we would like to know how concerned are you with argentina's moved to nationalize the company and if they somehow threatened to further isolate the country? >> well, i think it is a mistake and i think it is a symptom that we have to watch out for under economic pressure, whether countries will move to more national, whether countries will move to more national, whether countries will move to more national, whether countries will move to more national a son or protectionism. so i think it was the wrong thing to do. >> thank you. yes, howard. >> high, thank you. so when the arab spring is just curious camino, madam lagarde

later to stem stalemate basically and i was wondering from your perspective to what degree do you think political uncertainty in those countries is holding up the type of support you feel needs to come from the outside to get their economies back on track? and secondly, briefly, for dessert effectively transition what are you going to be able to do to help them in the door? >> on the first one, howard, it varies a lot by country. so let's take tunisia, which i referenced with two deep your tunisia has gone to an election process. they have an islamic discovering it. the government seems to be stressing the continuation of the policies that the prior interim government focused on the dozer policies were trying to do everything we can to support. not just basic financing the policies of inclusion because you have had sort of a growth

model that didn't pay enough attention to people in the west and central part of the country. trying to focus on some of the youth unemployment issues and very nicely with the agenda we are setting a open and social accountability when we did a development policy amount currently accompanied with a series of changes to try to open up their process and i think it's not only good politics. it's good economics obviously to have a society feel they are engaged in the process. but the tunisian economy still under significant stress. as far as tourism, loss effects of experts dearer. so ifc, private-sector team has been doing investments in there. so in the case of tunisia, this is not going to be done overnight. they're going to face a tough year, but it's in everybody's interest to support them if the government stays on the current path is again looking at this

record of economic history point of view, the north african transformation is going to take a while. but what i saw happen in east asia and elsewhere is countries that undertook the reforms become models for others. morocco has had a fast-paced evolution is a post. they're making a series of reforms to support the make and peered on the open aside, the investment side, private or side. please try to support jordan in jordan is going through a combination of political and economic reform. and a country like libya, they've got resources. we've been trying to work with some partners in a difficult security environment to help create capacity for basic financial management another dvds. so the big win obviously as egypt, which he referred to in here as i suspect from what she said christine mentioned is that they not only faced economic and financial challenge, but they're in the process of a political

transition. and i understand there's a need to be able to base the legitimacy of whatever economic relationships they have on the fund in the bank with the people who will be exercising power under the new constitutional arrangement. so i think that does so is the process. life is full of twist and turns as the facts of life and the reality. there's things i think the interim government can do to create a better environment for these. we have kept doing investment lending them a try to focus some investment landing in egypt on some of the sect there's a need. the bigger policy loans that we would do would depend on the macro economic issues the imf is addressing. frankly at least it has been my guiding stay also be based on some of the openness and social accountability issues we've seen in tunisia and other countries. and that is also important

because i think you're going to reap political transition process. the more open natives, then whoever is select good in this year, and mixture or others will have a better sense of engagement with the economic changes in egypt and the relationships with the world bank. so this is one of the things we've also had to learn lessons of the arab spring and economic growth alone is not enough. it ought to be inclusive than the more we can emphasize the things i've been talking about openness and social accountability is the future direction of the bank as well as these countries. .kim. >> i've been through a lot of transitions in my life so i have some experience with them. we've tried to centralize the team to avoid the standard problem of the 500 page briefing book by focusing on some of the issues that will come up first. i think the spring meetings are

timely because we'll get a sense from the governor's and the board about some of the issues could be of nature to be of continuation. some of the things i've talked about in the modernization agenda, which is both an internal and external aspects. and beyond that, i always think as you turn something that we have to send a present restraint. toby the person in charge. i happen to believe change is good for institutions as well as me and it's good to have a fresh person come in. so we'll try to explain where we think some of the issues are. he's sort they got a lot of perspective as i'm certain from the two were he took around the world in discussion with the board is uncertain by the time he takes office will have a pretty good feel for the challenges ahead. >> ask a right over there. thank you.

>> and your five years at the bank, which he considered to be a bigger success than what you consider to be your biggest failure? >> cannot hold on the second one? [laughter] well, i tried very briefly, and the opening sort of anticipating this question to say in my own mind i seen these three phases. so first i came at the bank, for those of you could've covered it was a tumultuous period. inside the challenge of the league are trying to turn around and do to shed into the credit of the institution, the best way to get out of the internal strife is to focus people on the mission. that's what people came to the bank and were able to do that relatively quickly. we have complicated issues to do with governance and anticorruption and paul volker and others hope. second, before too long, we pursued until crisis hit us in late seven. so i am particularly pleased that a combination of the

international experience and reading what is happening in the market we moved quite quickly and if you talk to people the food security community, they felt the bank was more agile than it might've been in the past. and in addition, we start to see this as an opportunity to invest in agriculture going into the future. as i've mentioned in the financial crisis, doing a quarter trillion dollars of support is not only important financially, but it was important to how we designed a lot of it. so the fat twin trade finance and the team leveraged financing to keep banks in the market i mentioned the vienna initiative. an entity should we organize for pedestrians and japanese attacks that proposal. so part of my point here is not just financing. we need to be out to leverage an innovative and innovative ways. and i think were able to do

that, including things i hope will become seize a very future growth like the asset management co., which is a subsidiary i see were not tapping the sovereign funds and pension funds and we've got $4 billion a minute to bank would've never seen going into african equity markets. so it's not only the response in financial terms, but also the innovation. and apart is that it goes to the modernization phase, which i think has just begun. and there as i mentioned briefly in my remarks and here i credit some of my team, killing anthony, sanjay proudhon, together we decided this focus on the opening of the bank as an institution was the key to not only development, but frankly having a healthier bank. so an open information policy is the first among multilateral as an indian and u.s. freedom of information act. the open data initiative that

party scene is going to drive a whole new way of doing policy because her making a successful with mobile phone technology in any country around the pacific rim have been much for interactive process. and just to connect this to is a bit of transition, it was interesting and i'm not saying this was the three candidates, but some others were saying the bank is doing too many things. it must focus on these three things. in my view that was a mistake that elitist economists made 20 years ago where they said we know that developing countries need and maybe it is because of my private and policy background, my approach has been fundamentally different. it says let's focus on the client can hear the client needs and let's take the innovation from the world and apply it. and in the process becoming with the client through an open process about how to do it better. i'm sure you encountered this at the guardian but i've

encountered at university campuses that the bank is still multilateral washington-based institution. but the more you open up an institution it's the best and it took to conspiracy theories and better policy. [inaudible] >> pardon? >> well, i'll let you be the judge of the failures. have a? [laughter] >> thank you. to the gentleman right here. >> thank you. the guy just said that low income countries have to deal with lower resources. i'd like you to discuss a little more on latin america countries but i'd also like to know if the world bank is concerned about the rights of process movements and more social demands and from countries, even the occupied wall street movement here in the

united states and europe of the situation. >> on the first one i guess the way i would approach concerns for low income is not just in certain countries but across countries. one thing a lot of people have lost sight of his two thirds of the people living under $2 a day is in so-called middle-income countries. i was just in india where he met with women with the self-employed women's association. these are extremely poor women. some of the challenges for the bank is getting people to recognize their going to dean to deal with poor people in a variety of different countries. foreign assistance is clearly a piece of that and it's under stress. by and large if you look at oecd numbers, countries have generally kept up what they were doing. but i guess my suggestion on macros to some of the things we said in modernization.

take a country like the united kingdom, which has maintained his effort to reach the 7% of gdp under difficult budget circumstances. it's an heroic effort to gas giants, canadians and others have done good work on this. but they need to show value for money. success goes to the results agenda and where some of the things we try to do to have evidence-based learning about what works and doesn't work as a conductor came is interested in will be very important for the future. another point is one reason it is important to try middle income countries into the multilateral institution is about a conservative estimate of the foreign assistance from the emerging borrowers or the emerging countries. there's about $15 million last year. that's about 15% of the total, probably conservative estimate. and recognize part of my view is he's got different sources of funds. you also have investment funds. so the rise of china and

increasing commodity prices has been one of the best things for latin america. the challenge would be for latin america to use that and that's one of the things i'll talk about what the governor's, as a broader basis for a more inclusive growth. so i gave a speech last year we talked about moving beyond aid. the idea was not that we can overcome that today, but we need to move beyond a charity model to the notion of investing in human capital, infrastructure with developed and developing countries and in some ways the best test is what are people most worried about today? era. if two thirds come from developing countries, we have to change people's mindsets. these are potential pools of growth and i just met yesterday with the african governors, what are they interested in? infrastructure currently shell integration. so those are the elements we need to focus on. the last point on the course,

the world is an unpredictable place. we're not going to change that. and so people who believe they can control this price at that price i wish them -- i don't wish them good luck, but anyway it's not going to work. but we should be doing however is make sure that every country has an effective social safety net and read a function on this yesterday because we've learned a lot from developing countries about how to do this in a way. the familiar programming presale are done for half of 1% of gdp. trust me the u.s. congress could get their entitlement programs down to any remote decrees that, they'd be pretty happy and if they cover 15% to 20% of the people and provide a matter of. in ethiopia has a different model. so that the bank and helped extend conditional cash transfer programs to 40 other countries. so if the philippine secretary yesterday and it expanded to 3 million families.

so to me the message for aid is not just the eight members but it's effective as and for the poorest, let's focus on basic safety nets for every country to deal with the volatility and certainty because the other lesson we learned this a few weeks of the crisis, it's too late. >> i think we have time for one more question. yes, we'll go to the gentleman in the back, please. >> now robert, mike to know the talk about the problems with finance and exporters. i'd like to know, what's your advice to the central bank of africa?

and what about trade especially in a time when the credit -- [inaudible] >> well, my first advice is first not necessary to the african tank it's on to the apostle and developed world bankers as they developed rules and build back and feedback loops because as sure as we're sitting here they will find ways to overcome straight, comedy with a pencil marks am most concerned about the effective over construction poor countries and developing countries and in the area of trade finance, something monday and i have talked about. they put in capital requirements and done a very good evidence, but frankly the evidence we have is the pretty short-term loan intends to get repaid. so my first start is with the developed world. the second play, again i wouldn't focus so much on central bankers. there's a huge opportunity in sub-saharan africa to remove

border barriers, create more integrated markets. so you're from east africa. so i visited order -- one-stop order in a place that helped open up i think he was actually kenya and uganda. they've gone from today's for goods transferring to two hours. this doesn't require huge sums of money. we have worked with private firms to develop the software and it means this intimate ties in the process could then be combined that with infrastructure development. so whether it's roser wheelbarrows reports or electricity to be able to strength in it. so you're right i saying that some regional integration i would focus on subregions come to east africa, southern, central africa is the way to really start to drive a potential for growth. and i keep coming back to this because when i read most of the

press, everything is focused on the macroeconomic fiscal monetary. fine, i'm not denying that. but you could ever deal with these problems unless you create sources of growth in their sources of growth in africa and i see it as sector firms been interested in it, but africans have you create the right enabling environment. >> very good. thank you very much. just not -- these ♪

>> what is embedded in the east afghanistan to massager starter tommy did u.s. government was wasting tens of billions of dollars am totally mismanaged the development and logistics contracts. >> i was in one media buyer to brigade commander and a guy named colonel mike power, this is not long after president obama took office and the state department said you're saying okay, going to give you a whole bunch of development money. its counterinsurgency. we're going to do this. and colonel howard said don't send me any more money. send me contract officers who can oversee this stuff. i need people. i don't need more money.

