plus analysis of the world of politics with our informative podcast. c-span now is available at the apple store and google play. download it for free today. c-span now, your front row seat to washington, any time, anywhere. c-span is your unfiltered view of government. we're funded by these television companies and more, including comcast. >> do you think this is just a community center? no, it is way more than that. >> comcast is partnering with a thousand community centers to create wifi enabled -- so students from low income families can get the tools they need to be ready for anything. comcast supports c-span as a public service, along with these other television providers, giving you a front row seat to democracy. the commissioner of the irs

testified before the house ways and means subcommittee on oversight saying the irs should be done addressing its tax filing backlog before the end of the year. he also answered questions about tax assistance for small businesses hurt by the pandemic. >> good morning and welcome. i call to order the subcommittee

on oversight. thank you, everyone, for joining today. we are holding this hearing in a hybrid format in compliance with the regulations for remote committee proceedings pursuant to house resolution 8. before we turn to today's important topic, i want to remind members of a few procedures to help you navigate this hybrid format. first, consistent with regulations, the committee will keep microphones muted to limit background noise. members joining virtually are responsible for unmuting themselves when they seek recognition or when recognized for their five minutes. committee staff will mute members only in the event of inadvertent background noise. second, when members are present in the proceeding, via web-ex, they must have their cameras on. if you need to step away and attend another proceeding, please turn your camera and audio off rather than logging out of the platform.

finally, we will dispense with our practice of observing the gibbons rule and instead go in order of seniority for questioning. alternating between majority and minority beginning with members of the oversight committee. i thank you all for your continued patience as we navigate these procedures to continue serving our country together in this great time of need. and with that, i will now turn to the important topic of today's hearing with irs commissioner redick on the 2022 filing season. i shall deliver my opening statement. welcome everybody. the subcommittee on oversight meets today to review the 2022 tax return filing season and the overall operations of the internal revenue service. i would now like to welcome our witness, irs commissioner charles rettig.

chairman pasquale regrets he couldn't attend today and asked me to serve as chair this morning. he wanted the subcommittee to hold this hearing today because it is essential that we ensure the irs makes this a successful tax season for all taxpayers. he has submitted a statement for the record, and without objection, it is entered into that record. mr. rettig, thank you very much for appearing today. we know this is a very busy time for you and the irs employees, so we are especially appreciative that you were able to join us this morning. we are very grateful for the dedicated service of the irs employees. we're particularly interested in receiving an update on the ongoing tax season including any recommendations you have for taxpayers or practitioners as we near the april 18th filing

deadline. the irs has warned that there would be enormous challenges this filing season due to an unprecedented backlog of millions of unprocessed tax returns. each return represents an individual, a family, a business, desperately awaiting needed refunds from last year. we look forward to hearing from the commissioner on what the irs has done so far this year to address the backlog and what additional tools the irs needs from congress. importantly, we must assist our constituents who have been waiting months for much-needed refunds, including individuals claiming the rebate recovery credit and small businesses claiming the employee retention credits. i recently held an event with our local taxpayer advocate, and it has been one of the highest reviewed events of the pandemic,

which just shows you how many people are looking for information and relief during this filing season. and it's not just credits and refunds. my constituent has been denied an increase on his sba economic injury disaster loan because irs has not corrected his business return from 2019. it also took months to post his returns from 2020. and the irs has not corrected his business return, and this may not have happened at all had the office -- my office not intervened. now his business, which is inspire home construction, is in danger of closing because of the backlog and an irs issue that keeps corrected returns from being posted so that the sba can

see them. as a former employee and member -- actually as a former member of california's elected state tax board, i know the importance of timely accessible service and assistance in ensuring fair tax administration. we cannot be complacent with a level of service in which only one in ten taxpayers calling the irs is able to reach a customer service representative for tax law and account answers. i recognize that the irs received an unprecedented number of phone calls last year, nearly 300 million, and i would like to hear from the commissioner, what lessons the irs learned in applying this filing season? that includes expanding the use of callback technology, and i look forward to hearing what is being done to expand the availability of that feature.

further, the tax laws provide the irs with administrative authority to address certain situations that develop during the filing season, which may be unfair to taxpayers. i've consistently advocated for various tax penalty relief as a matter of fairness, particularly as taxpayers continue to face covid-related challenges in filing their taxes. i look forward to hearing what administrative relief and actions are currently under consideration by the irs in response to taxpayer difficulties and the backlog. today's hearing is also an opportunity to learn how current funding levels are impacting irs staffing, programs, and most importantly taxpayers and tax administration. a decade of underfunding by those who do not value fair and

full tax administration harmed the irs and countless taxpayers. these impacts include a tax gap of up to 1 trillion dollars a year. a reliance on correspondence audits of low income taxpayers. the worst telephone services in the history of the agency. and antiquated technology that does not allow for the scanning of returns, secure e-mail contact with taxpayers and agency preparedness for now or the future. thanks to the bipartisan omnibus that president biden signed into law this week, the irs has received an increase in funding of nearly 6%. that is in addition to funding from pandemic-related legislation for information technology.

