club for journalists committed to our profession's future through our programming and by fostering a free press worldwide. for more information about the press club, please visit our website at www.press.org. to donate to our programs, please visit www.press.org/library. on behalf of our members worldwide, i'd like to welcome our speaker and attendees at today's event which includes guests of our speaker as well as working journalists. i'd also like to welcome our c-span and public radio audiences. after the speech concludes i will ask as many audience questions as time permits. i'd now like to introduce our head table guests. ...

[applause] >> our guest at the national press club today is now in the second year of the five-year term of the international revenue service. the 47th irs commissioner is responsible for collecting $2 hadn't 4 million in tax revenue. a daunting task anywhere. with more than 1,000 employees and budget of $1 trillion, he has significant federal reserves as he and you prepare for the

april 15th deadline, 10 days away. beyond balancing tax collection, he faces issues such as the plane crash into the tax building last february warly it became law last month. as representatives in the government, as time when the government isn't so popular, they are on the front line and sometimes public outrage. commissioner shulman came to the irs from the financial industrial regulation authority in the united states. he served at the same role of the national association of the security dealers before it's consolidation with the new york stock exchange regulation which results in the formation of finra. he holds the bachelor degree from the john f. kennedy school,

and it's been told his children are at the easter egg roll this morning. please welcome douglas shulman this morning. >> thank you. [applause] >> thank you. for that nice and gracious introduction. it is a pleasure to be here. before i start, i want to thank one person and one group of people. the one person that i want to thank is my wife, susan anderson. being the irs commissioner, i consider one the best jobs in the world. i'm not sure being the wife of the irs commissioner is. so very appreciative of everything the family does. susan is here with me today. i also want to welcome a number of the senior executives from the irs are here, my colleagues who make the tax system work every day. i would just say i've done a number of stints in both the private and public sector, and

right now, i work with as talented of group of executives as you will find in any business and any government, nonprofit, anywhere in the world. my hats off to the colleagues that are here as well. so it's good to be here in the spring to address the national press club. it's good to see cherry blossoms, those of you who live in d.c., it's good not to see snow this time of the year. one the things when you walk around, probably on your way over here, you notice lots of tourist going to museums, the mall, some people were going to easter egg roll. you also see amongst those tourist, police officers attending to the safety of everyone in washington, park rangers showing people where they should go on the mall, landscapers keeping the city beautiful, and you see a number of school teachers taking

classes around educating their students, teaching them about the capitol. one the things all of those people you see amongst the tourist have in common is that they are all public servants, who serve their fellow citizens, their neighbors, their family, their friends every day. there's another group of public servants that you won't see milling around the streets of washington. and those are the thousands of irs employees who right now during this time of year are answering taxpayers questions over the phone, processing tax returns, issuing $300 billion in refunds out to the american people and helping taxpayers during this struggling and tough economic times. and that's what i want to talk about today. is public servants and public service. and how we at the irs are

advancing and translating our public service commitment into real services that benefit the nation and taxpayers every day. winston churchill once said, the farther backwards you can look, the farther forward you are likely to see. so what i want to do is first take us through a quick tour of what the word service in internal revenue service and the history of the internal revenue service, and particularly all of our service offerings. around the turn of the 20th century, we were actually not called the internal revenue service. we were called the bureau of internal revenue. and we bore very little resemblance to what we do today. we were the mix of the bureau of alcohol, tobacco, and time --

firearms and the food and struck administration. we issues stamp taxes on liquor and if you look in the history books, even opium before it was outlawed. there was no individual tax, only the corporate tax. we were focused on doing things like breaking up illegal stills, which was dangerous work in those days. but the concept of service was not a big part of the bureau back then. the closest thing to service was in the 1890s, congress charged the bureau of internal revenue with analyzing samples such as milk to be submitted for inspection. we did public safety. we had people with microscopes, we had chemist on staff, and so service in that context meant we were protecting the public's

