epa, , formerly with the epa in washington, d.c. when d.c. went through a similar crisis. she's like an heard about the water? it's okay, it's fine. she said no, everything is not fine. it's not being treated properly because it's not being treated properly that would be led in the water. that was the moment i i realizi needed to take action. i tried to get children's blood levels because that something the state and county has a various programs for. they track this just like we track the flu and other epidemics, something we try. i couldn't get the government data so did my own research at our public hospital to see what was happening to her children blood lead level. looking at the change in children's blood lead levels and we saw was alarming. >> watch "after words" sunday night at 9 p.m. eastern on c-span2's booktv.

>> president trump has nominated beverly hills tax attorney charles rettig to be commissioner of the international revenue service. the senate finance committee held a confirmation hearing for the irs nominee yesterday. utah senator orrin hatch chairs the one hour 45 minute hearing. >> [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations]

>> the committee meeting -- the committee will come to order. i'd like to welcome everyone to today's hearings on the pending nomination of mr. charles rettig who is been nominated to serve as irs commissioner, very important position in this country. right now, the irs is at a critical juncture. the american people are already seeing myriad of benefits thanks to tax reform as unemployment continues to drop and wages rise. and the irs will be responsible

for implementing these new policies smoothly and efficiently so that the new law's full benefits can be more quickly realized. after years of turmoil and controversy, i am hopeful that the irs has finally started turning the corner. however, with a large governmental organization like the irs, there is always room for improvement. take for example, the problems of aging technology services. some of the irs's information technology dates back to the kennedy administration. unsurprisingly, that dated technology could inhibit the irs's ability to interact coherently with 21st century technology that currently powers our country and much of the rest of the world. if confirmed, i expect mr. rettig to work with congress to modernize the irs's infrastructure and technology to

bring the agency into the 21st century. another major issue is that the irs has an aging workforce. right now, the majority of the irs's workforce is over the age of fifty and nearing retirement. if that majority of the workforce were to retire at or around the same time, the irs will face a shortage of knowledge and experience. if confirmed, i hope that mr. rettig will start working with congress immediately to plan for the agency's future as the irs continues to implement tax reform, it must work with the treasury department to issue regulations and other guidance to ensure that taxpayers have certainty and predictability concerning this new law. it must also work with congress to ensure that the new law is implemented and administrated as congress intended. the challenges i have enumerated are greater than any one commissioner.

but the commissioner will set the tone of the workforce and will be charged with working alongside congress to thoroughly and fairly implement and enforce our new tax laws. an effective irs commissioner must also remember that our tax system relies, in great part, on voluntary compliance. and the system works best when american taxpayers trust the agency and are able to easily contact the irs to receive timely and complete answers to their questions. in short, if confirmed, mr. rettig has his work cut out for him, but i'm optimistic that he is up to the job and, if confirmed, will lead the agency with integrity. that said, should the irs slip i feel quite confident about that. -- that said, should the irs slip up, or fail to live up to the high standards caucasus set,

this committee will hold the irs countable as it always has. at the same time, when the irs acts properly, responds thoughtfully, and works with us, the irs will find no better friend than this committee. regardless of democrats or republicans. after all, we recognize just how important it is that our taxes are collected fairly, efficiently, and in compliance with what congress intended when we wrote the tax laws. i thank mr. rettig for being here and his willingness to serve. mr. rettig has decades of experience representing taxpayers before the irs. he knows the agency inside and out, due to his years of work on advisory councils and stakeholder groups. and he brings the necessary passion and dedication that this role will require. i am confident, that if confirmed, mr. rettig will be a trustworthy, responsive, and earnest partner with congress and this committee as we pursue our shared mission to improve the agency.

i do want to thank acting commissioner kautter, who has done a great job at the irs. however, that's not what we confirmed mr. kautter to do. and now, more than ever, we need mr. kautter back doing his full-time job at the treasury department. before we begin today, i want to clear something up. there have been inaccurate press reports based on leaked committee documents that the nominee didn't disclose property he owns in a trump international property in hawaii. this is absurd and false, and we should put this matter to rest right now. first, he disclosed these properties, which were purchased in 2006, on the committee questionnaire. that is a fact. he has been honest and forthright with this committee at every stage of the vetting process. the dispute here pertains to the additional details of noting the

name on the side of the building. second, any suggestion that there is a conflict of interest here is the stuff of conspiracy theories. maybe one wants to argue that mr. rettig purchased these properties in 2006, during season five of the apprentice, on the off chance that mr. trump would become president and nominate him to be irs commissioner. i notice you feel the same if i do, that that is silly and i hope we can put that matter to rest and move on to the substance of this mornings confirmation hearing. and finally, i do want to note that we've noticed an executive business meeting for this time as well. if at any point during the hearing, a suitable quorum is present, i intend to pause the hearing and move immediately to votes on the nominations of mr. jeffrey kessler, ms. lynn johnson, ms. elizabeth ann copeland, and mr. patrick urda.

thereafter we resume our hearing. with that i am pleased to turn to my partner, senator wyden, for his opening remarks. >> thank you very much, mr. cha. chairman and colleagues, the next irs commissioner is going to be in charge of administering a tax system that is broken in two. there is one set of rules for the cop on the beat or the work on the factory line. strict rules, no special loopholes, taxes come straight out of your paycheck. then there's another set of rules for the high-flyers. under that system, with the right advice from costly advisers, you can effectively pay what you want, when you want. mr. rettig, nominated by the president to lead the irs, made a career on dispensing that advice.

and the biggest policy challenge he'd walk into as commissioner is implementing the extremely complicated trump tax law, which did a whole lot more for the high-flyers and well-connected than everybody else. given that fact, it's up to mr. rettig to demonstrate that if he's confirmed, he'd work on behalf of all americans, particularly hard-working, middle-class families and the owners of the garages, corner stores and restaurants that make up our communities. the guy on the street, as he said in our meeting earlier this week. on another matter, if you've studied the nixon presidency you know there is a dark history of the white house abusing the irs for political purposes.

it's going to be particularly important for mr. rettig did demonstrate his independence, given that mr. rettig did not fully disclose to the finance committee staff that the condos he owns and rinse out in a trump branded and managed property. and on a matter the chairman, my good friend, touched on about leaks on this kind of discussion, i would only say that last night there was a memo to all finance committee members coming from the chairman and myself making it clear that we wanted all members to understand what was at issue with these condos and they are being rented out in a trump branded and managed property. having said that, disclosing

that information may not have been required by law. my view is it would've been a smart exercise of judgment. certainly if you want to eliminate any questions about appearances, you can sell the properties, but setting aside even that financial relationship, committing to independence is critically important. this administration often seems to be making tax decisions for political reasons rather than policy reasons, and that is a recipe for the kind of swampy corruption that makes people lose faith in institutions like the irs. for example, it appears a policy regarding tax-favored opportunity zones was changed at the behest of one well-connected republican donor in nevada. it's a sign the administration has put itself in the business of picking economic favorites as a result of the tax law. this donor wanted a special accommodation, and he got it. when the state of vermont sought

a similar change, it was denied. there are also reports the trump administration is going to introduce a new, untested tax form that will make the experience of filing returns even more of a headache for lots of americans, particularly seniors. when the debate closed and the new tax law passed, it turned out that most americans would not be able to file on a postcard, contrary to what republicans had promised. but the administration decided to go ahead and cram the same amount of tax math onto a smaller form anyway. that means many taxpayers are going to have to rifle through complicated new stacks of instructions, attach multiple schedule and in my view it certainly is likely to generate more errors. the new forms are setting up taxpayers to fail. one last point, mr. chairman. and finally, the vice president said in may that the johnson amendment, which bars 501(c)(3) tax-exempt organizations from campaigning for or against