however, we all know that this is not enough, which is why the house passed reconciliation bill included long-term sustained funding of 80 billion dollars. i look forward to discussing how we can make this tax season successful, and i now yield five minutes to the ranking member mr. rice for his opening statement. >> thank you, madame chair. i also want to thank chairman pasquale for holding this hearing today. thank you to the commissioner for being here and being so available to us. and before i begin, i want to say thank you to the tens of thousands of irs employees that have worked very hard and have worked overtime in many cases during this pandemic. we've had many policy debates here and many concerns about management decisions at the irs. that's our job, oversight. but your work is important and it's not easy, so we say thank

you for it. now, this tax return backlog crisis began with pandemic closures in march 2020 that impacted all of society. the irs was closed for months due to the virus, and so some slowdown would be expected. while the electronically-filed tax returns can be processed remotely, paper returns and mail piled up at the irs facilities with no one there to open them. i recognize that during the pandemic, congress assigned the irs significant new responsibilities, such as, sending economic impact payments and advanced child tax credit payments to millions of americans. there is no doubt that the pandemic created a significant challenge for the irs, just as it did for american families and businesses. the irs has certainly had successes along the way,

developing a process for sending out economic impact payments to millions of americans, with almost no notice, and executing those payments so promptly was clearly one such success. but not all actions taken at the irs have been successful during the pandemic. republican members of this committee have been sounding an alarm about the backlog crisis for well over a year now. and it truly is a crisis. tens of millions of unprocessed tax returns from last year await processing. that represents refunds due to individuals and to businesses, and it significantly affects households and the operation of those businesses. when biden -- when president biden took office, the return backlog and customer service at the irs were already at crisis

levels. customer service levels have been low at the irs for decades, but things got much worse as the pandemic dragged on. the agency was receiving millions more calls than in previous years, and phone call answer rates fell to even lower levels. this information was known when president biden took office. president biden didn't propose a plan to resolve the backlog and fix the customer service crisis at the agency. instead, he proposed doubling the size of the irs by hiring 87,000 new agents to conduct tax enforcement, not process the backlog or provide customer service to taxpayers. as part of that plan, the biden administration also wanted local banks to report details of nearly every american's bank account to the irs in a massive surveillance effort. so far these bad ideas have been

blocked from becoming law, thank goodness, but unfortunately, we know the administration is still pursuing them. when it comes to the irs, the biden administration has its priorities misguided. the idea that we would double the size of the irs by focusing on enforcement without first fixing the agency's ability to provide basic services to every day americans is laughable. it wasn't long ago that republicans and democrats on this committee came together to draft and pass the taxpayer first act. part of the purpose of that bill was to reform the irs and to make it work better for taxpayers. to put taxpayer service at the heart of the agency's mission. the biden administration's plan would undo that work and turn the agency into an aggressive enforcement agency that is adverse to taxpayers, rather than one that serves taxpayers. when it comes to the long-term

vision of the irs, we need to come together in a bipartisan way to fix the customer service problems and modernize irs technology. and so i've been on this committee for six years now. i've consistently heard about the fact that we're using computers that were built in the 1980s, some running cobalt programs that only one person in the irs knows how to operate and so program, and when that person retires or passes on, the irs is stuck. it is absurd that it's gone on for 40 year us now with ancient -- 40 years now with ancient technology, and we can't seem to get it modernized. we have thrown money at this problem before, and if we had solved this problem, in modernizing technology, i don't believe we would be facing the issues with the backlog that we have today. we can do it. there are members on both sides

of the aisle that are dedicated to working on it, but first, we need the irs's help. they need to tell us what needs to be done, and they need to convince us that they can actually do it because we have funded it before and it didn't get done, and so people have great doubts as to whether it will be done if we throw money at it again. so we need a cost estimate. we need to know what needs to be done, and we need to know how it is going to be done. let me transition back to the short-term. that's the long-term solution. more technology is the long-term solution. let's go back to the short-term problems we're facing. just last week, the irs and treasury put out what they called an aggressive plan to end pandemic inventory backlog this year. that would be an aggressive plan. i'm not sure that it's possible that we can completely do away with the backlog this year. that plan highlights several initiatives that we've heard

about previously combined with a few new initiatives. commissioner rettig, while i wish this aggressive approach had been implemented a year ago, i'm happy to see the agency has put together a serious plan that matches the seriousness of the problem. i want to highlight a couple of the key points from the plan and how we got here. in january of this year, we learned that the irs was sitting on over a billion dollars that it received in early 2021 while at the same time arguing it needed additional funding to deal with the backlog. i urged the irs multiple times in january and february to use those funds to address the backlog. it appears the agency may now be choosing to use those dollars to hire 5,000 workers dedicated to working through the backlog this year. after our calls for drastic action, the irs announced it would create a surge team to address the backlog.

i understand this involves temporarily moving irs employees from other parts of the agency over to submissions processing to help get through the backlog. that strikes me as a good idea given the scope of the problem, and i would like to hear more from you, commissioner rettig about how that process will work. i also noticed in your plan that you're evaluating options for pursuing additional contractor assistance. i'd like to hear more from you on that as well. finally, you have a number of items in the plan regarding communication with taxpayers. i'm almost through, mrs. chairman. i want to know from you what you are going to do in the short-term to help taxpayers who are contacting the irs actually get the answers they need. this problem is massive, and the inability to contact the agency feeds the ongoing problem. thank you for your aggressive plan, commissioner rettig, and i look forward to your testimony.

