collected. yield to ranking member mr. counts -- towns. >> let me begin with general george. your testimony indicates the ira's as two impediments that prevent them from effectively addressing the tax gap and of course you mentioned specifically that with the tax return that needs improvement, there is no change and this increases the burden on taxpayers. could you elaborate on this a little bit more? >> certainly. the irs has incomplete compliance research and the irs does not know all sources of non compliance so the irs's

resources cannot be targeted appropriately. the research which is needed is on the relationship between the taxpayer's burden and compliance and on the impact on customer service on voluntary compliance, various studies may have engaged in. additional research is also needed to measure hall establishing benchmarks, and effectiveness that the are harassing gauge in in the past. so for example we know for a fact that when they reach out to a taxpayer by letter the initial context normally results in relatively high response from the taxpayer. a taxpayer will acknowledge that he or she owes the tax and pay at and if the irs delays

reaching out to the taxpayer and don't have the exact numbers yet for the number of weeks or number of days we know the response rate declines. in a recent report we encourage the irs to increase the frequency in which they communicate with taxpayers and the irs has declined to do so. that is just one example. complete compliance strategies that the iris system identifies and returns to examination, need improvement to identify non compliant returns. the collection activity that extends for years has a lower rate of collection for delinquent liabilities. the irs has something called the ku which is the database in

which tax returns for people who overtaxes which are not handled by irs criminal officers or any other within the irs literally are put in line. that wine contains millions of tax returns. keep in mind there is a statute of limitations on when someone has to comply with their tax obligations. millions of dollars are potentially abandoned and reality being lost because the irs has not simply addressed these returns have someone assigned to them to look at them but one of the most disconcerting aspect of all of this is that the irs has an incomplete document matching program so the irs does not have reliable third-party data for taxpayers for all taxpayer sectors for all tax returns and most notably and confirmed by

the self-employed, i carry this card with me and take every opportunity i can because the information that comes from the irs is very compelling. you heard earlier today there's a high correlation between tax compliance and third-party reporting. the irs estimates individuals whose wages are subject to withholding report 99% of their wages for tax purposes. self-employed individuals cooperate in nonfarm businesses estimated to report only 68% of their income for tax purposes. the most frightening number is self-employed individuals who operate businesses on a cash business are estimated to report only 19% of their income. there's no question that the irs would have to have authority from congress, were able to mandate third-party reporting,

levels of compliance would go up astronomically i would argue. >> i need a minute to give mr. miller and opportunity to respond to some of that. >> mr. white very quickly. >> there is a whole batch racked in to general george's comment. a few things i would like to clarify. our national research program that comes up with a tax gap is used on an annual basis to improve our filters. it has a benefit to us to do these things and improve our selection process because we have a living process that filters back into results we could target or noncompliance. and we are improving on an annual basis. other things i will mention. the ku in the collection area exists. no question about that.

cases go to the ku when they are lower priority than other cases. the other cases can be higher priority because they're better dollar cases. or we don't have the resources to reach them. it is based on the attributes of a given case. >> let me ask you very quickly. has anyone looked perfect that you have 35,000 tax identity theft. what would happen if you had 55 of 45 with resources increase, i am not sure that is an economical way to go. >> i would agree with you.

nina olson and others have said we believe the irs is a good investment. we are in essence the people who bring in $4 trillion and it is 90% of every dollar that comes in. as we pull people and we have pulled many people to work on identity theft as we had to and as we should. that does impact other programs. >> if i might herman cahn earlier points from the inspector general the ira's have a project that is looking into the impact of service on compliance, my office is working closely with the office of research and the investment division and we are doing a lot of surveys to taxpayers and will be interesting what we find out

and this this is a constantly d area. you can get resolution but where we send notices to taxpayers early in the system, very effective. what that leaves us with are those taxpayers who are not going to willingly come forward. it is how you do the nudging. the main point i want to talk about is the comment about our document match. we have been giving significant tools with merchant card reporting. but the provision that would have given the irs more information about the purchases witnesses made. we really criticized the position because it imposed so much burden on the businesses who are going to have to do the reporting and that is the trade