>> the house today passed a bill that provides a one-year 7% tax cut with businesses to fear than 500 workers. the boat on the bill is 235 to 173. for the vote republican leaders discussed the bill and other tax policies. this is 15 minutes. >> well, good morning never appeared kevin brady, senior member of the house ways and

means committee. today we have a simple choice to make. we vote in the house to make our job creators make more for their hard-earned money or do we send it to washington to be squandered? we are struggling through a very tough recovery. the slowest recovery since the great depression. we have glittery tens of millions of americans who can't find full-time work. we have millions of americans who simply given up. giving up hope of finding a job they are not even looking for anymore. we have especially women who are not returning to the workforce. almost 600,000 fewer women with a job today than when president obama took office. in fact, here we have had a tsunami of government spending and programs and it had to bail out, stimulus, housing bailout, auto bailout, green energy bill, casher clunkers, deficit

spending and yet today there are fewer americans working in our country than when president obama took office. and it's the small businesses that bear the brunt of this poor economic recovery. the first to be hurt and must recover and frankly if you walk main street, walk your community and a day the past number of years, they'll tell you how much they are hurting and in the house, we republicans are taking action to help them survive this recovery. our small-business tax cut over some marginal tax rate by about 5%, 20% pay cut for small businesses will help 22 million small businesses in america, most of them mom and pop operations struggling to make it through this economy. what we'll do with the tax cut is the them keep more, a little more of their hard-earned money so they can survive their economy, invested workers, maybe

by the new piece of equipment and get ready we hope to proceed. this is a dramatic contrast. and the senate, white house pcs varies to punish those who succeed. that is what democrats want to do. punish those who work hard and invested over their lifetimes eventually achieve their dreams. republicans want to grow for people who invest and work hard and achieve success over their lifetime. the way we do is start with small businesses, those who create jobs in our economy. at this point i would like to richard harris marsha blackburn, the leaders on economic issues in congress. >> good morning. it is a great day to be cutting taxes and we are thrilled that house republicans are going to go to the floor and we are going to pass a reduction in taxes. make the cut.

and this is what the american people are wanting to see. kevin reference the moms and pops that are going to benefit from this because when you make that 20% cut, what you are going to do is give them the ability to hang on to more of their money. my small-business owners tell me they have too much month left at the end of their money and given the opportunity to have more workers. most of those moms and pops are now owned by moms and indeed 30% of the small businesses are owned by women. when i talk with women all across this country, the number one thing that they said is the uncertainty in washington. uncertain if the regulations, uncertainty about litigation,

the uncertainty around taxation is that is costing them to not innovate, not higher, not create jobs. so this is one way we can lower the rate. we can leave my money in the pocket of those that earn it and we can put our nation another step forward to award fiscal health. >> i marshak among members ways and means committee and commerce and from the at a party of illinois, 18th district. you know, i agree with the president. a year ago he said that now is not the time to raise taxes on any american in a down economy. and i would say not much has changed a year ago. and if your goal wasn't smart to raise taxes on the american, i would say the same is true today.

that is exactly what the united states senate is attempting to do, embracing the president's call for the bus attacks, which would raise revenue, raise taxes, take money away from many of the same job creators we are expecting to lead us to economic recovery. the facts are very clear. people could have different opinions, but not their own facts. facts are seven out of 10 jobs created in the last two years are small businesses. over the last 17 years, up and downs in the economy at the last 17 years, 65% of all the jobs created during those big guns provide small businesses, people who employ less than 500 people can't exactly the people of this bill targets. so i do not believe the vision for america could be any more stark. the contrast between our vision for economic reverie, are passed to getting people back to what could be more different than that of the president and senate

majority and i think that is a call for the american people to stand up and way into the president and the majority in the united states senate to embrace the house's vision of getting more money back to the very people who are going to hire people, create the opportunity for more americans to go back to work. the biggest obstacle of businesses growing his access to capital. and to marsha black transplant, if you don't have cash at the end of the month, you can hire regardless of what demand is. so this tax cut getting more money back to these employers will give them the cash they need to be to invest in equipment and people to put us back to work. >> good morning. i represent texas 22. i'm proud to be here with my colleagues in support of the

small-business tax cuts. ..

>> we republicans are the ones trying to make the american dream ride. >> good morning as well. my name is erik paulson and i represent the twin cities in minnesota. i also represent a vast majority of small businesses. i recently conducted a small business to her composed of women who own businesses. i have been listening to what small businesses are asking for and have been attending to their needs. they are asking for help to

invest in their people and employees and in their company and their operations. this is a small-business tax cut that will be targeted towards getting the small employers of less than 500 people with a vast economic engine of our economy -- where it comes from, to invest in their people and purchase more capital equipment. as congressman schoch mentioned shop mentioned earlier, this is where the vast majority of our jobs come from. but every economic recession in the past that we have had, small business has led the way. we are not seen him lead the way as they have in the past. this is a targeted talk to help small businesses, get our economy going, and ultimately bring in more revenues to grow the economy and produce benefits and challenge our national debt. >> good morning. i would also like to thank kevin for putting this event together. my name is bobby schilling. i'm from illinois, and i sit on

the small business committee and agriculture committee. for me, this is good news. my wife and i offer country and operate a pizza parlor in illinois. over the past year, we have seen our business plummets. we have lost 85% in our business. the one thing that we've really understand as small-business owners is that more taxes does not help our business and it does not help us to hire new staff. what we have seen here in the last three years is a president who just has been unwilling to give the proper tax reforms that are needed for the small businesses. one thing that we like to focus on are the things we can do and not the things we can't. rather than advancing partisan and unserious showboats come up votes that don't lower gas prices and encourage economic growth and don't impact our deficit, which the buffett tax

rule would not help out at all. we want to ensure that more opportunities for job seekers are out there. also that the job creators are able to offer those. rather than raising taxes and discouraging investment and punishing the many small businesses that file their taxes as individuals, we want to make it easier for illinois folks -- the more than 200,000 small businesses -- to grow, create jobs for unemployed friends and neighbors, and lead us to a recovery. we want to cut job destroying, wasteful spending, and debts. we want to provide them with a tax relief. americans deserve policies like this small-business tax credit act, which will promote jobs and grow our economy. i really appreciate the opportunity to be here today. >> let's take some questions.

>> i have a question for representative showing. have you done the math with what you get out of it for your business. i did the math with my husband's business last night. it's busy pretty easy to do in your head -- well, not that easy for me. >> yes, it will save us about a thousand dollars a year. here's the problem. within a downturn economy and the president talking about increasing taxes on small businesses, the problem with that is that in a downturn economy, it's the most ridiculous thing you can do. really, you have two choices. you can raise the price of your product, and it doesn't matter what you're selling, or you can be one of the toughest things to do, and that is to let someone go and have people fill their positions. it will save several thousand dollars, but every little bit helps us to either buy a new piece of equipment, hire people, or, better yet, key people on staff and retain what we have.

>> [inaudible question] >> i don't see a rival in the senate, certainly if majority leader harry reid can try to find a way to tax the successful individuals and businesses in america. he can certainly find the time to provide tax cuts. small businesses driver economy and have borne the brunt of this very week obama recovery. >> some democrats are saying that they are going to propose an alternative that would restore some of the limitations that were previously. [inaudible] [inaudible question] would you support bringing that. [inaudible] >> our thought is that we need

not pick winners and losers. we need to allow small businesses to use these dollars, not as washington directs, or what they need to do to survive this economy and grow as this economy recover your brokers. -- as this economy recovery occurs. we think they will have a bill sent over there this afternoon that can help provide targeted, timely relief for small businesses and do it immediately. >> can i ask for a moment about. [inaudible] we have seen a vote in the senate this week that says they think the senate democrats think that those who are wealthier should pay more here. let's bring on taxes for all. especially small businesses. can you distill the definition between the two parties.

you see a defining moment in saying that this is what they want to do and. [inaudible] >> as the american public -- as in the polls, they want to know the key differences between republicans in congress and senate democrats and the president, this makes it crystal clear. we want to grow more successful small businesses and the jobs along main street -- the democrats want to punish those who invest and work hard and succeed over the years. the truth of the matter is that america's economy and the deficit will improve unless main street grows healthy. unless main street grows as well. >> there are a number of folks in the middle -- folks that are wealthy, they should pay a little more. that's what this is about, trying to put those folks in the middle. [inaudible] [inaudible question] >> i would say most people, if you asked them if the problem is

that washington spends too much or takes too little of your income, most americans believe that washington has a serious spending problem. by taxing those who succeed, it would raise about 10 hours of government spending here in washington. but we if we award small businesses along main street, i guarantee they will grow the revenue of the jobs that will create and facilitate the recovery that we deserve. >> thanks. >> senate democrats also talked about the small-business tax cut. it's not expected to pass the senate. we will hear first from senate majority leader harry reid. this is 20 minutes.

>> our efforts to help small businesses are not equal. there is no better example about them at the house is attempting to do and what we are going to do. democrats want to provide the kind of incentives that businesses need to grow an economy. we want to encourage small businesses to expand their operations. when businesses hire and expand, that's how businesses succeed. this targeted approach will not only help our businesses grow, but it will help our businesses as well. it provides benefits for overall

as well. by contrast, the plan being advanced by house republicans to date is just another example of giveaways to big corporations and the wealthy. under the guise of small business. keep in mind, that their legislation, one half of all benefits will go to people who make more than $1 million a year. five out of every $6 from the house small business bill will go to people making more than $200,000 per year. so those numbers, one half of all benefits go to people making more than $1 million a year. five out of every $6 will go to people making more than $200,000 a year. that is not small businesses. there is nothing in their build it is designed to promote growth or hiring. corporations they rake in millions in profits every year, we'll dig giveaways for doing nothing. zero. without having to hire a single

employee or expand businesses one bit. this is consistent with the republicans pattern for having big corporations on their back. it is always helping the wealthiest of the wealthy and at the expense of the middle class. during the past few months, they have proven this often. a track record of defending millionaires, oil companies, oil speculators, big corporations, instead of working with us to build a stronger middle class. i would hope that in the senate, republicans can break this pattern and work with us to pass the bill. it is possible. this is the kind of proposal that shouldn't have to be a fight. a proposal to provide targeted tax cuts to small-business owners and encourage growth and new hiring. it's hard to imagine why anyone would be against a bill that we proposed. and we hope that that will not

be the case and the republicans will join with me. >> welcome to millionaires week on capitol hill. in the senate, the republicans defeated our attempt to establish a basic tax known as the buffett rule for those making over $1 million a year. all but one republican senator voted no. what was happening across the rotunda? the republicans in the house of representatives decided to give a massive tax break to those who are making over $1 million per year in the name of creating jobs. i don't know if they've been in touch with working families across america come at middle income families, struggling to survive, the folks making over $1 million a year are not struggling. remember the battle not that long ago, just a few months ago greatly wanted 2% payroll tax cuts for working families? speaker boehner and the republicans were resisting us