political candidates, quote, will no longer be enforced under this administration. that's a longstanding right-wing priority and a recipe for even more dark money to infect our political system. and i feel very strongly that the next irs commissioner has got to be in charge of enforcing the laws on the books despite the vice presidents pledge that in effect that won't be the case. running the irs is a difficult job that involves managing tens of thousands of employees. mr. rettig has decades of experience, yet will also be a a concern as he and i talked about that he doesn't have extensive management experience. he will be asked about that as he knows today. i appreciate mr. rettig's

willingness to serve, and i thank him for joining the committee here today. >> thank you, senator. i would like to extend a warm welcome to mr. charles rettig and thank you again for joining us this morning. soon we'll hear from mr. rettig who is currently working at the firm hochman, rettig and paris, pc where he is represent clients before the internal revenue service, the tax efficient under the department of justice and numerous state and federal taxing authorities. mr. rettig and served on the advisory board of the california franchise tax board, advisory council of the california state board of equalization, and the internal revenue service advisory council. mr. rettig is currently the vice chair for administration of the section of taxation of the american bar association, and

previously served as the chair for the section of taxation of the california bar. throughout his career, mr. rettig has specialized in federal and state civil tax and criminal tax controversy matters, and tax litigation including tax related examinations and investigations for individuals, business enterprises, partnerships, limited liability companies and corporations. mr. rettig received his bachelors degree in economics from the university of california los angeles and a j. d. from pepperdine university. he then went on to earn a degree in taxation from new york university. so i ask him. when your looks forward to hearing from mr. rettig and how he plans to integrate his past experience with his new role at the agency, if confirmed. and without further ado, mr. rettig, please begin with your opening remarks.

>> chairman hatch and ranking member wyden, it is an honor to appear before the senate finance committee as the presidents nominate to serve as next commission of the internal revenue service. before i present like to recognize my family who are here with me today. my wife, my sister-in-law, my sister-in-law with her husband michael, my stepsons, my daughter christina, my son charlie. i cannot explain the degree and extent that the love and support for me today and throughout our professional and personal career mean to me. personally i would not be here in my mind without the ongoing support of my family. i need to also recognize two of my comp three of my law partners are here today, two of them flew out from los angeles last evening, arrived this morning and are headed back this afternoon, steve, dennis and ed

are here. my mentor and the practice of law, abram, a very, very close family friend, garner, and another very, very close family friend. it's the support of my friendships that have allowed me to be a today and to do the things that i've accomplished in my life. my son charlie who is sitting behind me currently serves as a captain in the united states army and returned monday evening from a 12 month deployment overseas. when i was nominated charlie proudly pointed out, quote, dad, i'm so proud you will be following me into government service. nothing would make me more proud than to follow my son into government service. i did not previously have the opportunity and look forward to, if confirmed, had the opportunity going forward. i also learned something from my son. this tax season i was pressing in what he was serving overseas to get the information to the account in order to prepare his returns, and response that i got

was, dad, i have 180 days from when i return from the combat zone in the sinai peninsula to submit my income tax returns. it's nice to get your advice and army captain, son. i would also like to acknowledge my father who had a one truck air-conditioning business, and taught my brother and i the value of hard work, getting up early, working late and not complaining. i was the first my family to finish college, and through undergraduate school, law school, graduate school my family often joked that i would never stop studying, and they were right. for more than 35 years i have worked with all levels of the irs to achieve resolution on behalf of taxpayers and bring them back into compliance with our system of voluntary self-assessment. i have served as chair of the irs advisory council and in a similar role in my home state of california. i am currently vice chair,

administration for the 12,000 member taxation section of the e american bar association. i also serve as president of the american college of tax counsel. through decades of experience working across the table from the irs i've icing the difficus faced by taxpayers of all kinds, from large taxpayers to small businesses, to low-income taxpayers who need help. when the irs started problem-solving days years ago to allow taxpayers to come in without an appointment, i organized dozens of tax professionals in los angeles to assist unrepresented taxpayers who appeared at the irs seeking a resolution of the tax issue. i've also devoted a significant amount of time assisting taxpayers who can't afford professional help on a pro bono basis. throughout my career i have been privileged to work with many professional and hard-working irs employees and, if confirmed, would be honored to work alongside them and earn their

respect. despite the challenges it faces, the irs's fortune to have an experienced workforce committed to its mission. in my career i've seen the impact of those challenges firsthand long waits on the phone, inadequate i.t. systems are significant issues of frustration. for both the internal revenue service workforce as well as taxpayers. if confirmed, i would hope to work with this committee to take on these and other challenges that impact taxpayers across the board. we cannot fall into a trap of viewing the challenges the irs faces as facts of life but we must work together to solve them. if i am privileged to serve as commissioner, my overriding goal will be to strengthen and rebuild the trust between the irs, the american people, and their representatives in congress. that trust is critical to all of the irs does, particularly as a works with the department of treasury to intimate once in a generation taxi from legislation enacted by congress last year.

the successful application of the landmark reform bill would be among the highest priorities. in closing we should knowledge i was in the procedure 1954-22 by mortimer kaplan who at age 101 remains a legend in our field. it is the duty of the service to carry out the policy by correctly applying the laws enacted by congress to determine the reasonable meaning of various code provisions in light of congressional purpose in enacting them and to perform this work in a fair and impartial manner, with neither a government nor a taxpayer point of view. i'm grateful for the opportunity to testify and look forward to your questions. >> they get so much. we we're grateful you're willino take on this assignment. it's not an easy one, and it's one that there's plenty of controversy. i do have some obligatory questions i'm going to have to ask. first, is anything that you are aware of any background that might present a competent ventures with the duties of the office to which you've been

nominated? >> no. >> do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you've been nominated? >> no. >> do you agree with out reservation to respond to any reasonable summons to appear and testify for any duly constituted committee of the congress, if you are confirmed? >> yes. >> finally, do you commit to provide a prompt response in writing to any questions addressed to you by any senator of this committee? >> yes. >> that's great. mr. rettig, the irs stands at a crossroads both the terms of challenges and responsibilities. in terms of challenges, if confirmed, you will run an agency that has enormous responsibility. it touches every single american and every business here nearly

every function of the government depends on the revenue of the irs collects. and at the same time it has an aging information technology infrastructure, and an aging workforce. real and serious changes are needed, and this committee is working to help with that. now, the irs has a lead role implementing and a primary role in administering the aging workforce, and i to say real and serious challenges or changes are needed and this committee is working to help with that. the irs as a lead role implementing and a primary role in administering the largest tax overhaul in a generation which delivers tax relief and simplification for taxpayers across the country.

now, mr. rettig, this is a challenge not a lot of people would willingly accept. so why, why are you dumb enough to accept it? [laughing] >> why do you want this role and are you up to this particular challenge? i no, you are not dumb, so please forgive me for my out-of-control sense of humor. >> chairman, i have a deep respect for the internal revenue service, for this country, for this lag, for the people who work for the internal revenue service, and respect the fact that the internal revenue service is a critical component of the success of this country. and i'm committed to giving my best efforts to make the internal revenue service the best agency that it can be. >> i think that's why you've been nominated, and from what i see you are very capable of doing that. under president obama this committee -- main investigation

into question of political bias at the irs and issued the only bipartisan report on the matter. congress has long been concerned with questions of political bias at the irs which has been a serious issue across the agencies history. most notably in the kennedy, nixon and obama administration's. if confirmed, and he pledged to lead the irs without regard to partisan political bias or inappropriate influence? >> absolutely. >> the internal revenue service has never been a particularly parker agency, as you know, and its reputation has been challenged in recent years. how do you intend to restore america's faith and trust in the irs? do you consider it important to build a better relationship between the irs and the taxpayers? >> i think that the relationship and the viewpoint of the american taxpayers as to the internal revenue service is

critical for the success battle of the internal revenue service but also of this country. i think a large portion of reason that i am significantly interested in becoming commissioner is to rebuild the trust in that agency, to confirm to the american taxpayers the internal revenue service is impartial, nonbiased and colorblind for all purposes. >> great. ancient computer equipment is something that we are commonly noted despite people and being aware of this as if updating equipment at the irs. substantial progress remains elusive. what are your plans to update the technology needs and how are you going to accomplish that? >> the modernization of the irs i.t. system and bring the irs i.t. system into the 21st century is one of my top goals. i think it serves two purposes.