food and making sure it wasn't adulterated. even with this quirkily portfolio, stamp taxes, public safety, food safety, one the bureau's early leaders was about the future unique role that the irs would play in the growing nation and the increasingly complex economy. in 1901, one of my predecessors who had a big long beard and different outfit than i have was john w.yerkies. the bureau is quote a business touching closely, the interest of thousands of our citizens and coming into nearless of contact with great and small commercial and financial transactions of the nation. so even back then, the commissioner said, this is going to be an agency that touches lots of parts of the economy and lotting of people. although he didn't get to see

his full vision implemented, over the next 40 years, the irs role changed dramatically during two world wars and some momentous pieces of tax legislation. the most famous, which most people know about, was the 16th amendment to the constitution. which gave congress the power to levy and collect taxes. but it was actually the revenue act of 1942 that quadrupled the number of americans that were subject to tax. from 20 million to 80 million americans in just one piece of legislation. probably the most far-reaching tax act when it came to the irs or the bureau back then and legislation was the current tax payment act. that was the beginning of information reporting. that's where it got required that employers when you make

wages withhold your taxes and send them directly to the internal revenue service which last today. along with these new tax laws, came millions of new taxpayers and in the first seeds of tax complexity for born. also, though, the first seeds of taxpayer service was born. a major breakthrough around service was in 1952, when there was a reorganization of the bureau. and the bureau of internal revenue became a thing of the past, and quietly slipped into the pages of history and the internal revenue service was born. i don't want to make too much of a name. but the only name didn't have the word service, and the new name did. if you look at the legislative history, there was a newfound emphasis on service.

we had now tens of millions of people we were interacting with and the expectations were high. in the 1952 annual report which was the first annual report of the internal revenue service, there's a quote in there that said the easier it is for taxpayers to file, the easier becomes the job of the tax office. the reorganization will provide one-stop service for taxpayers. this is the first time that the concept of complying with taxes and service really came to the forefront. i will tell you, 1952 was when punch cards and electronic typewriters were cutting edge. so service was pretty bare bones. but in the 1950s, telephone service started. albeit local telephone service, where you could call your local office. no toll free line. we also made irs personnel and

executive available for local rotary club and how we could help them. taxpayer service kept me andering down this road into the 1960s. our first toll free was called the centiphone service. and then in 1975, the first big refundable tax credit was created and passed by congress. which was the earned income tax credit. it was a official all of the sudden that policymakers here in washington viewed the tax system and the internal revenue service as an efficient distribution

system for societal benefits, not just the mechanism to collect funds to run the government. i think the tax system has moved in that direction ever since. later in the 1970s, there was a very telling sign about service. the first ever assistant commissioner for taxpayer services was founded. i think internally at the irs in '70s, that really signaled to people that service was no longer an adjunct or stepchild of enforcement, it was a major part of the irs. if you pick up the pace, you'll see things that ripple through the tax system today. in the 1980s we started electronic filing, which has been a great service to the americans taxpayers. and then the 1986 tax reform act was passed.

which was very complex, took three years to implement, and the irs was asked to do more and more things as we went forward. in conjunction with pws, actually, when that reform act was passed, we produced a two-hour program explaining the bill to the american people that aired in 226 stations and had 4.6 million viewers. then in the 1990s, i think the tax system just kept changing and kept getting more complex. you know, the tax code became complex, complexity was viral, and it actually grew larger than four times. one of my favorite quotes of the tax quote is four timing longer than war and peace. then the national commission on restructuring the ris -- irs was formed in the mid '90s, but also complaints about service.

it was the late '90s, the 1998 restructuring and reformat, where really since 1952, the second big restructuring again with a real focus on service. as you can see, the history is one that started with enforcement, to this day where we take very seriously our dual mission of providing service to over the 100 million people who are trying to get it right with the complex tax code. we also have robust enforcement programs for those who aren't going to pay. when i think about service, i actually -- there's a couple of interesting things. one is in many ways we're a large financial service institution, just like a large bank or credit card company or others, we have to process payments, answer questions. the unique thing about the irs is our customer base has 100% over lap with over businesses.