off in the self-employed area. the way to get information reporting on the self-employed is to get the householder to report on the person cutting their grass every week. you are not going to get that done. that is not something we can impose. that is where we have to do vigorous on a delicate areas of risk and think of some alternative strategies. i am not convinced information reporting is the end all be all for this tough area that we have got. >> also whatever your response is, getting back to third-party reporting. do you think the irs is taking advantage of third-party reporting or whatever else you have to add? >> let me start with a quick example, want to follow upon mr. miller's point. the recently enacted basis

reporting requirement for financial transactions, financial securities, that policy proposal was based in significant part on research that was done using the compliance date of that was developed for the tax gap. the use that data to make changes, estimated the first seven years, the proposal brings an $7 billion. that is a reduction of the tax gap. third party information reporting, one of the advantages has been discussed that irs can match -- rather than having to do an audit, labor-intensive costly for irs and more importantly very burdensome so this is an alternative to audits

enforcement process. the difficulty is identifying new information reporting sources. some that we have raised, some additional sources. one -- >> if i can ask you mr. connolly's floor statement, we're going to come back with examples of additional sources. >> i thank my colleagues. i would ask that my answer be read into the record and for the request the president of the national treasury employees union's statement be entered into the record. >> without objection. >> i thank the chair. you set up $450 billion tax gap

this year? >> as of 2006. >> and is growing. >> yes. it is a local figure and part of the earlier discussion indicated an ongoing review. does include aspects such as the international tax gap. >> do you think there could be some relationship between the growing gap and the 20% reduction in 1995? >> if the irs had additional resources they would collect -- >> for the sake of argument, $450,000 in money owed the government, that is what the tax gap is. times 10 is $4.5 trillion. here we are going big at four trillion. the sequestration would be

$1.2 trillion. this would be -- if we put the resources into irs to collect the money. over and above that, this subcommittee led by my colleagues has done a lot of work and the issue, mr. miller, you were covering that in your testimony. what is the estimate of annual improper payments? mistakes get made, refunds get send to people who don't qualify and the amounts are wrong or whatever. what is the estimated -- >> to give two examples. >> is there a global figure? what is the comparable figure for annual improper -- >> let me respond so i can say definitively under the child tax credit is estimated that

$4 trillion a year although the irs under an interpretation from treasury whether or not that is an improper payment we don't believe it authorizes payments of the additional tax credit who are not u.s. citizens and don't have -- >> we're trying to deal with global numbers here and it would be useful to have a number. the total amount estimated for the entire federal government is $125 million a year. >> income tax credit is $13 billion a year but i do not have the global number. >> tax gap numbers say that tax credits as part of the underreporting get our $28 billion of that 450% of the growth tax gap. and so that includes a number of

refundsable tax credits. >> mr. miller. >> the only thing i would caution is the difference between the improper payment which is what went out that shouldn't have gone out and all sorts of different -- >> i am making that distinction and trying to get the number for the former. >> i don't have that number. if you set a goal understanding that is an impossible task, backing into that, what would be required to close that $460 million gap and get a handle on the improper payments? we are making incredible and sometimes egregious policy decisions that will do real damage. we are cutting back on investments. very important to stay competitive. here in front of us is a source of revenue. this body is not willing to make

the investments we need to make. what is clear from this testimony is for every dollar we invest in irs especially in terms of compliance we have a big return. without pain and suffering. i am puzzled why congress wouldn't seize on that opportunity as one measure to put -- without having to create weeping and gnashing of teeth. if i may, mr. chairman. you talk about off shore tax -- >> i hope not. >> what percentage of tax filers

have off shore -- >> we don't know -- we know the ones who are declaring them, the f bar rules call for a check box on the 1040. we will find that out when the 2011 comes in. >> that is a legal loophole in the law. >> it is a permissible act. we have made inroads off shore and also the fact of rules that require banks to report to the united states those who have foreign bank accounts. >> can't think of anybody who has those accounts. >> according to one study the percentage paid in taxes for the top 0.1%, has declined 70% to