>> thank you, mr. rice. without objection, all members' opening statements will be made part of the record. without objection, i would like to enter a statement from mr. bradley schneider who was unable to attend this hearing. now, we will turn to our witness, commissioner rettig who has joined us here in person to discuss this very important issue. your statement will be made a part of the record in its entirety. i would ask that you summarize your testimony in five minutes or less to help you with that time, please keep an eye on the clock. if you go over your time, i will notify you with a tap of my gavel. commissioner, you may begin. >> thank you very much, chairwoman, ranking member rice, and members of the subcommittee, thank you for the opportunity to discuss the filing season and irs operations.

before i continue with my opening statement, i need to address something personal which is this may be my last time testifying in front of this committee. my statutory term expires november 12th of this year, but every single time that i've testified up on the hill, i have had the extreme privilege of being accompanied by the same person, who is sitting behind me, ms. diane grant has been with the irs more than 50 years. i'm with diane every single day, and that if folks think that a commissioner comes in and makes decisions, i want you to know how much i value ms. diane grant both as a person, as a colleague, as a friend, as a tax expert, and an irs experienced expert. i think in many ways, diane epitomizes the irs employee. she is all that. [applause]

she's also extremely humble, and i'm going to hear about this on the way back, but thank you for affording me the opportunity because we have some truly spectacular employees. as you know, the fiscal 21 gross receipts for the internal revenue service were approximately 4.1 trillion dollars, which represents about 96% of the gross revenue of the united states of america. a successful fully functioning irs is important to the continued success of the country. the government does not build bridges, education and things in the military context, those are built with funds, 96% of which flow through the internal revenue service. funding the irs appropriately is critical to the success of the country. the questions you are going to ask me today, i'm fully aware in large part you're going to hear me talk about funding shortfalls in many many different parts of the agency. i came on board almost four

years ago -- october 1, 2018, knew a lot about the internal revenue service, have obviously learned a lot about the internal revenue service, and i might encourage you to invite me back when i'm no longer wearing the collar of a commissioner, for an additional discussion, whether that's one-on-one or in a committee hearing. i'm not the shyest person in the world, but i am representing an agency that i care deeply about, and that's why i came to this agency, which is really for the people of the internal revenue service, the people of this country, members of congress, to try to make it better, and as similar to some of you, i had 36 years practice interacting with the internal revenue service on the outside, and i could not be more proud of my term as commissioner. the irs and when i say irs, i'm saying the irs employees have been at the forefront of every issue during the pandemic of the last two plus years. the irs employees have performed spectacularly well, delivering

over 1.5 trillion dollars, during a pandemic, three rounds of economic impact payments, two rounds of 1040 refunds, and then an additional six and in some cases seven advanced child tax credit payments during the last half of last year totalling an additional 93 billion dollars. this is for people who i sent home in march of 2020 concerned about their health and safety, and i think i'm correct in saying we shut down the internal revenue service at the front end, maybe before any other federal agency, fully aware that in march and april of 2020, one of our primary responsibilities is the people in this country and to issue refundable credits, which are the difference between a food bank and food on the table, the difference between, you know, rent and no rent. ::

>> entered throughout this time were contending for eligible taxpayers and accurate returns, requesting the direct deposited continues to receive it the refunds or by depositing in about 21 days in the has always been for the internal revenue service pre- pandemic and during the pandemic, and fiscal 20 when we received over to 70 million at tax returns and paper, and congress led us into changing and encouraging electronic filing scenario, that we are currently in fiscal 22, about 97 percent electronically filed returned and that is critically important it thing congress can do to help us is to have the people continue to file returns electronically, accurately returns and when i say a them talking about the tax

credit to the vip, because the returns that are not accurate, fall out and ended up needing a manual processing card from last whaling season, we had more than 10 million returns and return and recovery remake contacts and more than 13.2 million returns were people have recorded something to do with their unemployment insurance and as you know, the legislation changed during filing season to exclude $10200, of unemployment compensation we were already processing returns submitted million in the recovery to pay and to remain 13 million on unemployment compensation it we got millions with respect to the hard income tax credit and as you know congress change the law so that individual in the 2019 and 72022 my thank you so much and otherworldly much more content to be discussed charles rettig without a question so at

this time, i will open the hearing and further questioning without objections, each member will be rocky and ice for five minutes to question our witness said as mentioned earlier probably will not observe several it is hybrid and we will instead going over seen questioning and the majority and minority getting members of the oversight subcommittee members appearing virtually a reminder to unmute yourself linkin park recognized 25 minutes. i will begin at by recognizing myself for questions, charles rettig the irs has announced the use of search teams to address the tens of millions of returns the backlog in a sentence or two can you tell me when with backlog be eliminated, before december. >> in november, absolutely

before december nfl the respect of my ouija said that my clock appear so that i had an initial that i had a minute and do not mean for you to have to gavel and i was watching my clock and we have 800 members of the searching with employees that have come onto accounts management at 700 coming into submission processing it, and as of today barring any unforeseen circumstances covid-19 etc., as world series yesterday, we will be healthy by the calendar year 22, and into the 23 filing season through the eyes of the taxpayer. >> thank you and that is very encouraging news to hear that definitive statement that we will be cleared this year and commissioner charles rettig and police that the urgency of irs hiring needs in order to address this historic backlog in which are that taxpayer returns are processed in a timely manner.

an effect provided the agency with regard to hiring authority that i am not taking opportunity due to employer challenges particularly in key roles like the returns processing the ga report published last publisher's mother founded the last fiscal year not only the irs struggled to be is hiring search goals returns the processing but these employees had an attrition rate of 17 percent, more than double the agency average and can you talk about what agencies doing to improve the retention and attrition rates temecula the effectiveness of the direct hiring search. >> for more than two years we've been requesting direct hiring authority because we compete with the private sector to convey some of the unborn next week and for us it is been six - eight month process when you get into the submission process and accounts management, those people have a lot of options come the amazon walmart so they have the rest of walmart also

cited their hiring 50000 people at target announce onboarding it $20 an hour and up until the presidents reach the executive order we were $14.57 and i can only encourage people so much to come on board for the good of the country that at those levels, the difference between a $50, and the $20 is whether another going to have a lunch or dinner that what it's going to be and we need assistance and to provide whatever and what we are doing a mess what we have tuition waivers and childcare we have a whole host of things that we work with our unions and national treasuries and employee unions and i would not even go out on a limb and say that we are close, regular conversations with the residents of the union and we have done that since i have been on board and we have a great working relationship as i've said, your members are our employees a lot of employees to be here today during 22, and i want them to be here during 23

