned, mr. chairman, in the final days of the filing season, we saw extraordinary increase in the pace of taxpayers filing with direct l file and it all went very smoothly. >> let's talk about the massive

fraud that was seen now in the employee retention tax credit program. as we all know, this was a real help to a lot of people during the pandemic but it was a blower told me not to long ago that trust 95 fraudulent, choking the irs system, delaying ballad refunds. the bipartisan tax bill that i introduced with chairman smith over in the house would cut off the claim after january 31, 2024, and gave the agency new tools. the question to you is, if the senate fails to take action on this bipartisan project, it seems to me that fraudulent e rtc claims are going to continue

to clog the system that will cost taxpayers billions of dollars. it will divert resources away from law-abiding taxpayers. your thoughts? >> yeah. i absolutely agree, mr. chairman. we issued a moratorium on september 14, 2023 because over the summer of 2023, we were seeing an increasing number of questionable claims coming in. we were worried, not just about the financial bottom line of the u.s. government, we were worried about honest small businesses that we thought weree being taken advantage of by aggressive marketers and promoters, convincing the small businesses that they were eligible for a credit they weren't to be eligible for. they were saying, you can get this credit at no risk to you and that wasn't true. we had to take steps to stop the flow. and, we did slow it. even today, mr. chairman, we are still getting 20,000 new

claims every week, even when we announced september that we stopped processing. this is because the law allows these claims to be submitted through 2025 and these promoters are out there still pushing for these claims to be filed. i really do appreciate the legislation that you are sponsoring, chairman smith, and the house. there are two things being harmed. one, the financial bottom line i in the u.s. government because you are giving us tools to crack down on fraud and two, in our big inventory of claims, there are still eligible claims in the mix but they are very hard to find. it is like finding a needle in a haystack. with your help, we can get those eligible claims found and issued hold back from issuing the ineligible claims. >> i talked to chairman smith late last night and he wanted me to say we are pulling out

all the stops to get this legislation passed. if i were to go through all of s the groups, conservative groups and other groups before this legislation, we would still be here tomorrow morning at breakfast. i am not going to do that. we are pulling out all the stops to get this stopped. the next question i want to ask is about ira funding and customer service. funding provided by the ira this filing season seems to have been a major success. the irs tested call wait times to three minutes and customer callback service opened for in- person service. there was new digital tools to scan millions of paper filed nd returns. that ought to speed up some refunds. commissioner, how will taxpayers notice that ira funding has improved service this year, a. and, b, what would taxpayers notice if the funding was cut? >> taxpayers, i believe -- i have heard from them. they had

saw and felt a big difference in the past two years, in particular this year. we are putting inflation reduction acts on the good used to serve taxpayers. we now have the right number in our phone center. they are trained. they are answering the phone calls at peak efficiency. the wait time is down three minutes and we use ira funding to modernize our call center with things that taxpayers want like a callback option and like more chatbots and automated solutions so you don't have to wait on the phone if what you can get done with the irs can be done by pressing a button or speaking out loud. these are things that taxpayers are seeing and feeling and it io is making a difference. we also are using inflation eo reduction act funding to update irs.gov with new tools. there are things people can do on their individual accounts now, updates to where is my refund. we had over 500 million hits to irs.gov this year. it is a record for us and we

believe that is because we updated with tools that taxpayers are finding useful. we submit documentation to the irs electronically rather than on paper at the post office. all of that needs to be sustained. this is what is critical about our budget proposal. our budget proposal is not saying we need a lot more money to get the job done. we have got, for example, the service to an extraordinary high-level. the money we are at is to sustain. we don't want to lose the 5000 -- we don't want to have to fire them or lay them off. the funding that we are asking for is making sure that we can sustain the right size customer- service workforce and the right tools so this new service level we achieve can be sustained into the future. >> i am over my time. >> thank you, mr. chairman. commissioner werfel, the first issue i want to talk about is identity theft case

resolution. i assume you are aware that we had significant issues with that in idaho. i think they are existing all across the country. according to data provided by your staff, on average, it is currently taking the irs almost two years to resolve id theft cases flagged by taxpayers to the irs. your staff also indicates that the irs currently has a backloga of almost 600,000 such cases. during this time a taxpayer awaits the irs resolving a case, many negative outcomes can occur including the irs itself taking action that could harm the already victimized taxpayers such as imposing leaves or levies. as a sign of how pervasive and troubling these cases are, i am aware of instances where state and local government has reached out to congress to assist with their own id theft cases.

i am not asking you to comment - today on any particular case, though, my staff has been in touch with you and your staff with regards to some of these. speaking generally to all of the cases, i am concerned and certain that he would agree that taking years to identify and resolve id theft victims' claims and problems is unacceptable and that most delinquent resolution time and the sheer volume of the backlog needs to be improved rapidly. would you agree to provide me your responses no later than your responses to the committee's other questions? on record, a report detailing the concrete steps that the irs will hereafter take to quickly and thoroughly resolve these unresolved id theft cases as well as an analysis for the reason why there are so many of these cases in the first place? >> yes. absolutely, we will commit that. >> i appreciate that. this is something that really needs to be highly prioritized. the next issues that i would like to go to is, basically,

the direct file and what i see is a lack of transparency regarding the way it has been added. i raise concerns with the direct file program. at the time, the irs was allegedly only studying. you assured me then that no decision has been made on moving forward with a direct file. a week later, you told the house ways and means committee members that you would reduce a study and then you would come back and talk about it with congress. what happened is the very same day you issued your study with both gao has now flagged as s missing key information and analysis, you announced that the irs was going to do direct file. putting aside policy concerns with respect to direct file, my question for you is,

do you believe that the irs has statutory authority to implement a direct file program? >> i do. >> what is that authority? >> we have authorities under the internal revenue code to provide taxpayer service to taxpayers and update the tools and solutions. we lived in a world where we had only paper forms. then we moved to a world where we can put a pdf form on the web and people can fill out that pdf form on the web but we you need congressional authority to do that. we worked to develop a partnership with the pre-file alliance to end and work with them and support their efforts. we did not need congressional authority to do that.

now, we are hearing from taxpayers -- not every taxpayer but some taxpayers that they want an additional option. . they can go on a pdf file in the web. they can work with a commercial software provider. this is just another option on the menu. it is our assessment that we have the authority to add such options on menu. maybe there is another option that will come after direct file. this is the irs working with taxpayers, serving their best interest and making sure we are giving them options to make it easier to file taxes. >> i will pursue this with you more later. i only have time for one less more question and i need to get this question in. this is the budget request for another $104 billion. you stated before that the irs would have a decade to rebuild with the $80 billion in irs fundingey and they would be

healthy pressure to immediately take the funds and demonstrate what a well-funded irs means. at the time, many of us raise concerns about the level of funding which is five times or more the budget of the irs. it would say that we need this money to maintain the employees. now i'm understand that we need $104 billion more to maintain the employees of the irs. i guess my question could be, when will it stop but my question is, now that the irs has requested an additional more than eight times its annual budget for more new mandatory multiyear spending, when is it going to end? what is the actual amount of doubling, tripling, multiplying the size of the irs budget in order to accomplish whatever the objectives you say can't be accomplished with what has been provided? when will we see the end of the amount of phenomenal

multiplications of the size of the irs in budget requests? >> i am glad you asked that question, senator. i would like to take a moment to explain our budget. we have a base budget and then we have a modernization budget and our base budget is too small to serve the tax system that we have today. her base budget is roughly the same as it was in 2010 and the tax system has grown in a variety of different ways. more eilers, a gig economy, more complexity. thousands of changes to the tax code. as the tax system grows and our base budget stays constant, we have to rely on the modernization funds to close that gap. what we are asking for in the funding is to basically create a new baseline so as the tax system continues to grow, we have the right set up to run the schedules that are created by that tax code. it is not about asking for more and more and more money to

build an ever-increasing irs, it is about achieving a baseline. what happens in the out years bi is all the money goes away. we lose all of our ability to maintain service by 2026. if you look at 2028 and 2029, we lose our ability to maintain technology because there is a cliff. that money that you are describing and the concern, is i intended to address the cliffs in the out years. if the taxpayers came to us this year and we were able to answer nine out of 10 of their calls in three minutes time but the presidents budget is saying, please make sure that same result exists in 2026, 2027, 2028 and 2029. >> so the new baseline is 800% of the existing baseline? >> it is not 800%. it is different in services than it is in operations but currently we are about $3 billion a year off of our

services baseline. by the way, the tax system continues to grow. i can show you the map and work with your team on that but i want to be clear that the increased money is really a combination of making sure that we can provide digital tools to taxpayers and not just run the train schedules that we have today to overcome these cliffs that are coming. >> okay. senator carper? >> thank you so much. i think it was 14 months ago that you sent at this table and behind you was not your leadership team from the irs but your wife, your kids, your parents. i think them for sharing you with all of us and i just convey to them that i still feel that way and i encourage the leadership -- i want to say to my colleagues on both sides of the aisle that some of us previously served as governor.