40%. if you look at the middle income quintile it is increased to 20%. that suggests a dramatic regression in taxes paid in the tax code. would you comment? >> i would not be able to comment on that. >> are those numbers accurate? >> i would have to check on them. >> the top 0.1% which used to pay 70% of the percentage of income paid in taxes is now 40% that is certainly called regression. sir that is outside what the deputy would be speaking about. miss olson 11. >> i don't have those numbers. >> would you agree those numbers

are accurate it would suggest that the income tax has become more regressive? top 1% is paying half of what it used to. the middle quintile is paying more. >> is difficult to answer that question because i have been looking at historical data and is not clear to me the highest income taxpayers are paying less than what they might have done historically. i need to look at what you are asking and the charts that i have got. >> number is available to me are quite clear. they're not ambiguous. is significantly in terms of the percentage of income tax. i thank you for your indulgence.

>> thank the gentlemen. i associate myself with the gentleman's comments about the need to do a better job making that investment to get the return for american taxpayers and similar to how the three of us worked together on funding levels for government accountability and appropriations of committee members and staff, $86 for every dollar spent, glad to work with you on something similar that made the case and advocates numbers presented pretty well with the return on investment. back to mr. towns and mr. white. if you want to include reference to some examples of additional data collection that would be helpful. >> this would be additional

information reporting. two things we recommended in recent reports. one is services to corporations. not payments for good the purchases of services from contractors, outside contractors. if you are incorporated does not have to be reported to the ira's. if so it does have to be reported to the irs. one suggestion for additional information is to suspend that the contractors. payments for services around real-estate is another area where we increase reporting. there are also cases where reporting is done now but additional information could be provided. one example is reporting on mortgages. the 1098 forms that report mortgage information do not include the address which includes problems for the irs in

sorting out suspicious returns from direct returns because it is not easy to tell how many properties somebody owns. there are both sorts of opportunities. one other point i would mention is there has been quite a bit of discussion on return on investment. something we highlighted with irs. importance of doing more estimates of return on investment so far proposed initiatives which the service is now doing and after the fact try to calculate, trying to measure the actual return on investment from compliance so the service lens what has been effective or more effective than they thought it would be less effective than they thought it would be. that raises the possibility of redirecting resources to get the biggest bang for the buck.

>> just to touch on what mr. white discussed, we talked about the need for the irs to receive additional information, third party information and revenue collection. what is just as important is once the irs receives this information when it does with that curve. that is something we have reported on before. the irs will receive this information from an employer and then will receive a tax return or return seeking a refund and won't match the two in time to shore the information is accurate. if someone wants to commit tax fraud they're able to claim more in a refund than they ridge had to because the irs on a timely basis prepare the information from. that is a major problem.

it is resources derived in terms of having fewer computer systems or revenue officers or confirm to mr. miller to address how they handle it internally. >> it stems from another of reasons. under the current system we don't have information to match. we started talking to the community about real-time which has in mind exactly what general george is talking about. the most information we can have at the time of the refund, we should have the w. 2 and the 1099 with respect to that person

so we can validate that it is the person that should be getting the refund and the amount is correct. >> we get that. >> we receive many 1099s that are due on march 30th and we are $70 million in to refund strom by that time. >> to see in terms -- what needs to be done. >> something my office proposed several years ago. we did a study looking at different countries around the world. i alluded to this in my testimony. they don't start the filings or issue refunds until the filing season is closed and they received the returns and had the

chance including information to run everything and do matching and issue the refund and in the united states the blood showing up the first week of january to get refund. a major shock to the system. i understand payroll processing companies have said if all we needed was gross wages and withholding this they could basically provide us the information within the first week of january. all the information classifying, non taxable health insurance. it takes longer, as commissioner miller said, engaging in conversation with the information reporting sector to see what we could get early. i could tell you australia took