until the end. now they are calling for a 20% -- not 2% -- 20% tax rate for those making over $1 million a year. the good news for donald trump. good news for oprah winfrey. bad news for working families across america's america. all it does is add to the deficit by providing a tax break of $45,000 more a year for those making over $1 million. let me tell you what we should do instead. the senate bill is very basic. it provides a 10% income tax credit on new payroll through hiring or increased wages for jobs in 2012. and it extends a provision that allows businesses to write off the entire cost of major purchases in the year 2012. think about that. there is a incentive for a new business and also to make your capital purchases to build their business. which is likely to create more

jobs? a 20% tax break for donald trump, or this kind of investment in real businesses across america, which create real jobs? congress shouldn't be padding the pockets of the rich. what we ought to be doing is working so that middle income families have a fighting chance to survive and we start expanding this economy with real jobs. thank you. there is no greater contrast between how democrats think and how republicans think there needs to small-business bills. let's compare them. their bill is missing a vital keywords. new jobs. you get that 20% tax break whether you create a job or not. so, let's say you're a multimillionaire making $20 million per year. and you have 50 people in your

company. enter profits are $20 million a year. well, you're going to make 4 million extra dollars, even if you don't hire a single person. you will make 4 million extra dollars even if you fire 10 people. what kind of jobs bill is that? it is missing one vital thought. new jobs. and it is utterly amazing how our colleagues across the hall can figure out more ways to help the very wealthy and had a jobs bill even when they don't create a single job. now look at our bill. we checked. we looked at what will create the greatest amount of jobs. where is their baying bang for

the buck. we put together two provisions that have been tried and true and supported by businesses. the first says that if you hire someone new, but only if you hire someone new, you get a 10% tax credit for hiring a person. the second provision says if you have new capital expenditures, you can claim that in the first year. if you are a bakery, you need to buy an oven and you need three people to work it. you will get a very significant tax break for both buying the oven that creates jobs and by hiring those three new people. i've traveled across upstate new york. our small businesses are beginning to see more orders coming through. they told me that these two new incentives are really going to push them over to hire new people.

our economy is gradually getting better. but we still need things to do to accelerate hiring. this is what the doctor ordered. it has been estimated on the bonus depreciation for every dollar spent, you add $9 of gdp. that is real bang for the buck, and her colleagues are not talking about jobs. and don't just leave us. ronald reagan's former economic adviser, he has said, the republican tax plan has said it will do nothing to increase enjoyment. our plan is a meaningful at step the democrats can help to increase employment. what if are they due yesterday? they cut $33 billion on food stamps, which needy americans depend on. on the next day, they get

$46 billion in tax breaks to millionaires and corporations whether they hire a new person or not. that is just another week of work for the house republicans. we have to change things around. the business community is on our side. the economists are on our side, and most important, people who are working and want to work are on our side, and that is why when these two proposals come together, we will prevail. >> i do think you have to give the republicans credit for their persistence. in fact, i think their motto this year could be that if at first massive tax cuts for the rich don't succeed, try, try again. over and over again, we have seen him go to any length to cut rates for those of the highest end of the letter while sticking middle-class families with the bill. we saw in the rhine budget, a

budget that provides the wealthiest individuals with tax cuts of about $3 billion -- $3 trillion. it makes these talks permanent -- these tax cuts permanent with cats to health care and nutrition and investments for families in middle america who are struggling today. we sought in their protections for tax cuts for the wealthiest oil and gas companies that are posting 1 billion-dollar profits while prices at the pump for average families continue to rise. we saw just earlier this week when republicans opposed the buffett rule, which was finally requiring every millionaire and billionaire to pay their fair share during tax season. today, we are seeing it in a massive tax giveaways disguised as a small-business bill. this is a bill that not only provides a handout to those that are most fortunate, but it does in it in a way that discourages investment and growth and cost us $46 billion.

in other words, it's the kind of bush era investment strategy that led us to the point where middle-class families are starved and the privileged to enjoy economic gains. according to the tax policy center, nearly half of this tax giveaway will go to those with incomes exceeding $1 million this year, and they each would receive an average tax giveaway of almost $45,000. i'm pretty sure if you asked the average working family today if the rest of. [inaudible] they would tell you no. but yet again, republicans are focused on novel would work for ordinary americans, but what they can get to those of the very top. our approach your is very different. i -- our bill provides

incentives for small businesses to grow. it reduces the cost to businesses adding employees and increasing payroll, and it makes each dollar down an actual job creation. it also supports big investments that small businesses must make to sustain job creation. it is an investment and what works to hire and grow business, not a giveaway that the very wealthiest can put on their bottom line. it is time for republicans to realize that job creation and tax cuts to the rich are not synonymous. it is time for them to join us to give tax relief to spur job creation. i think there are signs here in the senate that some republicans are coming to their senses did i just came out of the appropriations committee. and i was very happy to see that senator mcconnell, along with every republican voted with the democrats to set the

discretionary spending levels at those levels we agreed to last august in the bipartisan budget control act. that is a good sign. it is a sign that senate republicans are moving away from the radical rhine budget and working to a place where we can count on agreements that have been made and be able to invest in what america needs at this time. i hope that they encourage their colleagues to come to their senses and come back to the deal that we made last august, instead of threatening us with another government shutdown. questions? >> [inaudible question] [inaudible question] what is the timeline, and will there be a debate [inaudible

question] >> you'll remember that we tried this and tax provisions. senator cantwell and others pushed very hard to get the tax provisions to be reinstated. the republicans refuse to do that. i assume, and this was something i'll take your word for, it appears that what they are doing is waiting until after the election to find out if they can use that as leverage. they are called the bush tax cuts. we would rather they are not called that, but that is what they're called. i think they're planning to read after -- to wait until after the election. >> there is nothing to debate until there is some agreement. we wanted to do that. we still want to do that. >> was wondering if you could give an update on another job

still [inaudible question] >> yes, i still haven't worked out with senator mcconnell on what the ratio will be, but i hope to talk about it this afternoon. >> [inaudible question] >> we're not going to be the conference here. the speaker needed to get that in the bill so he could get his people to vote for this. but it is very clear now how we stand on this issue. we have voted on at a number of times. but maybe someone will come up with a magic formula that will allow us to do more. clearly, the progress has been made. we know the problem has been with the refining of the middle part of our country. that is why the president, rightfully so, sign up on allowing the pipeline to go from the middle part of the country

to the coast. that will allow the oil to be refined. as far as the northern part of the so-called keystone pipeline, there is no agreement on that yet. >> [inaudible question] >> yes, we hope to do it as quick as we can. we are booked up at this time, but we hope we can do it at that time. >> [inaudible question] >> the house hasn't offset pairs, and we have an offset ours. if the republicans, in good faith, want to help us get this thing passed, i would personally do it either way. >> [inaudible question] >> you're talking to the wrong people. as senator durbin said, this is

helping millionaires today, tomorrow, and any other time. their bill is, and i hope you folks do a good job of writing about it, it is laughable. half the folks make $1 million a year. that is not a small-business bill. they can call it that if they want, but it is not a small-business bill. >> [inaudible question] >> the president will send that out. certainly it is his responsibility to do that. as you know, senator heller spoke out against her, and chairman barbara boxer spoke out her already, because she said that she did not tell the truth to the committee. that's why we have a congress and there will be hearings held. we will approach that when we have to. final question.

>> what's your timeline for bringing any appropriations? >> there is one thing that senator mcconnell and i agree on. and we want to do a appropriations bill. i'm told the house will complete one by then, and if that is the fact of the case, we will try to take that up. it is really quite a luxurious way to legislate, because we can't have all these nongermane or relevant amendments. we have a rule that we can't legislate on appropriation bill. that is very nice. this is the last question. >> [inaudible question] are you comfortable that dhs is taking the proper steps to write that agency -- do you think congress needs to do more to reform the culture over their? >> i'm told i have enough -- of

course, have not talked to the secretary, but of course they are doing their own look at what went wrong. the committees of jurisdiction will hold hearings on that. understand this. there is not a committee hearing that is going to take the place were stop people from being stupid. there is not a bill we can pass to cause people to have common sense. think about this. people that are here to protect the president, they go to columbia and have a fight with a prostitute over how much she should be paid. that is very stupid. >> people saying this -- [inaudible question] it's well known. >> that is why the committees will act.

i rather have great confidence in the secret service myself. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] c-span congressional directory is a complete guide to the congress with detailed information about every congress and cabinet member from a supreme court justice and governor. it's available for 1295 plus shipping and handling. you can order your copy at c-span.org/shop. tonight on c-span two, a house oversight hearing on the under payment of income taxes. and an update on the global economy from christine lagarde. and world bank president robert

zoellick. then members of congress talk about tax policy and a small-business tax cut bill. >> shootings, two things, first, this is such a complicated conflict that we have never ever fought a war like this before. it is really complicated. the second thing is that what is referred to as nationbuilding. it is very targeted war fighting. >> david wood has spent decades covering for various news organizations. this week he won a pulitzer prize. he is one of the many poles surprised when this week. a list that includes john lewis gaddis. find over a quarter century of american policy and public affairs on your computer. >> at this house hearing, senator irs officials talked about the problem of uncollected taxes in the american system of

$300 billion. they bring this end justify the problem of identity theft. this house oversight hearing is an hour and 45 minutes. >> today's hearing of the subcommittee government organization efficiency and management will come to order. i certainly thank everyone for being here today, both witnesses and guests, and i welcome our guests from new york. we focus on two key issues. first, we will address the tax gap between what people owe in federal taxes and what the other is ultimately collects. second, we will review the increasing problem of identity theft related tax rock. federal taxes make up about 96% of the government's total revenues each year.

because of this, it is very important that the irs is able to effectively collect taxes, and enforce federal policy. the majority of americans pay their taxes voluntarily and on time. but every year, there is a gap between the amount of federal taxes owed and the amount of taxes that are collected by the irs. earlier this year, to address released its analysis on the tax gap easing data from the 2006 tax year. that data shows a 450 billion-dollar gap between taxes owed and taxes voluntarily paid. the irs recovered approximately 65 billion of this amount, making the net tax gap $385 billion. according to national taxpayer advocate, the average household must pay approximately $3400 more for the government to raise the same revenue it would have collected at everyone paid their taxes in full. there are many causes of the tax

cut, including intentional underreporting, the inability to file taxes, or not paying our taxes that are filed. because of this, we need an approach to achieve an effective and appropriate response and to close the tax gap. and third-party information to verify tax returns could increase voluntary compliance. the treasury department has recommended increasing penalties for people who purposely do not comply with federal tax law, especially egregiously. maybe more so, repeatedly. the federal tax code could also help to make it easy to file taxes and making it harder to commit tax evasion. we will hear more from our witnesses today about solutions and how we can close the tax gap and better serve all of our taxpayers. this hearing will also address identity theft fraud. identity theft affects dozens,

hundreds of thousands of taxpayers each year. it is a significant impact upon the victims. personal information is often stolen, including names, social security numbers and addresses. criminals file taxes and victims might not even know they have their tax returns stolen until they go to file their own return and the irs notifies them that somebody has arty filed on their behalf. fraudulently filed on their behalf. they can -- they can often take months to resolve this for the victim of the crime. tax fraud is a serious and rapidly growing problem that has been the focus of two hearings in the past. while significant work has been done in the past, and i certainly commend the irs for their efforts, we must do more to protect victims and do harm

right by lawful citizens. >> just as we, authorities reported that a man working for a health care nonprofit stole the identities of more than 50 brain injury patients to steal through fraudulent returns. the american people deserve a government that protects is the taxes they paid, and fairly, and equitably enforces the law. we need to ensure that honest taxpayers are not unduly burden because other do not pay their share. we must also work to reduce identity theft and prevent it before it gets to criminals. today we are joined by four experts to talk about these issues. i look forward to the testimony of our witnesses and to continuing to work with each of them and all partners, including

here within the subcommittee to better prevent tax fraud and fairly administer the tax code. with that, i yield to the previous chairman of the committee and the ranking member of the subcommittee and previous chairman of the subcommittee. my good friend and colleague from new york, mr. jones, thank you. >> let me thank the witnesses as well. i think this is a very timely hearing. this is the third hearing in a series held by this committee to examine how the irs is handling identity theft and tax fraud. as a hunter of march 2012, over 430 tax returns with 2.7 billion claimed in fraudulent refunds was handled by the irs. fortunately, irs screening of

those fraudulent claims were prevented from being paid. today, the irs is doing a better job of protecting the taxpayer and the treasury from criminals than ever before. and we salute you for that. we must stay ahead of the criminals and help the victims. one of the first priorities we must address is the quality of assistance. the assistance given to taxpayers victimized by employment or a tax refund fraud. the inspector general does not paint a pretty picture of how the irs will be able to handle this problem going forward. it seems as if tax payers will have fewer health centers, we are short $1 billion, and longer full-time on the phones with irs agents. i hope we can find ultimate solutions to these issues. today, we will also focus on the