in delaware, we don't have the irs, we have the delaware division. we did not do a very good job of collecting taxes that were owed. we went to work on that. we did not fix it in a year. we did not even fix it in one term but we fixed it in eight years. the year that i stepped down of -- as governor, we earned and received the quality award for service among all the businesses, nonprofits. the quality award is like, are you kidding? no, we are not. we are collecting revenues and we balance our budget eight years ago in large part because we had done that. it can be done. it can't be done overnight. it can't be done without support. it can't be done without leadership. thank you for providing that leadership. i want to talk a little bit about direct file program if we

can. it is a major step toward improving the taxpayer experience. this year, taxpayers in 12 states could directly file with the irs through direct file and i look forward -- we look forward to working with you and your team to build on the success of this year's pilot to bring direct file to taxpayers in all 50 states including the first state of delaware. do commissioner werfel, does the irs plan on continuing to direct file by next tax filing season? do you plan on expanding fthe scope for the next filing season? if so, how? >> senator, as we sit here today , the pilot is still ongoing because massachusetts, one of our pilot states, they have until april 17 because of patriots' day. the pilot is not done yet. here is the plan.

once the pilot is complete, we will gather the data. we have already started gathering the data and we will report out publicly the information, including cost. the senator mentioned in his remarks the cost estimate that may exceed $100 million. i am not seeing that in some of the early data coming in. i am looking forward to having a public discussion around what we saw, what the demand was, what the performance of the product was and what the cost was once the pilot wraps up. we are a couple of days away from that. once we can get that information out to the public space, i would expect we will hear from some stakeholders and we will here him the states and members of this committee and members from the house ways and means and then we will make a decision. i will consult and we will make a decision about the future of direct file. the results have been encouraging. there was significant demand for the product. when we released it on march 8 to the broader public, we anticipated that time based on

traffic, that we would see traffic, that we would see 15. we have blasted through 100,000 on april 13 or 14th and we are still getting more returns and. demand exceeded what we thought the day we launched the product widely. in terms of cost, we are gathering information but i don't see anything in the early data that points to over exorbitant costs. again, we want to have that public discussion and then we want to make a decision as transparently as we can. >> thank you for that. i'm going to stick with this direct file for a moment if i could. how can we support the direct file program to ensure that more states, including my state, can participate next year? >> i think it is about making sure there is balanced information about what the ambition of direct file is. it is intended to be an option,

not intended to be mandatory. it is still taxpayers preparing -- there are still some -- we want to hear from taxpayers in delaware and other states more broadly. what we want by the irs as seamlessly and easily as possible? how can we reduce their stress? a lot of taxpayers are telling us a free solution to work directly with the irs online is one option we would like to have. we would like to not lose it but we would like to have it on the menu. we would like to be ever more informed and how we serve taxpayers. >> mr. chairman, when you and i were colleagues 1 million years

ago, we used to hold a lot of town hall meetings in our respective states. every year, right around tax filing season -- we only have three counties. we would help people file taxes and we would have an exercise where people in the audience could help us balance the budget. it was pretty interesting. one year, the group was having a hard time and the citizens were having a hard time balancing the budget and they were able to work with defenseman and we still could not balance the budget. lady in the back of the room raised her hand and i said, yes, ma'am and she said, we are having a hard time, do you have any thoughts. i said, well, if you have not thought about revenue, trying to get a stash was revenue as part of the solution. it is not just raising taxes, it is making for people who have income -- the lady said, i

don't mind paying even more taxes, i just want to make sure everyone is paying their fair share. that is what we are trying to do. >> we are going to move on but don't think you are retiring. we will call on you. >> you know that i spend a lot of time listening to whistleblowers throughout the bureaucracy. i no one july 21st, supervisors, special agents emailed you, asking that you have senior irs leadership to stop retaliating against him. on may 18 of last year, irs special agent emailed you to . disclose his concerns about the irs handling of a case that he was working on. i have an

opportunity to talk so i know they have asked to meet with you. what they wanted to discuss with you, i would assume they want to tell you what is wrong with the handling of certain cases and i would think you, at the top of the irs would want to listen to them so i am not going to ask you a question butt i am going to do now what i told them i would do. i was going to ask you to meet with the two of them and just listen to them. whether you take action or not is up to you but i think you ought to at least listen to them. i think whistleblowers throughout government are some of the most patriotic people i know and i would ask you to do that. now, i want to go to my first question. the irs whistleblower program, which you know i was involved in getting enacted, it brought $6 billion into the federal government. it has been a pretty effective '

and efficient program but we have this problem with the average wait time for people to get their case closed. it has gotten longer and it is now up to 10 years. the average wait time is in part due to the irs policy against paying partial awards. under this policy, the irs will wait years until all the years of claims are completed to pay anything whatsoever. effectively, the irs has created barriers to pay awards on its own that are not in the whistleblower statute passed by congress. you need to examine the unnecessary policies in the irs revenue manual and work to allow partial awards to be paid to whistleblowers as quickly as possible. could you do that?

>> senator, i am glad you asked the question. between the question that senator carper asked identity theft backlogs and your question on the backlogs on the whistleblower claims, you are pointing to two very high priority things as we move forward. as i said in my opening statement, we had a good filing season but we have more work to do and these are two areas. i will commit -- that is an interesting recommendation on partial payments and the way we can potentially accelerate how whistleblowers who are providing such valuable information to us get their fair share of the money that they saved the american taxpayer so we will look into that and i will get that to you. also, as soon as i get the opportunity, i will get back to you on identity theft, another big priority and another big issue that we have to do better at. >> i am glad that whoever makes arrests for people who violate

the law in the irs -- this one contractor is now serving five years for disclosing information but i kind of wonder how an activist likes him, who presumably got a job for the sole purpose of making public information about taxpayers. in this case, i guess atit was after trump's tax returns. how the activist had plans to steal taxpayer information were able to get higher and gain access to taxpayer information and what action is the irs taking to ensure an active employee or contractor is never again able to access and ensure sensible taxpayer information? >> thank you for the information. protecting taxpayer information from unauthorized access is a solemn responsibility to the irs. the individual you referenced

betrayed the trust of the irs and the american people. it is a trail that cannot be tolerated. based on what is laid out in court, it is not being tolerated. this bad actor was brought to justice and will be serving a five-year term in prison. from my first day on the job back in march 2023, it is tough to strengthen the data security at the irs and we have taken numerous steps to address this to make sure that we have their to-do list. fewer users, more encryption, s stronger oversight, better access logs, less removable media, tighter email control, h new printer control. all of this is ongoing and being put in place to make sure that this type of unauthorized access by a contractor or an irs employee can never happen again. there is always going to sibe that risk. what you try to do is narrow

the risk to as small as it possibly can be. insider threats and unauthorized access from insider threats, it is impossible to get rid of completely but i am committed to reducing the probability to as small as it can be by putting in the sweat equity to close all of those gaps. >> commissioner, i am a partner on the whistleblower effort and have been for years. i very much support the fact that you will make those issues about whistleblowers a priority going forward. i will be working with our calling from iowa. >> commissioner werfel, thank k you for being here . i am considering taking a political risk this morning which is to use the word good news and irs in the same sentence but i think -- i really want to call

out at a moment where there is a lack of confidence among the american people and our governing institutions, particularly the deployment of technology by government agencies. i am going through that misery myself as american people are with what the department of education has failed to do on te the fafsa form. i have worked for years and years to try to improve it and now the american people are having to struggle with this absolute disaster that it has become in terms of implementation. i say it appears to me that the irs direct file effort may be a model of government technology implementation. that has been the experience of people in colorado. there were 100,000 americans who have used this to file

their returns. i hope many more states will have the chance to participate going forward. a lot of coloradans have interest in using this tool going forward. i just wonder, could you talk a little bit about how you were able to successfully deploy this, commissioner? what do you think made the direct file effort as successful as it was, that we could learn from and other technological implementations across the federal government? i apologize for that sounding like such a ridiculous question but it is such a rare occurrence that i thought it was important to give you a chance to talk about that. >> i am proud of what we are ea able to accomplish. i am proud of the success of the direct file pilot. i also knowledge that there is a lot more work to do. as i look across the irs, there are areas where we can learn from the success of the direct

file and our own technology operations and our own management success and i will learn from it as well. i think the first big decision we made was not to go too big and to make sure we focused on what i will call executional certainty. we could have tried to release direct file to way more states and to have way more taxpayers eligible to use it in this first year but what we decided to do was find that right first step where we can test the interest, the demand, the user experience, the cost, but not try to hit a home run at our first at-bat. we went out to 12 states and based on the way we scoped it, 19 million people are eligible. we could have scoped it a lot bigger. we also waited until march 8.