an interesting approach, they sat down with many partners like major banks and major employers. what information could they get quickly? people voluntarily came in and said we could get this quickly. if we wait until filing season starts here, you could go on line and you could see the information we have and be sure what you get. they voluntarily ask taxpayers to wait in the filing season and because they had a free film returns the taxpayers' -- it was viewed as a positive thing. they're getting 40% of taxpayers waiting and using information that the agency is getting voluntarily. they are getting to the point

where they might say we are changing deadlines because we are seeing people move to later in the filings. that is the approach we recommend. make it a desirable thing. taxpayers will wait because they wanted certainty. negotiate with partners like the irs is beginning to do and rather than bringing a huge shock to the system where taxpayers are desperately waiting for refunds. >> to add a little bit to this. a few other considerations in addition to the burden on the third parties changing the filing dates for the information returns. there does need to be enough time for them to ensure that the information returns are accurate. if they're not accurate. if they have errors they are less useful for the irs because they're finding false positives and contacting taxpayers about a

mismatch when there may not be a true mismatch. one other point about the value of this information return matching early on before refunds are issued is it would to some extent be a long-term solution or at least a partial solution. the irs would be able to do more verification before issuing refunds to detect the legitimate claims. >> you mentioned, mr. chairman, the statute of limitations. those the statute of limitation on fraud -- >> that is correct. it is in the queue for five years. the statute of limitations for someone having to pay their tax

obligations. the others haven't gotten to it and also -- correct me if i'm wrong but -- how do they know it was wrong unfortunately? >> much of the tax gap is not in the queue. significant parts of the tax gap that the irs doesn't detect the bristol identifying the particular taxpayers that the that amount. one of the issues here is a significant portion of the tax gap is in small amounts of money spread over millions of taxpayers for. there are a lot of small businesses with reporting problems, intentional and unintentional. the tax liabilitys are small and it raises the question of whether it is worth going after them because paying taxes in many cases you have to audit

them. another question is how interested you want the tax system to be to find those relatively small amounts spread over millions of taxpayers'. >> one correction to general george. there's a two year statute for us to collect the money. i would agree that the older and colder the debt the less likely to collect any other debt. we do have offsets that occur constantly and we have other tools to make use of that data. >> something that mr. white said. other than direct enforcement, very valuable tools. mr. miller mentioned the refund office. large percentage of collection

occurs -- the computers seeing the refund and grabbing and it goes into the public treasury. another thing the irs is doing this year is behavior modification if you will. we recommended several years ago this fall proprietorship that you break a linee sole proprietu break a line of reporting in come. here is other income. as a formal return preparer i know my client show me their 1099 in come. clearly and won't got your books but clearly you have more money than that that you earned and $100 or something. if you force taxpayers to articulate they will put all their money into the 1099 and say the irs is going to audit me. the report money on this other line, the non 1099 income and

you disappear even if people are reporting a one hundred dollars and go to $1,000 that is $900 per taxpayer and that is a lot of money. we used that behavior modification that drives people to more compliant behavior because they're looking at it. that is a very important tool. that is the policy behind information reporting. you don't just need it for a third party. you do it for what they have to report on their return. >> thank you for your generosity. the gentleman is more than welcome. i want to turn the discussion towards identity theft and the issue the ranking member and i focus on with staff and both sides and subcommittee staff. certainly want to command the irs for increased focus on this issue and certainly a necessity as we see numbers going up each

year of those who are seeking to defraud the american people through identity theft related tax refunds. one of the issues is the taxpayer protection units that established as somebody who has been a victim of identity theft, designated unit. that is an important step. one of the things that jumped out to me in the testimony, that is unacceptable, the level of service. understand that in general, about 60% level of service and yet when taxpayer protection unit in march was under 12% and even this past week was only at 35%.