450 billion-dollar tax gap. this tax gap equals nearly 20% of our forecasted deficits. our deficit for this visible year. we simply cannot afford to look the other way and just not do anything. part of the tax gap is a result of tax cheaters who simply refuse to comply with the law. which increases burden on the rest of us, but it could be due to unintentional errors as well. i'm sure we can all agree that the tax code is extremely complex. this complexity makes it hard for taxpayers who honestly want to pay their taxes to figure out what they actually ill. as a result, they can accidentally overpaid or underpaid. we must do more to understand

the sources of the tax gap and comply function comprise solutions so we can make progress by making solutions. we cannot close the tax gap by enforcement against the average american who did their best to comply with the laws. we also must work to reform our tax code in a way that will help us collect more of the taxes. more taxes that are older, but not pay. and let us continue our work to make the tax code more fair and simple. in order to do that, we must work together. i think our witnesses today, inspector general miller, mr. white, ms. olson, for your appearance here today. mr. george, i think all of you for being here. and i look forward to the

testimony with great anticipation. we need to make certain that people are protected and obligation lies on us to do it. by working together, we can do a lot better than what we're doing. this is not a committee to blame you and you blame us, this is a committee to find solutions. thank you so much, mr. chairman. >> i would echo your final comment there as well. we are about working with you and all to solve problems, not played the blame game. we appreciate the witnesses being here today. we will keep the record open for it to monday's board extra material and statements to be cemented. we are honored to have very good dedicated services and service

function servants who benefit the subcommittee today. we thank you for being here. we are honored to have mr. steven miller, deputy commissioner at the irs, ms. nina olson, national taxpayer advocate, the honorable george russell, inspector for tax administration, and james white, director of strategic issues. we think each of you for being here. we have had a chance to review your testimony, and we appreciate you spending that. it allows me to go through and make a note of things i want to get to during the time we have. we do appreciate having that in advance. if we could try to state to a five minute window, that would be great. and then we will come back for questions. commissioner miller, if you'd like to begin. i apologize. if i could ask all four of you

to stand, i need to swear you in. if you could stand and raise your right hand. do you solemnly swear and affirm that this testimony that you are giving this committee is the whole truth and nothing but the truth? thank you. all four witnesses have affirmed the oath. >> my name is steve miller. deputy commissioner of the revenue service. i appreciate the opportunity to testify today and update the committee on our work this season. the tax gap is the difference between the amount of tax owed by taxpayers for a given year and the amount that is paid voluntarily and on time. the amount includes the complete spectrum of behavior from confusion to fraud. the tax gap analysis itself is best seen as a directional tool to provide insights into areas where noncompliance exist and the means by which we can impact

compliance. as better explained in my written testimony, our work shows that compliance is most prevalent where there is withholding and third-party reporting. the irs recently received an updated study covering the tax year 2006, which shows that the nations compliance rate for that year is 83%. this is essentially unchanged, covering tax or 2001. the report also showed that the next tax gap for 2006 with $385 billion. the tax gap is comprised of three components. underreporting, on an no filing, and not reporting the. >> interview, any discussion on how to reduce the tax gap must consider three guiding principles. first, both unintentional taxpayer error and intentional

taxpayer, must be addressed. enforcement and service are necessary. second, different sources of noncompliance required different approaches. and third, any major attempt to address the tax gap by legislation, regulation or to increase enforcement must be considered within the context that fully recognizes taxpayer burden and taxpayer rights. in keeping with these principles, our strategy involves not only increasing enforcement activities, but also educating taxpayers about their tax obligations, improving customer service in order to make it easier for individuals and businesses to get the help they need to meet their filing requirements, expanding compliance research, and improving information technology. with respect to enforcement, the irs is making headway with compliance. over the last decade, tax collections have gone up significantly and audit rates have risen.

thus, we would ask for your support for 2013 budget. we believe the best way to impact the tax gap is to go through a commission of discussions on legislative change and responsible investments in the irs. now, to identity theft. in november i testified and described our ongoing work. in my written testimony provided an update on irs actions. what you will see is that we have implemented the many initiatives we outlined in november. as before, our approach is to prompt. first, we need to stop false response before they get out. second, we need to help those who have been victimized. we are stopping much more refund fraud generally. we have put various new screen filters in place to improve our ability to stop pulse returns before they are processed and before he refund is issued. the numbers are in my testimony,

and i am more than willing to discuss any questions that you have any particular area. on her work with victims, we have trained at 35,000 employees to recognize and be sensitive to identity theft. we have also expanded a program for identity protection personnel and id pins. for the 2012 filing season, we issued id pins to over 250,000 id theft victims, which will allow filing for those individuals. we continue to increase staffing for identity theft victims and will revise and streamlined our process when duplicate filings occur. again, i will say that we are not done. but we have made real progress in the area. mr. chairman, this concludes my oral testimony. i am happy to answer any questions. >> thank you, commissioner miller. >> numbers of the subcommittee, thank you for inviting me today

to testify about the subjects of the tax gap and tax related identity theft. both of these issues present challenges to tax administration. regarding the tax gap, the irs recently released an updated tax gap estimate of 385 billion in 2006, and the size of this estimate is understandably attracting considerable attention. there are many causes of noncompliance, including difficulty understanding and complying with the law, and inability to pay, and deliberate understatement of tax. i believe the complexity of the tax code is responsible for a considerable portion of noncompliance. and i have repeatedly recommended in my reports to congress that you simplify the code. while you are working on that and i am ever the optimist, that there are other steps that can be taken. first, the irs should be given the resources to substantially improve its taxpayer services.

the percentage of answers, known as the level of service, has been declining in recent years. for the year today, about one out of every three calls seeking to reach a representative from the irs hasn't gotten through. when taxpayers have managed to get through, taxpayers have waited an average of about 14 minutes on hold. the iris is also behind in timely processing correspondence, with a percentage of letters classified as over age and nearly half of all correspondence at the end of 2011. there is no doubt in my mind that some taxpayers give up in frustration or a beer when they find nobody is home and they don't file the page. this state of affairs made caused the tax gap to increase, by converting formally willing

people do not comply. i believe the funding level should be substantially increased. overall, the irs is an extraordinary investment. on a budget of $12.1 billion, it collected $2.4 trillion in tax revenue last year. bringing in about $200 for every dollar invested. yet the congressional budget rules generally require spending like all other spending programs with no direct credit to the funds that the irs brings in. that makes little sense. in my view, improving taxpayer service and giving the irs is sufficient funds to expand its enforcement programs in the proper way would go a long way toward maximizing the tax compliant. regarding identity theft, the irs has made significant progress in this area in recent years, including adopting many of my office's recommendations. notwithstanding these efforts, it is clear that combating identity theft continues to pose

challenges for the irs. three points deserve particular emphasis. first, the irs should continue to work with the social security administration to restrict public access to the master file. second, i am aware that from state and local law enforcement agencies, they would like access to taxpayer return information to help combat identity theft. significant concerns about taxpayer privacy, and this is an area where we need to tread carefully. as i described in my written statement, the irs is developing a procedure to allow taxpayers to consent to the release of their information in appropriate circumstances. giving taxpayers a choice strikes appropriate balance. lastly, i know that even if the irs is being urged to do much more to combat identity theft, taxpayers are clamoring for the irs to process returns and issue refunds more quickly. while there is still room to

make improvement in both areas, the tuples are fundamentally at odds. if our overriding goal is to process tax returns and deliver tax refunds, as quickly as possible for the vast majority of persons who filed legitimate tax returns, it is inevitable that some identity thief will get away with refund fraud and an honest taxpayer will be harmed. on the other hand, if we decide to place a greater value on protecting taxpayers against identity theft, and the treasury against fraudulent refunds, the irs will need more time to review returns. and roughly 110 million taxpayers who receive refunds will have to wait longer to get them. perhaps, considerably longer. alternatively, the irs will require a larger statue review questionable returns more quickly. there is no way around these trade-offs. i appreciate the opportunity to testify and am happy to answer your questions. >> thank you ms. olson. inspector general george.

>> thank you. they give her the opportunity to testify on the tax gap and the efforts by the irs to enforce plans in compliance with the tax code. it might come as also addressed tax fraud and identity theft. in january of 2012, the irs released updated estimates of the tax cuts for 2006, which indicated that the nation's 83% voluntary compliance rate was essentially unchanged from prior estimates. the iris estimated that the gross tax gap increased from 345 billion to $450 billion, as was indicated by mr. miller. my written statement included a table that shows the comparison between the prior and current tax gap estimates. as also stated earlier, the irs reported that the gross tax gap is comprised of three components. again, $376 billion in

underreporting of tax liabilities, $28 billion due to non-filing of tax returns, and $46 billion in underpinning of tax liabilities. the irs reported that the growth and tax gap from 2001 to 2006 was concentrated in the underreporting and underpayment forms of compliance, which account for more than nine out of 10 tax gap dollars. the irs also reported that the tax gap is also due to tax law complexity, confusion, and carelessness, and willful tax evasion or cheating. the irs needs to overcome institutional impediments to more effectively address the tax gap. these impediments referred to the established policies, practices, technologies, and business requirements that add unintended cause or are no longer optimal given today's

society. we believe the current impediments are namely compliance research, reassess strategies, determine how best to fix incomplete document matching programs, and find a way to handle the insufficient enforcement resources. every year, more than one half of all taxpayers pay someone else to prepare their federal tax returns. third-party reporting and transparency is crucial to high compliance among individual taxpayers. this reporting associated with the buying and selling of security is an area that needed third-party reporting based on previous studies that showed low levels of compliance. the new merchant card reporting requirements were established in 2011. they provide third-party reporting on business receipts for the first time. making it much easier for the

irs to identify businesses that are either underreporting receipts or not reporting at all. globalization of the u.s. economy has been a major trend for many years. the scope and complexity of the international financial system creates significant enforcement challenges for the irs. the rs continues to be challenged by a lack of information, reporting on many cross-border transactions. in this classification of millions of employees and independent contractors, it is a nationwide problem that continues to grow and contribute to the $72 billion under reporting and employment tax gap. more than 74,000 taxpayers were identified who may have avoided paying $26 million in social security and medicare taxes of 2008. we have continued to access the irs efforts in preventing identity theft.

