welcome back to washington journal we're joined by dani worfu welcome. it's good to be here. >> you are part of a group of former irs commissioners who are warning the trump lay-offs of irs employees which is about 7,000, that would be a dangerous thing. what prompted first, the creation of that. as it turns out the former commissioners and

the former irs commissioners going back to ronald regan we connect with each other and we have a network. they were supportive of me when i was going through confirmation. and when there is news about the irs and we think we can help or explain what is going on to the members of the public we do so. when we heard about the lay-offs and we understood that the stated purpose of the lay-offs was cost efficiency, we all scratched our head and said how can this be about cost efficiency when the irs is the primary agency responsible for collecting the revenue and the receipts for the u.s. government. >> they would say it's a bloated agency and you don't need those 7,000 and you are paying them for no reason. >> i would say that you don't understand the history of the

irs. the irs has gone through a decade of budget cuts from 2010 to 2022 the irs was cut or held constant by inflation. or essentially was cut. the staff size in 2022 before the inflation reduction act was passed was at it's lowest point since the 1970s. in the meantime the population has grown and the number of filers has grown and the economy has become larger and more global and the tax system has grown. so if you have a growing tax system and a decreasing number of employees to manage putt taxx system you have the emergence of challenges. including not only, the challenges of answering phones or meeting people in walk in centers to answer their tax questions, you start losing pace on collecting what is owed.

these are not new taxes. >> whether the irs staff something high or low does not particular date whether your tax is high or low. congress decides whether your taxes are high or low. right now we run about a 700 billion-dollar deficit each year in terms of what is owed, versus what is paid. and in this way, the way it's set up, in particular, because our understanding is many members of the doge are coming in from the private sector, with private sector experience. we're asking if they had a mission to cut waste and create efficiency would they take an axe to the receivables

department. a ceo that does that would say we sold a lot of goods and services last year but let's deplete the capacity of the part of the organization that collects the proceeds of those sales. we don't think the board of directors would be happy about that or the shareholders would be happy about that. the only people that would be celebrating would be the company's competitors. one more point about this question about bloated agency. one of the things that the former commissioners absolutely support is modernizing and moving to technology solutions over time. we were on a path with the inflation reduction resources and have had good momentum of getting the organization ready for automation and ai. >> were you not able to modern

eyes -- modernize in the four-years of the biden administration. >> there were more ways for taxpayers to file online. the irs had a two-year window to modernize because the inflation reduction act provided funds to the irs. >> modern use costs money. when the inflation reduction act was passed the irs was dough ded of resources. they'd record low customers on the phones and record low of people in the walk in centers. because of the budget resource strain finally caught up with this organization, around 2021, 2022. there was not the opportunity to modernize because you are plugging holes in the dam. you are really trying to stay

afloat. finally you get the funds in the inflation reduction act to modernize and the journey started. and what that is intended to do is to help taxpayers to make it easier. so they can get more solutions on the website and not call into the irs. >> i want to show people the number of employees at the irs going back from 1980 to 2024 and this is the curve. you see a very low dip here in the first trump administration what happened there. >> this is with the ongoing budget cuts and the growth in the number of people leaving government through retirement and other forms of attrition and if you don't have the funds, you can't higher behind those people. i mean we have been talking about for decades the fact that

the baby boom generation is eligible for retirement after 2010. we're in the heart of it right now. and we're in the heart of a lot of baby boomers retiring and that was at the heart for the first trump administration. these people leave and you don't have the budget to higher behind them, you lose people. that doesn't mean the loss of an irs agent knocking on your door to ask you for money. >> that means people to be helping you. to sit in the walk incenters and to get the refund back to you as soon as possible. >> these people that were laid off, are these the ones processing the returns is this going to have an impact on our tax season. >> we don't have all of the details of exactly who was laid off. what they did they focused on probationary employees which