as well and the employees are the strength of the agency else's important but the employees and their pride in their privilege are very important. >> thank you flat and it would like to discuss the issue of the fairness especially in the context of a tax gap as high as $1 trillion a year. a recent report from syracuse university, found that in the last fiscal year the irs audited low income wagers with less than $25000 in total receipts at a rate five times higher than for everyone else and these taxpayers are less likely to have professional tax advice and likely to face. like a limited english proficiency so even a course in correspondence audit present a major burden and not only are these audits unfair but they are ineffective, guilty get little revenue and policy or how is iris using this search to address the audit entered

complex returns of the higher nurse and what you taking the texture to ensure that the most vulnerable taxpayers are not bearing the brunt of tax enforcement just to keep overall numbers steady me first address the report and draw your attention to her data book, 202010 book page 33 table 17, and i also like to draw your digital or kyiv data page 34, this for 2020, page 33, for 2019, page 34 and 2020 table 17d 42019, table 17 and that reported by sark use university, is absolutely 100 percent, false and i'm tired of having to deal with this issue and we audit high income taxpayers more than any other category in the internal revenue service and taxpayers reflecting over $10 million, that of income are audited at a rate exceeding 7 percent and taxpayers of the 25000 level which is primarily

the taxpayer were the only people who we look at our part of the 1.1 percent of those in correspondence audits and it appears that we do not have to file improper payment race because we are forced to look at it low income taxpayers and the improper earned income tax in the world, we must audit a percentage of those so that our research folks can come up with what the improper payment rate is, at 25 percent error rate in earned income tax credit and it is over $17 billion each year and the secretary signed off on that but in the high income, if you drop between five and 10 million you will see a 4.2 percent rate if you drop between a million and 5 percent, 5 million you will see is 2.2 percent between 1,200,000 to come drops off considerably because of that range, we have information reporting under a million or about a million executives who have to reduce who have 1090 nines and you get

over a feeling you run into entrepreneurs who have rights as such we are putting every experience agent on the most complex tax returns but to give you one example and i heard you say before, that last year we received 4.2 million partnership returns which are close to the returns so many of those are complex and multitiered, and about foreign blockers and entities that come into a chain that essentially block certain tax effects and 4.2 million, and i have 6500 experienced frontline revenue agent said these are most capable technical people and their entirely devoted to higher income taxpayers to abusive transactions and we are putting every effort on that and i do not believe the people to be able to gain system and you heard me say before that we are all kind in the hiring authorities are needed and you also make our counseling else

that were looking for tune experienced tax attorneys and i am pleased to say that we put out that announcement we received multiple from out for folks coming on board were not only in counsel but in other areas as well. >> i could go on but. >> will as you can imagine, is fairness that is the issue had i heard the statistics. >> we need to change this and earned him tax credit we do not have the ability for a file return what a qualifying child is we need to issue those refunds immediately we do so 95 percent of the it refund is refundable credit so advice april 15 at that is important money for imported people tend to get lost in society. >> and thank you for that. now i would like to recognize mr. rice for five minutes to ask

us questions. >> mr. commissioner, you peaked my interest, what single factor that i don't have the five minutes i have to keep it really short your answers when single factor would help the most in solving this 25 percent for great on the earned income tax credit. >> portal the definition of qualifying child, that's tax credit. propose from what i've seen, i will, behind me he's been working the issue since 1970 from the bmi hills ford and family credit, urged all of these credits into companies that agency can administer without getting into somebody's life. >> what about income verification. >> the end texture and we don't try to verify the income we try to verify physic qualifying

child. >> so i limited time, mentioned in my opening statements, but i'm glad the irs in the department enough about the result of backlog and i am very pleasantly surprised that you say can be done this year and i would applaud that it would've taken longer than that why did it take someone to to come up with a plan. >> it did it, we have this plan since we entered the pandemic and obviously there was no pandemic playbook in july of 2020, we had a 23m cases of unopened mail we have the capability of the staffing to open it between one and when end and half million of pieces of la year. >> you do the math that week, 23m backlog, we needed to fight through the backlog and we did not have direct hiring authority which meant to him more people making it $14 an hour with a six - eight month - >> so this brill briefly if you did not have direct authority

how did you do this you didn't do the hiring yourself right. >> pretty the hiring. >> quite frankly, i'm not given a presentation without telling people that we are hiring how we come in hallway to bring them down to the irs, every irs employee, investor, every employee is a recruiter we actually have a referral system to back but before he had direct they authority who did you hiring pretty who did you hiring. >> we got two days ago we have a human capitol. >> before that who did your hiring for you. >> human capitol office remember from. >> how long did it take as or federal agency right. >> irs. >> and how long did it take before you had direct hiring authority to get some video aboard eight months is the best example we spent three months looking for 5000 people

preprocessing. >> eight month before, how long will it take to make 75 days we should be able to onboard. >> thank you nl as we discussed here in this hearing, and hearing before for five years now, and privately yesterday, i think the real long-term solution to most of these problems is to modernize the information technology via the irs and i believe that everybody republicans and democrats want to see that done and i think that there is a hurdle for the rss god overcome because we feel like we have funded this before and have not seen that results so i think a hurdle the irs to jump is convincing us and maybe mostly or all i don't know, that if we throw money at the problem that a will be or increase the efficiency of the iris can

