evasion. we've also proposed new regulations recently related to business taxpayers, uncertain tax positions that will help our large business with taxpayers as well as the irs achieve certainty, consistency, and efficiency when it comes to their taxes. and finally, because paying taxes is one of the largest financial transactions that the american family has each year, we've proposed heightened oversight of the tax return preparing entity to ensure there's a basic level of competence for preparers to help boost both service to taxpayers and tax compliance. :

technology, we will improve our phone service, we will improve our processes, we will improve our our reach and education, we will improve our compliance, but most of all, like any big agency that interacts with every taxpayer, we are going to continue to improve ourselves. let me conclude with this thought -- i firmly believe that the spirit of public service is not only part of this country, but it is part of the we are as irs employees. the men and women of the irs are often underappreciated public servants. at its but the men and women of the irs are often underappreciated public servants. at its core we're an agency of professionals trying to serve the hard-working taxpayers of this country. processing returns, sending out

refunds, answering questions over the phone and trying to help people navigate a very complicated tax system. on february 18th of this year, a man intentionally flew a plane into an internal revenue service building in austin, texas. killing one irs employee and injuring others. the employee who died name was vernon hunter. and as i learned about vernon hunter during the weeks afterwards, i learned that he really exemplified the spirit of public service. he was a vietnam veteran who served two tours of duty in vietnam. and he had worked for the irs from 28 years. and while he wasn't the target of the attack, he died at his desk doing his job.

he was also a manager of revenue officers. now, to tell you what a revenue officer is. revenue officers are the people -- when we've sent you lots of letters and made lots of phone calls and years have passed go out to collect people's debt in person. these are the very people that can be paritied as the prototypical irs agent even though they try to help people out and work through difficult situations. vernon hunter's son, ken, said something incredibly profound. which captures the spirit of how people all over the country who work at the irs view their job. rather than showing anger when interviewed by the press towards the man who killed his father,

ken, vernon's son, simply said, and i quote, if he would have talked to my dad, my dad would have helped him. the people of the irs serve this country every day. they are not a faceless bureaucracy. but they're the face of public service, the face of dedication and professionalism. the face of the internal revenue service. it's an agency that i've gotten to know over the last few years that i'm incredibly proud of serving the american people every day. with that, i'll be happy to answer some questions. [applause] >> well, thank you very much for your time, exhibition. -- commissioner. we had many questions, of course, dealing with the recent healthcare reform package that's been passed. first of all, for your agency, what are the challenges of

enforcing compliance that be coming up under the healthcare reform plan? how will you penalize individuals who don't purchase coverage? >> yeah. so the health reform bill that was passed will have implications for our agency. i guess the first thing i would tell people including the viewing audience is none of the individual tax provisions come in to play this year. this is all down the road. most of them coming into play for 2013 and 2014. second, the department of health and human services has the lead on all of the health-related provisions. but there are a number of tax provisions which our agency is responsible for. and they range from things like immediately this year. small businesses are eligible for a tax credit to help them buy healthcare for individuals. which is your classic tax credit provision.

there's a number of fees and taxes on different parts of the industry. and then there's also a requirement that individuals either have health coverage or make a payment on their tax return. our job is going to be to first and foremost make sure people are educated about all the benefits that are available for them. second, is get things like the $400 billion in the bill of tax credits out to individuals and to businesses. and others. when it comes to compliance especially, i think, the question was around individuals, i think the provision that's gotten the most attention has been the requirement that people have health coverage or pay a fee on their tax return. the way this will work is department of health and human services and the insurance companies will work together to determine what adequate health coverage is.

when someone files their return, the insurance company will send us a little box that is checked, a yes/no question that says did they have coverage or not. they'll send it to the individual. the individual will attach it to the return. and they'll send it to us. think it's just like a 1099 where you get information reporting about the interest that you have on the bank account. we will run matching programs around that. and if somebody doesn't have coverage, they'll either have paid the penalty that they owe or they'll get a letter from us saying that you owe this amount. i think there's a couple important points i would may, though, about our role in health reform. one is that these are not the kinds of things -- check the box whether you're here or not that we send agents out about. these are things where you get a letter from us.

second is congress was very careful to make sure that there was nothing too punitive in this bill. and so we do not have authority -- first of all, there's no criminal sanctions for not paying this. and there's no ability to levy a bank account or do seizures or some of the other tools. so our roles is going to be straightforward and administering the tax provisions and we're going to be the major part of the payment system. hearkening back to the commissioner's and what i said before, because there's already a way to administer this through the tax system. i think that's why the provision was put there. >> this questioner says their 80-year-old mother was left on hold for an hour by the irs to ask a question. and following on this, the question is, how will you provide better service when the irs will need to add thousands of staff to handle the new demands of monitoring the healthcare reform rules? how many workers will you need to answer questions and handle the levies for fines?