on scriptless individuals are stealing identities at an alarming rate with false income and withholding documents. for processing year 2011, the irs reported and detected 940,000 tax returns involving id theft and fraudulent tax returns totaling $6.5 billion. the amount of fraudulent tax refunds the irs detects and prevents is substantial. the iris does not know how many identity thieves are filing this year's tax returns and how much revenue is being lost, resulting from the issuance of fraudulent tax refunds. we have found the issue with fraudulent tax refunds based on false documents go beyond the amount detected and prevented by the rs. and an upcoming report will provide further data. third-party income and withholding information at the time tax returns are processed is the single most important tool that the irs could have to prevent tax fraud. german flats, ranking member

towns, thank you for it the opportunity to share my views. >> thank you, inspector general george. mr. y.? >> members of the subcommittee, i am pleased to be here to discuss the tax gap, id theft, and how to reduce them. the gross tax summarized on table pages four and five in my statement, as you have heard, was recently estimated by the irs to be $450 billion for tax year 2006. this is the amount that taxpayers should pay on time. note that this is just for one year. of this, the irs estimates that it will ultimately collect $65 billion from its enforcement actions and from payments that are late from taxpayers leaving a net gap of 385 billion. one piece of context is that the tax gap is at the same level of

total tax liability for decades. this despite a near it of efforts. the text that is spread across various types of taxes, taxpayers and taxpayer behavior. most of the tax gaps is for individual income tax. but the corporate income tax and employment tax are also significant contributors. much of the gap is due to this reporting period even for a certain category, there is a variety of this reporting behavior. for example, in a recent report, we found that sole proprietors misreported their receipts and expenses, and some of each is unintentional, while some is intentional. one level, as you have heard, is easy to understand. withholding of information by

third parties, such as employers or banks, has low misreporting. only about 1% is misreported. on the other hand, 56% of rent, royalty, and sole proprietor income with little or no information reporting is misreported. there are opportunities to reduce the tax gap. ..

the problem is that most third parties that meet these requirements are already required to reports. another opportunity as approving services to taxpayers. for example we can take it through his sisters around 16 minutes this year. the model of human ancestors responding to tag payers may not be sustainable given its high cost. different strategies for answering taxpayer questions such as on the irs website works or pay tax preparers or tax preparation software will be needed. another opportunity is additional resources with tight budgets if irs's efforts to innovate don't keep up with work or a the risk is enforcement and

with that voluntary compliance will go down. that could snowball. a taxpayer would lose faith in the fairness of the system they could become less willing to comply themselves. another opportunity to increase in pre-refund compliance checks redoing my computer is checked before refunds are issued could reduce improper payment and might also limit referring fraud based on i.d. theft. leveraging external resource. such resource include a preparers, tax software companies and whistleblowers. we've made recommendations to help buyers leverage all three to reduce staff. modernize information systems to touch the dems cannot come close to help tax payers get the answers they need and support irs enforcement staff with timely access to data. simplifying the tax code, also been discussed to make it easier for taxpayers who want to comply do so successfully and make it

harder for those intentionally trying to invade to hire from irs. in closing i want to have it valued research on the nature and causes of the tax gap. such research is chisago at its congress in congressman iris have a struggling to reduce the tax gap without a fact-based understanding of its causes. mr. chairman, this concludes my statement. i'd be happy to answer any questions. >> i think all four of you and perfect timing here on the floor. i'm going to run over in mr. con man i will return very quickly as soon as those concluded and then put an end to questions with you. this hearing stands in recess to call the chair.

[inaudible conversations] [inaudible conversations] >> will come to order. i appreciate everyone's patience. we will conclude for votes in the vituperation that will yield myself five minutes to begin. certainly the numbers are pretty staggering when you think of a tax cap of almost $400 billion even after netting some recovery attacks is not properly paid what we talk about taxpayer identity theft fraud and the

fact we have hundreds of thousands of americans being fake nice and again billions of dollars every as. so the issues we are trying to adjust it a real issues and real money and about trying to protect american people as well. they are not paying $3400 to someone else's tax bills are not the victimized by criminals. starting with the area of the tax gap and commissioner miller, i guess it's kind of a structural question or framework. is the data we are looking back, the 06 data. we are now 12. and so, i think prior to that it was one of the factors that refer we have similar data. one, is there a plan that this year you're going to date began five years and now it is six years to update the data about

the tax gap? what is the difficulty in having it be more current? what is the difficulty in having it be more current? six-year-old data certainly is helpful, but it is helpful lewes 1-year-old bertie-year-old? >> i think that is right, mr. chairman. but the process has been to do examination. so for example, if we are to do 20 about a near comatose returns are now coming in. it would be a while before we would do our statistically -- statistical sample. using 1040 as an example we do 14,000 surge of research audits per year to update this. so it is a continuing path we are on. it will be a while. it'll be a few years before we compete those audience and are able to roll up the information with respect. 2006 is a long time ago. but i'm not sure how much better

we would able to get. i think we'll have an easier time going forward than we had in 2001. we did a better job in 2006 at better data, better estimating models. and we'll get more current. but i don't think wherever going to be -- it will never be a 2011 cat as the second 2012. >> i certainly don't expect the year 2012 we can look insane 2011 this is what the tax was. but the fact that it is six years data will show using, especially with technology and the thing that concerns me a little bit is we are still doing audits and completing and compiling audits from those six. >> 07 or eight, for your spot, fighters back. that is one of the issues in the inspector general races and the

ability to use the data we have and whether it deals with identity theft, tax cap. i understand that it costs money, but if we do a file and i am what you learn, it save money in the long run by helping to close the tax gap in this case. and so that is a concern that we are relying on six-year-old data and the need to make that more current so we can be more effective and how we respond to whatever the data tells us. >> mr. chairman, if i may add, i think the irs is doing what is the rolling research, so they're going to be doing for years rolled up in a time so you'd be able, even though you may be a bit behind, when 2006 is done, you do 2007, 2,002,009 go together and move one year on as you go wrong. and to the point about how long it really does take, if you have

even 2006, some people are filing in october 15 and you may want those people in your sample because they may be some complex concern to the way for those to go to the complex thing. silly than the 14 highest audits we had come that they may want to go to peer with before the for court. if they could tax court it may take a year and a half before that of tax court. we have to wait until we are final on the whole issue if we don't know what's going to be in the 14,000 sample, whether it's going to be tax court or not. so it's not an easy thing, but i think the irs proposal about the rolling really will work and give us, even though we have here supplied, it would give us good data going forward. >> i certainly appreciate some of these cases of the complex comes especially those in tax court. but again, we don't need the data for all 14,000 be able to

assess what is working or not. you know, if we lost 4000 week 10,000 to look at. it's 3-year-old data in a six-year-old data. that would be more beneficial. >> i was just going to add, that they are certain segments the tax gap that the irs hasn't adequately addressed, too. for example, the international tax gap. that's hundreds of billions of dollars per year that is due to the american taxpayer and treasury that isn't being paid on time if at all. and so again, is enormous at tacitus pointed out an additional resources or something that needs to be addressed. >> did you want to comment on that? i know that i know that it's a scenario where we have come and understanding, the most limited information regarding what efforts are. again, i realize this is an issue of resources.

i'm not an appropriate or come up to look at how we can try to make the case in the taxpayer advocate is well documented the investment with the services of a germanic return of an investment that is compared to enforcement and how we can try to help promote what your needs are. but when we hear of hundreds of billions of dollars that maybe we're not getting in that one category, how can we do better? >> some international tax gap, i'm not familiar with the inspector general's numbers to be honest with you. so i'm not going to speak directly to that. in international i can say two things. are not looking at a single number. you're looking at different components. you're looking at what is cross-border activity of large corporations and that is one step this document patiently with the guy. but we are doing operational audits they were to look at that and that is a window into the

world. the other world is offshore accounts, which as you maybe aware we've done a remarkably good job in. with 33,000 people who've come into us and wants to come in three years about $4.4 billion of declared money coming into the treasury to attack big secrecy jurisdictions. do we know the total number? to know the full pie in either case? probably not. but we are currently doing good things in those areas. >> yeah, i don't want to suggest that for not moving in the right direction, but i think to the american people paying taxes and doing their best to pay whether it's 5000 or 3000 or 10,009 when they see numbers, it was even tens of billions, but it's hundreds of billions not being paid, we need to do a better job out of fairness to those who are complying with the law and

paying their fair share. one other question before yielding to the ranking member. one of the issues were talking about this in the current system, we use the electronic system, especially for the reporting of it in taxes and we have a mandatory 94% requirement for irs and use and the like tronic condition. the way understood his or her suggestion or recommendation is if we buy the same approach to estimated tax payment, it would not just help the taxpayer, but ultimately generate more collection if we took that approach? >> we were very successful once the irs was given and manage to achieve this goal and employment taxes and getting electronic payments, which saves the whole

government money obviously because they're not processing checks. but it also makes it easier for the taxpayer after they get used to it. which apply that to estimated taxes. i think in some areas as hypertext years to pay estimated taxes quarterly. so if they can pay it monthly like they pay other bills and they pay a lot of bills through their banks bank accounts to setting up payments. we don't have a good interface. and so i think that if we could get some kind of a nudge from congress the fed goal, the irc has always developed a strategy and that we get the different price of treasury together to make it a good user interface for the taxpayer. >> is a kind of the same argument i'm making it clear that volunteered withholding agreements would achieve msn said in goal? >> yes, that proposal came from trade associations than that with me, is set for example of a

hair salon, they do have an employee like the receptionist. so they're already in the payroll tax system. the people cut here are independent is renting booths from them. but they get in trouble and move on because they don't pay their estimated taxes. to the hair salon said if we could get in the system will it hold the and keep them in compliance. we will have these people stay with us and we learned so to people. i worked as counsel, they said we don't have the legal authority to enter into those agreements the way that particular code section is written. >> does the buyer's general counsel need additional -- >> they need additional statutory authority. so this really was a user-friendly taxpayer friendly proposal. >> something were required to look at is a try to see if we can work to allow that. i think it sounds like a win-win for the person who has the

independent contractors working in their facility. they don't get to turn over independent contractor support. >> it's not voluntary. >> alternately taxes are better collected. go to the ranking member, mr. accounts for the purpose of questions. >> thank you very much, mr. chairman. let me begin with you, general george. her testimony indicates that the irs has institutional impediment that prevents them from effect to be addressing the tax gap. and of course he mentioned specifically that even when the irs examined the tax return that needs improvement, often there is no change me to the return and this increases the burden on compliant taxpayers. could you just elaborate on this just a little bit more? >> certainly, mr. accounts.