filing season started january 29. we could have gotten excited and said, let's release this to everyone first day of filing season to try to really drive a bigger impact but we wanted to take weeks working with a small number of volunteer taxpayers to see how their experience was. any time you do something for the first time, there are going to be mistakes. lots of testing. lots of prioritizing executional success versus the big splash. i think also, we worked across governments. this was done not by irs alone but we had a lot of help from people at gsa and a lot of help from u.s. digital services in particular who brought fragile technology, product expertise.

they worked side-by-side in a team room at irs headquarters. it was inspiring to visit that team room and to see different parts of the government working together so well. i ultimately -- this is a little juicy. it was agile technology that was the eye-opener. there was discipline around howy you move more quickly to deliver incremental l functionality, how you strip through bureaucracy and get decisions made more quickly, that you take calculated risks more regularly and the irs is no different. federal agencies tend to not be agile. that is why you hear about projects taking five, six, seven years. here, by sizing this in an increment, in increments that have impacts, we are able to have executional certainty and launch something we can all learn from. where direct file goes from here, we are not ready to announce that but once we know taxpayers had a positive

experience with it and we all learned a lot. i think -- >> i would say to my calling that i don't think the history of the finance committee we have ever heard anyone give an eloquent explanation of incremental technology. excuse me, ink rental functionality. i very much appreciate that. >> you have to start somewhere. >> you got the points on the board. >> thank you very much, chairman and thank you, commissioner, for being here. first of all, let me echo what senator bennett said. i meet with my taxpayer advocate in rhode island and she is seeing her workload expedited so quickly as the caseload that she carries to help constituents be able to move much more rapidly through the irs in the wake of the funding. you have a fan who can show real results from the work you have done to simplify and speed things up. the topic i want to raise with

you is one i raised before and that is the 501(c)(3) and 501(c)(4) enforcement. my view is itthat when the supreme court performed its citizens united decision, that released enormous amounts of money into the political system and made it, for the first and made it, for the first consequential thing to be able to hide who the donors were. once you have tens of millions of dollars donated, it is a whole different game. they went straight to work in the first aerie with the 501(c)(4). irs today fumble of the way it handled that. at the same time, the problem was real. when people started looking into the abuse of the 501(c)(4), there was a massive right-wing pushback using what i call the faux outrage machine. the next thing you know, your predecessor was being

threatened with impeachment, his assistant was being referred to the department of justice for prosecution and since then, billions of dollars have flowed through 501(c)(4). there are two areas where there seem to be a lot of ongoing violation and one is the planned cycling of money through 501(c)(4). you have four sitting around the table and the first one takes 50% of the money and sends it to the super pac and the second one takes 50% of the 50% and sends it to the super pac and the third takes 50% of the 25% and sends it to the super pac and by the time you're done with the fourth one, you have more than 90% of the money going straight into politics, contrary to the rule of 50%, which i think was a sloppy rule to begin with. taking it as a given, this is a really cheesy end around and i don't think any effort in enforcing it. now, the state-of-the-art in political influence is the 501(c)(3) and the 501(c)(4) that are virtually indistinguishable. the best i can tell, there was

no effort whatsoever to pierce the corporate veil or incorporate whether 501(c)(3) is legitimately staying in the lanes. uy i would really urge you to take a look at this. it is in the wild west out there. i know that you guys took a of a beating. i know that the obama administration did not stand up back then but at some point the sheriff has to put the boots off the table and on the ground and go out and clean up the town. >> i want to make sure we get the right answers for the effective following of the appropriate rules for 501(c)(3) and 501(c)(4). between fiscal year 2020 and 2023, the irs worked 100 unique cases under our political

campaign intervention program. is that enough? no. there is more work to be done. when i describe what the inflation reduction act funds enable us to do, it enables us to make investments to spot complexity and to address complexity. that often happens in multinational corporations, offshore tax havens and all of that. there is also complexity in the tax-exempt space as well. it the situation with tax-exempt is that you very clearly outlined is fraud, with risk and delicate decisions that need to be made. let's say there are 10 different pads for how you movei forward. eight of them you can step in a pothole and mess it up. you have to be really, really cautious in how we scale our

enforcement efforts so there is no set ever where there is any politics in irs operations that are doing things nonpartisan and we are tackling this issue in a way that is above any reproach. >> a your goal here is not to enforce the law but to avoid reproach, people who don't want you to enforce the law can try to keep you from enforcing the law. >> we want to make sure we are building trust with citizens. i am ready to roll up sleeves and work with you on how do we build off the cases we have launched, ramp up our enforcement -- i am ready to take criticism. the issue is just making sure that broadly, taxpayers believe that we are taking the right progress and doing things transparently and that they can

have confidence that there is oversight to make sure that there is no risk or no perception. i am absolutely committed to that. i am willing to work with you on that. >> my time is now up. thank you, chairman. >> okay. the next would be senator cassidy and then senator warner. >> thank you for coming in. >> the first time we met, certainly the first hearing, i think i pulled out clippings from the reagan administration talking about how the irs was modernizing the computer system and about how it never happens. i have been looking at a lot of stuff. you are not the only agency -- we never accomplish -- i grant there is some success with the irs. i have done a little

research. in 1994, there was the federal acquisitions streamlining act, a law that prohibits governments from starting though fueled projects to give the off-the-shelf solution is available. there is off-the-shelf solutions right now to capture fraud, to answer people during tax season. a.i. can do that. i have a statistics that only 29% of phone calls are answered in the 2023 tax season. there is off-the-shelf stuff that can do this. minor modifications but a few said it has to be done within six weeks or six months. boom. they would hit it. is the irs doing any of that? >> yes. it is mixed. where we see an opportunity to

use an off-the-shelf solution, we need to seize it. >> in all due respect, when you say when we see it, by what means are you viewing? >> we try to understand, for example where industries are using something similar. if we have an opportunity to use voice recognition so when someone asks and calls in, they can talk to a computer and say tell me about my refund. many more days until i get it, the computer understands them. they don't have to wait for the phone and it says the refund will be issued to you and eight days or whatever. that is something that we have an opportunity. when you have something that is very specifically wired to having to accommodate the complexity of the tax system like someone filing an amended return, right now, the way we process amended returns is

automated. >> have you gone to the industry and asked them if there is an off-the-shelf solution? i say this because operation warp speed was warp speed because we did a lot of off the stealth -- off-the-shelf stuff. when i read about a.i. and ukraine or israel, we are really good about software. who is making the call that this is so specific that you can't have the off-the-shelf solution. >> i am in agreement with you. i agree that off-the-shelf is the way to go and in general, government agencies tend to customize when they shouldn't. i have the same guiding principles, why modify it? you should modify your business

processes. the off-the-shelf approaches the better approach. we could be more aggressive in that space. what i would like to come back to if you are willing, with some inventory discussions around where we are, where we are not and maybe we can look at the gray area to see if we can move more to off-the-shelf. >> let me ask you this. if you said, okay, this is what we are going to talk about. we are going to meet ideally within three weeks and this is what we will talk about. give us a week. just called three or four different software companies. could you address this as a the shop? i think there are capabilities out there that you and i are not familiar with and that frankly the government agency may not be familiar with. >> i agree. if we can schedule a follow-up and then get a little bit of advanced notice and give us time to scout out. >> i appreciate this. >> this is going to make my day. >> let me just do one more

thing. the irs has decided to delay implementing a change to the form 1099 k, reporting threshold for transactional and third-party payment platforms such as venmo and paypal. it was enacted under the american rescue plan in 2021 and it moved the threshold from 20,000 to $200. the irs will keep the 20,000 and 200 transaction threshold for 2023 and phase it in in 2024. can you discuss -- by the way, senator brown, bipartisan, we put in the red tape reduction act that would raise the in threshold to 10k to protect small businesses. and you discuss the irs starting to delay the implementation and can you explain how the irs arrived at the $5000 threshold for tax

year 2024? >> yes. i can do both and i will do it quickly. first, we have an in law responsibility to implement all tax laws in a way that protects taxpayer rights. taxpayer bill of rights is written out in the law. as a result, there have been times in irs history that in order to protect taxpayer rights, we have had to ramp cu implementation of the law if it would either be overly burdensome to them or potentially overtax them beyond what they owed. this particular law created both risks. we felt in order to meet our statutory responsibility to implement the code consistent with the taxpayer bill of rights, this is one case -- we have done it before where we have a ramp implementation of the log. 5000 came from work with

stakeholders. we worked with the major companies, that third parties service platforms. they were concerned about their customers receiving a slew of 1099 and they would not know what to do with. a lot of confusion about how you would, for example, calculate a basis of some kind of good that you sold on one of these platforms. some of the questions came in. we ask them a lot of questions.d what is the right way to ramp this, protect the taxpayers from confusion, burden and being overtaxed? they said give us time and they helped identify $5000 as a threshold that would allow them to deal with a smaller number of transactions and customers but yet get a lot of receipts back to the u.s. government. >> we've got to move on. the next three will be warner, langford and johnson. >> thank you, mr. chairman.