actually pull it off because we thought we done before and it did not get pulled off. so mr. commissioner can we work on establishing maybe with outside experts, credible plan and how much it will cost and when he could come in and give us some confidence that will actually occur. >> i call your attention to do this is the agency that distributed $1.5 trillion and these payments in record time, two weeks 48 hours 24 hours again in i would also call your attention to our business modernization plan that we provided on april 16th, 2019, the plan was reviewed by poughkeepsie, we provided it henry just based on some profits with mckinsey, and as i've indicated i think my been up here, myself and the agency, we welcomed oversight and oversights an important part taxi ministration and the irs

operations and not only myself anybody what follows some place would welcome the opportunity to work with you, we take all ideas from all sources and at the end of the day, i said in a different hearing recently, but are and democratic california has an undeclared that i am an american i'm very proud american euro pot americans, we can help us help others and that's what i spent my entire time on thank you gentlemen's time has expired turnout recognizes the next person for five minutes. >> thank you manager for the opportunity and thank you mr. charles rettig premier willingness to come in this very this busy time to speak with us and wanting to us a couple of questions grateful to my colleagues have discussed the backlog some of the other issues

that it when issue that is a little more closer to home for me, i just want to share with you, in 2004, high decided to move to the virgin islands which is where my ancestral family strong, was born and raised in new york city i was living in washington and when i moved there and part of the reasons that i was able to move is at the virgin islands has a specific tax incentive program, it brings the businesses and industries to the territory this really helped us to reap bursar - cover somebody people in my same age bracket and professional experiences remotely to the territory and bringing with them their expertise in law, accounting, engineers, architects, etc. welcoming back home and doing great work. unfortunately, the work several individuals who treasury in progress felt were abusing that tax incentive program and so

rightly, congress lifted it and changes related i believe that there was overcorrection that was done it at one of those has been in the area of residency, now i know individuals of the irs has a date willing to us and have discussions with us about that but this is a long time since the american jobs act was made and nothing has been done i want to understand how we are going to correct this residency issue and if i was in the virgin islands, i can only be considered virgin islands resident for tax purposes if i lived there 183 days and everywhere else in the united states is 11202, i moved to connecticut, i'm considered resident there for tax purposes, after 11202 days. but being in the virgin islands it creates a higher bar which also bars individuals who can really support our economy

reside there and no one in this global economy, flips anywhere coming they are doing it no business for 183 days except during the pandemic when we are all forced to be at home with their husbands and wives and children and dogs. so i want to know what support you may be able to provide it and is the irs looking at this. >> i would suggest that we may know very familiar with the virgin islands residency issues and also familiar with california and u.s. residents coverings 183, and more than nine months edit also on the federal side you have this three year rolling average, and maybe working out some kind of thing without but ultimately i have to say i'm a taxi ministration treasury does policy, see medical you have the ability to treasury because your implementers can influence the house treasury or how they are going today next this i talked to treasury have you.

[inaudible]. >> i think you do and you're the one to trigger whether there will be this with individuals with this, we have. [inaudible]. a lot of tax base to be because of this rule. >> i am very familiar and i have offered to sit with you anytime out of his hearing i will make the afternoon available cancel meetings on regular people but we do not influence treasury policy, that is exclusive it arraignment of the treasury and past agency that follows the law and you will get and as i think i said here, on commissioner, because i can to make comments in it as a non- commissioner but i cannot make those comes as a commissioner and thank you when you understand and i think that everybody should be treated fairly at the core is a bona

fide of the residency and i am familiar with those who abuse that relationship and we have similar situations going on with respect to puerto rico and 700 situation between the seas coming from california, thoroughly familiar with the people who arguing that they live in las vegas and some non- taxed a song familiar with the residency issue to be more than willing to sit with you and give you my 36 year private practice experience and maybe an approach the approach has to be treasury don't have that >> i understand you who has authority over and i would pose to you that you do have more influence than you think about thank you very much and i'll take you up on the offer. >> anytime. >> i yield back. >> the judge ladies time has expired turnout recognizes the next person for five minutes. >> thank you, and thank you for coming out today, hit is obvious

that there's an effort to get a handle over during this pandemic but obviously some factors that have occurred while before the pandemic is systemic it deficiencies in bureaucracies that it handcuffed battling it with the market people dealing with this so much and the irs obviously supportive great stress for the american people and nobody likes to deal with the irs and i just ask a few questions and just because of the difficulty that we have now getting a hold of this, do you guys ever use an outside agency and everybody is asking for money many of these things are committed try to give the irs efficiency and try to create more you have have contracts with quite a few consultants on the outside who do exactly that. and i've made visit various

parts run the country trying to encourage others to produce me us as i did on behalf of the country and i think that the high and tech companies for example in california can do better contributing and we have a lot of different abilities things that are these tech companies in their be powerful ' gives the raised in the country they have a rule of law that they can rely upon an inch every is duty quite prickly to help support the agency is accountable for 96 percent of the gross revenue predict the touches more americans anything about it. >> i just, most americans believe that less convent is better and this is just the perfect example that we don't need more more government because the bureaucracy and inefficiency that we have for all the outstanding tax girl filing some of these monies that have been painted to the girl not refunded or filed and do you have an estimate of how much the

united states government owes the american people because of filings not been dealt with. >> we do not will have to try to figure how to get it but the inventories are down significantly and most of you have staff who participate every friday. >> so if we have 10 million filings that have not been done, the average finally is how much. >> the average refund actually is a much. >> currently running around 3400. >> this would not all be refund returns with the average. >> so hundreds of millions of dollars that are owed that are sitting in government thereunto those people. >> but the majority of those ones a fall on the the inability of function reconcile economic impact minute is the change in law that allowed 2019 coming so 2020, we had a menu and manually