the bottom line is the irs has been the compliance research and specifically the irs does not know all the sources of noncompliant so the irs's resources cannot be targeted appropriately. the research needed is on the relationship between the taxpayers burden and compliance and on the impact of customer service on voluntary compliance. i mean, desert area studies that may have engaged in the past, but we don't believe they've done so adequately. additional research is also needed to measure how establishing benchmarks and other measures to assess the effectiveness of some of the efforts of the rss engaged in the past whether some team is working very sober name. so for example, we know for a fact that when they reach out to a taxpayer by letter, the initial contact normally results

in a relatively high response from the taxpayer. that is a taxpayer will either acknowledge that he or she owes the tax and pay it. and yet if the irs delays reaching out to the taxpayer and i don't have the exact numbers yet, but the number of weeks at number days, we note the response rate declines. so in a recent report, we encourage the irs to increase the frequency in which they communicate with taxpayers. and the irs, to my understanding has declined to do so. again, citing resources. but that is just one example. incomplete compliance strategies, the irs systems that identify terms for improvement to identify potentially noncompliant returns.

the collection activity that extends for years as the logo rate of collection for delinquent liabilities. the irs is something called the? , which is a database in which tax returns for people who owe taxes, which are candle by irs revenue officer's or any other method within the irs that earlier put in mind. in that line contains millions of tax return. and keep in mind, there's a statute of limitations when someone has to comply with their tax obligation. so millions of dollars are potentially abandoned and in reality are being lost because the irs is not simply addressed these returns, have someone assigned to them to look at them. one of the most disconcerting aspects of all of this is that the irs has an income sleep document matching program.

so the irs does not have reliable third-party data for taxpayers for taxpayers that is at least in file tax returns and most notably income earned by the self-employed. i carry this card with me and i say this at every opportunity that i can because this is information that comes from the irs that is very compelling. you heard earlier today a very high correlation between tax compliance and third-party reporting. the irs estimates individuals whose wages are subject to withholding report 99% of wages for tax purposes. self-employed individuals operate nonfarm businesses are estimated to report only 68% of their income for tax purposes. but the most striking number of self-employed individuals who operate businesses on a cash basis are estimated to report

only 19% of their income. so there's no question if the irs again would have to have authority from congress and some of these instances were able to mandate third-party reporting, the level of compliance would go up astronomically i would argue. >> mr. chairman, i need a minute to give mr. miller an opportunity to respond to some of that. >> thank you, mr. towns. >> there's a whole batch wrapped into general george's comment. a few things that like to clarify a good one, national research program that comes up with the tax gap is also used on annual basis to improve our filters. so it has the benefit us to do these things to improve our selection process because we have a living process that sax

filters in the results that we can target letter are noncompliance. there is no doubt we can improve and are improving on an annual basis. other things i will mention, the? in the collection area access, no question about that. cases go to the? when they are lower priority than other cases. other cases can be higher priority one because we think they are better dollar cases are because we don't have the resources to reach them at this point. we are doing a better job of select in cases where collection. it's not first-in, first out. i want to make it very clear. it's based on the attributes of the given case. thanks. >> let me ask you this very quickly. i appreciate your generosity. has anyone ever estimated or looked at the fact you indicate you have 35,000 employees in tax identity theft comes.

what would happen if you're 55 or 45? i mean, what the resources increase? i'm not sure that not having my staff is an economical way to go. >> so mr. towns, i would agree with you. i think nina has said and others at this table have said that we believe the irs is a pretty good invest in and that we are in essence the people who bring in $2.4 trillion in the 90% -- but the 90 percentile of every dollar that comes into the government on an annual basis. so i think is to pull people in we have pulled many people to work on identity theft. as we had to them as we should, that doesn't cut other programs. >> sir, if i might comment on some of the earlier points from inspector general. the irs does have a project right now that is looking into

the impact of service on compliance. my office is working very closely with the office of research and with the wage and investment division of her doing a lot of surveys of taxpayers. and it will be very interesting what we find out. and this is a constantly developing area. i've been critical of the irs is collection strategy and your use of automation and failure to just pick up the phone and talk to taxpayers because i think you can really get resolution. but the notice dreamweaver sent notices to taxpayers early in the system are in the process theory for days. what that leaves us with are those taxpayers who are going to willingly come forward and need maybe a little nudging. and it's how you do the matching. the main point i want to talk about is the conflict that are incomplete document matching. we been significant tools of the merchant card reporting. you will just repeal the provision that would've given the irs for information about the purchases that businesses

need, but the upshot and we've really criticized the provision because it imposed so much burden on businesses who are going to have to do reporting. i think that is a trade-off and in the self-employed area the way to get information reporting on the self-employed is to get the householder to report in the person who is cutting their grass every week. are not going to get that done. that is just not something we can impose on taxpayers. that's what makes it a vigorous audits and areas of risk and think of alternative strategies. i'm not convinced that information reporting is the end-all be-all for this tough area that we have god. >> also included whatever your responses, getting back to third-party reporting, do you think that rss taken full

advantage of third-party reporting and whatever else you have to have? >> let me start with a quick ample that highlights the importance of research. i want to follow up on mr. miller's point there. the recently enacted basis reporting requirements for financial transactions, financial securities, that policy proposal was based in significant part on research that was done using the compliance data that irs develops to estimate the tax gap. and so that is an example of how you can use that data to make changes to reduce the tax gap. it is estimated the first seven years of the basis reporting proposal bring in $7 billion. that is the reduction in the tax gap. in terms of information reporting, third-party information reporting, one of the advantages they are as i think has been discussed somewhat is irs can match the information to tax returns

rather than having to do an audit. audits are labor-intensive, very costly for irs. more importantly, very burdensome on taxpayers. so this is an alternative for audits for enforcement processes. the difficulties in identifying new information reporting sources. there are some we have raised in recent report. some additional sources. >> if i can ask you, mr. towns if you don't mind, mr. connolly needs to run for a floor statement. if we can kind of go back and then we'll come back to those two examples of additional sources. is that okay? >> i think my colleague. >> mr. chairman, i ask unanimous consent to my opening statement be entered into the record. >> what that objections a worker. >> i further request the collins

be prepared statement also be entered into the record. i think the chair. mr. george, i think he said the $450 billion tax-cut. >> gross, yes. >> that's this year? >> that's 2006. >> 2006. and it's growing? >> yes. i believe it's a lowball figure and part of the earlier discussion said it doesn't put us back such as international tax gap. >> understood. to think there's relationship between the growing gap and the reduction since 1995 and revenue offices and agencies? if they had resources they reveal that could additional tax. >> just for the sake of argument, $450 billion in money out to the government for not

collecting. that's the tax gap this? >> roughly. >> times 10 is $4.5 trillion. now here we are sweating. cominco bake at 4 trillion sweating the sequestration of the 1.2 trillion. this would be a big dent in the dead if we simply put the resources in the irs to collect money that is owed. over and above that, this committee, the subcommittee that by my colleagues, mr. platts and mr. towns has done work on the issue of improper payment. and i think you are covering that in your testimony. what is the estimated annual improper payments? mistakes get made, refunds get sent to people who clearly didn't call aside for them in amounts around him at every baby. what is the estimated annual improper payment for irs? >> just give two examples.

>> is there a? of 50 billion is a tax gap had was a comparable figure for annual improper payment? >> let me respond by saying i can tell you definitively under the additional child tax credit estimated at $4.2 billion a year out of the irs under interpretation from treasury disputes whether that's an improper payment. you know, we don't believe -- the i.t.'s office doesn't mean the lawyer authorizes the payment of additional child tax credit to people who are not u.s. citizens and don't have -- >> yeah, but we're dealing with global members here and it would be useful to have a number. the total amount estimated for the federal government's $125 billion a year. >> and of course he earned income tax credit is estimated to $13 billion here. but i do not have it quotable number. >> are tax-cut numbers say that tax credit as part of the

underreporting gap are about 28 billion of the 450 or 6% of the gross tax gap. and so that includes a number of refundable tax credits. >> all right. mr. miller. >> 's ability to is the difference between an improper payment which is what we know and shouldn't have gone out. >> i agree with you. i'm making that distinction in trying to get what is the number. >> i don't have that number. we can come back. again if you set a goal of making it zero, understanding that's probably an impossible tax that backing into that, what would be required to close the 450 million-dollar campaign to better get a handle on the improper payments because, you know, we are making incredible come in my opinion, sometimes egregiously poly- decisions that

are touring the damage to united states of america, cutting on investments that are important to fleece a competitive and in front of us as a source of revenue we are owed except this body is not going to make investments in irs we need to make. what is very clear from the testimonies for every dollar we invest in irs, especially in terms of compliance, we have a big return. without pain and suffering. and it puzzles one why congress wouldn't seize on that opportunity is one measure to put her through dent in the debt without having to create national tv. if i may, mr. chairman and then i promise -- you talked about offshore tax payments, is that

correct, sir? >> yes. >> is something every average american taxpayer has, right? >> i hope not actually. >> what percentage of tax filers have offshore accounts? >> i don't have the percentage with me, but we know the ones who are declaring them are either under the nascar rules or under our new rules that call for a check box on the 1040. we will find that out when the 2011 regards fully come in. >> and that is a legal loophole in the last that someone can take advantage of? >> it is a permissible act. obviously was made inroads on offshore and also have de facto rules that will require banks to report to the united states those who have foreign bank accounts. >> i can't because anyone who has those kinds of accounts.

>> according to one study the income paid in taxes for the top one 10th of 1% of taxpayers in that top bracket has declined from 70% to 40%. and if you look at the mindel income quick dial, it has increased 14.9% to 20%. that suggests a rather dramatic regression in taxes. and they do fact the tax code were living with. would you comment? >> i wouldn't build a comment. >> are those numbers after a quick >> i'd have to check your >> would you not agree at the top one 10th of 1% from what used to pay 70% of the percentage of income paid in taxes is now 40%, that asserts enough progress. that is called regression.

>> so that is outside of what the deputy and internal revenue would be speaking about, sir. >> ms. olson. >> sir, i don't have numbers. i'd be glad to look into them and get back to you. >> would you agree that would suggest that de facto income tax in this country is becoming more aggressive, not for progressive at the top one 10th as paying a must-have for what it used to be? in the middle quintile? >> circum- reason why it's difficult to answer that question is i've just been looking at historical data and it is not clear to me the highest income taxpayers are paying less than what they might have done historically. so that is why sandy to look at what you're asking me in the charts that i've got to appeal to reinsert.