if you are going to get to senator cassidy, this information about not re- creating the whole ball of wax on software programs, i would like to see it as well. 500% agree with you. it just seems we always have to customize on everything in government and usually in the products that are not as good as off-the-shelf. while there are enormous challenges, in this area, there is a great deal of upsides. whatever information you give to senator cassidy, you could give to me as well. it is great to see you and thank you -- i remember when you first got nominated for this . was this really the way you wanted to spend this part of your life? i am glad you are. i am glad you are getting results. i am a little surprised that we have gone through a number of questions and you haven't been asked what i thought would've been one of the first ones, even from my republican

colleagues who don't like all the money going. i think most of them would agree that that her enforcement would help grapple with the tax gap. the most recent estimate on the tax gap for 2021 put it at about $688 billion. we would not raise taxes if we could have that full payment. there have been some estimates that we could actually get a savings with the investment. 800 billion over 10 years. there has been some testimony that you and the treasury secretary indicated you are i looking at high net worth individuals, in terms of enforcement. i think there was some reference that there is upwards of $500,000 in additional revenue from each investigation. can you give us some sense, for those of us who pushed this kind of records investment in

the ira and the organization, what we look like in terms of making progress in closing thise tax gap and what kind of metrics on a regular basis could we see? >> thank you for the question. first, i would start by saying the first clap -- gap we have been able to close -- we make sure we hit the right number of people on the phone and we have gone from 30 minute waits to three minute waits. second, we have made a commitment to use inflation reduction act funds in enforcement exclusively on large, complex filers and we are just getting started. we announced initiatives for wealthy individuals who have not filed. about 125,000 of them. we have announced initiatives to collect delinquency's from millionaires and billionaires that owe back taxes. we have announced efforts to crack down on something called transfer pricing with multinational corporations

shielding profit income in the u.s. and move it to a different tax jurisdiction. we have announced efforts on cracking down on the largest most complex partnerships who are particularly sophisticated when shielding their income at times and using a.i. to spot that complexity. we believe that the efforts that we are undertaking under the inflation reduction act, could result in nearly $700 billion in return. >> that 700 billion is over 10? >> yeah. >> we were debating earlier, the president's 25 budget and concerns were raised about the $104 billion that we have asked for in the out year starting in 2026 and beyond. i described needing that money

to make sure we are sustaining what we are able to achieve this year and beyond as a tax system and the economy continues to grow in its complexity. that $104 billion we are asking for would also return hundred $41 billion over 10 years in additional revenue. >> beyond the 700 -- >> that would be included. >> that is why it is such an interesting take on the irs funding. there are two things that play. one is making sure we can help taxpayers who need it. taxpayers have questions. the tax system is complicated. we can't answer the call. having enough funding to be able to have the right staff values and the right customer service but also, it is absolutely essential to the government's bottom line that the irs is closing that tax gap and collecting the balance due. >> i know that my time is running out. one area that we have a lot of

concern with this improved ic customer service, families who have a loved one who died, how you deal with the deceased processing, quickly. some plans on how we can improve that? >> there are different areas when you look at topics where we hear from taxpayers that it is complicated and they're not getting as direct and clear service -- identity theft victims, we have done a fairly good job preventing identity theft, working with partners but on the backend, once you have been victimized -- we are too slow. we need to get quicker. you raised another question in terms of families dealing with deceased relatives and resolving -- >> i hope you can come back. our time is up but i hope you can come back with a plan on how you can improve that service. >> we will. thank you.

>> thank you, senator warner. >> thank you. good to see you again. thank you for the work you continue to do. it is a difficult job. obviously, this week, it all goes on. i appreciate you being here. senator cassidy was just asking about the been mow requirements from the inflation reduction act that there be additional reporting on people who use st been mow and that there be new filing requirements. you expressed that there is a flexibility on the at interpretation based on other statutes. this is part of the challenge right now, the flexibility. to try to determine what is something that can be counted on and how that is interpreted and where it goes. sitting at that exact same table just a few weeks ago was a business leader from the huntington corporation talking about how they were doing chemical manufacturing for eb batteries but the tax credit -- the clean vehicle credit, the mp

foreign entity of concern and restriction that was out of pa there was waived for china by treasury and by irs so that theo company that was an american company no longer was competitive because the chinese company was not competitive even though the statute itself a says that is not allowed. there was a waiver that was given to a chinese company that directly undercut the american company on that. ew regulations. ew a beastly previous administrations had an additional review. this administration took that out. my question is, why is it a bad thing for the irs to be able to obviously, previous administration had an additional review. this administration to that out. my question is, why is it a bad thing for the irs to be able to have a review of her regulations they are putting in when you r have expressed the flexibility you have to be able to do that. every other entity needs to have a review in order to have some

kind of review under the administrative procedures act? >> that's a great question. i started my career at the office of regulatory affairs and i am a big proponent of noticing and i am always telling my knee -- team if there is an opportunity to go out for public comment, whether through foreign channels like r the administrative procedures act or anyway, so that we can telegraph where we are going and going back to the 1090 9k, that is what we try to do in terms of public meetings and open forums and webinars to try to hear the concerns and reconcile them and making sure that we are accessible. i know that we continue to notice. for example, on the recent regulations on cryptocurrency, we got 40,000 es comments on it. we continue to have that

process. i will have to get back to you on. the nuances of how we continue to work with only be -- it is a different path, but it's not a no path. we continue to feel accountable to make sure that we are leveraging notice and comment as often as we can. >> what i don't want to have is when we don't want to go through a review, we don't have to, but when we do have to, we do. i don't want a situation like that, because it is unpredictable and we are back to the flexibility issues. this committee has talked about this often dealing with the pillar conversation out there. pillar two is expected to take away about $120 billion from american taxpayers. the finance committee in particular asked the treasury to say, are you going to go around this committee and cut out $120 billion? we are still getting this push and pull back and forth, so we

are interested in what is predictable and consistent. if i can move on to a couple of different things, one thing that you and i have talked about before is how i have worked on charitable giving him a which is important. it comes up in our conversation next year when we are dealing with tax policy issues. we need to get some insight from the irs on what is happening. it is our understanding that after we stopped incentivizing charitable giving through our tax code, we had a dramatic drop. that hurts our nonprofits and big safety net and we want to get more information from you on that. we will follow up on that in the days ahead. the job cuts act is coming up and we have a lot of debate right now on it. it is interesting to me on this that we have seen such conservative locations as harvard, princeton, university of chicago recently put out a study saying that based on some

of the business tax pieces, there was a 20% increase investment and an increase in taxes coming in. my question is that there is a conversation happening about trying to raise taxes again and based on this study that i am sure you have seen with others out there, are we continuing to see more investment in business than what we saw years ago? >> that is a question i need to get back to you on, because it is more in the domain of treasury and tax policy. i don't want to get out in front of them, but i will coordinate with my treasury colleagues and get back to you. >> we will keep going, because i know we have a schedule next appearance center, johnson and senator, but we will keep going. johnson, you are next.

i will be back. >> senator asked you to meet with the whistleblower and i don't think he asked for a commitment, so will you commit to the meeting with those two whistleblowers? >> what i commit to is relying on the inspector general to run the process to make sure that the rights of these whistleblowers are protected, so i will consult -- i'm not going to jump in front of and inspections general. >> your answer is no. there are some bizarre things going on that seem like a politically motivated unannounced home visit. we wrote you about that and you claim section 61 of three, which i understand. we have also seen a fake alias to enter someone's home and an attorney backing documents. have you investigated these situations and has anyone and

held accountable? have you invested in these? has anyone been held accountable for these bizarre acts? >> in any situation where the irs makes a mistake or acts inappropriately, we have to ak acknowledge it and we did in the cases that you are describing. we have to fix the issue, process, train, put in new controls, then as you mentioned , take appropriate personnel actions. i have instructed the team in all of these cases to do all of those things. >> appreciate that. you said that as the tax system continues to grow and you obviously mentioned how our economy is growing with more taxpayers, but you also mentioned complexity. you said that the tax system is complex. i have noticed that the solution was not to address complexity, but to throw more money at the problem. from my standpoint, i think we

could do so much to help solve so many problems if we have addressed the complexity and try to start simplifying taxes. that is my first question. is that something that the irs has taken a look at in terms of the project of, what would be in the best and most effective that we can direct towards the tax system? also, is it more complex on the individual side versus the business side? can you give me some sort of --? >> it is complex in terms of the business side. >> what is interesting about that is that business taxes, about 16% last year of total revenue. if that is all the complexity -- again, i don't have the numbers j as it relates to the individual, but we don't raise anywhere near the amount of revenue. that is the complex side.