look out one and 30 million returned and i was under 5000 people to do that but in terms of technology and what we have been doing during the pandemic, there are many many look hundred you when we did it what was known as - and staff are aware of it they took a position and automated the processing of the return to recovery february 28, processed 4.2 million of ten-point $3m, if a lot of that operated at a very fast pace. swift novellas and personnel phones and other types of services, with technology will be returning to the point health chairwoman and the ranking members, and really good direction. >> let me ask you this then, what percentage of your workers are back in place and person working. >> like the rest of the world,

have a blender between telework to michael what percentage are back in place. >> percentage of people are required be back in the office back in the office processing folks were back in the office and june of 2020 and socially distanced and multiple shifts, mandatory overtime as well as voluntary overtime for the workforce and account management consumption processing >> thank you to do know this is difficult but i'm not saying it's not all. >> i printed out to do but i do think that just as with anything, we do a lot better now recited be out tremendous amount of money and interest because of the delays in processing and without a doubt that was money that should never have had to be spent by the working taxpayers, i appreciate the work that you do and i hope that your retirement is a good one and hopefully the replacement will come in and be even more efficient a better steward of our taxpayer dollars and thank

you and i yield back. >> the gentleman site has expired turnout recognizes the next person for five minutes to my thank you so much, thank you commissioner for your this is money i'm very pleased that we responded favorably to the request made to keep open the submission processing center and one of just three of our facilities that process the returns at all familiar with common

, with the irs. and eventually replace it system but over the last decade as you know funding went down 20%. staffing went down 17% spray the number of returns that you expect to process went up 19%. the result of the process returns my republican colleague

was just talking about, unanswered calls in general unhappiness to rescue america's slashing funding in half have. [inaudible]. >> mr. - you sound is off. >> can you hear me now. ..

efficiency -- >> cutting our budget -- >> perhaps shutting it down is what makes the proposal. let me ask you -- >> i'm not proposing to shut it down from responding to the question. like to andrs would the decisions over the last decade to shut it down slowly, abruptly. let me ask you earlier about the tax gap, you've estimated the difference between actually paying, i believe it's an astounding trillion dollars a year, another estimate is 70% of

the cap is a top 1%. what resources do you need to close that tax gap? >> we need a visible robust mechanism, down 17000 enforcement personnel that doesn't mean everybody, it meany strategic, experienced people -- you cannot complain we conduct audits, you can complain if we conduct audits and go on tomorrow or we should move on certain arenas but we do not have the ability to do what we need to and i continue today to standby the trillion dollars we are about to issue our tax gap estimates for the period, cost 2011 to 13, we are going to do 14 to 16 and you're going to see them track but i like to draw your attention, i assume there will be a lot of press and

project what we think the tax gap is for 2019 but no last year was over $14 trillion in transactions and virtuals currency with the market cap over to trimming dollars, somewhere between 30 and 43% of that market easily u.s. people, additional u.s. reporting and theyey need to report. >> the gentleman's time has expired. the chair now recognizes mr. evans for five minutes. >> thank you. congress enacted the preparation legislation that would increase funding by nearly x%. i understand is not enough to reverse more than a decade of severe funding that i recognized we need more resources in the antiquated technology. how does the plan increase in

ncthe funding improve service delivery provide response to our constituents, particularly those who do not file a tax return child tax credit? >> msixty-five active 21 but 50 million and treasury requested about 609, 300 million of living adjustment to about 375 million adjustment for an agency called upon time after time after time for new responsibly and performs, our people perform. in terms of earned income tax credit, child tax credit and numerous others, we need to educatee people, help people get it right. i'm incredibly proud during my p

term, being a public school kid from l.a., opening doors about certain parts of the community and for the first time in the history of irs, i'm number 49 as commissioner. it in spanish and accelerate through the language, you may have noticed last weekan we announced we launched spanish braille for our returns. i will call out last year over 2 million hits on irs.gov, more than 90 million were non- english speaking. they are in the communities in person providing services, we have a variety of taxpayer services, it online in our taxpayer system centers, one of the first things i would encourage funding congress is to let staff 358 assistance centers, frontline retail operations, 39 unstaffed, we

people people and advocate services they got a little this year, that is the safety net taxpayers on the outside. have them, case three or four times normal, almost impossible for any individual and you know we've launched thisy year taxpayer experience, to operate and look and get questions difficult at one thing, we t routinely hold interactions with front-line employees whether on the phone or taxpayer assistance, what are you hearing in terms of filing? you will see as issue alerts and announcements and letters, reach to congress to work with your local officers to relay and we interact with the transmitters because they run almost emirate operation during filing season. if you went through an electronic transmitter, that the

present to call so we share information with them as well. >> when constituents cannot get help from the taxpayer service, they contact a member of congress. your response to that aspect? >> the pandemic has been difficult for all of you, for your folks onks the front lines and it's difficult for us as well. i have almost never interacted with somebody in congress, 535 plus who does not have my personal cell phone or their personal cell phone about deputy commissioner for operations support. we are available, advocate services are available, legislative folks are available, i will hold a one on one connotation with youou or your staff, bringing in corbin, taxpayer experience officer and

constituents having difficulty wanting to know where their matterer is, get a waiver so we can talk topa you and taxpayers information. i've been on calls where it opens up 70 and 14 are here, 13 waiting so the idea when we talk about how many returned we have, it's not like they are sitting in a closet somewhere, we have 4 million returned from a paper returned to process. the rest of the inventory from a they've been kicked out for an error in return and kicked out for matching, identity theft, a host of reasons. keeping in mind we are the gatekeeper for fraud, gatekeeper for cyber and over 1.6 billion cyber attacks a year with recent world events. you want us to be vigilant and you must find us to keep the gate closed to the benefit of

every american. we get hit, it's emotional. >> thank you and i yield back my time. >> the temperament time has expired. the chair recognizes ms. miller for five minutes. >> thank you, madam chair. thank you for being here today. if the irs struggled recent years and the challenges from covid have only exacerbated the challenges your agency is facing. i appreciate the genuine efforts you've made to try to rectify these issues, many questions still remain on high have the irs continues to function and i want to focus my questions today on employee retention tax credit which was an overwhelmingly popular emergency program to help small businesses and nonprofit organizations weather the storm of the pandemic government mandated lockdown.