>> so first of all, i don't know whose mother was left on hold. it is highly unusual that someone would be there for an hour but they shouldn't be. you should come talk to one of my staff and make sure your mother's issue was addressed. second of all, i always told me, you know, starting back in the '70s with the earned income tax credit we crossed that rubicon that said the irs and the tax system isn't just for collecting taxes. but it's also for administering a variety of other programs, the earned income tax credit being the biggest one. like any large institution, what we need to implement efficiently our programs is flexibility around administration. we need plenty of lead time. which the health bill give us plenty of lead time to get done what we need to get. and then we need the proper resources to get it done.

regarding number of personnel, you know, a lot of this is quite dynamic. for instance, last year we got 5 million calls for people who are asking what was my adjusted gross income the year before? because you needed that in order to true up your stimulus payment from two years ago. this year we actually built a web application so we didn't have to get those calls. and we funneled those 5 million calls onto the internet where people could just get it automatically. so we needed less staff because we inovated as we went forward. we're right now looking at all of the implications around resources for this bill and other bills as they come along. we're going to try to create as many options as we can for people. so we can answer the phones. give people all the tools they need and information online. and obviously have some people around that depending on what the implementation but it's way too early to say exactly what

we're going to need three or four years from now from the actual full implementation. >> with the tax gap of uncollected funds of over $300 billion estimated amount, can the irs still be considered an efficient distribution system for societal benefits? >> so to put the tax gap in context, we collect about $2.5 trillion of revenue every year. people who make wages, who -- so me as an irs employee. the federal government withholds my taxes. and they send a document to myself. but you get the point. people get their wages withheld. we get information reporting. there's 99% compliance. a lot of what we're doing to combat the tax gap and make sure there's compliance are the things that i listed before.

information reporting being the biggest and most important. things like credit card reporting. basis reporting. things like the foreign account tax compliance act where we're going to get reporting by financial institutions are things that help very much bring up compliance rates. and frankly they're the way we should be thinking in this century about compliance. we shouldn't be thinking about sending more agents out pouring through more records. it's about information reporting and matching documents. it's also things like our preparer initiative. where 60-plus percent americans use a paid tax preparer. if we can have them well-educated, serving people well with no incentive to help people push the envelope and not pay what they owe, that's going to help us around tax gap issues. the other thing i would say the notion of a tax gap which is really the compliance rate, this

country is one country out of several that actually measures it. it's very hard to measure 'cause you don't know exactly what you didn't get in. but we also have a pretty high compliance rate. there's no country in the world that has a sealed system where there's no noncompliance. think about the cash economy. think about, you know, someone who comes to your house and does a service. we would know how to close some of that tax gap but it would put a burden on people. so what i would say is i would go back to what i said before. give us time. give us flexibility around implementation. give us the right resources and we're a big institution who knows how to interface with individuals, businesses, nonprofits and we can do things well. >> how far long is the irs in processing the 15,000 disclosures received as part of its amnesty program? and what types of patterns have you observed so far?