>> we always advocate where we can for the ability to administer the tax code effectively. anytime we look at a set of laws and the reality of what's going on in the economy, we are always going to say, here is where we can administer more easily versus not. ultimately, it is up to the committee working in means and my leadership over at the treasury department to decide how to change laws. yes, it's not just complexity and tax laws, but that feeds different types of corporate and large partnership behavior. we are seeing more complicated arrangements with the movement of money across international jurisdictions. movement of subsidiaries. >> i'm talking about all the problems i simply find tax code. noneconomic behavior driven by

complex tax systems. again, i am interested in the off-the- shelf solutions and let the entire committee know that. i encourage the irs with your expertise in terms of what you are having to deal with in terms of complexity to report back to this committee. here is the low hanging fruit. this could help us out a lot if you can simple by this, but not impact revenue. i think we do so much in terms of closing the tax gap. the tax gap is complexity. people are avoiding taxes and not even reading them -- necessarily evading them. is that something you have done? is that something you can take a look at? >> it is a case-by-case basis, like earlier in discussion, the law associated with the , employer tension credit, the

fact that you can still file for an erc into 2025 when the period of eligibility was between 2020 and 2021, that creates b a lot of extra work f the irs and complexity that ns drives our costs and this is why we need funding. on a case-by-case -- on an inventory basis like you are describing, it's a great question.re >> if you can find the low hanging fruit that is nonpartisan and it is so obvious and we can fix this, then i would like to think that the committee and congress could fix it. thank you. >> thank you cvery much. i wan to thank you, gym member -- chair member for this hearing. thanks to the people that you work with for all of their fine work, as well. at the irs, modern i.t. systems are particle -- critical for taxpayers. in past years, i have heard

again and again from my constituents about delays with getting refunds and other taxpayer services. i.t. has contributed to these delays. irs's difficulty in processing paper tax returns has led to issues for taxpayers and an issue that the irs has taken steps to address. what are you doing going forward to modernize irs's i.t. systems, so families don't experience delays in getting refunds and other services? >> on this, i have some good news. the main system at the irs that is the engine for all individual returns is on the cusp of finally being turned on into a modern solution, which ha is coming after the filing season. we will have more on that. to be able to describe to you, the american people and constituents is how that will impact them with more real-time information and faster processing.

there is good news coming in our technology modernization efforts and in particular how it impacts individuals and families. >> that's terrific. thank you. it is something that we are about literally daily in our team. different topics. cyber criminals often quickly convert stolen funds into cryptocurrency making it nearly impossible for law enforcement to recover funds. this happened in new hampshire in 2021 when criminals stole mb $2.3 million and then converted it into cryptocurrency. following this cyber attack, i pressed predecessor on how the irs can combat this type of crime. he sent me a letter recommending stronger know your customer requirements for cryptocurrency exchanges. in your view, how could strengthening these requirements help recover stolen funds after a cyber attack? >> i agree that there is a chain of events that occur.

people along the chain of events need to know what's going on. outside of crypto, suspicious activity reports, financial institutions, brokers are critical for law enforcement to understand where the activities are. y that is not mature yet in the crypto space and with the brokerages. i completely agree that it's a place to focus. >> thank you. last question, i led a bipartisan push last year for the irs to address possible tax scams fueled by artificial intelligence is one concern that we have raised is that scammers can target seniors and small businesses with convincing ai generated emails that claim to be from the irs. what trends in ai generated tax scams has the irs seen this filing season? >> we have seen an increase across the board and our

private sector, partners and tax preparers are also reporting an increase a lot of irs impersonation and very sophisticated behavioral science to understand what will convince an elderly person to pull out their credit card and pay a fake text at. we have to solve this through a combination of things and awareness campaigns can help. i helped participate in an international tax summit as my fellow commissioners around the world, i asked the same question. one of the big fixes that has helped is putting into individuals online tax accounts the basic flag of whether the irs or tax authority is trying to reach you. some of our peer nations have really disrupted ai impersonation by encouraging their citizenry to come to your

tax account and see whether it is us that are really trying to reach you. we have plans for next filing season to include a flag in people's online accounts. >> that is very helpful. in response to our letter, i think this is along the same lines. the irs is adding online tools that would allow taxpayers to verify, so this is what you are really talking about. >> they have to sign up for their online accounts and not panic when someone calls claiming to be the irs. >> where is the irs in getting these online tools up and running to protect taxpayers against the scams? >> this is a big priority for next filing season. it is a combination of flagging , but a one-stop shop for taxpayers with notices that you may have gotten. many taxpayers will have none. this is what is interesting. you get a text, email or phone call and your neighbors got theb same one. the vast majority of

taxpayers will not hear from us. it is really about educating and we are working to make sure that next filing season, we have tools in place. we are doubling down on awareness campaigns. >> commissioner danny werfel, a would you introduce the lady that has been sitting behind you and has been working for the irs for 53 years? >> diane grant. >> thank you for your decades of service. mr. danny werfel , i don't expect you to have an answer, but if you do, it would surprise me. i wouldn't expect it. can you give me to date the system implementation? >> i wouldn't do that, because it is still running as i'm sitting here. it would be premature, but

within days read by the end of april. >> i don't want just the irs internal cost , but fully. we really understand the nature of the investment. quick question on that, i think you are implementing an api that automatically loads agi and something that we have te asked for for years. what is the posture of the agency in providing that api to authenticate third parties? >> i will look into that. we were talking to taxpayers who are using the direct file solution and there was confusion on how to get to your agi amount, which is a key moment for the tax filing process. absolutely willing to talk. we worked very closely with them. >> i agree.

if a tool has got to be available for refiling, then we can deal with whatever privacy or security concerns that there may be, but it doesn't seem fair or appropriate to have that additional step. >> wewill look into it. >> this thing you are working on , at some point you just decide it's not worth it, because the private sector options become such a distraction and that is my personal bias. i was trying to figure out a way that i can ask this question that would not get you in hot water, but i admire your background and support your confirmation. so far, i'm happy with what i have seen. i can't imagine a project of this scale. if you are trying to fix all of the things that need to be addressed or modernized and you would have been pounding the

table saying that this has to be one of my top five initiatives in my tenure. can you at least stipulate while this may be nice, it is not one of the most important things that the irs would be dealing with right now? >> that's a difficult question to answer, because there is so much that goes into it. as we try to hear from taxpayers , it's not an exact science in terms of what you are hearing from different constituents. there are loud voices who want the solution. >> again, i'm not going to get you in hot water, but it justifies logic. i have implemented a lot of financial system platforms. i would never go to a client and say, we should build it from ground up. we should do this differently. what is disturbing to me or disappointing to me is that i have not seen a fully executed strategy on exhausting all of the possibilities for free filing, for pay filing, filing

for free on some of the for pay platforms. it seems to me that we could have found another way to fix a problem and instead of using a flyswatter to address some of the problems that some of the irs filers were having, we decided to agree on a device to do the same thing. >> i will share one benefit from all of this. it is that we saw a substantial increase in the number of people who file for free h electronically across all platforms this year. 2 million more people filed electronically for free. there was so much attention on it. >> fraction on the money of this platform we are putting in place. we have to care, feed and modernize 10 years from now. it just seems like there could have been a better way to achieve the goal if it was to provide cost-effective or no-