i look at that as saying we will create a special unit for those who have been victimized by criminals because of identity theft and set up a special unit to call and only 32/3. dedicated to their sins and even those who do get through to get assistance according to advocate testimony, the average wage was 1 hour and 6 minutes. that is not how we should be treating victims. it goes to previous discussions here that we need to recognize it for what it is. there is a victim of crime and set up a special unit it is a good thing but the unit can't deliver. dropping the 60% level of

service is a concern but dropping to 12% for those who have been victimized and even those who wait over an hour, anyone enjoy being on hold for over an hour? i don't think so. i am amazed anybody stayed on hold over an hour quite frankly. that is just not acceptable. that is not how you treat a victim of a crime. i recognize you are trying to do the right thing here. we are far from where we need to be. >> just to make a clarification, the unit that the number went to is different from the unit where taxpayers -- identity theft victims called the irs out of the view. the unit those statistics go to the personal taxpayers' letters

and a question about your return and not going to hold it. >> there is a belief that there is identity theft here. and put them on hold for an hour if they get through. and the majority do not. >> i agree. i was unaware that 35% of the earlier problem, i thought we had resolved that. we had more staffing. >> not only do they not have -- expended waste time and someone calls back to find out what the status is of the case and someone who may not have seen the case before and handed it to the same person who has institutional knowledge of their case. in addition in times such as

recently, the tax filing deadline people normally assigned to those cases are reassigned to regular tax concerns from other taxpayers who dial the 800 number or walking to taxpayer assistance centers. there is a way the irs can run this system lot better than it is. >> you raise an important point. whether the irs has looked at this in the past or not especially when you set up special units to respond specifically, certainly at a fraction of the numbers here. i would equate it to my office. we about 4,000 new constituent cases the year as an office and that is individuals. if somebody calls in and the person i'm working with is not in, another number of my staff can full of the case and see if

anything has been updated since they last talk to the staff. there is a dedicated staff for they are working with. that makes a huge difference from starting over. i don't feel that is anything the irs has looked at doing. sir you are not starting over and have to reeducate every time you call. has that been considered? >> it is considered and i don't know if it would work here or not. taxpayer advocate -- not to disagree on this -- we don't necessarily have resources to save this is your person. what we ought to be doing is in shore whoever got on the phone is all the information in front of them. that is what we try to do. >> through the case file

electronically whoever helps is well documented in -- >> our attempt -- we are talking about this is a microcosm of the way we do business on the phone generally where we can't necessarily -- versus sins and not permit a single person -- is not the most efficient way to do it and we can't do a single number to a single person at this point. in a perfect world and individual assigned to my account and not being able to get there in terms of resources. >> not just an identity theft but in correspondence examining automated collection the most frequent complaints we get our taxpayers saying i talk to four -- four people and had to explain my situation over and over again for each one. i have looked at the notes people take and you can't read. you cannot build a story from the notes. you don't know what the person before you did. to mr. white's point this is

where you go to the return on investment. to do the analysis by saving pennies by having anybody answer the phone whoever's the next available person are you really saving money downstream where you get the wrong result and the taxpayer keeps calling back and then you have two employees working the case, mine and the irs and go to appeals which is higher great employer and go to tax court rehab lawyers and the tax court personnel and can we really get a return on investment on that? >> when you add to that, we know our best chance of the tax gap is voluntary compliance. the person who is calling in is trying to figure out what is up. i would use the example of the victim calling in because they have been defrauded or anybody

calling in the fact that they're calling in is a good thing. they're trying to resolve. we want to get them the assistance they need and the data shows that. that goes to the issue of taxpayer services versus enforcement. a penny saved and a pound lost. doesn't seem to be a well thought out approach. an issue where i want to acknowledge what i think is a very positive step, if i understand this correctly, something we raise in the first hearing on identity theft last june, somebody files a return fraudulently. the legitimate taxpayers find that somebody got filed and got a $4,000 refund and it will take awhile to work through but even when that happens working on