are fairly new employees. my understanding that most of the people that were laid off were in the collections part of irs versus the services side of the irs. the layoff of this size of 7,000 people during the filing season that is hard to imagine it wouldn't be disruptive to the organization. during filing season the last thing you want to do is take increased risk and take on additional operational complexity and you want things steady as she goes and the layoff this size creates a lot of risk for our tax system and we want to avoid that risk. we don't think that the lay-offs are appropriate especially in the name of cost efficiency. because we think in the name of the american government and fiscal sol svensy we should be collecting the receipts and not

leave them on the table. we want a fair tax system. the fact that the irs has a diminished capacity to collect the tax that's are owed. that shifts the tax system for those that don't play by the rules to those that do. and they are carrying more of the load of funding this government. so there is just a fiscal sensibility issue. why not collect what is owed if you are trying to improve the bottom line. you learn in the first business class, day one, what does it mean, what is a company or organizations bottom line? it's both made up of cost and revenue it's both pieces together. you want to increase or maintain revenue for that bottom line. accounts receivable is a critical part of the

government's bottom line. >> if you would like to join our conversation you can do so, our lines are democrats it's 202-7800. >> and i want to may a view he was asked about the tax view for the wealthy. here is the exchange. again what you have seen is we don't have the resources for the wealthy tax cheats. i want too see someone make the commitment that pool have the pe the resources to go after the wealthy tax cheats that go after this system. i welcome your

we'll need resources so will you support that? >> if con if i wered, i will come back to you with a plan for upping collections. >> on wealthy tax cheats? >> well, for -- you seem to believe that the wealthy cheat more, but i think across the entire income spectrum so you're saying that the wealthy have this special cachet and if there is some large mother load there, then to figure out how to crack that, whether it's through ai or some other means that i will commit to coming back to you. >> what do you think of that? >> when i was at the irs, what i learn second-degree i don't believe the wealthy cheat more than anyone else. not at all.

i think there's many wealthy individuals, large corporations, large complex partnerships that play by the rules. i also think these same individuals, most of whom play by the rules, want there to be accountability for those that don't. especially if i'm the cfo or ceo of a major company and i'm not going to go to sleep at night unless i play by the rules, i want to know my competitors are being held accountable to play by the rules otherwise it's not a fair marketplace. here's why senator wieden is saying is so important in my opinion. when you say we don't care about data science or subject matter expertise or staff size, we'll have a smaller, less impactful, less effective irs, then it's harder for the irs to determine where the tax evasion is occurring. it makes it harder to determine where there's tax evasion in complex situations. look, for the average taxpayer

going to work 9-5, your taxes are pretty simple. imagine a company that's operating all around the world, in many tax jurisdictions, subsidiaries on subsidiaries on subsidiaries. has all kinds of organizational complexity and their tax returns are thousands if not hundreds of thousands of pages long. it's very difficult to understand in those situations what the balance due is versus what's being paid. the idea is to invest in an irs that not only has the ability to find the balance due in the sipple taxpayer that's working 9-5 or that small business, but also invest in an irs that can figure out what the balance due is in the most complicated largest organizations in the world.

they can for a very wealthy person. not that the wealthy cheat more. if you don't have an irs with the capacity to find the balance dues, two things happen. there's a risk we audit people playing by the rules, large corporations. i'm ceo or cfo of that large corporation. if you ask me do you want an irs with a capacity to better see where the evasion is to audit them and not you? i'd say yes. do you want an irs with a better capacity to hold your competitors accountability to make sure they're playing by the rules just like you? i say yes. that's what it means to have an irs you're investing in and a healthy tax system. taxes are unpopular, and i get that as a former irs commissioner. also, all former irs commissioners agree there's absolutely opportunity for more efficiency in both government and in the irs. we applaud efforts to be looking for that efficiency. what we're suggesting is if you're going to do something big, do it after filing season.

don't create risk during this critically important moment. if you're going to attack cost efficiency in the irs, recognize the budget trajectory it's been on, which was pretty down to the bone just a few years ago before the new resources came in. second, in the name of cost efficiency, don't discount revenue and receipts. cost efficiency is both. it's not just about cuts costs and it's revenue and receipts as well. not raise or lower taxes. i have no opinion on that as irs commissioner. i'm saying let's collect the taxes that have already been enacted. >> this is the one that says doge presses to check federal benefits payments against irs tax records. elon musk want tosser much for fraud and privacy law bars the irs from disclosing irs forms to other parts of the government.