ert sequence unfairly cut short fourth quarter of 2021 and small businesses and nonprofits are still waiting on relief from the third, second and even the first quarter of last year while processingr delayed eight to tn months. when congress authorized the program from a it was designated to be emergency relief from receiving advanceder payments could mean life or death for small businesses and nonprofits in every single congressional district. with the irs creating successful processes to ensure individuals could receive direct payment during the pandemic, explain why the irs handles the rtctc processing like a normal piece of correspondence and you do not have procedures to prioritize these credits. >> we do have procedures in place we do not w have the abily to automate our systems, that is one difference, automate systems

to process it but i would encourage arrange a meeting or call with your staff and the folks there. >> i do not have your personal phone number by the way. [laughter] make sure i get. [laughter] >> i was going to say it -- >> you better. [laughter] >> probably not my best move. >> can you commit to the committee today irs prioritize the rtc processing including creating a dedicated mailbox, phone line and updated timeline to when to expect the refunds? specifically for small businesses and nonprofits attempting to claim the credit. >> i come from a small business environment, my dad had a truck and very committed to helping small business -- small business taxpayers are the backbone of the country, the ones we interact with and not the ones

during the pandemic -- thank you, most of these were not previous, they didn't have a challenges the pandemic presented to them previously and nowhere to turn to. >> do you know any business over the door whether a truck, glass door or any, they are putting themselves at risk, taking a gamble by being in business and the speculation the rtc was eliminated in q4 2021 within the infrastructure bill because members of congress did not think employers were taking advantage of the relief. congress should not have -- couldn't have information due to the processing delays again but your agency. could you explain this quarter amendment 2021? how many have beene processed since? >> i don't have that but i can get this this afternoon and i

want to be clear, the irs is not the one the retention tax credit, we follow the law. >> i think you and look forward to continuing to work with you and i urge my colleagues on the committee to cosponsor my bipartisan bill to reinstate the rtc fourth quarter of 2021, hr 6161 and will deliver our to relief small businesses and nonprofits in your community. thank you. >> potential ladies time has expired. the chair recognizes -- for five minutes. >> thank you, madam chair. i appreciate this important time the hearing, good to see you, thank you to you and your team members, congratulations on 50 years of service to you as well. i'm going to get right into it

because we have a number of priorities facing the american people and one of them is the issue of gas prices. there too high and it is imperative we identify solutions to bring themti down. since president putin started his devastating war in ukraine, the price of gas has gone up 75 cents. the price of oil is rising disproportionally compared to theis cost of a barrel of oil. as gas prices soared in 2021, the largest oil and gas companies made a combined $205 million in profit according to a new report by accountable.u.s. the largest oil and gas company in the u.s., over 23 million in profit in 2020 alone, a 60% increase compared to 2019,

profit of 14 billion this on top of the tax cut they got under the trump tax proposals and three oil companies paid an effective federal tax rate of zero. at the same time, many of these oil companies are not paying their fair share of taxes and there are many not paying any at all and not doing anything to pass the profits on to consumers at a time when the american people need it the most, it simply not fair and it time it's addressed. mr. reddick, what steps is and can the irs take provide relief to the american people as it pertains to accountability for big oil companies in the price of gas at the pumps? >> we will do all we can for every american, that predates

me, that will continue for the employees, we are not a brick-and-mortar organization, we will follow law, i encourage congress to take a hard look at the law and in conjunction with that, i heard recently there was discussion about acts, a lot of things the media is talking about in this space bar coming back, irs has 6500 experience agents and i only gave you one language, -- >> thank you. >> we do not have the resources to go after the big or super pigs as you referred to them and we are outgunned routinely in the space. >> let me reclaim my time than on that. but the income tax credit, the low income people are identified for auditing data higher disproportionate rate and get we don't have adequatedo staffing o go after big companies and in

this case, big oil, some are not paying any federal tax and those who have record profits and not passing benefits to consumers. does the irs support and income based tax relief to provide consumers a monthly rebate paid for by excess profits of big oil companies? >> that would be a policy call for treasury, treasury handlesca that, we follow the law i look forward to contact treasury to follow up on that. i want solutions now, we cannot wait. my constituents are struggling to get by as it is and we have a lotes of priorities but this is one that must be addressed. >> i'm confident deputy secretary will. >> i hope you will and i appreciate his leadership as i well. turning back to the tax filing season is my colleagues have talked about, i have two questions i want on the record,o one, is there someone at irs my

staff can call with respect to the delays in direct deposit issue we are hearing about and how does the department divide up resources to address the 2020 tax return back walk while processing incoming 2021 claim? >> i think your staff has my cell phone and affairs folks can reach out to them and also we have friday briefings to p.m., or can get the direct responses for you. in terms of processing, we process on a first in, first out basis. we have a few milling returns filed in paper returns, calendar year 20 -- excuse me, 21 and about 1,000,004.2 million total paper returns in inventory. everything else is looked at and