>> i have to i have to say to you, ms. and the numbers available to me quite clear. they are not ambiguous. they declined significantly in terms of the total percentage of income tax collected by the irs. mr. chairmana thank you at thank you, mr. accounts for your indulgence. >> i think pajama men. put associate myself with each anonymous comments about the need for us to do a better job of making an investment with revenue suffers to get the return on that investment for american taxpayers. similar to how the three of us worked together on funding levels for government accountability office and advocating to the appropriations committee members and staff on the return. the firm but there were $86 for every dollar spent at gao. i'm glad to work with you and miss talents of others on something similar that makes the case in advocates and members

present up really well with the return on investment is. with that, back to mr. accounts and if it's okay, mr. white if he wanted to include some examples of additional data collection that would be helpful. >> this additional information reporting. two things we were back in. when his payments to services, not payments for goods. the survey purchase of services perhaps some contract terms, outside contract cursor may be incorporated. if you're incorporated, that does not have to be reported to irs. if you're not incorporated it is have to work at. so one suggestion for additional information as to extend not to contract resort inc. payments for services with real estate where we've recommended reporting. for additional information can

be provided. one is on reporting on mortgages. currently the 1090 forms the mortgage information do not include the address of the mortgage property and that creates problems for irs in sorting out suspicious returns from correct returns because it's not easy to tell many properties some unknowns. but for both sorts of opportunities to. one other point i mentioned is quite a bit of discussion about return on investment. recent work we've highlighted the importance of doing more abstinence both for proposed initiatives and then after the fact train to calculate in trying to measure the actual return from investment on compliance initiative so that serve as far as what his benefactors, what's been lost is

that it than i thought it would be and that raises the possibility of redirecting resources to get the biggest bang for the buck. >> okay, mr. george. >> we talked about the need for the irs to receive additional information, third-party information to enhance revenue collection. what is just as important as once the irs received this information, what it does with it is a problem that we've reported on before whether it is the 1099 or what have you. the irs will receive this information from an employer and then will receive a tax return seeking a refund and about match the two in time to ensure the information is accurate.

so if someone wants to commit tax fraud camino, they were able to claim more than a refund and they are entitled to because the irs did not timely basis compare the information and that is a major problem. yes its resource derived in terms they are having fewer computer systems are revenue officers and i would affirm mr. miller to handle that internally but it is this second problem. >> miss talents, i agree with general george. it is a significant problem that stems from a number of reasons, the key of which is timing. but after 1099 with a double w. too often. we do what we can. but under the current system, we don't have the information to match. we have recently started talking to the community about being real time, which is exactly what

the generals talking about. the most information we can have attended the refund the better off we'll all be. we should have the dead p2p reached we 1099 with respect to that end so we can validate that it is the person they should be getting the refund and two, that the amount is correct. >> how can we get that? >> so we receive many 1090 nines due march 30th and we already are 70 million into the reefer and stream by that time. >> what changes -- you know, seen in terms of what we can correct, you know, that is the purpose. so what needs to be done? >> you know, this is something that by office has proposed several years ago. we did a study, looked at many different countries around the

world. many countries and i alluded to this in my testimony of a. they don't start failing. they don't issue refunds until the filing season is closed and they've received all the terms of a fetid chance, including information returns may fetid chance to run everything again to do matching and then the issue the refund. the united states, people show up the first week of january to file their returns to get a refund. it would mean a major shot to the system. i do understand -- i understand that the payroll processing companies have said if all we needed was growth wages and withholding, that they admit w-2s could basically provide us that information within the first couple of weeks of january to file the information classifying nontaxable health insurance and retirement plan.

that's what takes a little bit longer to process. so i think the irs is looking a nice commissioner miller said, we are engaging in conversations now with the information reporting fact or to see what we can get early. i can also tell you australia took a very interesting approach. throughout the united states is doing as they sat with partners like a major banks and some of the major employers and said that what information can you do this very quickly? people voluntarily came and said we can get you this very quickly. and then they told taxpayers if you wait until this day, filing season starts here. if you wait until this date you can go online and see the information we have. so you can be sure what you get. so the voluntarily ask taxpayers to rate in the filing season. because they had a presold returns that taxpayers could just sort of download that information and fill in the rest of the staff, it was viewed as a

very positive thing. now, they're really getting about 40% of their taxpayers are actually waiting in using the information that the agency is getting voluntarily. and they get to the point where they may appeal to say okay, now we are changing deadlines because we are seeing people move to later in the filing season. and that is the approach we've recommended. use of voluntarily. make it as a desirable that taxpayers away because they want the certain d. negotiate with partners like the irs is beginning to do. rather than bringing a huge shock to the system that taxpayers are desperately waiting for a refund early. >> mr. wade. >> just to add a little bit to those, a few other considerations in addition to the burden on the third party changing the filing date for the information returns, there does need to be enough time allowed

for them to ensure those information turns are accurate. if they're not accurate and have barriers, very much that's useful for the irs because they're fighting false positives and contact contacts fears about a mismatch when there may not be a true mismatch. one other point about the value of this kind of information return match in early on before refunds are issued is that it would to some extent be a long-term solution or at least a partial solution to the i.d. theft problem. irs would appeal to do more verification before issuing refund to detect illegitimate claims. >> you kno >> you know, you've mentioned this, mr. chairman. you mentioned statute of limitation. there is no statute of limitation on for a period >> that is correct.

the perv in the front, i iran, which first? it is in the? if it is fair for five years, that is the statute of limitations. or someone having to pay their tax obligation. the irs hasn't got to it. it is that of. you can correct me if i'm wrong, commissioner, so if they haven't proven by then, how do they know it was fraudulent? >> much of the tax gap is not an aikido. there are significant parts of the tax gap that irs doesn't detect the scent of identifying the particular taxpayers that know that amount. one of the issues here is that a significant portion of the tax gap is a very small amount of money spread over millions of taxpayers. there aren't a lot of small businesses that have reporting

problems, both intentional and unintentional. they are small. by definition tax liabilities are small and it raises the question of whether it's worth going after because defined the unpaid taxes in many cases you have to honor them. and then another question is how it treats if you want the tax system to be to find those relatively small amount spread over again millions of payers. >> so if i could. there is a 10 year statute for us to collect the money. and i think i would agree that the older and coated the back of the less likely it is reported to collect, just like any other data. but we do have offsets that occur constantly another liens and tools they do make use of that data and those accounts are collect it on. >> something mr. white said. it seems other than direct

enforceme3 it seems other than direct enforcement that are very valuable tools, commissioner miller mentioned the refund offset. large percentage of selection occurs because a taxpayer has sat with us, but they get a refund in a future that is just the computer seemed a refund and grabbing a panic us into the public treasury. but another thing the irs is doing this year is some behavior modification sql. we've recommended several years ago missal proprietorship return that you break out the line for reporting income, we say here is income from 1099 as reported on 1099 to filing here is that their incomes. i just knows a formal return repair that my clients would come in and show me their 1099 income. we see clearly i am not going to audit your books, but clearly you have more income from this that you brought in. yeah, $100 or something.

was he forced taxpayers to articulate, they will look at all their money into the 1099 cd pirates is going to audit if i don't report money on this other line, the non-1099 income. so suddenly disappear, even if people are now reporting $100 go to a thousand, that's $900 per taxpayer and that's a lot of money. so we've used in that in the past, behavior modification that drive people to little more compliant behavior because they think we're looking at them. and that is a very important tool. that's really the policy behind information reporting that she got to sing up for third party. you can do it for what they have to report on their returns. >> thank you, mr. chairman for your generosity. the gentleman is more than welcome. i want to turn the discussion a little more toward specific identity theft initiative to ranking member and i have focused a lot of time on with

their staff and outside the subcommittee staff. certainly want to commend the irs for increased focus on this issue. and they certainly necessity as we see the numbers going up each year, those seeking to defraud the american people for identity theft related to tag refunds. i know one of the issues is the taxpayer protection units that have been established and benefit them of petty theft are believed to have a designated unit. that's an important stat. i'll tell you one of the things that jumped out to me and it was a tax for advocates testimony that is just and except as the level of service members and understand that in general this year was about 60 plus% levels

of service and yet when the taxpayer protection bubbles in mid-march was under 12% and even in this past week, the heaviest time is only a dirty fight%. and i look at that event we are going to create a special unit for those who had the demise and have been with nice by criminals because those identity theft. with that of a special unit for them to call and we are only helping not even two thirds would be at the highest vote assistance dedicated to their assistance. and even those who do get really good assistance, according to the advocates testimony, the average wait on hold was one hour and six minutes. that is not how we should be treating it turns. and it goes to our previous discussions here that we need to recognize this for what it is.

it is a victim of a crime that we set up a special unit has a good thing. but if the unit can't deliver to help with the dems, that's not a good thing. and so, dropping to 60% of the series overall turn are dropping at 12% for those that are supposed to help those who think it denies them even as the guy pal pad to wait over an hour on hold. anybody mr. and enjoyed being on hold for over an hour? i don't think so. i'm amazed anybody sit on hold for over an hour quite frankly. that is just not acceptable. and now, that is not how you treated the mother crying. so i want to recognize that you are trying to do the right thing here, but we are are from where we need to be. >> chairman platts, just to make a clarification, the unit that number went to is different from

the unit were taxpayer suit a bit a has been identity theft the dems called the irs out of the blue. the unit of statistics go to our unit for the irs has sent taxpayer letters instead we need is a question about your return and we are not going to hold it. >> absolutely. and if i did make that clear, whether there's a believe there is identity theft here and we set up a special unit for them to respond and then they put them on hold for an hour if they get through an as the numbers show the overwhelming majority do not. >> i agree, mr. chairman. i was unaware that 35%. i thought we had resolved that. i know we've added my staffing and maybe we have not added enough. >> not only do they not had adequate staffing and extended wait times, if someone calls

back to find out what the status is of that case, they are sent to someone who may not have seen the case before and not handed to the same person who has the institutional knowledge of their case. in addition, such as recent tax filing deadline, people normally assigned to those cases are reassigned to answering regular tax concerns from other taxpayers who does he have a number or who walk into taxpayer assistance numbers. so there is the way the irs concert rerun the system a lot at it than it is. >> general george company raised an important points in whether the irs has the depth is or not. especially you set up a special unit to respond specifically and certainly at a fraction of the numbers here. but antiquated to my office are ranking member time for this.

we have over 4000 new constituent cases either as an office. i'm not as individuals. now somebody calls in the person they are working with is not in, another member of my staff can pull up their case to see if there's been anything updated since i last talked to the staffers. there is dedicated staffers they are working with. and that does make a huge difference than having to start over. and so, i do not know if that's anything but the irs is the day doing so when you call in, once you make that contact, and that she then had the case manager that you should be dealing with so you're not starting over and having to reeducate every time you call him, is that something considered? >> it is considered and i don't know whether at work or not to be honest. generally and i think that the taxpayer advocate and i may disagree on this.

we don't necessarily have the resources to say this is your person. but we ought to be doing this to ensure whoever does get on the phone with you has all the information out of them and that is that we try to do. >> is that done to the case us electronically that whoever helps you is then allowed documenting. >> that is our attempt. and remember we are talking about this is a microcosm of the labor doing business on the phone generally, where we can necessarily, our systems do not permit a person. we don't believe it's the most efficient way to it and we can't do single number two single person at this point. so we are looking at it in a perfect world and an individual was assigned to my account and we have not been able to get there in terms of resources or systems today. >> all i know is not just an identity theft, but in correspondence and automated collection, some of the most significant and frequent

complaints agaric taxpayers see and i talked to four different people, had to explain my situation over and over again for each one. at that dissent within its people is people taking you can't read. you cannot build a story from the notes. you do not know what the person before you did. into mr. white's point, this is where you go into return on investment. to do the analysis to say by saving pennies, you know, but having anybody answer the phone, whoever is the next available person, are you really saving money downstream peer group is the wrong result of the tax payer keeps going to announce a service area to employees work in the case, mine and the irs employer coetzer appeals, which is the higher grade employer he got a tax work we've got the lawyers and paralegals and tax court personnel involved. we really do a good return on investment and you're not saving money. >> and when you add to the data shared here today that we know

that our best chance of eliminating the tax gap is the voluntary compliance of the person who is calling and is trying to figure out -- and i was using the example of the type them calling in because they been defrauded over the demise, but for an icon and from the fact that colin is a good thing. they're trying to resolve the case we want to give them the assistance they need and the data shows that. and that goes to the issue of taxpayer services car return on investment versus enforcement. and so i think it is, you know, a loss. it doesn't seem to be a well thought out approach. let me -- in an issue where i want to acknowledge but i think it's a very positive step in the identity theft if i understand this correctly and are sent in to be raised in the first hearing on identity theft last june i guess it was.

and that is somebody fast return gradually. for legitimate taxpayer files to return and find that when someone already founding father refund and it's going to take a while for us to work through. it even when that happens, you know, and we work on shortening the timeframe for the victim to be made whole, but in the past that the gun couldn't get any information about the fraudulent conduct, even though it's admitted in their name and social security. as i understand the general counsel has said the legitimate taxpayer has a right to that information of the fraudulent material submitted and then can authorize i want that information i want to be able to share with one worsening. i'll use the enforcement of a couple citizens who testified last year. i guarantee if they had been given a year ago the information, they would've gone to new york with the information

, gone to the n.y.p.d. and said listen, here's for the chat client. plus get the photos from the bank and show who came in collected that money if they had any information. and at that point they were being told now. is that correct that it's been changed and they have the right to the information? >> so it is correct, mr. chairman that we have the opinion of counsel that we can share that information. it will require what we do as we speak, ruling out a pilot with some local law enforcement. the real issues we cannot share this information with local law enforcement. ..