>> so the question that somebody wrote shorthand -- the question for the broader audience is we have been very focused of on finding people who hide assets offshore. having them pay their taxes that they owe and discouraging them from doing it in the future. president obama, when he was a senator actually had a bill around this issue. immediately when he became president he asked us to focus on this. secretary of treasury geithner has been very focused on this and has been talking about it at the g8 and g20 and has been focused on information-change. -- exchange. and we had a variety of enforcement programs around this. as we geared up our enforcement programs, we actually created a program a voluntary disclosure program which is not an amnesty because the way it works is you -- if you come in voluntarily. you have to pay your back taxes?

you have to pay your hefty penalty. you have to pay interest. but you can avoid going to jail. we had an overwhelming response this fall when we closed down the program. 15,000 people came in. and disclosed their foreign bank accounts and were in the process of moving them through the system. what i can say around trends is there were taxpayers from over 70 -- or bank accounts in over 70 countries. every continent except for antarctica was represented. we're collating the leads and both processing through people we need to audit or get more information from. we are getting in trying to close out cases. but we also are looking for patterns of financial

institutions, advisors, countries, money flows which will be the next wave of our enforcement and compliance activities as we go forward. >> following up on a question asked earlier. just to clarify, if you can't use sanctions to collect healthcare fees, what will keep people from getting away with not signing up for insurance coverage? >> you know, again, he -- when somebody either will get health insurance. or they'll get it through the exchange and get subsidized for the federal government so they can afford it or when they file their taxes there will be money that is due. my belief is, while some people may play with the kind of question that was asked, the vast majority of american people have a healthy respect for the law. and want to be compliant with their tax obligations and whatever else the law holds.

people will get letters from us. we can actually do collection if need be. people can get offsets of their tax returns in future years. so there's a variety of ways for us to focus on things like fraud. things like abuse. and we're going to run a balanced program. there's been a lot of attention because there's been a lot of attention and i think a lot of political heat around healthcare. what's important for everybody to know is the irs tries to stay out of the political fray. we try to administer the laws that are on the books. and we try to run incredibly balanced programs where our first line of defense is of education, service, answering questions, getting out to see taxpayers, going to forums across the country. and that's what we're focused on. of course, if people are trying

to commit fraud in the system or have abuses we will have compliance programs. but there's been a lot of attention around the compliance programs which are only part of what we're going to try to do. both with healthcare implementation to the tax reform pieces to it or the bill that passed. >> given the event of austin do you think the risk of working for the irs has increased? and if so, what would you say is fueling that? >> my answer is no. the risk has not increased. there's been a lot of stuff in the press around increased threats, which is actually inaccurate. and when i think of a threat i think of somebody actually saying, you know, you, doug shulman, and i'm going to do something to you. what there's been is increased

chatter on the internet that has an antigovernment sentiment. and sometimes the issue of taxes has gotten swept into it. and there's a lot of difference people not liking taxes and the tax system and people having issues with the government. and people actually -- it being a safety issue for my employees. i take the safety of every single irs employee incredibly seriously. we have always had and the event in austin, you know, was both a reminder and a heightened awareness about making sure that our physical security programs are as strong as they can be. we also need to make sure people just are aware. and awareness training is out there. we need to know what these threats are. but there has not been, you know, any sort of scaled-up actual specific threats against irs employees. i think a lot of the reporting

is just more general around some of the, you know, antigovernment rhetoric that you hear out there. >> irs section 6103 allows tax information to be disclosed to people with a material interest including owners of 1% of a company's stock. considering the american taxpayers now hold large stakes in many contains should their tax records be held open to public inspection? >> one of the incredibly important principles of the tax system and for sure for us is the tax administrators is that we deal with sensitive financial information. of the american public. and so it's actually against the law for us to disclose taxpayer information. that's why mary, frank, sondra are assumed names. you learned nothing about individual tax information. and we take it very seriously.

the broader question about should shareholders get tax information for companies has been one that, you know, has been out there and bandied around for a while. i'd defer to congress. you know, we have some very major corporate tax initiatives underway. one of them i mentioned, which is for corporations to disclose on their tax return on certain tax positions. that is if they have a reserve and think the tax position won't hold. put that on the return. we think that's an important initiative and makes sense in this day and age where we are. and so we're focused on initiatives like that. and so i would leave, you know, whether or not a shareholder should get their tax information for other people to bandy about. >> and i'm sorry, commissioner, i totally know who mary is and i think got lenny figured out.