how safe are irs tax records and does doge already have them? >> it's such a important question and if you allow me, i want to talk a little bit about this question of fraud. what is fraud and what is error and how do you stop it? then i'll address your question about the data. because when the and i've been working on this for virtually my entire career. one thing i learned and i don't have the monopoly or the right answer. not here to say i figure it had all out and know how to solve the problem. i have lessons learned and one of the lessons learned as you're getting ready to make a payment to a grantee, to a contractor, to a individual, 9 times out of 1 -- 1 -- 99 times out of 100, they

don't know if it's going to be fraud or error. if they do, they stop the payment. but two things need to happen, you need to gather more information about the recipient. know more about them and know for example where is the as set management and need to know household size because that might also be a criteria for eligibility. all kinds of data helping you determine whether this is the right payment. so you ask for more data. other thing is needing more time. two things happen trying to address error. one, you increase burden on the american people. the government is collecting more information about them. and you take more time i don't

want them knowing what's going on inside hi bank account and household. then there's high risk of fraud or error. i don't want a delay. i don't want you to delay three months that medicare reimbursement you owe we. no, pay me now. that tension plays out and you end up in a situation where you balance burden, speed, with error. now, a great example of that in the question you asked. the doge going in and saying we've got to stop error and running into the same thing i ran. >> we need more information.

let's grab the irs information. now as a taxpayer, do i want irs spreading my information out to all the other government agencies? that sounds very big brotherrish to me. i don't like that. some people don't like that. there's a whole law called section 6103 of the internal revenue code that determines when and if the irs can share information with another federal agency for this very purpose. and over the years congress has been pretty stubborn in changing 6103. it can take years and years and years of lobbying congress. i remember when i first started in government in the 1990s, we were trying to get the irs -- i was at omb at the time, we were trying to get irs to share taxpayer information with the department of education to validate if the pell grants were improper or not. they got that authority but it

was like maybe close to 20 years later that it finally went through and congress finally enacted it. what's going on right now is doge is running into the same thing i ran into when i tried to address this and needing more information. but congress and only congress historically has decided whether the irs can share information with other federal agencies. >> all right, talk to callers. we'll start with leonard in massachusetts, independent line. good morning. >> good morning, everyone. thank you. i'm really excited to hear you talk about section 6103 and didn't know the number of internal revenue code and data privacy is super important and interesting. my question though is wasn't there a study done by economists saying that the irs and maybe department of education was one of the best returns on investment and every dollar spent on auditing brought back like $45 or department of education every dollar spent

generated three times as much in the future based on what you invested in the people? that's my question to you, thank you. >> yeah, it's a great question. i think the first question to me is shouldn't we cut accounts receivable if it's bloated? the reality is that every person in the irs that's doing these collections earns for the american taxpayer close to $6 of revenue for every $1 we spend on their salary. so it's a good deal. we should be -- if you're trying to be efficient, you'd add more. but the point is well taken that you can save money by sharing irs data to other federal agencies because you cut down on fraud and error if you give the federal agencies more information to detect that fraud and error. yes, from just a quantitative

limits. there's the largest error rate and earned income tax credit and program run through the irs and very important program and antipoverty program, it's well researched as having a huge impact on reducing poverty in america. but it has a really high error rate. one of the reasons it has a high error rate is because it's very difficult to determine eligibility including one of the primary eligibility criteria is that you live with a dependent child you're claiming for six months or more. when the irs pays that out, we don't know where the child is living. we don't have realtime information. we could essentially eliminate all error in the program if we had a national childhood residency data base with realtime information. imagine, and this is completely hypothetical and would never fly but playing it out