it serves that only the protection of taxpayer data which i believe universally we all agree is a principal concern, but also modernizing the i.t. system serves to enhance services to the taxpayers of this country deserve. >> how will you use your longtime experience as a tax attorney, special one that's been at the side of the courtroom from the irs, to a better perform your duties at the irs? >> i've been a consumer on the consumer side of the irs as asa stakeholder working with the irs it virtually every level from field level agents in revenue officers up through to the corner offices of the internal revenue service. and so i think i a pretty good understanding of the operation of the irs and the various roles, the different levels of the irs play in trying to efficiently move tax administration of this country with an eye towards the benefits of taxpayers. >> okay.

i think my time is basically up so i will turn to regular. >> eighty very much mr. chairman. mr. rettig, let me start with the comet the vice president. vice president pence said in may that the johnson amendment which prohibits the 501(c)(3) tax exempt organizations like churches from campaigning for or against political candidates will, and i quote here, no longer be enforced under this administration. i'd like to give you the opportunity as we begin this hearing to respond to the vice president of the united states. who is going to be in charge, if you are confirmed as commissioner? who is going to be in charge of the irs? will it be the vice president of the united states, or will it be

you? >> if i am confirmed i will be in charge of the internal revenue service and will make sure that the internal revenue service moves forward, follow the law in an impartial, nonbiased manner. >> do you find vice presidents statement troubling? isn't that sending a message, inherently political message when what we want, whether it's democrats or republicans, whether we want the law enforcement a troubling message? >> as the nominee and can really speak to my viewpoint of what would happen if i was to operate the internal revenue service as commissioner, if confirmed, and i confirm to you and i pledge to this committee, impartial, nonbiased operation from the internal revenue service from top to bottom. >> i understood your answer, but i think every american, democrats, republicans, whatever your political philosophy ought to be very troubled that the vice president thinks he can make a statement like that, that

this administration is in effect above the law, that the law is not what matters. what matters is political -- let me move on to the question of the president's tax returns and particularly this matter of being -- the president stated for over ten years now that he can't releases individual tax return because he's been under these continuous audits. in your 35 years of representing certainly many high income taxpayers, complicated business arrangements, have you ever represented anybody who was under continuous audit for ten years or more? >> we have had taxpayers both individuals and entities that affect multiple year audits speeded the question is ten years. >> that's were i was going, senator. i personally cannot recall that ten year examination but i'm not particularly, i have no

information about the audit with respect to the president. >> so how would one even get in a place of having ten years worth of audits? i mean, i find it incredulous that somebody could be under a continuous audit, and unless they had made enormous mistakes on their tax returns over and over again. and my assumption is, professionals in the field like yourself would never let that happen. so i find it very hard to buy the presidents excuse that he has been making all these months for not releasing his returns, but how would one even get in a position like this? >> from my expert i would say the more complex the return, the

longer it takes to get an examination completed. but again i have no familiarity with the presidents returns. >> i'm going to leave the record open on that point. i'd like to amplify on that because i just find this incredulous excuse, and you told me essentially that this doesn't happen very often. it happens sometimes. >> in my practice. >> right, it happens sometimes. my view is you only get there by making enormous mistakes, , and professionals wouldn't make that possible. now, i'm going to read you something that goes to this question of fairness for working class people. tell me if this sounds familiar. wealthy taxpayers often engage teens of sophisticated tax business and estate planning lawyers, accounts and other professionals to oversee their business activities and to legitimately minimize the

potential tax liability. does that sound familiar? >> it does. >> okay. now, you identified earlier this week the pastor deduction as one area -- pass-through -- where guidance is badly needed from the irs. that's a provision that is so confusing that tax consultants are already feasting on planning opportunities for the wealthiest clients. given the right opportunities for tax planning and tax evasion, frankly, we are under the tax law, how are you going to combat the kind of aggressive tax plan you were trying to describe your feelings about in that quote i gave you? >> that quote relates to the fact that taxpayers have teams come wealthy taxpayers have teams of representatives handling the returns. typically taxpayer desires to

cheat is not going to go to a group of tax professionals to put some structure together to do something. that's the universal but that's difficult. >> i'm over my comps i just need you to tell me briefly how you would combat those who were trying to wring every possible advantage of this, in effect to find holes in the law? >> for me it would be critical for the irs to provide clear, timely, assisting to guidance as to what the positions are and what the intent of congress was with respect to each of the provisions in the texts produced in the next and we will talk about what the clerk i thought to be. thank you, mr. chairman. >> senator cardin. >> i i appreciate your having differing today and mr. rettig, you and i've had a chance to visit on a number of issues including as the chairman indicated our appreciation of your willingness to step up answer. i also want to if i could mention army captain charlie

read it again who just came back from his 12 months to plan in a combat zone. i'm going embarrass him and asking to stand up if you would just for a second because i'd like to give them a round of applause. [applause] >> he's right, you were following him in service and although it's not combat, , it's going to be a tough job. >> i think it is combat. >> ya. so you and i talked a lot about irs reforms and one reason i'm excited about having a commissioner place, it's an opportunity for this committee working with you and the ways and means committee to make some changes at the irs. we did this 20 is a go with a big restructuring of reform act that came after a commission was formed, actually by this body. i coach or that with bob kerrey as you know and along with senator ben cardin was coming in amount will be here, we introduce legislation that senator hatch took a leadership role as did senator wyden in his

rule then -- role than on the committee. we said okay brs is not working, not functioning to help taxpayers at that time. only half of the calls were being answered when a taxpayer would call the irs. they spent about $3 billion on an iq system that wasn't working, wasn't talking to each other. it was a big waste and so we undertook this series of reforms, 52 different new tax the right to add it irs oversight board. half the calls being returned in that time. we passed the legislation. within ten years of instead of half the calls being returned, 83% of the calls were being answered. that was a big improvement. all the ratings you look at, which agency or department do you feel has done a good job for the taxpayer, the irs is at the bottom, we started the reforms by the time and user of the reforms are getting a place, it was about halfway up the ladder which isn't bad for the tax collection agency.

i will say here we are tenures lead and, unfortunately, we're kind of back to a situation where tax not being served. by 2015 just three years ago only 37% of calls were being answered. today understand his back closer to 50% but wait unacceptable. first of all do you agree withe on that? >> i agree that america's taxpayers should other telephones answered. i think that's critical not only for whatever the reason the calling, it's critical for them to earn the respect of you to secure interacting with when they get efficient and timely responses. >> that's not the only measurement. another would be how many taxpayers come in and get an answer from a person, and that's also declined. another issue i know senator cardin and i look at is the appeals process. we believe it's been more truncated since 20 is ago when we put reforms in place.

there are other issues as well but one we talked about in our meeting was the irs oversight board. this is something senator kerrey felt very strongly about, as did i and others here we put in place this oversight board that would bring expertise, service sector expertise, management expertise, and, frankly, i think it's sort off pretty well and then because of lack of support by every administration frankly along the way, it kind of fell to the wayside. the idea was not to have to have a commission every 20 years and not to have to have process that we need to undergo again this next couple of years. hopefully with the new commissioner place, hopefully with you, but how this commission perform the role of oversight and injuring we stayed on track. there are no members of the commission right now, not a single member has been appointed. again this goes back administrations. the obama administration was no more supportively than the clinton administration was, than the bush administration, than

the current administration. what do you think about the irs oversight board? was it a good idea or a bad idea? should to be resurrected? does it have a role to play? >> i'm in favor of oversight by the irs oversight board, by this committee, i others. it assists in the transparency of the operations of the internal revenue service as well as providing assistance. as commission i would look for to getting ideas from everybody, and more ideas the better and then we work on the ideas collectively. >> i appreciate that answer, and i do think if you are confirmed that this committee will be very serious about working with you on irs reform. last question just briefly. on the idea of having an independent appeals process, do you support taxpayers have access to an independent appeals process? >> absolutely. >> thank you, mr. chairman.