shortening that time frame, in the past the victim couldn't get information about fraudulent conduct even though it was submitted in their name and their social security number. your general counsel has issued an opinion that says the legitimate taxpayer has a right to that information. the fraudulent material that was submitted and authorized i want that information and be able to share with law-enforcement. i use the example of a couple citizens who testified last year. i guarantee you if they gave the information they would have gone to new york with the information and sit here is where the check when, get the photos and show who collected that money if they had information and at that point they are told no. it has been changed and they

have a right to the information. >> it is correct that we have the opinion of counsel that we can share that information. it will require rolling out a pilot with some local law enforcement. we cannot share this information with local law enforcement. >> the taxpayer can authorize it to be shared. >> the taxpayer can authorize through waiver for to be shared and rolling the data as we speak. >> in cases of tampa the legitimate taxpayer can say work with local police, give them everything you have, i understand talking about average of $3,500 or $4,000 fraudulent return refund that from prioritization resources that cost that the national level going after this but the local guys that is what they do every

day. what my local police are helping citizens every day. smaller types of crimes or fraudulent conduct. that is a positive step and i am displeased with the level of service on the protection unit i want to recognize that is a very important step in the right direction. two other issues before we wrap up and i appreciate the witnesses. the fact that it is an open game for fraudulent conduct for those who want to commit fraudulent conduct. the irs believe the condition is to restrict access to that. is it correct you would like legislative action to restrict who can access that information? >> we are working with the social security and administration on legislation to

do that. >> that is an ongoing effort but not ready to say here's what we think is the right approach within the administration? >> that is right. your question would be well answered -- they are actively engaged in talking to people about it as we speak. >> something we want to look at because to me that fact that the information is too freely shared some time for legitimate purposes but is too big a target for those committing identity theft. the final issue is more of a broad issue. that is the balance. if any of the four of you would like to comment when it comes to fraudulent this goes to the issue of timing matching documentation with returns. it is a balance between a quick refund which those who are entitled to refunds wanted to be

quicker. i also say that most taxpayers don't have to wait for a refund. if they wanted to adjust their filings and get the money in the paycheck they could get instantaneous refund every paycheck rather than one lump-sum human nature, talk about human nature and behavior management i will admit that i am one who is for savings and i would rather get $1,000 back then have to write a check for $1,000. it is how you look at it. but it is a choice that every taxpayer has to try to ensure they don't get refund. if they want they could no money and come out ahead if they have the money and write a lump-sum check. given that, how do we balance the quick refund against the risk? that we are not able to manage.

today with electronic filings and the use of electronic filings more and more the norm, also the ability, they have a printer that is also a scanner. that is the norm with printers today. you by printer today it can scan and print. if you want to file a chronically maybe it is not all refunds but you have to scan in your w. 2s. rather than waiting for something to be mailed in or matchup with a third party if you want electronic return stand in your w. 2s or electronically submit and especially when paying taxpayers, what is the percentage? 65% or higher? >> above 60.

>> for those i guarantee if you are a paid provider your ability to scan a document is given. is that something we should consider? >> if i could start a couple things. two separate points which is enforced savings. it is absolutely true for you and i. but less true as you go down the income scale where you have earned income tax credit and one third of people floating in and out on an annual basis, changing circumstances. >> that is a very relevant point. >> on the second piece we should look it everything we can. we need to get better at our screening and get as much information as fast as we can to refund as they come in. on the scanning item we should look at it. at this point to be honest with you we still get a lot of paper

fraud. i am not sure -- it may be a piece of a larger strategy worth looking at but i am not shore in and of itself that will be a game change for us. >> i agree. the same concern about the scanning the identity fields are making up. so getting one from the taxpayer doesn't guarantee it is legitimate. you need to get the information returned to employers faster and that is where technology may help. a lot of the deadlines mr. miller mentioned earlier for due date for the information returns were set many years ago and with more modern technology it may be possible for a third party -- certain kinds of information returns to submit them much