>> the final issue is more broad and if any of you would like to comment when

it comes to the issue of timing, that chain documentation with returns. i know it is a balance between a quick refund those one to be quick most taxpayers don't have to wait for refund if they want to adjust the buyings and get it in their paycheck instead of the one lump-sum talk about behavioral management management, i am one that is forced savings i would rather get to a check back $1,000 instead of writing a check. but it is a choice but every taxpayer has to ensure they don't have to get a refund.

they can no money and come out ahead to write the lonesome check. how rebalance the quick refund against the risk that we cannot match? today with electronic filings and as that is more and more normal also is the ability the typical individual not just a computer but to a printer and sdn. if you file electronically you have to ski and your w-2. rather than wait to mail it

then then when you electronically submit, is it 65% for hire that use pay? >> it is above 60. for those especially i guarantee if you are a provider you can scan your document is a given. is that something we should consider? >> two separate points with the four savings' it is true for you and i but less as you go down the income scale with the earned income-tax credit. with changing circumstances. >> that is a very relevant point*. on the second piece, we need to look at everything we possibly can. we need to get better with

ever screening and get as much informations as fast as we can to apply to refunds. on scanning, we should look at it. to be honest, we still get a lot of paper fraud. i am not sure that of itself may be a piece of a larger strategy but not of itself would it be a game changer for us. >> i have same concern that the fees are making up i did you to getting one from the taxpayer does not mean it is legitimate but you have to have their return. that is where the deadlines from earlier for those due

dates were set many years ago with more modern technology it could be possible for third party or certain kinds to submit much earlier in the filing season to be matched. other things need to the place as well. the irs's modernizing their system and we need systems of place to handle masses -- massive amounts of data. you talk about a lot of information to match very quickly so you do not make the taxpayers wait for refund. >> if they allow those people to download electronically but you are right. it is $65 to purchase.

>> we think allot about behavioral modification the anticipation loans you could get the dollars to more no suddenly the irs getting many with direct deposit within 10 days looked like a long time. we need to think hard with messaging what is the reality of the filing season and they want to do the refund screens may be the first year it is hard the kids you depend on the money but did you can adjust your behavior and depend every year the lower income use it for their heating bills or buying refrigerators, school

clothes, we have to work with the larger community to get people used to it but the irs has to step up to change expectations and behavior. >> two final questions. when the immigration is provided with a plush on certified tax preparers preparers, when there is a professional or paid to they have to certify or sign in some way they have seen the supporting documentation? >> i don't think this signature means that.

what exactly are they signing? the due diligence they are required to do is at a broader level than that. but i can come back more specifically. >> looking at contact talk about the issue of debit cards and what percentage of a dent the theft and fraud is paid out on debit cards vs. into a bank account for a criminal to access money in a big account there is a trail to pursue criminal conduct, a different band-aid debit card. >> we have to come back to that. we have ceded increase. you are right.

>> back goes to the broader issue of the assessment of the information that we have. if we identify 400,000 possible cases of identity theft, what percentage were asking for refunds on debit cards? should be issued debit cards? >> i am not sure that we know that. >> we need to know that. >> the financial management services sees the account number it does not know if it is a debit card or i'll bank account that is done by the software providers. fills our discussions on going. >> would you hear the testimony where of former

drug dealer has 50 debit cards that were fraud fraudulent returns some evidence there are organized criminals doing this using that method more than any other method for broke i am after the data and analysis. >> no doubt we see the same story is that there are rows of debit cards. i want to make it clear. if we stop the refund the criminal still has said debit card just nothing is loaded on it. it will be stopped or by the company by us so those tax i am sure they have money but it should not be assumed

that all of them do. >> a final comment. on identity theft i just want to real precise about the victims, legitimate taxpayers who are victimized , no more egregious example then it was reported this week a fallen hero who gave his life then his parents learn they not only lost their son but he was victimized related to the refund. that epitomizes what is occurring. what we need to do right by that family and every individual family out there. with those legitimate law-abiding assistance if and when they are, i know we

can do better in that regard. i want to thank you for your patience and their ranking member. we're trying to work through the issue with you. whether adequate the mundane for the reset -- resources to make that return on investment, the alleged authority but on all aspects comedy you have a final comment? >> i want to clarify one thing about the statute of limitation. with the 10 years to collect their is no statute to one bill vol fraud but three years of the ira's ability

examination so that is something we need to clarify >> i appreciate that. any closing rex? >> i just want to think the witnesses and say if there is something we need to do on this side, appeal free to let us know. i think the areas that need to be dealt with and working together we can work together. thank you, mr. chairman. >> we will have a record owe been for seven days for the extraneous material and we appreciate the witness's testimony. this hearing is adjourned.

[inaudible conversations] >> after flying 39 missions the space shuttle discovery and arrived at the smithsonian. upon arrival in virginia at a welcome ceremony was h he of it with

remarks from the directory of the smithsonian and then john glenn. [applause] >> is a pleasure to be here. i have a general who reports to me. he did not choke up but under his leadership on the dulles airport grounds are the two magnificent museums so we're so proud of jack and his staff. give them a hand. [applause] we are pleased to be here and we value our great partnership with nasa and dollar brings to the american people. i am proud to be here with the region's chair. i would like to ask the board to stand up.

[applause] of of course, it is always an honor to see john glenn who is the supporter of the smithsonian and a legendary pioneer of space travel. [applause] discovery is just the latest year that senator glenview's and personal exploration you can see the county was strapped into for the mercury program or the drugstore camera he bought and bonafide to take on french ships seven. now this magnificent engineering marvel -- marble will be a centerpiece here. as famously noted, there are no second acts in american lives. senator glenn disprove the

notion of this very show at the age of 77. now discovery begins its own as sec and act with imagination, education and inspiration. as transportation secretary ray lahood said, that was a great moment in american history has thousand stood and cheered as discovery made the final play. 2009 i have a great pleasure of introducing senator glenn at the aerospace museum. we were there to commemorate the 40th anniversary of the apollo program and he said something that struck me. he noted 1969 people all over the world said we landed on the moon. all cultures across our planet per. most people made a personal

connection to the shuttle program and discovery. my brother was a nasa employee and worked on the shuttle program from the inception. i was touched win georgia tech alums brought back flags from space for the archives and two were from commanders who are here today. [applause] discovery and all space shuttles bridge cultures for astronauts represented the spectrum of a diversifies -- society from europe and japan and canada and the international space station. no matter where you are from, with hard work and dedication learning math and science and a engineering you could travel to the

stars as discovery embarks on its mission it will continue to teach the lesson. of the they have a chance to see it in person rican reach many more worldwide as we do this as sony websites. people share their comments on facebook and youtube and it twitter and purchase of prince on tuesday goods bought the shuttle and the results in 24 hours were remarkable. it generated 10 million people talking about the landing of the discovery. that has helped us bring science and education programs to the people of the world. where special excise about potential to help students and inspire young people everywhere. they will grow to be the

next engineers and scientists to build the next great advanced spacecraft. ball goes to get the observatory represent the best. maybe young visitor will be the first astronauts to step in the foot on a distant planet and another universe. discovery is not just a reminder of ingenuity to solve problems but a challenge to keep the wisdom of apollo eight this operation is essence of america in the spirit. but the discovery read channel the spirit so that we realize we can do again. thank you. [applause] >> thank you dr.. our next speaker is himself an american icon. at 90 years of a gs sir

country in many capacities and contributed to the space program in many ways. in november 83 see the highest civilian award bestowed by congress the congressional gold medal for his contributions to use space exploration it is my privilege to introduce a marine aviator who made his historic flight 1962 and return to space aboard discovery 36 years later please welcome senator john glenn. [applause] [cheers and applause] >> thank you. thank you very much. perhaps it started with the

pioneers to first lived in this way and americans always had a curious nature that has served us well. what is over the next hill? around the next bend? in the laboratory we can burn how to separate out this chemical we could do whatever. it paid off beyond their wildest dreams. they send out ski at -- scouts from wagon trains with insurmountable obstacles of deserts and mountains and whether. sometimes there were losses but they pressed on. a good day trip was about 10 miles. has a made this six month journey to california. discovery could travel at

10 miles into seconds although at a higher altitude. meanwhile new science breakthroughs what they replaced wagon trains gasoline engines brought on automobiles and 23 years after the last wagon train the right brothers flew at kittyhawk 1903. for thousands of years people looked up at the blue sky by day and the stars and moon by night and wondered what was up there. could we ever go up there? what would we do if we could go up there? almost the insurmountable odds, we must counter sells

the most fortunate people time to realize the dream to finally go up there. as remade the sub orbital flight just 59 years after kittyhawk. mercury and gemini developed our abilities followed by apollo and neil armstrong first ever footprints on someplace other than earth. the transition to the space shuttle which was intended to broaden opportunities for activities and it certainly did. discovery is the star with the most extensive record. 39 missions include a scions platform nine flights, satellite launch and 12 flights, telescope

repair station which charlie mentioned. has literally rewritten the astronomy books were all-time man served as a truck and the first space station delivery truck 13 flights were made to put together the space station. discovery was of heavy hauler of the international space station and it is now doing continuing research with 15 international partners in the most unique scientific laboratory ever conceived. the unfortunate decision made eight and a half years ago to determine -- to terminate the shuttle fleet prematurely grounded discovery and grounded research but the decision has been made and we move

forward with new programs and possibilities that will not limit us. [applause] today we also honor those who may discovery possible scientist and engineers, the most complex machine ever built, that technicians and dedicated work force who capt. not only flight were the but excellent through the many years and the nearly 250 astronauts' that plan one discovery represented here today by the former flight commanders. today discovery takes on a new mission, less dynamic but important. it will be on display natalee as a testament to events of overtime also allows an inspiration to future generations a symbol for our nation's, a space

flight that shows optimism and hope and leadership and aspirations to explore and to excel. that is a big mission in its own right recently celebrated the 50th anniversary of the first orbital flight. and a speech to congress cyclos with a statement i will repeat today. as our knowledge of the numbers in which relive increases, my god grant us the wisdom and guidance to use it wisely. thank you. [applause] .