>> thank you, mr. chairman. congratulations, mr. rettig, in your nomination. as you know, new jersey joined 32 of the states and d.c. the recently passing a law that authorizes towns and cities to create charitable funds and provide tax credits to encourage donations. but in an advisory notice released in may, seems to me that the irs is arbitrarily singled out new programs like new jersey and worn taxes could face penalties if the write-off deductions, right off the donations i should say. this fundamentally flawed advisory contradicts decades of president and case law all the way up to the supreme court and its committees against states apparently based on political affiliation. so my question to you, if you are confirmed as the irs commissioner, would you do to the principles of federalism and states' rights and respect the three estates to center on tax policy? >> it by conference as commission of the internal revenue service we will follow

the law impartially and nonbiased manner. and as i believe i've indicated previously, nobody should presuppose my position on any particular issue across the board, that the internal revenue service will appropriately look into the fax, look at the relevant policies, procedures, prior guidance that has been issued. and i would come to the accurate conclusion in issuing whatever guidance the internal revenue service is -- >> i appreciate that. if 32 of the state and the district of columbia already had the exact same principle and it is in effect and it is that upheld by the irs, would you see any reason to discriminate against another state if, in fact, they are doing the very same essence of what those 32 other states are doing? >> it's not an issue that in my practice i have dealt with, but in the press that i've read was respected issue, it's my understanding there's a

possibility the post-tax act of situation could be not on all fours with the earlier position taken by the internal revenue service in the 2010 chief counsel. >> as you know speakers that will be explored. >> i raised this with you and you told me to know much better i gave you a very early warning that are be asking you this question at this hearing. so this is a serious issue that can raise property tax burdens and confusion for hundreds of thousands of new jerseyans and they deserve a clear answer your so again, would you undermine new jersey's law and deny people deductions for this charitable contributions if they are in line with 32 other states and the district of columbia that are doing this right now that the irs has upheld? >> senator, the irs and treasury are both working on guidance. my incentive with respect to the guidance would be that it be accurate, impartial, nonbiased,

and clear and issued timely and it should not be lost on the committee that although your comment relate to new jersey, i happen to be from california which is working on a similar situation. and i would still look at and a nonbiased impartial manner. >> let me give you some background. 2011 the irs chief counsel released an and advising them r punk state credits do not, i repeat do not prohibit taxpayers from right off the full value of their charitable donations. in other words, did attacks but does mean you earn more money and thus you shouldn't be taxed as a result. the supreme court confirmed this interpretation rolling that state tax credits given for charitable donations are not considered a think the valley and rather i quote the government declining to impose a tax that i think we can all agree it's the logical, and practical fundamentally backwards to tax people on the value of a tax break they received. in some states tax lawyers and accountants have bragged about

heather using the program to circumvent the property tax cap. for example, in alabama financial advisors explain so-called donations are as i quote, treated as if you paid alabama taxes for federal purposes your donation will be reported as a charitable contribution. otherwise the state tax payment would be reported as assault deductions subject to the $10,000 cap and provide no tax benefit to you. these efforts to maximize deductions were, even before the trump tax bill gutted the property tax deduction. indeed high tax priceless and accounts in georgia have been four years urging their clients to shift the itemized deductions from state taxes to charitable donations in order to avoid the alternative minimum tax. our alabama and george's programs in compliance with the law and irs rules? >> i think you're aware i'm not specific aware of the alabama and georgia programs themselves and i think when we met you raise an issue that perhaps the

current situation, the difference between credits and deductions that are not sure that's a difference that -- >> you are tapping before my time is up. >> your time is up. >> it's up now but not when you are tapping. and here the balance of the angeles? >> i think both of us went about a minute or so over. can senator menendez just have that, too? >> sure. i'm not going to stop speech i appreciate -- >> don't accuse me of interfering with your -- i tapped that to let you know you are near the end. so that we don't have to carry over to prolong this committee unnecessarily. go ahead. >> senator, i'm aware of your concern with respect to this nation the concern of others with respect to the issue and the concern taxpayers across the country with respect to these issues and i look forward to a resolution that universally people could sit is the right resolution. >> i will just close on this. the one thing at a what is see is the irs weaponized against

states like mine. it's either good for everybody, the 32 states that been doing it and the district of columbia, or it's good for nobody. that's i hope that you will seriously look at this in that matter because otherwise we will feel that we are being treated unjustly simply because we are the state that we are. thank you, mr. chairman. >> senator carper. >> i think senator cardin was wh your head at me. i didn't go ahead. senator cardin was ahead of me. please. all right. >> so courteous. thank you. >> i'll never make this mistake again. i just want to say welcome to you and your family. special put at here. we welcome we welcome you to our country and hope we welcome more often other some of the countries to our country. i spirit we can use around here these days. we talked, thanks for coming by. we talked about adequate funding for the irs we just passed tax

bill last year that's going to increase the budget deficit by a couple trillion dollars over the next ten years before spending, our deficit is already at enormous levels and is going to climb higher. a matter of great concern to me and you and my colleagues. one of the ways we can reduce the deficit and increase revenues without raising rates would be to fund the irs. what you see is reductions in funding of the last over years about almost 20%. number of employees down by double digits. your thoughts about this, please, and what would you do to turn that around? >> it's the responsibility of the irs to expend any funds received in a very responsible forthright, efficient manner. that is critical to obtaining the trust of the american people. if confirmed, and if i'm in the position as commissioner one of my top priorities would be to analyze the budget of the internal revenue service, workforce letter issues, training related issues, all of

which encompass from press on the outside all of which encompass the probability of the need for additional resources, funding resources, possible additional workforce. i'm a huge believer in training the workforce there so that they are the best on the planet. i think that we need to universally get on board with the training of the internal revenue service so they can provide top quality service to american taxpayers. that's where i'm coming from. >> good thank you. former commissioner john koskinen, he was greatly criticized spurs by folks on the other body but someone like him to come out of retirement at the age of 70 to take on a thankless tough job like this, i think he deserves our kudos. but he repeatedly called on congress to reauthorize streamline program but to no avail. can you inform the committee reviews on streamline critical pay authority. could you tell in the absence of this authority what your plans

are for ensuring irs's able to track top-flight top talent especially given the ongoing cybersecurity identity theft threats are growing? >> i'm a proponent of critical pay authority for the internal revenue service tickled with respect to the i.t. side of the operation here i think it's publicly known that the internal revenue service if the system gets can detect between two and 39 times a day and i think it's critical to the success of this country and to the appearance and trust the american tax present in the internal revenue service having the system that depends taxpayer data better than any other system on the planet. and if any absence of critical care, pay scales, i think that it's a significant effort on my part and on the part of other senior leadership members of the internal revenue service to encourage not only the workforce that is there to remain and what remained there and be proud of remaining there, but to encourage people on the outside, recruit from the outside the

benefits of government service, which is actually what i'm doing today. >> thank you. one of the things we talked about yesterday was minimum standards for preparers. we have a huge problem. the comptroller for the gao said we have a huge problem here. senator wyden has introduced legislation with my support and others on the committee to ensure that better ensure folks who are preparing tax returns know what they are doing and reduce the number of errors that flow from that. .. ike to ask if i could for your views on this. >> people have tax returns on behalf of others should be capable, confident and understand the tax law for the returns. it's a typical regulation or involvement . involvement and licensing and whatnot of most repairs is critical.