cost filing options. i know you are doing your job. i hear people and i'm just going to make a comment and not even ask you, but i think your goal right now is that if you are a successful irs commissioner, you will succeed in not having the tax gap grow. you are not going to dramatically reduce the gap, because we could get into a variety of reasons as to why it exists. is it fair to say that those of us up here who may see it have $500 billion or whatever the latest number is. >> 616. >> is it fair to say that it is a good pay for probably not being realistic about your ability to just zero out that tax gap? >> it is a difficult enterprise to undertake. >> i will go ahead and roll,

because i want to be respectful. i will get back to you on progress with the tax gap. thank you. >> it is an important issue. the next two will be warren and blackburn. i have to tell colleagues, we have to keep everyone to five minutes or we will never get done. >> thank you, mr. chairman. it wasn't long ago that the punch of the pandemic and nearly 20 years of underfunding brought the irs to its knees. the phones that were not answered and stacks of yo unprocessed returns sitting in boxes, but democrats secured billions of dollars in long- term funding for the irs, see you could do your jobs and the turnaround has been truly remarkable. yesterday, it was the tax filing deadline and i want to congratulate you, commissioner werfel and all of the hard- working folks for a smooth tax filing system and season. b

the irs launched a pilot program. the first of its kind for americans in 12 states to be able to file their taxes online directly with the irs. it is easy and free. that means that instead of the $150 on average and nine hours that taxpayers typically spend for the privilege of filing their taxes, they can do it for free with the irs. werfel, i am sure that your team is still going through the data for the filing season, but what is the feedback that you have seen so far on direct file? >> it has been tremendously positive. the results have been super encouraging for a couple of different reasons. the product worked. second, our partnership with the states like massachusetts, the product that we handed it off to, because once you do your federal taxes, if you have

a state income tax, you have to do the handshake, like we did with the state of massachusetts and new york. that worked, as well. taxpayers told us in almost unanimity that it was easy to use, fast, secure and of course free, which was the bottom line that people want to emphasize. very encouraging results. you know this better than anyone. massachusetts is still filing. the pilot isn't done. there are a lot of people who want to know the cost or final numbers. days away. i do want to start with the fact that direct file is getting five-star reviews. >> it is. >> taxpayers are leaving for the phrase that i heard is, so darn easy. they filed on their lunch n break. best of all, don't have to worry about fees, ads or up sales. the way that the giant tax prep

companies like turbotax make their profit. of course, these tax prep companies are kicking thomas --, screaming and somehow claim that it is illegal for the irs to provide a 21st-century online tax form. this argument is laughable. the irs, like every other government agency is supposed to modernize and upgrade services over time. let's dig in more. commissioner werfel, decades ago, the irs mailed out tax filing forms and the post office stocked the paper forms. that was it. in 1986, the irs piloted electronic filing. back then, plugging in phones into modems, transferring data by tapes and it was cutting-edge staff in 1986. to your knowledge, did anyone

suggest that the irs did not have legal authority to do that? >> no. >> decades ago, a tax refund was a paper check. in 1987, the irs expanded the pilot and added electronic direct deposit to put refunds directly into people's bank accounts. did anyone to your knowledge say that the irs could not do that because direct deposit wasn't specifically referenced in the statute? l >> no. >> in 2008, the irs created pdf forms that taxpayers online could fill out and fire electronically. did anyone suggest that that was on the reach of the irs? >> no. >> there was a time when the only way to ask the irs's question was to mail a letter or show up in person. at some point, the irs started using the phone, then email and we still -- be still my beating heart, the irs uses

text. the irs is doing what all of government should be doing, modernizing and making it work better for ordinary people. there is a big return on the investment here. the economic security product -- project studied the full cost of benefits of the program and determined that nationwide direct file will save taxpayers $23 billion a year, including tax prep for use that they won't have to pay and tax refunds that people currently miss out on. in i did the math. that is about $100 to individual taxpayers for every one dollar invested into file. thank you for the program. >> as much as i agree, we have to move on. senator blackburn? >> thank you. always good to see you.

i want to talk about telework policies. you and i have discussed this before. i understand that you have a policy of requiring people to work in office 50% of the time. what percentage of your employees are teleworking? >> we are at the governmentwide mandate of 50%. >> half of your employees are working 50% of the time? >> the way to look at it is that at any given moment, 50% of the irs is working in a remote location and 50% of the irs is working on site if you are randomly picked out a time. >> have you all evaluated whether teleworking enables employees to properly work without proper supervision? >> that is a constant evaluation of ours in terms of, are we hitting productivity goals? are we answering the phones? are we processing? are we getting refunds out? all of the key fundamental

things that we have to do. >> you are about two years behind on refunds? >> no, we are up-to-date. we had one of the best filing seasons. >> i was asking these questions about telework, because of the tax court cases regarding irs revenue agent david combs and manager david combs. they were backdating penalty approval forms during audits of partnerships in 2022. mr. chairman, i have got a tax notes article to submit for the record. i think that this fraudulent activity taking place with the agency is important to be addressed and it thickens important that you are doing something to ensure irs employees are fired and removed. those are found to be in such

violation of policy and are properly reprimanded by the respective associations. >> with respect to the case that you raised, we need to do better if we are going to build trust with the american people.f we are acknowledging that we should have prompted our representations in this case and i have instructed the irs leadership team to take all appropriate actions to make sure it never happens again with training controls and the extent of the appropriate personnel actions. >> it's important to note that this happened during a teleworking time. without proper supervision, i want to talk to you -- we have discussed also this issue of total positive income and the 400,000 of what will happen with those audits.rm now, in the american families plan tax compliance agenda, i

have got that for the record. treasury pledged that audits would an increase for taxpayers with incomes below 400,000 in actual income relative to recent levels. one can assume that actual and taxable would be the same thing. the irs has opted to use total positive income.. that is the sum according to what you all have said. it is the sum of all available income before deductions. congress has not established a statutory definition for total positive income. let's have you clarify, what does it account for?

doesn't allow charitable deductions if you are gifted money? is it included? is it an insurance settlement or inheritance? is it included in the tbi? since there is that definition and actual and taxable, where are we? >> as a general rule, you can assume that if it's in, it is rude -- included in total positive income. what we are trying to do is give a bright line. an easy way to understand how to distinguish, we believe that our commitment of only in creasing audit scrutiny above 400,000 is a high enough amount were middle low income people around the country can breathe easier. that is knowing that they are wh likely never --.

>> my time has run out, but when you say general rule and assume, you know what happens when people end up going to court. we will have to be more explicit. i will talk more about it later. >> next in order of appearance would be senator young. >> welcome to the committee and thank you for being here today. when you came before the committee for your nomination hearing, you noted in questions for the record that if confirmed , it will be a priority of mine to ensure that irs employees are where they need to be to co carry out irs's mission effectively. over a year later, i continue to hear that my constituents are having trouble obtaining assistance from the internal revenue service. i'm assuming all of my colleagues offices still regularly receive complaints from hoosiers that the local

irs offices are empty . representatives are not consistently answering phones and when someone does pick up at the irs, there is often no resolution to the issue at hand. i know you are here today touting customer service improvements and advocating for additional funds for the irs . one of the reasons you were put in this position, i think the general perception was and in looking at the background, i know that it is your objective and your team's objective to make sure you achieve results. i am curious what results you are seeing that indicates success regarding taxpayer services. frankly, the irs has received billions of dollars in supplemental funding, yet two years later, we are still seeing

poor customer results manifested in the feedback i get from taxpayers. it is my responsibility to press on that issue and i suspect that you are going to be some data on phone answering rates. unfortunately, those aren't instructive to us, because those answered phone calls are not actually leading to resolutions by my estimation , which is why i continue here for my constituents with all sorts of lamentations and upset pertaining to the service from the irs. why is the irs focused on hiring employees to answer the phones instead of focusing on hiring where taxpayer problems remain the most

significant? such as, the processing returns, correspondence and taxpayer disputes and issues. >> we have more work to do. we want every taxpayer to feel like they need the irs, we are there for them. we answer the call and the person on the other end of the line and the walk in center or the tool on irs.gov, we have not achieved that goal. there is no victory lap. 99 out of 100 voices from taxpayers our concerns. i know that taxpayers are being served well. i know that things are trending better. i'm not going to cite all

statistics, but we are answering calls and getting sn people into those centers in the state. we are serving more people in the hoosier state than we ever have served before, but that doesn't mean we are done. we have more work to do and are prioritizing some areas raised aware we don't answer the calls affect ugly on some of these topics with victims of identity theft. some of your colleagues on both sides have raised really ks pressing questions where there are still gaps in the ability of the irs to serve . i want to build on the momentum. things are getting better and improving on all dimensions of customer service, but the race is not finished. >> we have a five minute question and answer format on this committee with roughly 15 seconds left and not enough to

continue with this line of questioning. i have put on the record my concerns and i have heard from you that we should remain hopeful, but we continue to vigorously oversee the irs and i will certainly do the letter on behalf of my constituents. thank you. >> your point about oversight, that is what our job is about. >> it has been a long morning. i just have two questions. one involves the inflation reduction act tax credits and i want to thank you for making the low income communities bonus credit program a success in its first year. it is set to deliver nearly 1.8 gigawatts of clean energy in low income communities across the u.s. and more residential solar was installed in 2023 than ever before. here is my concern. after reviewing the 2024 program