most businesses do analysis and benchmarking. we actually have every financial institution in the country is generally serving one of our customers, which means that tax payers are comparing us with the last interaction that they had with another financial service provider. i think at the end of the day, tax dayers want the same thing from us that they want from them. they want predictable service. they want a hassle free experience, and they want to get their transaction done as quickly as possible and get on with doing other things. in a very real sense, the service today has fulfilled commissioners yerkies vision. because today we touch every adult american, every nonprofit, every business, each and every year. and this is a diverse taxpayers

base, we have to phone service, internet for tech savvy citizens who want to interact with us via the web, and we have to in person service, sometimes for older folks who need -- who feel more comfortable talking to someone face to face or people with limited english proefficiencies who want to see someone and work through their issues. i will tell you we have come a long way from the turn of the century or the turn of the last century, even since 1999, the most telling of the measures that we watch at the service is something we called the american customer satisfaction index. it's an index of people who interact with your business or agency that's run by independent firm that looks at people's perceptions of their interactions with you. in 1998, we were 51%. we're now consistently in the

high 60s%. it's a trend that goes forward. we've come a long way. with that said, we cannot resten our laurels. when it comes to taxpayers service, we need to be willing to break with orthodoxy. we can't become calcified. we have to be open to new ideas and best practices. and we need to always be willing to keep doing what works well, but throw away things that don't or have changed as the times have changed and continue to innovate. that brings me to what i call the tail of three taxpayers. what i want to do is take you through three taxpayers with very different needs and give you a sense of how we're serving the american people today. the first taxpayer i will call mary. she's single, in her 20s, in a management training program at a

department store, she doesn't own her own home. she rents. her income comes largely from her salary. she also owns a mutual fund and reinvests her dividends. on the surface, mary's tax needs are pretty schism. -- pretty simple. we also have a lot of services that can benefit mary. harkening back to the current tax payment act of 1943, her taxes are withheld by her employers and reported to the irs. however, she may want to go online to our w-2 calculator at irs.gov and make sure they are withholding the right amount. you don't want to hold too much because you're giving the government an interest-free loan, you don't want to underpay, because you might have a penalty.

there's more options now than ever before for mary's tax return. she can call the toll free and talk to someone live or get automated help. we added a wait time feature. if she calls at a peak time and there's 7 minutes, she can hang up and call back at a time that's more convenient for her. she can log on to irs.gov and we have a feature called the interactive tax assistant. she can type in questions, lead you through prompts and get her questions answered. she can also check the status of her refund on the web site, or she can check out tax law changes, including things that you can get, or tax advantaging from the recovery act, which a lot of people have questions about right now. for instance, she doesn't own her own home. she's been looking on the street. on our web site she saw she's still eligible for the

first-time home buyer credit for the another couple of months. she can get an $8,000 refund if she decides to purchase a house. when it comes to preparing and filing her return, there's a whole set of options for mary. she can use her home computer, or commercial office self-software, she can prepare her taxes in e-file, and right now if they file and direct deposit, they should expect to get their refund in about a week. this year, she can split her refund and buy a u.s. savings bond with their refund, so we can make sure people save and give them vehicles to do so. since her adjusted gross income is less than $50,000, she qualifies for free filing. which is a free service on e-filing that's just a click

away on irs.gov. of course, there's a lot of taxpayers who's situation is not as simple as mary's. one the things we have done this last year is tried to go the extra mile and meet taxpayers based on their own individual circumstances. and so as the american people have been struggling with unprecedently difficult time, we put in place for the first time ever having a hard time meeting the tax bills and other bills. let me give you an example of taxpayer, couple taxpayers we'll call frank and sandra with a family and three children. in early 2009, frank was laid off from his job at autoparts manufacturing plant. although he hopes to be called back, he's worried about paying his bills. he's picked up some part time