>> good. earlier one of the things you talked about yesterday is the i.t. for the irs that we reported earlier here. just old and tired. i heard them say we talked yesterday as much as $400 million upgrade. is that something that you would be inclined to support? >> from the press -- i'm not on the inside. so i don't know the particulars on it. but from the press on the outside and from what we see on the outside, i think the american taxpayers want the most advanced i.t. system on the planet. >> lastly question on your management experience. some people are going to say it looked good on paper. maybe a decent guy, wonderful family. just a quick word on the managing experience. speak to the question of the manager experience. a big job that a lot of people manage. >> management experience to me is based on leadership and the skills of leadership and

creating teams and the leader facilitates the ability of the team to perform to their top capabilities and open communication from top to bottom. i perceive myself as interaction to others. i'm open to criticism and open to providing criticism as well. >> all right. thanks so much. >> senator garden. thank you very much for your willingness to serve. you have a very distinguished career in understanding the tax laws and advocating on behalf of others. so i thank you for your willingness to get involved in this area, which is not without controversy. thank kryour family. >> i want to follow up on some of the comments made by senator portman and senator carper on tax administration. but i want to start with the budget that senator carper asked you about. we've gone through a series of budget years where the irs has really taken a hit on its

budget. the only reason you got an increase -- there was an increase in this year's budget was to implement a new tax law. it didn't deal with the underlying capacity within the irs itself. and i appreciate the fact that you want to -- that you recognize that you have to live within the funds that are appropriated and you want to make sure that every dollar is properly expended, and i want you to do that. but i also want to know whether you'll be an advocate on behalf of the men and women, the professional people there serving their country and trying to make sure our tax laws are administered fairly. that they would have the resources they need and the support they need in order to be able to carry out their mission. are you going to be that type of an advocate within the trump administration to make sure that you have adequate resources to carry out this mission? >> senator, people who have known me for the past 50 years would -- the last word they would characterize me as is shy. the committee, the american taxpayers should anticipate that i'll be knocking on every door

possible if i make the determination that i think we need something to accomplish the goals that we have set out. >> and you'll be prepared to tell us directly those needs so that we, as an independent branch of government, can get that information? >> yes. this committee will hear from me directly. >> i want to underscore some of the points on legislation that's moving through here. you mentioned several times that you want to make sure that the personnel are adequately trained to deal with the complexities of our tax code and the needs of the taxpayer. there's legislation that would establish a division for training within the irs to protect those funds because as you probably are aware when there's tight budgets, those funds are some of the first to be cut. will you work with us so that we can protect the resources that go into training to make sure your people are adequately trained? >> absolutely.

>> thank you. there's also a program that you know to deal with systems in the irs. are you prepared to work with us in order to strengthen that program? >> absolutely. >> thank you. okay. you already answered the questions on tax preparers. i think we need to make sure that consumers are protected when it comes to those that are out there making -- using consumers as a part business. and i appreciate that answer. on private debt collection, we've been debating that for a long time. every study has shown the private debt collection usually ends up costing us more money than we raise. i think the house has come up with an effort to try to deal with the -- dealing with the size of the taxpayer as one of the methods. will you work with us so that we can try to resolve this issue as to the private debt collection? >> i will. >> thank you. the last issue i want to talk about is different.

i'm the ranking member on the small entrepreneurship committee. we received a great deal of business from the small business committee as to the administration of the tax laws before the change in the tax code. and now since the change, we've heard a lot more as to how small businesses will be able to deal with the changes that have been made. we've had a lot of concern about the tax preference of business income for small businesses. would you be prepared to come before -- confirm come before the small business committee at the senator's request in order to work on ways that we can help small businesses deal with the complexities of our tax code that was there before the tax reform but now made more complicated by the passage of this law. >> absolutely. i grew up in a small business. i believe small business is the backbone of this country. >> thank you. mr. chairman, i'll yield back

the balance of my time. >> thank you, senator cardin. for the benefit of senator cassidy and whitehouse, this that order i'll call on you and i'll end the first round for those listening in coming, i'll have a second round after i can my questions. senator cassidy. >> thanks for coming in. i enjoyed our meeting in my office. in february i had an exchange with the acting committee. my identity was stole once. and it still has implications in terms of how we file and when we receive our dollars back. so significant reductions since 2015, they're 1.4 million fraudulent returns in 2015. about 600,000 this year. so what thoughts do you have as to how we can move that 600,000, which costs us billions of dollars in fraudulent returns down towards zero. >> i'm proud of the fact that

the internal revenue service has made a dent in the anti-identity theft. any identity theft is still too much. there are issues with respect to the timing of certain functions in the internal revenue service that if the irs was allowed more time, they could prevent more id theft in situations like that. and so if confirmed, i would like forward to working with you in that regard. >> i will point out that i'm told that my stolen return did not note that i had three children, which formally i had had three. and so you could have checked the obits to see if something had happened. but it does seem as if integration was a social security fund or something could have revealed that sort of simple thing. >> there's tremendous pressure on the internal revenue service to issue refunds. and i believe that that's part of the issue to be dealt with. and i share the concern that any identity theft related to the internal revenue service is -- >> the congress is considering

some irs administrative reforms that would approve this. let me give you an ideas and see what you think of it. designating a single point if the irs was an id theft victim could call. notifying taxpayers when id theft is suspected. and updating on criminal prosecution. i'd like to know that this just isn't, oh, my gosh, it's just happening and we don't care. and then expansion of the id protection pin program. any thoughts on those? >> the single point of contact i think is critical because it's confusing for people who have suffered id theft. there's multiple gates, multiple doors to get into, so i think a single point of contact would be significant. the criminal investigation issues i think is a significant part of the criminal investigation function within the internal revenue service. so making people who might consider going down that road in terms of id theft, make them aware of the fact that they could be facing a significant prison sentences.

>> i think if somebody stole my id, that's going to get out in my community. >> correct. >> and so the kind of -- presumably somebody i know stole my id. it could have been somebody that logged on and got my info. but to the degree -- anyway, just to kind of revurburate. >> i understand there's contemplation of maybe issuance of different social security numbers and different pins. we can remember a social security number. we might not remember a pin code as we go into the future. and even getting into government buildings as you're asked for the social, it starts at the beginning for the last four. and so the possibility of issuing new social security numbers to people that have incurred that might also generate respect for the victim for the fact that the government stands with them. >> uh-huh. the treasury -- should we talk about the return review program,

again, to improve fraud detection. it's been implemented in recent years. appears to be a significant improvement over the old system. a treasury id for tax evaluation support from september '17 noticed that the irs may not meet its september 18th target for retiring the legacy system. again, i've been -- i've had an unflagged flaw unflagg unflagg unflagged fraudulent return. >> being on the outside, i'm not familiar with the system but it would be a high priority for me to look at it. >> okay. the irs has undertaken an information sharing pilot program to reduce fraud and id theft. i understand 24 states participated in 2017. it seems reasonable to expand that. again, your views on that? you probably are familiar with this? >> i'm an advocate of information sharing with other

similar state agencies. i think that that's critical. >> no parochialism there, if you will. lastly, i'll say that i'm pleased to see the irs has improved customer service. but still i think one in five people calling never get their phone call answered. what can we do to improve that? >> i believe it's critical for the respect of the agency and to earn the trust of the american taxpayer when they call the irs they receive -- somebody answers the phone. >> it seems pretty basic, huh? any ideas on how to improve or more manpower or woman power? >> i'm aware of other states that have the ability to when you call in you actually get a recording and it says if you -- you know, the whole time is 17 minutes if you would leave your number, we'll call you back in three minutes. as well as private industry tends to do that routinely. and i think that it would be --

if that's possible on the scale of the internal revenue service that type of a system would be significant. and i think not only in terms of getting the person off the phone so they're not on old, but with respect to the agency to make them the 21st century agency as though the private sector operates the same. that's what the taxpayers are used to. >> uh-huh. >> they are used to calling a private sector entity and getting a three minute hold, leave your number and they'll call you back. and i would like to see the irs working with the committee. i would like to see the irs get to that level. >> that would be great. thank you very much. >> thank you, senator cassidy. senator whitehouse. >> thank you, mr. chairman. mr. redick, good to see you. thank you for your visit to my office. the irs has a history from days of having been used as a political weapon. we have a president who apparently is regularly