[laughter] >> in january you said people will have to have their unsure tax positions. you delayed a comment period on that notice until june. when do you expect this to take effect? and what will the irs do with this information? >> that's the provision i was referring to before. where an accounting under a regulation called fin48. corporations take a reserve for uncertain tax positions. but the details of that aren't now made available to us. what we've proposed is getting a list, not all the work papers underneath that and the other information that companies goes through but get a list of where those uncertain tax positions are. the real reason for this is my belief is we have a voluntary tax system. that where people show us all of their information and either it passes muster or if we have differences in either what the

facts are or what the law is, we should talk about that. right now we spend a lot of time with large corporate taxpayers just trying to find issues, which we find eventually. but i think it's wasted time for corporate taxpayers and wasted times for the irs. we're trying to streamline the process and do what i said before. which is to create certainty so we can resolve issues quicker with taxpayers. create consistency. and be more efficient in our systems. we initially had a comment period which was going to end. and then we were going to put out draft forms in publications, which were more detail that people would comment on again. what we basically did was just wrapped it all up into one comment period. and so what we did is we delayed the first comment period. we committed to this month getting the draft forms and instructions out so people could do one round of comments by june the 1st.

and implementation will really depend on comments we get. how we go forward. but our goal is for -- to not have this lag and to move it forward. but right now we put out skeleton cal proposal. -- skeletal proposal and we'll get comments and move on from there >> should people with independently earned income like wages and pensions even have to file a return? why can't the irs do it for them as california did in the pilot project? >> so california has a program called ready return. that if a very limited group of taxpayers can get what's called a ready return where people look it over and say whether it's accurate or not for california state taxes. and that's people who are single with only wages. no interest income, no other kind of income who take the

standard deduction. the list goes on. it's the simplest tax folks. they had about a 5% pickup rate. it's a pretty small program. we've been asked about this and i would say there's a couple of things. one is, our technology has been woefully underinvested in over the last 20 years. and so we're actually going through a major program to get all of our taxpayer account data consolidated into a database. which assuming congressional funding, you know, should be done in time for the 2012 tax year where you could start even thinking about this kind of program. i think the second issue is, you know, we already have a 1040ez. and it's already pretty simple for people who do that. and so we need to think about doing this versus the -- all the other things on our plate. and so it's certainly something we're willing to look at.

but we got to get the technology and see if the cost benefit is there. there's two other things i think is worth talking about in that context. one is the business community would need to change significantly. because right now it is not till the end of february that there's a requirement that we get tax returns. a lot of people file in january. people don't even need to get their w2 until the end of january out to individuals. and so actually there would have to be a bunch of system changes. we're not sitting on the information at the right time right now. that doesn't mean anyone isn't willing to change if this would make sense. and then the last unknown with this whole notion we'll do your taxes for you is kind of the culture of taxes and the american experience. where we have a voluntary tax system. where, you know, it's the law that people pay but the government doesn't calculate it for you. you calculate it for yourself. you bring in your deductions. you bring in your other income. you put it forward to us.

and one of the questions is, if we did it, there's a lot of information that we might not have. although that gap is narrowing over time. but would people still go through all the expenses of running it separately themselves. getting an accountant or a tax preparer themselves. and that's one of the unknowns. but what i would say is after 2012 when we get this database done, it's an issue that certainly should be up for debate. >> we are almost out of time but before asking the last question, a couple important matters to take care of. first, to remind our members and guests of future speakers. tomorrow, we will have kathleen sebelius the secretary of the u.s. department of health and human services discussing the new healthcare reform legislation. on april 12th, actor dennis quaid will discuss the prevention of potentially deadly medical errors. and on april 15th, janet napolitano homeland security secretary will discuss the state of the worlds and nations aviation security system. second, we would like to present

our guest with the traditional -- if it's down here. national press club mug. [applause] >> thank you. final question, everyone, of course, has to do some sorts of taxes. and many in the audience wants to know who does your taxes? and if you can't do it yourself what hope does anyone have to do theirs themselves. >> i have a preparer that i've had for 15 years. he does my taxes with my help. and i wouldn't read into anything about me doing it. i'm just a busy guy who i've gotten good service for the last 15 years. and i won't give you a name. [laughter] >> thank you for coming today. >> thank you. [applause] >> we would also like to thank the national press club staff including its library and broadcast operation center for organizing today's event.

for more information about joining the national press club and on how to acquire a copy of today's program, please go to our website at www.press.org. thank you very much for your attendance today. and thank you again to our speaker. this meeting is adjourned. [applause] [inaudible conversations] ..