, the current guidance reduces the amount of capacity for category one residential solar projects. this reduction will negatively impact states like nevada that have an active residential solar market, but no regulatory framework to support community solar, which is where the credit capacity was increased. residential solar deployed seven times more capacity than community solar last year, so my question is, can you explain that or address concerns that i have with respect of that change? >> i need to learn more, senator. why don't i commit to getting back to your team as early as tomorrow and schedule a follow- up meeting where we can dig into the issue and get answers to your questions? >> i appreciate that and i look forward to that dialogue. the only other question i have for you is on the earned income tax credit. my colleagues are concerned that one in five taxpayers

eligible do not claim the credit. what do we need to be doing? what can irs do to reach these families? >> it is important. for the most recent data, there was roughly 7 million americans eligible that never claimed it. there are a series of steps that we need to take to make sure that people are getting the credits they are entitled to. vulnerable populations in particular. they are individuals who don't have memethe means or are intimidated by the irs in some way , shape or form. we need to break down those barriers and get them the credits they are entitled to. we need to do more outreach in communities and work with local community leaders. we need to set up spaces for people to come, learn more about the credit and understand that it is a friendly environment and we are there to help them get the credits they are entitled to.

there are things we can do to potentially improve the 1040 form and other things that we can do to make it easier. we are analyzing a variety of different steps across outreach to the forms itself and anything that we can do behind the scenes to detect out front where someone is eligible and they didn't claim and get out in front of that. we are going to be releasing our updated annual plan in the l coming weeks. we have dedicated a new priority section in what we are calling credit uptake and it addresses a lot of questions that i look forward to sharing with you and talking more about it. >> thank you, commissioner. >> my colleague senator will be next. >> first of all, i want to thank you for taking on this challenge. as we have talked previously, it is an extremely difficult challenge and we appreciate the commitment you have made the public service. i

want to talk about an area where we have seen a change in the way that athletes are handled and whether the tax code is really keeping up with those changes. we introduced legislation and many of the nonprofit organizations associated with college are participating and our concern is whether it was consistent with their nonprofits tax exempt status. you issued general legal advice memorandum in june 2023. can you update us as to the enforcement of the tax exempt status for those organizations that may be going over the line? >> we did issue that memorandum

and we made it clear in that memorandum that organizations that promote and develop likeness opportunities for student athletes are often engaging in what would be a nonexempt purpose and if that's the fundamental thing that you are doing, then it is very likely that you are operating for nonexempt purposes. we have started finding organizations and revoking tax exempt status or not granting tax-exempt status based on this update. this is a new area and there is more work to be done where the early stages of working across stakeholders to make sure that they understand what the irs position is on this. i would say that we are at the early stages of implementation, but we have taken some steps with respect to certain organizationss and enforced the

generic legal advice that we issued in may 2023. >> we saw some uses by certain organizations that were not rewarding athletes, but trying to enhance the ability to recuse -- recruit rather than giving benefit to a person because of the name or likeness. >> we don't have any opinion, good or bad, on and il. fo do it, but lay by the roles. >> that is our point. we want people to be awarded, up but we don't want to see it abused. we appreciate that you keep us informed as to how your enforcements are going in that area with the additional help from us. i want to follow up on points in regards to low income families. this is a program that has been

helping low income taxpayers get the help that they need and i know that your direct file is a pilot program and we expect that it will help. can you tell me your strategies to try to help lower income taxpayers who struggle with trying to comply and get the benefits of our tax code? >> it is multifaceted and recently i was at a clinic in baltimore and i am seeing good works going on there to provide free tax services to distressed or vulnerable populations. it is inspiring work and we need to do more. we should be investing and growing these volunteer programs working in local communities and with local universities to provide free services. these are environments where we can really connect people to their tax credit. it is about awareness campaigns and working with local partners

. it is about setting up environments, like a vita clinic where people feel that they can come in and understand benefits provided and there are also things we can do behind the scenes at one. i mentioned how we are looking at updates to the 1040 potentially and other changes to the forms. what can we do to make it clearer and easier for taxpayers to apply for tax credit because if 7 million americans are eligible and are not applying, then something is not being done correctly. >> preparers that are abusing lower income families. >> protecting them from scams. exactly. thank you. >> thank you. senator from wyoming? >> i want to talk with you about this direct file program and i know you have talked to

others about it today. there have been a lot of controversies surrounding the irs starting up the direct filing portal that could replace successful private- sector options currently available to taxpayers around the country. unlike the current free file process, which partners with the private sector, this would a be solely handled by the irs and make the irs a tax collector and tax preparer. the so-called inflation reduction act provides $15 million for the irs to study the feasibility of the direct file system, but did not provide statutory authority to create and operate a new multimillion dollar direct file program.us to me, in the classic big file fashion, the irs spent 130 million on a direct file program and only 55,000 people used to the program, so the irs spent $2000 per taxpayer and

when you compare that to the file sector and serving roughly 30 million taxpayers and costs taxpayers and government nothing. my oh my only state treasurer they called this in search of a problem and the treasury inspector general for tax administration has also raised concerns. last week, government accountability office released a report listing problems with the new irs program . do you think the irs could do a better job than the private sector at helping taxpayers? io >> what we are trying to do is provide an option. it's not supposed to be better or worse, but give them options. i also would offer that the at pilot is not done. there have been no cost estimates. you referenced a cost estimate that i'm unfamiliar with and i don't think it will end up being an accurate cost

estimate. there are more taxpayers that have filed direct file in the past few days, so the numbers are very different than you have in front of you. i will say this. we have not made a decision on the future of the program. after the pilot is done and we saw massachusetts filing through april 17th and they are one of our pilot states, we will report publicly on the results and i can provide a final cost number, final number of taxpayers and give opportunities like your state treasurer to react to data and provide us feedback. we look forward to that. >> also, a big private-sector guy and the question is, does the sector have the same conflict of interest that the irs has? the tax enforcer and now the tax preparer. >> my answer to that is twofold. i don't consider it preparer, but taxpayer inputs inputs

information and it is an option. feels like this is too much irs for them and they can use any other option available for them, including using the free solutions offered by the software company. they are very good products. >> what safeguards have you put in place to protect taxpayers from conflicts of interest, as well as in traditional? >> it is the same as mentioned. first of all, it is your option. we try to be transparent as we can with what the parameters are and what they are not. we make it very clear that there are other ways to file taxes and you don't have to file with direct file. we have allowed taxpayers to make the final. they have reviewed the form and make final decisions.

their data goes into the same pool of data as any other tax file coming in. it has equal protection in terms of data security. there is no real change in your status as a taxpayer once you hit submit versus hitting submit on any other solution. >> last year, i voiced my concerns about the funding priorities and the inflation reduction act allowed $80 billion to be into our revenue service. 45 billion went to enforcement compared to 3 billion taxpayer services. we talked about that in my office. the irs asked for another 104 billion in mandatory spending p of that and 59 billion for enforcement. this would be on top of almost 5 1/2 billion dollars provided annually through corporations. our small business owners and taxpayers going to be protect it from some burdens of onslaught of audits if you spend more than $100 billion on auditors and enforcement agents?