demanding loyalty of folks who are appointed. we witness the administration leaning on both independent reg larts -- regulators and on agency of government like doj that are supposed to be independent to try to impose their will. that combination of factors raises the question of how, a, have you made any loyalty pledge or been asked to make any loyalty pledge. no, you have not. >> excuse me. no on both counts. >> no on both counts. and along the spectrum of yielding to political pressure when it's brought to bear on you versus being staunchly independent as commissioner, where do you expect you would fall along that spectrum? >> i would hope that the members of this committee and the american taxpayers see me as staunchly independent or more so. >> one of the problems we talked

about in my office is the problem of shell corporations. they're used for tax avoidance and evasion. they're also used for a considerable degree of criminal activity. much of that is a matter of state law. but there are signals that the irs commissioner can send by, for instance, telling investigators looking into tax fraud that when they bump up against a shell corporation, they ought to really redouble their efforts and not just walk away because we can't figure that out. and also to be a voice with respect to the shell corporation problem as congress deliberates that problem. let me know what your thoughts are on dealing with shell corporations in those two ways. >> if confirmed, i would be a vocal advocate for the strength of the enforcement mechanism for

the internal revenue service, including a criminal investigation of the internal revenue service. and in my background, criminal investigation does not back down from a challenge. they appreciate the challenge and they move forward. >> and would you be willing to make a report to us once you've been there for a while and gotten a look at this as to how bad the shell corporation's problem is from your perspective in terms of law enforcement. >> absolutely. >> okay. great. thank you. there is a collection gap between what taxpayers owe and what the irs collects that's estimated to be about $400 million. would it be fair for us to evaluate your tenure as irs commissioner based on what you can do to reduce that number? >> senator, what i can tell you is i'm very familiar with the tax gap. i'm familiar with the majority of the tax gap. it comes from the individual side under reporting, non-filing and under payment. and i actually look at the tax

gap as somewhat of a road map to tax avoidance, tax evasion in this country. it has been identified going back to 2001. i believe it was the first tax gap map that was created dealing with tax year 2001. very sensitive to that issue and i'm sensitive to the need to reduce that issue for a variety of reasons, including a little bit more respect if we got 1 more percent of voluntary compliance, we'd move it from 83% to 84%. that's another $30 billion a year. and on the other side, if we lose the -- if the internal revenue service loses respect of the american taxpayer and it loses 1%, that's a $30 billion a year loss. i'm extremely hopeful to put a significant dent in the tax gap. >> and my last question is that a lot of the work that the irs does is based on truthful reporting by taxpayers. if it should come to your attention that a taxpayer is

claiming one thing under oath in a filing to the irs, and is claiming something that on its face appears very different to other reg larts -- regulators or in other reporting environments, what do you think should be done about that? is that worth at least a preliminary look to see why the taxpayer is reporting something very different to the irs than they are elsewhere? >> the commissioner is not in the -- not responsible for audit selection of taxpayers or issues. that's really more the work force. but i think that the irs itself has those mechanisms in place, and they do read the newspapers. they do pay attention to what's going on outside of the service. >> should it be something the irs looks into if there appears to be inconsistent reporting to determine whether the reporting to the irs is truthful or not? >> in my experience the irs has looked into that. >> and should it continue to do

so? >> i believe that they should. >> okay. >> it's been my experience that they do. >> my time is up. i thank the chairman. >> thank you, senator whitehouse. mr. rittig, would you tell me about the ucla scholarship fund. do you know anything about that? >> i will probably tell you about the vet count rule. >> we'll gladly listened. >> i created the fund through ucla for the purpose of ucla extension is the number two extension program in the world in terms of actual registrati s registrations. vet camp scholarship fund is intended to provide scholarships to active duty and veterans. you see reality tv where you see soldiers in a sandbag installation in iraq or wherever they happen to be and maybe playing videos games. and the intent of the account is to remotely through webcast or otherwise allow soldiers serving overseas in something like a

sand bunker to actually earn extension credits in areas of finance accounting and such so that when they leave, if you've been a machine gunner on a humvee for three years and you have the gi bill, the ability to go to a college or university in this country and sit in a geography class might be a challenge coming out of the environment that you've been in. the vets count is to provide active duty soldiers and veterans with the ability to assimilate into society with some financial literacy, some accounting, and maybe in time they would go to college. but immediately to give them some respect when they come back into the job market. >> as i understand, you're the co-founder of that program; is that correct? >> i'm the founder of the program. >> the reason i bring it up is i'm the chairman of the veterans committee in the united states senate. and it's always great for me to point out a united states citizen who is lending their expertise and their career to help support veterans employment and veterans education.

and having co-written the act a few years ago when senator kari and i did it and you're putting a calculus book in their hand. i wanted to commend you on our commitment to the military and your son. he'll be a good student following your leadership, sir. >> thank you. >> second, are you familiar with free file? >> i am. >> i have in the last seven years had a free file event every april in atlanta at an underemployment and unemployment center promoting the available software made available by american software developers to file your income taxes or get your eitc one way or the other. i tried to pursue making that permanent. it's only been authorized every two years for a couple years. would you give some idea if you support permanency of the free

file program. >> if confirmed, i'd look into it more detail. i'm in favor of whatever makes it easier to get into compliance. >> thank you for that answer. and i turn back to the ranking member for his second questions. my personal feeling, and this is me personally, i pay taxes since april 15th, 1959 when i made $40 a week as a surveyor's assistance and had $8.90 withheld from my check which is my first experience paying taxes. some say that's when they became a republican. i didn't become a republican then. i came one later. but nonetheless, that's not relevant one way or the other. what is relevant about it is that i paid them for a long time. and i've had professional help to pay them a lot of that time. because i personally -- it went beyond my ability to do it and felt like i was doing it right or accurately. but i believe that the most recent tax change, actually

simplified the process of filing and paying income taxes. am i wrong or right on that? >> senator, you know, i know from the outside and from the press reports that i believe, i believe we're on that course. but i believe in terms of able to come up with a calculus in order for a right or wrong, we need to see how this tax season goes with the irs. >> i agree with that. and i'm talking to you as a taxpayer here, not really as a senator. but it just seems like with the enhanced individual deduction, the doubling of the deduction with some of the reductions and itemization that takes place over the last couple of changes, it has made the dream one day of having a one-page 1040 where you sign it and send it in maybe within reach of us. and i hope this commissioner of irs you'll work towards completing that task to moving towards simplification of the system. because you just said in answering senator whitehouse's question with regard to the amount of income we've lost by

people not paying and filing that most of the income we're not getting are the income tax gap we're getting are people who aren't filing or paying. >> correct. >> so it's an act -- overt act on their part that we're not getting the money. not a mistake. and i would think simplicity would help us to reduce that amount of people who are not paying and increase the amount of people who are filing. so if you would help us do that, i think it would help you a lot in raising that percentage of collection from 83 to 84. >> i agree. >> thank you. senator wyden. >> thank you. mr. chairman, my friend senator isakson makes the commendable point about simplicity. and i hope you'll take it seriously. and i'll just tell you it's confirmed you've got some heavy lifting to do. because after all of the balihoo about how the administration was going to get taxes on a postcard apparently for a lot of people, you would have to complete six schedules in order to be part of such a drill. so you're going to have some

heavy lifting to do. and i'll just tell you point blank, i hope what you'll do is focus on the small business guidance on the pass-through provision which looks like it is literally from fantasy land in terms of trying to figure out what is expected of these small businesses in april. a lot of them told me they couldn't even begin to make an estimate of their estimate. i hope you'll do that first rather than continue on other matters that might -- might make for good publicity but don't really deal with the guts of what our economy needs, and particularly in my state and much of the country, most businesses are pass-throughs and th they are literally crying out for some clarity on what's going to be done. now, for my next question, i would like to turn to the charity area. because we have had strong bipartisan support in this committee for charity centers. we have prosecuted that case for a long time. secretary manuchin says the bill