hypothetically. imagine if every morning a parent had to swipe their child in and swipe them out in the evening. then we would know if they were living there and we would never propose that because it's so invasive and such a violation of l our values in this country. yet if we fall short of that, we will not e nowhere the children live and risk error and that error is worth it versus the other solution. my answer to this caller it's a ball languages point between reducing fraud and error but preserving our values around privacy and nongovernment overreach that i think is so important. >> nelson in pembroke pines florida, republican. >> good morning. can you hear me okay. >> yep, we sure can. go ahead, nelson. >> okay. with all due respect, sir, i

first thank you for your service to the country. but i would like to point out that even the internal revenue service has its own waste and it's own problems with regard to trying to balance its own budgets and trying to ensure that the funds paid to the irs are used appropriately. the trump administration has to start somewhere, and i think it's done a good job up to now trying to deal with the balloon ballooning federal deficit that we v. i do my own taxes, i'm in my mid 70s. i would never file online because of the problem of identity theft. that's one thing. also, i have made errors in the past and has

been corrected in a timely manner by the irs so as best as i can see, they're doing a pretty good job as far as i'm concerned. i would also like to point out that in regards to the people who are trying to have a fair system, 50% of the population does not pay any income tax at all. i think it's just a matter of time before the united states is going to have to look at another method of collecting tax revenue rather than income taxes might want to consider going to a federal sales tax that would allow everyone to pay their fair share of taxes and not just the wealthy and the middle class whom pay too much taxes as it

is. your comments, sir? >> all right, nelson. >> nelson, i appreciate the question. on your first point, i completely agree. there is absolutely inefficiency in the irs that can be cut out. i propose -- and i think what the trump administration wants to do is modernize the irs in the way that it's far more automated and far less reliant on employees. and that's a reasonable am bibs to have. when -- ambition to have. when and how they do that is the question. think about irs as assembly line. there's a lot coming in and a lot going out. what coming in is tax returns and correspondent upon dents and phone calls and people into the walk in centers. those are all kind of coming in. what's going out are payments, refunds, and credits and audits.

so -- what's also coming in is remittances or payments of people's taxes. the idea is can we make that far more automated and have less people managing the assembly line? and the answer is yes. i would offer that in the last two years of biden administration important progress was made that the trump administration can build onto further automate that assembly line and further reduce the need for people to manage. but we're not ready yet and if you pull them off too quick, it creates messiness and that means you can't get through on the phone or hurts your neighbor if there's an issue they need to see an irs person in a walk in center to go over something and that walk in center has been shuttered or closed.

the downsizing idea is reasonable but it's when a how. portland, mareen, said speak about the irs completely modernizing beforemerican public isodernized. my step dad, he's not the only elderly person, doesn't have a cell phone, computer or internet. unfortunately i believe that's why progress needs to go slow and roadwaylated to that -- related to that is the question of where we are about not using the price gouging products to file taxes. that's from colin in baltimore. >> great question, colin. first of all, yeah.

some jurisdictions around the world required all citizens to file electronically. that's not us. file how you want. filing electronically and selecting direct deposit is the quickest way and if you do it and there's no errors, get refund in under three weeks and we were successful in doing that in the two filing seasons i was there. but not everyone wants to file electronically or has the capacity. there's something called a digital divide. whether that's people that don't have access to technology or people that don't have access to high speed internet, you want to make sure, again, that the system is fair and that you're meeting taxpayers where they are.

taxpayers like you would ask the question: if i'm going to file online, why do i have to work with a software vendor. can't i file for free electronically online with the irs? can't i have that option on the menu? we made that option available darning my term. it was a head scratcher why it was controversial. we're not denying anyone. don't have to use it. opt in or out. sew i agree. i think the more options for taxpayers the better. >> steven in washington dc, line for democrats.