has fallen out for some particular reason but we can go through it. i'm confident if i may, any of you are in my seat, he would have the same passion and pride i say hereo with, the effort of our folks to get this right, we are working really hard on behalf of each of you and every american. >> appreciate that and you can follow up in writing in detail on how you will process these returned this year. the judgment time has expired and the chair recognizes mr. hoenig for five minutes. >> thank you for being here today, great to see you again. i like additional conversation around the rtc issues going on across the country, a lot of companiess, small business 35 years understand the importance of the relief congress gave and much of the relief did not get

to the businesses but they had exposure and they were struggling and we've talked to accountants and companies about the issues facing e rtc issues. the main issue companies are faced with now is the quarterly federal tax return 941, companies are calling 941 on time and filing amended because payroll companies don't have the bandwidth to get the b informatn needed for the 941 filings. in these cases, companies will file april 22 returns with reduced wages but they still have not received a check for the credit. ultimately it means taxpayers are paying tax on income they've never received, not only are small businesses liable for the tax reduced wages but also for the safe harbor under estimated taxes, inflated due to reduced wages. we part shocking instances of companies having to take out short-term loans to pay quarterly estimates or liability

that is due until they receive their credits from previous year 2021. my colleague pointed out the program was meant to provide emergency assistance to small businesses, it might seemed like an innocent time to the irs and i understand your passion but i assure you small businesses are hurting and should not be penalized for doing the right thing. i understand there's massive backlogs of the irs and procedures in place to address these issues but small businesses who kept their doors open need certainty they will receive the credit in a timely manner and assurance they will not be penalized. notices going out automatically to taxpayers who filed on time but returned stuck in the back walk. groups have asked irs to consider penalty relief and i guess my only question is, i'll give you the remainder of the time to elaborate, are youto considering this relief for

taxpayers who didn't do anything wrong specifically as it relates to e rtc? >> specifically and generally we are considered -- i said everybody here every time i go outside, and i do external presentations, representing taxpayers mostly in respect to theng irs taxing agencies, like tell the accountants, any conversation i would have with the person going back to february 2020 would start with covid and it would be covid, our employees have gone through the same thing, our employees understand. the automated notices were stopped so if somebody received run recently like to have the notice and find out, all automated notices were stopped stopped months ago so we've addressed virtually everything, nothing is off the table to consider. we have regular meetings with people all over and i think you've heard me say, i know thousands of people on the outside have my non- irs

personal cell phone. >> would you want to share that? is getting. >> thank you for protecting me from myself but the thing is, in every direction, you heard me talk about touching our people, that is getting to me, externally, my friends of the people who are talking about on the outside with small businesses, accountants and people without designation or people with designation, the understanding are there in understanding the need for priority, i do not anticipate people ending up with a penalty when we had automated -- >> if i could retain my time, we have about a minute left there are a lot of repairs watching the video, i am trying to put you on the spot, you been in the

business on the other side representing businesses, all they are asking for is not to be penalized in liability and estimates on money they have not received yet. they understand they receive the money, it's not asking for anything special other than not be penalized for money they have not received yet. >> the people who provide the letters know the answers to the questions asked. >> -- >> the answer to that -- >> this is people i've talked to, i been in business 35 years, this is a personal thing it should be for everybody. >> when you mentioned aicpaer -- that's what i am speaking to. >> okay. >> i'm speaking to the same people you are talking to, these are my friends, your friends. irs is an agency of people who understand and have gone through the same h thing people on the outside have gone through. >> you are not answering the question, there's consideration and it will get out quickly because we are at the end of the quarter so i get back.

>> the gentleman yields back in the chair recognizes mr. davis for five minutes. >> thank you very much and let me thank you for being here and answering all of the questions coming in. first of all, let me thank you for your letter yesterday clarifying payments to foster youth are nontaxable. it's not showing me -- >> i apologize, i thought it went on to you previously and you and i have had discussions in that space before and the letter was to confirm the

discussions. >> well, thank you very much. i also want to thank you and your team for creating materials to help homeless youth understand earned income tax credit for reasons relevant this. i want to thank the chicago advocate and their help educating my constituents about the refundable tax credit. each of the refundable edits, can your team provides myself and the committee reports on the

amounts in 2021, the refundable tax credit soon after? this information will be of great help to understand how they impact families and could that information be provided? >> i have the information for you today. we don't keep the information directly but on the path act we are required to hold those until february 15 but if the information i have today is on the refundable r credit we've hd as of february 15 but since have been released. three basic categories, held only for economic -- earned income tax credit, only for the child tax credit and health for both child tax credit and earned income tax credit so in total,

34 billion withheld through february 15 in accordance with the path act, we can't distribute that until after every 15th. e itc only was $2.3 billion. a ctc only holds 110 million. e itc and a ctc hold combined, people who claimed both credits, 26.7 earlier, there's 5 billion of other credits, non- e itc and non- pc, a total of 34 billion, 2.3 billion the itc and 110 million a ctc only in a combined 26.7 billion fourth the combination of e itc and the rest. i kind of rounded off. >> thank you and i want to shout out and say thanks to the taxpayer advocate in chicago for

the assistance they've given. time to make sure individuals understand earned income tax credit and understand child tax credit and understand the benefits and help spread the word so thank you very much and i yield back. >> the gentleman yields back. i'd like to think our witness, commissioner roddick for joining us today.g please be. advised members have two weeks toe submit questions o be answered later in writing.os those questions and your answers will be made part of the formal hearing record. with that, the subcommittee stands adjourned.

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