is going to encourage more charitable donation. the non-partisan experts at the tax policy centers say in their view that the number of taxpayers claiming the charitable deduction will be cut by more than a half. and overall charitable giving will decline by as much as $20 billion annually. you probably have seen in the press a lot of the charities are speaking out publicly about their concerns and their concerns about the vagueness of the provisions drafting. they don't in many instances know how to comply with the new rules. do you have any reason to doubt the findings of these non-partisan experts who talked about the decline of charitable giving as i've described? >> i have not reviewed those reports personally. and so i -- it would really be unfair of me to comment on what

they are saying. but i believe in the concept of charitable giving and, you know, would support that. >> on the management front, what is the largest number of employees that you have managed? >> actually employees? >> yes. >> our office of 35. >> 35. okay. so there's 70,000 people who are going to be working at the irs if you're confirmed. i thought your point with respect to senator karper that you've shown leadership and you've had all these kinds of boards. i would like you to furnish for the record because time is short and my colleague we have some business to do, i would like to hear more specifics about what kind of management approach you would actually take. because there is a big difference between managing 35 and managing 70,000. and i would just like that for the record to have that. one last question with respect to these charitable groups and political activity. i thought your answer to my

question about the vice president was a good one because i thought that statement he made was way over the line. i mean, not even close. because that's really trying to interfere with the impartial administration of tax law. but i continue to be concerned about these issues given the allegations that the trump campaign operation coordinator even diverted how trump foundation grants were distributed to provide maximum benefit to the trump campaign. in the meeting that you and i had, you emphasized the importance of the irs using its resources to send a message to the public. you talked about some examples about it. what kind of a message would it send for the irs not to pursue evidence of the law being violated by high government officials? i'm not talking to you about a specific case. but i just like to hear your thoughts about the kind of

message it would send for the irs not to pursue evidence of a law violation by a high official. >> in my experience, the irs looks into a lot of matters, develops the facts of those matters, and sometimes we hear about them publicly and sometimes we do not. so the public acknowledgment of what the irs might be doing doesn't really serve us until something gets through the system. but also in my experience, the irs does read the newspapers and they do create cases out of what they read in the newspapers. >> the irs -- the irs certainly will get the newspaper. but given what was happened recently, literally a month ago with the vice president of the united states basically saying that his views were more important than the johnson amendment which prohibits politics from the pulpit. i think we ought to understand we're in a different kind of time. so i look forward to continuing these discussions. i've asked for a number of

matters for the record. chairman hatch and senator isakson have all agreed we have other things to do after senator brown has a chance to ask his questions, and i appreciate the second round, mr. chairman. >> yes, sir. senator brown. >> thank you, senator isakson and senator whitehouse. i appreciate that. i'd like to start with welcoming mr. rettig. it was good talking to you. thank you for joining us. i'd like to start with the issue of private debt collection. i echo the comments that senator carder that it is unfair. it's too often confusing for taxpayers, as i know you're aware. the taxpayer advocate has said that it's unfairly targeting low income individuals. that, too, i would think to all of us is unacceptable. if confirmed, would you commit to a full review of the private debt collector program, including a review of its collection methods? >> i would. the internal revenue service

responsibility is to follow the law. as we all know, private debt collectors is part of the law. the issue, i think, that surfaced is implementation of the private debt collector law. is it being implanted in an impartial matter. and i would absolutely look into that. >> that means you are suggesting you work to ensure extremely vulnerable taxpayers are not being targeted? >> agreed. >> okay. the irs is planning, as we've talked about, to shut down a branch in covington, kentucky, just on the other side of the river from cincinnati, affecting 800 of my constituents. would you commit to finding similar employment for workers at a nearby irs office? >> i don't believe it's fair for me to commit not having been in the internal revenue service. and with respect to that and the reason behind terminating the employees. but i share your concern with 800 individuals not being employed if they shut down the office. and i would commit to you, sir, that i would look into that and work with your office. >> considering the amount of

talk about the agency's need for resources and staff, which i certainly support and i hope my colleagues on the other side of the aisle will too, i think it's unreasonable to eliminate these positions rather than work to reassign those workers. so i will work with you on that. and i proficient that. lastly, i know you discussed your experience with the vita program. my understanding is you have done that from the time you were in school. for tax compliance especially with respect to the earned income tax credit which is one of the most important parts of our tax law and it rewards work to moderate and low income workers and every march or april lots of -- literally hundreds of thousands of ohioans who make 20 or 30 or $40,000 a year because of this refundable tax credit all things you know will get a check of 2 or $3,000, which that income is very, very significant obviously. vita site has a 93% accuracy

rate. they're really the gold standard. describe for us, because i think it's so important to have an irs commissioner that actually practices this and cares about vita, tell us about your experience working with vita and reassure all of us on the committee that you'll be sure -- that vita sites has the resources they need to make demand for their services. >> i'm a huge proponent of vita. it serves two furps. it's the tax -- purposes. it's the tax service provider side. the other side of that is significant number of tax professionals in this country started out understanding what tax administration was about in a vita program. you know, preparing returns and interacting on behalf of taxpayers in that context rather than taking tax or accounting courses in a college-type environment. so for many professionals that i know, their spark on the interest of being involved in tax administration became in a vita program. and as you indicated, senator, the accuracy relates from vita programs, the training of the

people involved in the programs is significant and point on for the purpose of preparing accurate returns, which is critical to the success, if you will, of the tax administration in this country that returns get prepared as accurately as possible. >> thank you. i so appreciate the work you've done with vita and so appreciate your comments. i hope we can count on you when there are members of this committee and there are politicians in this town that love to talk in a deceitful way, frankly, by playing with numbers about fraud and earned income tax credit. always exaggerated fraud. that's echoed sometimes by newspapers like the wall street journal. because so often what they call fraud is really either underpayment or overpayment that the taxpayer are nothing to do with. they were simple mistakes. and, again, often it's un-- it's underpayment of refunds, not

overpayment. it's far from fraud. but i'm hoping we can count on you as the -- as the irs commissioner to defend that and speak out and set the record straight when those accusations are made. >> absolutely. >> thank you. >> senator. >> thank you, mr. chairman. mr. rettig, thank you very much for being here, for your willingness to serve in what is sometimes a thankless position. i enjoyed our chat some weeks ago. a couple of points here. one, the tax reform measure that we passed almost exactly six months ago is contributing, i think, enormously to a very, very good economic environment. we're seeing some very encouraging data. record low unemployment. unprecedented fact that there are more job openings than there are people looking for jobs in america today. the cbo revised it's gdp growth for the year. their estimate from 2% before the tax reform to now they're expecting 3.3%.

our goal to eliminate the lockout effect on the -- on foreign earnings by changing to a more territorial basis. it's clearly working as dividends from abroad are coming home on the scale of hundreds of billions of dollars. so this is proving to be extremely beneficial. but as you know, there are still provisions that need to -- that need rules for implementation. and i simply would want to ask that you would commit to working with this committee and members of congress to ensure that as any ambiguities are addressed and rules are developed that you are taking into account the intent of those of us who wrote this legislation so that we get it right for our constituents. >> absolutely. if confirmed, the internal revenue service will follow the law with the intent of congress -- with what congress intended in putting it into the law. and i look forward to the opportunity to assist the internal revenue service in

providing clear, concise, timely guidance so the taxpayers in this country can get it right the first time. >> great. great. thank you. we also spoke briefly about the foreign account tax compliance act, often known by the acronym fatca. and this is the requirement that foreign financial institutions have to report about these accounts to the u.s. government or withhold 30% as a tax on these. the fact is, many foreign financial institutions find this so cumbersome they simply refuse to provide banking systems to american citizens abroad. this is a huge problem for americans abroad. a record number of americans have renounced their u.s. citizenship because they just cannot manage their finances if they choose to live abroad for some period of time. it also makes it a huge competitive disadvantage for americans who are seeking to work. and sometimes a stint overseas can be a very valuable experience for one's career.