>> as long as i am commissioner. >> not from anybody on my side of the aisle. thank you. >> great to be with you and congratulations on a successful filing season. thank you for being here today. i am pleased that the irs continues to use the money appropriated in the inflation reduction act. call wait times are down three minutes prior to more file options available than ever before and i am pleased that you announced an increase of audits and complex partnerships with more than 10 billion assets and pursue the 25,000 millionaires who neglected to file their taxes it's 2017, which is a much bigger number when you lower that below $1 million. here is my first question. can you explain what the irs is doing to ensure that million

dollar companies and millionaires or higher pay what they owe, just like middle- class americans have to? >> i appreciate the question. i want to close out my response . my marching orders is to make sure that the inflation reduction act funds are exclusively used on enforcement of high wealth complex organizations, large partnerships and corporations, which is where our focus is. if you are a middle or low income, there is no new wave of audits coming. the audit rate you had the day before the inflation reduction act, which was historically low, is the same rate you had the day after and the same that you will have today. it is the same into the future. no new wave of audits. y we have a lot of work to do to deal with the complexity that exists in the u.s. economy today and how large corporations, complex partnerships and very wealthy individuals are

shielding income. many aren't and many are playing by the rules, but i would like to say that our focus on high wealth and large businesses benefit high wealth. if you are the cfo of a major he corporation and playing by the rules, then you want the other company that you might be competing with to also play by the rules. you want the irs to know which keys to select. by having the right funding, we can be precise. those playing by the rules will never have to hear from us if we are smarter, technical and competent in this complexity. also have the comfort of knowing that we are not selecting them for audit, but those in the industry. that will create fair competition. this is really about an irs that can do its job and enforce the code fairly and equitably. if we don't have the resources to spot and deal with the

complexity we are seeing, then the system starts to degrade. >> thank you very much. commissioner, you might be aware that in february of 2023, a norfolk southern train derailed in east palestine ohio. close to the pennsylvania border feet away from pennsylvania, the township in pennsylvania to avoid toxic exposure from the crash, the burning of toxic materials, thousands of people in ohio and hundreds in pennsylvania had to flee their homes. norfolk southern provided reimbursement for the families hardship. senator brown and i have been working to make sure that the victims are not taxed on these a reimbursements that they got from norfolk southern. i hope we can deliver on this tax assistance to the victims. passing the partisan tax bill, but if not and if that doesn't happen, i hope you and

secretary use your authority to declare that this was a catastrophic disaster and related payments are exempt from tax. can you assure us that you will do everything in your power to deliver tax relief to derailment victims? >> absolutely. this is one of the spots where we talked a lot today about the irs authorities. i mentioned on many occasions that one of my fundamental responsibilities as commissioner is to implement the tax code in the way that protects the bill of rights and reviewing how it is actually section 7803 83, which requires me to implement the tax laws consistent and the text bill of rights. i think that is one of the most important provisions that i have as commissioner. this is where you basically look for opportunities to protect taxpayers and you have these taxpayer bill of rights

with the balancing against what might be a part of the tax codei that has this can't does my consequence of not really understanding the situation. i think it will be enormously helpful. in the meantime, we are rolling up our sleeves to find a solution for residents of east palestine. >> thanks very much. >> senator menendez? >> contrary to the standard, payers are not obligated to hold a license. while they offer exceptional and professional services and regrettably there are some who take advantage of hard-working taxpayers.ed these ghost preparers or other preparers often promise hefty returns claiming credit for taxpayers that they are ineligible for and charge fees based on the inflated refund amounts. the preparer will call and

providing the irs prepared tax a i.d. number as mandated by law leaving the taxpayer exposed and potentially liable for any inaccuracies. what have you done or what can you do to crack down on fraudulent tax preparers and what additional resources and authority if any does the irs need to eliminate this practice? >> within our legal authorities, we are trying to lean income into more awareness campaigns, work with taxpayers on the risks of ghost preparers. that only gets you so far. it doesn't mean that we should be leaning in to do more of these awareness campaigns. we have put in the budget, a variety of different provisions that would help us with cracking down on ghost preparers and other preparers.

new tax penalties, which would be created and allow us to determine more comprehensively whether tax preparers are suitable or not. there are certain restrictions that we have at the irs in wy terms of essentially regulating this space. this is a spot where i think regulations would be helpful, because vulnerable populations in distressed communities need help. they don't have the means to hire an accountant or lawyer. i >> i would very much like to hear from you -- not right now, but and your staff. th what type of authorities or regulations would you like to see to be able to be more successful? i would imagine that if a law says that you are a tax prepare , then making that type of crime

is a real incentive not to do that. i would like to hear your --. >> appreciate the question. >> department of treasury uncovered that black taxpayers face over three times the likelihood of being audited by the irs. the absence of race or ethnicity data collected by the irs obscures the roots of this inequality. the potential discrimination embedded within the algorithms. after confirmation here and we had a little bit of a discussion about this. the research highlights that this disproportionate audit rates targets individuals claimed on the. within the framework of the inflation reduction act. the irs has pledged to engage in researching and comprehending any systemic bias and the focus of the initiative is the continued assessment of algorithms for selecting audits

related to eit see, for example. what are the findings of your research thus far. to not conduct research into audit bias in latino taxpayers. we commit to evaluating latino taxpayers as well. >> let me start by saying, as it sat here on the very 15, 2023 and my confirmation hearing with this report came out, it was alarming and concerning and i wanted to get in and roll up my sleeves. first thing i did when i got to the irs is respond to mr. chairman's request for an update . i provided an update. i acknowledged the validity of the findings. acknowledged that there were racial disparities in how we selected audits for certain credits including itc and committed to do something se about it. we medically reduce the number

of itc audits and we made changes to the selection algorithm. we made changes to stakeholders. we work with others to make sure that we are setting up the right infrastructure to evaluate potential racial disparity so this does not happen again. i committed to the chairman that i would be prepared by the fall of 2024 to start unpacking the results of these and i think we will still make that deadline. >> i look forward to you sharing that with us. i hope you will look at latinos as a part of that. fairness is an essential part of your mission. thank you. >> is the commissioner you have been in that seat for almost 2.5 hours. i am going to liberate you here very briefly, in just a couple

of minutes. in particular, we have dealt with an array of substantive and important issues. i think for example we could have a debate further about direct filing, it has been back and forth and part of the exercise. for history it is just not accurate. that seat over there set at one time dan cokes of indiana and he joined me with the tax reform bill that included a version of direct dial. that was history and i know sometimes history feels like the last minute there are bipartisan fruits for direct file and i appreciate how you described this similar to th building a startup because that is appropriate. also, i want you to know, we are going to pull out all the stops to get this tax bill, bipartisan, 357 votes in the house representatives.

you cannot get 357 votes to order a piece of apple pie. this is an extraordinary accomplishment. the chairman deserves an enormous amount of credit amount bipartisan work went on for months and months. the provision that we talked about today dealing with the fraudsters. this is now a bill that is offered to give you a tool to go after fraudsters and you made it clear that you are annoyed going to able to do the job without the enforcement capability. i appreciate that. i'm going to close with this. i have had about 1060 townhall meetings. the way you come to the finance committee seems to be almost a townhall meeting. you get a lot of russians from senators. that's what we get an election certificate for either answer them or use have to get back to you because you do not know xyz. this is not just an isolated event that you have been

available for roundtable on the senators have been asked to come to meetings privately, discussions in the office, come talk for 40 minutes or something like that you have been open and accountable, that is what public services about. i appreciate it and i want colleagues to know that the questions are due by 5:00 next tuesday. with that, commissioner we will excuse you. icap.org] [captions copyright national cable satellite corp. 2024]

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thursday fdic chair martin greenberg and vice chair michael barr and acting controller of currency testify about financial oversight, a recent independent investigation found continued sexual harassment and discrimination at the fdic. watch live before the senate committee beginning at 10:00 a.m. eastern on c-span three, or online at cspan.org. they wrecked their countries and they want to come here and collect our welfare instead. >> most people come here to make a better life, if not for them, their kids. my italian grandparents never spoke english, i never had a conversation with them. >> this friday author ann coulter and columnist debate over the question should the u.s. shut its borders the

debate is moderated by journalist barry white. watch friday at 9:00 p.m. eastern on c-span and online at cspan.org. >> will you solemnly swear that the testimony you are about to give will be the truth, the whole truth and nothing but the truth so help you got? >> saturday watch american history tv congress investigates , as we explore major investigations in our country's history from the u.s. house and senate each week writers and historians tell the stories. we will also see footage from the. and talk about the legacy. this week we look at the investigation following the 19 73 seeds at -- 1993 compound near waco texas. watch congress investigates saturdays at two p.m. eastern on c-span2.

>> c-span is your unfiltered view of government . we are funded by these television country companies and more. >> charter is partly recognized as one of the best internet providers. we are just getting started. building 100,000 miles of new infrastructure to reach those who need it most. >> charter communications supports c-span as a public service, along with these other television providers giving you a front row seat. >> next we will hear testimony on the impact of forced arbitration clauses on workers and their inability to seek legal recourse. witnesses include former fox news anchor who talk about her sexual harassment fight with a network. and a nurse talking about age discrimination in the workplac