work for now, and sandra works a few days a week at a day care center and has some w-2 income. but their savings have dwindled, they also are worried because right now they are paying the irs an installment, they are on an installment agreement from some money they owed us when a few years ago, frank had to withdraw money from his 401(k) and forget to put that on his return. they cut back their expenses, but they were kill worried about making ends meet. they were especially worried about the installment. they didn't want to get behind on something they were trying to catch you have on already. they actually heard on their local news that the irs this year was instituted special saturday open houses where the goal was to resolve taxpayer problems, make sure people were available to work through issues in the tough economy. they figured, what the heck,

let's give it a try. they called, got an appointment, put together their records and drove over to one of our centers. they met with an individual taxpayers advisory specialist. they explained to her their situation and they asked if there was anything we could do to help. she actually went through all of their documents, their they stubs, they receipts, helped them calculate their adjusted gross income. she had good new forest them. the recovery act created a new earned income tax credit for families with three or more children. frank and sandra would qualify for the maximum tax credit of $5 ,657. that wasn't all. they would also qualify for the make it work pay credit and child tax credit which is $1,000 her child. in hardly any time with the

specialist right there, they got their return filled out. they e-file it had from the center, they had it direct deposited. from the time they were wondering what to do, they showed up on the special open houses, filed, and a week later they got a sizable refund check. what about the installment agreement? that didn't get handled there. during the last year, if there are taxpayers who are always meeting all of their payments on time that defaulting or missing a payment wouldn't default the installment agreement. and that we could actually take into consideration economic hardship and come up with a smaller monthly payment. so while they were there, came up with a smaller monthly payment. their installment plan is something they felt comfortable they could meet. they didn't know the day could turn out that way. that wasn't their image of the

irs. but they drove away with quite a bit of assistance from us. our third is a small business owners. a general contractor who specialized in home remodeling and renovation. times have been tough with lenny's general contracting. and in this economic downturn, don't go look up lenny's online, this is a assumed name. with the housing market problems, he found himself having trouble meeting bills, having trouble making ends meet. actually had to lay off of couple of his employees. he had just about given up when he actually read that his local chamber of commerce was conducting a small business tax workshop where representatives from the irs would present answers to questions about how we're trying to help struggling businesses in tough economic times. at the workshop, the irs

representative explained a lot of valuable information. explained there's a new net operating law with carryback provisions which lenny did not know about, if he files a return and has losses, he can carry back and get an expedited refund in taxes paid in an earlier year, which he realed he could do and hadn't realized before. they also explained that small business owners are generally going to be qualified for the making work pay credit. and they also encourage people to go to the web site. so first of all, lenny didn't think that the chamber of commerce irs representatives usually show up and help them work out what can we do for you? that happens all the time across the nation. he found in the recovery act that there's some refundable credit for install things like energy efficient windows or

insulation. he figured out he can do some marketing to current and past customers. he would be able to pitch them and get some new business. he walked away feeling a lot better, having interacted with us. i hope these scenarios have made the point that every day across the country there's thousands of irs employees helping taxpayers. but we also serve honest and hard-working taxpayers throw robust and evolving enforcement programs that ensures that everyone pays what they owe. hereto we are innovating and evolving our programs every single day. we're going to continue to use new and enhanced techniques to bring people into the tax systems and make sure they pay the taxes if they have been hiding assets overseas. we have a new global high wealth

operating unit where we are taking a unified look at the entire web of business and economic entities controlled by high wealth individuals. so we can better assess their compliance risk. we are also making better use of data and information to boost compliance. there's new laws which harken back to the current tax payment act which require brokage firms to report basis on stock sales and credit card companies to report payment to merchants. these are going to help us with our compliance programs. on the global front, a bill has been passed called the foreign account tax compliance act that weavers together strong international reporting by taxpayers who have assets overseas, but also disclosure for foreign financial