i don't think we should be putting americans and for that matter american multi-nationals at a competitive disadvantage for this way. so can i get a commitment from you that you'll work with us here in congress to find ways to lessen in burden that fatca is it imposing on americans. >> i confirm with not only fatca but every issue we come up with to confirm that taxpayers will be protected coming forward. >> and then, finally, it struck me as surprising that i learned that the irs has so few appointed positions and so many career positions. lots of terrific career staff. there's no question about that. but my understanding is there's a commissioner, a chief council and a chief of staff that are the commissioner's direct discretionary hire. the commissioner gets appointed, of course. but otherwise everybody is a career staff. and i just wonder if it wouldn't be better for the commissioner

to be able to assemble his or her own management team to a greater extent. do you have an opinion on that? >> i believe that the work force and leadership currently in place -- career workers are absolutely world class. but i also believe having a private sector experience and bringing that inside is critical so that there's a deep understanding of the impact of each step that the internal revenue service takes on american taxpayers and interactions with this committee and others. >> okay. great. thank you very much. thanks, mr. chairman. >> thank you, senator toomey. it was the committee's intention to nominate four members. but we'll have to move these to the floor later today. i understand the ranking member would like to make a brief statement about the nominees, and i recognize senator wyden. >> thank you very much, senator, and i agree with the decision to vote on these nominees off the floor later. we are going to be putting on

four nominations as chairman isakson noted. they're up for positions on the tax court. obviously key positions with respect to fairness for taxpayers. mr. chairman, i note that our friends senator scott has come. i believe he probably wants to ask questions of mr. rettig. why don't i hold off making my comments about the nominees. then we can let senator scott go before we go to another matter. >> senator scott, you're recognized. >> well, thank you both very much. mr. rettig, the department of treasury and the irs formally certified nominations from the state, the district of columbia, and all positions of the united states to designate opportunity zones in their areas of jurisdiction. this is really good news. securing this provision in the

tax bill for the huge legislative win for many americans living and struggling in communities in need of a renaissance. please thank acting commissioner cotter and his team for their hard work in pushing out the guidance that helped local leaders select their opportunities. this provision will help to create permanent and positive change that will benefit generations to come. i look forward to further guidance for the investors and entrepreneurs on establishing the investment vehicles and identifying qualified investments most likely to drive jobs and economic activities back into those areas. innovative tax incentive programs, such as my opportunity zone provision has been created to achieve important public policy goals but risk being severely underutilized because of taxpayer fear of irs retribution. if confirmed, what will you do going forward to more closely align irs guidance and

enforcement with congressional intent? >> senator, if confirmed, i look forward to working with you and other members of the committee in making sure that guidance issued by the internal revenue service is clear, concise and timely. and i would hope that we could get this situation where the american taxpayers do not fear retribution from the internal revenue service but respect the internal revenue service, and they know that the internal revenue service respects the american taxpayer. >> thank you very much. that's good to hear. if you think of the opportunity on legislation, we're talking about legislation that can provide private sector capital to more than 52 million americans living throughout this nation still in distressed communities. so the positive impact of attracting maybe $2 trillion of capital gains back into some of the most distressed communities in the country would be just impressive and necessary. having grown up in one of those distressed communities myself, i understand and appreciate the potential that is locked and

trapped in the soil in those communities. and we have a way of excavating that potential. i think it's incredibly important. thank you very much for that one. one final question. mr. chairman, the irs currently weelds a tremendous amount of power over the folks in south carolina and across the country, far more than the founders intended. one example is found in forfeiture. the practice allows the irs to confiscate a citizen's wealth upon the mere suspicion of wrongdoing. during a two-year investigation, the way the means oversite committee discovered the irs had seized civil assets from small business owners without providing substantial evidence to support their claim. that's why i introduced the respect act, which would require the irs to show probable cause before seizing assets and facilitate taxpayer presentation of proof that would clear them

of wrong doing. will you commit to working with me to protect taxpayers and small businesses? >> absolutely. >> thank you very much, sir. this is basically an issue of liberty, and there is a bipartisan consensus that civil asset forfeiture is an abuse that needs to be stopped. thank you for your response. thank you for your indulgence. i yield the rest of my time. >> thank you, senator scott. i might add since i'm only acting chairman, i'm going to abuse that privilege if i can to commend senator scott on the asset forfeiture issue being brought up. i'm a co-sponsor of the legislation. there is a georgia taxpayer i think is the base of the movement around the country to end the abuse of the civil asset forfeiture treatment. and i hope the irs will do everything they can do to resolute that. >> thank you. >> thank you, mr. chairman. i'm sure it's hard for folks to accept where we are.

unless any other members come in. mr. rettig, we'll look forward to getting your written responses and continuing our discussions. and chairman isakson and chairman hatch and i agreed we will all vote on the nominations that are before us off the floor of the senate when we have a vote. so there's several nominees. mr. copeland for positions on the u.s. tax court. obviously those positions deal with fairness for taxpayers that we've been talking about today. jeffery kepler is nominated to be an assistant secretary. if confirmed, he would play a key role in another area of bipartisan concern. tougher enforcement of trade laws. i plan on supporting each of those three nominees. the fourth was up for consideration is ms. lynn johnson nominated to serve as assistant secretary for family support. in that position, miss johnson would be the head of administration for children and family.

there are several specific issues regarding that nomination that i will just touch on briefly. the first deals with the child welfare system. our committee has passed a number of landmark bipartisan child welfare laws, and it is our job to perform vigorous oversite of those laws and the congress. to do that needs access to the information that shows how child welfare programs around the country actually work on the front line. unfortunately last year the trump administration announced a plan that would make it significantly harder to get the information this committee and the public needs to conduct oversite of these programs effectively. so this is not a criticism of that particular nominee, ms. johnson, but it certainly was a mistake by the trump

administration. a big mistake in my view. a mistake in the wrong direction for kids in foster care. i've been working with the department on the issue for several months. we've had communication. but i still don't think there's been enough actual progress down front. that then brings me to the second issue with respect to ms. johnson. if she's confirmed, she would oversee the office of refugee resettlement. this is the agency that has custody over the thousands of refugee children the trump administration separated from their mothers and fathers. americans have rightfully been horrified by these stories weeping mothers unsure of where their daughters and sons have been taken. and some of the audio tapes, gut wrenching audio tapes have been heard about young children crying out in fear inside the detention facility. and americans want answers as to how this is going to be fixed.

now, ms. johnson when she ran the colorado children's program allowed foster kids to be placed in juvenile detention facilities. when the committee met several weeks ago for a hearing on her nomination, that was one issue among several that committee members had to consider. now because of the new fire storm that the trump administration has created, the issue of putting children in detention facilities, is obviously very much on the minds of the american people. in my view, the committee has not had an opportunity to learn nearly enough about how ms. johnson would handle this part of her job if she's confirmed. and the fact is, we have been in the dark to a great extent on this matter for several weeks now. we had secretary azar with respect to the children under his custody not able to give us straight answers, even with

respect to how many of the parents have been told where their children actually are. so ms. johnson certainly if confirmed is going to have a key role in addressing this issue of protecting these kids and making sure these children are safe when we've seen significant evidence that they really are at considerable risk. so she has a big job ahead of her. we'll have the vote off the floor of the senate. certainly a number of my colleagues on both sides of the aisle are going to support her. but in view of the two issues that i have mentioned, i am not able to support her nomination today. thank you, chairman isakson. and it looks to me like we're done. >> we're almost done. i have a statement to read for the chairman.

thank you all for attending today. and in particular mr. rettig thank you for your commitment to public service and we commend you to the work on the past and the veteran affairs. we appreciate that very much. we appreciate all of the good questions that were provided today by the members. and other questions can be submitted for the record. please know that should you serve the agency and the american people well, mr. rettig, you will have no greater friend than this committee. however, we hold a responsibility to the american people and your actions will be overseen and reviewed. we hope you will count on us for help. and we will be the greatest watchdog you and the agency have. i ask any member who wishes to submit questions do so by the close of business on tuesday, july 3rd. with that said, the hearing is adjourned. thank you, mr. rettig for your attendance. [ inaudible conversations ]. >> thank you, senator. [ inaudible conversations ]