>> hello. i would like to know more about the $7 billion difference between taxes woed and taxes paid. what percentage is corporate versus personal and amongst those two groups, how much of it is coming from large corporations versus small businesses or large income earners versus small or middle class income earners? then third, what are the main reasons that this fraud or error is taking place? is it fraud? is it illegal? is it intentional to not pay their taxes and therefore they can be charged with a crime? or is it error and what errors are being made and how much is due to the enormous complexity of it, even for us, individual taxpayers, it's very complicated with questions i don't really understand that causes

frustrations and errors. thank you. >> yeah, really important question. every year the irs publishes the tax gap. as much detail as we can about what makes up that tax gap. where she people at all level wspa.com a balance due higher than what they're paying. then within that, there's a complexity of sometimes it's inned a versus frequency taint and sometimes just because of the -- inadvertent and because of the weight of the tax laws, people often make honest mistakes and therefore pay less.

there's a lot of money left on the table for balance due versus balance paid for every taxpayer type. the focus that the democrat haves had for example on the than tajikistan point is the

theed irs not getting invested in, we lose the balance due. how quickly the economy is reconstructing itself and digital economy and things like you caner and paypal and all of these activities that are have moved and operating and selling gods and services and these companies are completely virtual sometimes. it's not like there's workers down in france or in the nordics or africa. they might be head quarted in the u.s. and selling goods and services and interacting in a electronic way. >> it's all new and not sure about the tax gap and balances due and balances tate.

>> lance, you're next. >> i'm retired and i take a, i pay for a 1099 and still work, thank donald trump that i can make $56,000 extra, and i'm going to say this and the weaponization of the irs and -- is one thing and i think really it hurt the -- the irs the thousands of weapons weapons and

ammunition stockpiled to go after american people. tax pay ores raiding their houses and it is a it's a shame and i saw you almost cry awhile ago in your first part and what i'm saying is walk a mile in my shoes and you'll know how to cry. >> weaponization of irs and stockpile of weapons and ammunition. >> lance, i'm glad you're asking this and it's important to understand the facts on the ground. less than 3% of irs operation is armed and that's our criminal division. know what our criminal division is involved in? breaking up organized crime, human trafficking, drug trafficking, counter terrorism. what happens is that law

enforcement often work together we're going after someone that's a danger to your neighbors, children, and society because of all the bad things they're doing and the fbi and other law enforcement and sometimes the best way to take down the criminal enterprises is through tax crimes. and it's just how we are playing the chess game against these criminals. that means they're serving search warrants search warrants and arresting bad people. these are not every day citizens and grandmas and grandpas who may be have paid $10 less than they're supposed to. there's no armed agents knocking on these doors and it's really

about these criminal enterprises and the stockpile is under the rules in order to be an armed agent in the government. you need training, a lot of training so virtually all the irs has ammunition is for training on the gun ranges and that's why the stockpiles are so high. the number of times an irs agent's weapon was discharged you could count on one hand. you'd hear a lot more about it in the news of an irs agent discharging their gun in any way shape or form that was inappropriate. it is an absolutely never or exceedingly rare chance. this small number of less than 3% of irs workers that have a gun need it because they're going into very dangerous schismuations. they're heroes. they're going into situations

with work with the >> the employees being highest viats and not filing annual tax returns and are they losing jobs and penalized like ordinary taxpayers? synergy home this is a really important question.

you're terminated from employment if you don't pay taxes or put on suspension or depending on the circumstances you're given a opportunity to make it right. we give people grace if they make a mistake. if they pay up quickly, maybe they -- they're disciplined and come back to work.

i would hope thinking about the irs employees doing their jobs and not in dc by the way and more than 98% of irs employees work outside of dc and cities and cities cities and supporter bushes that -- superbs and understand that if they get laid off and not demonnize people coming to work ask coming to work every day and chosen unpopular profession but >> i got my tax and irs gave my

number and they booked me for $ $4,000. because of theed stroke. can you help me get these things off of me? i thank you. >> yeah, look, i've heard from tax -- while i was commissioner and even since heard from taxpayers like you who are struggling and irs installment agreements that can be set up and we always at irs train for

empathy and in tax solutions in financial dire straights and tax system is way to complex and leaves people like you in a situation where you can't figure out heads or tales of what you're supposed to do. it's so important to work with congress to make sure that our tax system is fair and not as complex as it is. the idea is noted harping people like bill, when we hear stories of people like bill, it breaks our hearts. one of your callers said he thought i might cry. i get emotional when i talk to people like bill specifically struggling and i want an irs that's well equipped to help

people like bill that are out there.