earlier in filing season and there are other things that need to be in place to make this work. the irs is modifying its information system and you need assistance in place that can handle massive amounts of data. the irs gets billions of information returns each year. talking about a lot of information you have to match very quickly so you are not making taxpayers wait for refunds. >> certain software packages do allow people to download their w. 2s electronically. it does exist. $65 to purchase that package and some people don't want to make that expense. >> we have fought a lot about behavioral modification. the demise of refund anticipation loans. tell taxpayers you can get your

dollars tomorrow and suddenly the ira's getting your money through direct deposit and electronic filing with in ten days looked like an enormously long time. and we have to think about the message and communicating with taxpayers to talk to them about the reality of a filing and they do want us to do these refund screens. the first year may be hard because you're depending on this money like you have always but if you adjust your behavior you can depend on it in the future at the same time every year. the lower income use this for putting it down, studies show they use it for buying refrigerators, school clothes and stuff like that. we have to work with the larger community to get people used to it but the irs has to step up to

the plate and really change expectations expectations and behavior. >> the information provided where you push on certified tax preparedness, when there's a professional tax preparer do they have to certify that they prepare the document? do they have to certify some way that they have seen the w. 2s or supporting documentation? is there an affirmation they have to make? >> i don't think the signature means -- i come back on a more detailed discussion on what they are signing when they sign the return but the due diligence they are required to do is at a broader level. i could come back with more

specifics. >> in looking again at conduct and the type of fraud, we were talking about the issue of debit cards and what percentage of identity theft fraud is paid out on debit cards versus deposited to a bank account? the availability for a criminal to access money in a bank account, much more of a trail to follow, different than the debit card. >> i have to come back with as well. we have seen an increase in the use of debit cards. there are pluses and minuses to that. >> that goes to the broader issue of assessment of the information that we have. if we are identifying 400,000

actual cases of identity for if that were identified, what percentage of those were asking for refunds and debit cards as opposed to should we be issuing the cards? >> i am not sure we know that. >> we need to know that. >> the debit card has to tell the bank account. >> the financial manager services to are part of the treasury making the payment sees an account number. it does not know whether it is a better card. that is something known by the software providers. those are discussions that are ongoing. >> when you hear the testimony or information from tampa, former drug dealer, they go in and have 50 divot cards and fraudulent returns, it seems

like some evidence that criminals, organized criminals doing this are using that method more likely than any other method. it is a data analysis. >> one other point. we are seeing the same story you are aware there are rows of the cards. if we have stopped the refund, criminal has a debit card. he or she will have a debit card. nothing loaded on it. it will have been stopped by us or by the debit card company because it is finding fraud as well. those stacks, i am sure some of them have money but it shouldn't be assumed they all have money. >> final comment and we need to wrap up. on the issue of identity theft, i've want to emphasize this is about the victims.

legitimate taxpayers victimized by criminals. there is no more egregious example of what was reported this week of a fallen hero of this nation who gave his life in defense of the nation and when his parents come to learn not only did they lose their son but the sun gave his life in defense of this nation was victimized by identity theft related to taxpayer refund. that it epitomizes the type of victimization that is occurring and we need to do right by that family and every individual family out there, legitimate, hard working citizens are not victimized and if and when they are we prioritize them. i know we can do a lot better in that regard. i want to thank each of you for your testimony. and thank the ranking member.

hopefully come through, we are about trying to work through this issue and how we can help and whether it is the issue of adequate funding for resources to make the return on investment and invest and taxpayers come out ahead or legislative authority and we need to provide but we want to work with each and every one of you and your offices. the you have a final comment? >> i want to clarify one thing. mr. towns's question about the statute of limitations. mr. miller was correct. there is no statute of limitations on fraud if it is willful fraud but there's a three year statute of limitations on the irs's ability to do examinations on a tax return. something needs to be clarified. >> appreciate the clarification. mr. johnson, we want to make a closing remark? >> i want to associate myself

with your remarks and said that there's something we need to do a this side. there are areas that need to be dealt with. working together, i think that off -- for this hearing. >> we will have the record for seven days for extraneously cereals and responses from -- appreciate the witness's testimony in this hearing stands adjourned. [inaudible conversations]