captioning performed by vitac the arab spring, the awakening presents everybody opposed to extremism with an opportunity, that is to build democracies in those countries, countries where people were denied their legitimate rights to build the kind of democracies that would provide a place where people could express their dissent without turning violence, where people would have a stake in the society so

they would not want to turn to violence. >> i understand that. my question is really very particular. are the transitional governments in libya and egypt and tunisia, for that matter, do you find cooperation is about the same, improved or actually degraded? >> i would say that in the case of tunisia, it's undoubtedly improved significantly and, in fact, my office will be conducting programs under the anti-terrorism assistance programs there. there's no question that there's been an improvement. we have a better relationship with the tunis government. i would say that we have a good but nascent relationship on councillor terrorism with libya and our counterterrorism cooperation continues with egypt, which is obviously a nation going through considerable major events but we continue to work closely with them and we are optimistic that

that cooperation will continue into the future. >> thank you, mr. ambassador. with respect to pakistan, i have two questions. first of all, is the united states government satisfied that after the tragic incident on the border that we're back on track in terms of cooperation and collaboration with respect to counterterrorism? >> as secretary clinton has said, this is a very complex relationship that we have with pakistan. there's no question that there has been something of a pause, if you will, caused by the tragic incident in mohman. we're happy that the iraqi parliament has completed its investigation. we believe that we are going again in the right direction.

>> are they cooperating? >> on a number of issues they certainly are. >> on april 12th you mentioned the parliament. on april 12th pakistan's parliament unanimously demanded the end of all u.s. drone strikes in pakistani territory. what's the reaction of the united states government to that and if they're cooperating with us, how does -- that seems to fly in the face of cooperation. >> well, we're still studying the resolution that the pakistani parliament passed and we are engaging in talks with the government to see what the implications of that are. of course this is a program that we don't discuss in public so i'm afraid i can't really go beyond that. >> well, without discussing the program, let's just discuss the policy. when another legislate of body

uni unanimously does something, that would suggest certainly at least on the legislative side of that government, they've taken a pretty firm position of noncooperation. it's not a classified matter that the united states has deployed drones both in pakistan and across the border. should the congress of the united states not read into that a resolve to end cooperation, at least with respect to the deploud deployment of that technology, without getting into the deployment of that technology? >> my own view, sir, is that the prudent thing to do is to allow to us have our conversations with the pakistani government and to see how it wishes to act on the basis of a resolution, which i believe is nonbinding. >> mr. chairman, i know my time has ended but i do think this is

a very important development and i understand the diplomatic nicety being expressed here by ambassador benjamin but i would simply say for the record that i think this is a grave matter and i think that while as the ambassador pleads for patience and he deserves patience, patience i think is wearing thin on beau sides of the aisle with this matter. i thank the chair for his time. >> thank you. i have one last question for ambassador benjamin. going through your testimony before the committee last year, you testified we continue to see a strong flow of new recruits into many of the most dangerous terrorist organizations. i was going to ask you if that strong throw is still -- is still the state of play. what do you see?

>> it's hard to measure the flow of recruits, but we have a strong sense that in many different parts of the world, the terrorist groups are indeed gaining strength. this is certainly the cakasecase yemen and where it has picked up membership. we have seen that what is going on admittedly not in an aq affiliate but as you said before suggests that that group has grown before. we believe aqim and the islamic magreb has probably added some recruits to its ranks, though exception is probably al qaeda core in the federally

administered tribal areas. that group is in particularly difficult circumstances, as i think is well known to this subcommittee. but i, you know, i believe that our work in strategic counterterrorism and particularly encountering violent extremism is essential as ever, essentially because many of the peaks of this movement have been cut off and don't threaten us in the way they did before. there remains a large number of people out there who are committed to violence against the united states, its values and its friends and that's why i believe we need to do what we can to cut off the flow of recruits to these organizations. >> one of the areas where counterterrorism has been pretty effective is with the philippines. do you see a continued joint special operations task force

philippines? do you see that continuing as it has? sir, i think that's a question best for the department of defense but i would certainly agree with you that both on the military side and on the civilian side we've had very good -- very good results in the philippines and i think it demonstrates the kind of advances you can make with a robust capacity building effort and robust coordination between our military and others and when i look around the region in particular in southeast asia, i think that we have a strong model of what you can do with robust engagement with these countries, whether it's the philippines, indonesia or others and i would certainly commend that to the attention of the committee. >> thank you.

thank you very much, ambassador benjamin and thank you for your testimony here today. we stand adjourned. when i was embedded in eastern after began stan, the soldiers starting telling me that the u.s. government was wasting tens of billions of dollars on totally mismana mismanagementmismanaged contracts. i was in one meeting where a brigade commander, an incredibly effective guy colonel mike howard, not long after president

obama took office and the state department was out there saying, okay, we're going to give you a whole bench of developmental money, we're going to do this, win their hearts and minds, nation build and colonel howard said don't send me any more money, send me contract officers that can oversee this stuff. i need people. i don't need more money. >> douglas wissing on bankrolling the enemy sunday night at 8:00 eastern on c-span's q&a. and monday look for robert caro, and his biography of the 36th president. senior officials announced a tax deficit of $36 billion and

they talked about how identity was affecting tax refunds. this is a little than two hours. >> today's hearing of the subcommittee on government organization efficiency and management will come to order. i thank everyone for being here today, witnesses and our hearing today focusses on two key issues at the internal revenue service. first our hearing will address the tax gap between what people owe in federal taxes and what the irs ultimately collects. secondly the hearing will hear the tax fraud. it is very important the irs is able to effectively collect taxes and enforce federal policy.

the majority of americans pay their taxes voluntarily and on time but every year there's a gap between the amount of federal taxes owed and the amount the irs collects. earlier this year the irs released its most recent analysis on the tax gap using data from the 2006 tax year. that data shows a $450 billion gap between taxes owed and taxes voluntarily paid. the irs recovered approximately $65 billion of this amount making the net tax gap $385 billion. according to the national taxpayer advocate, the average household must pay approximately $3,400 or more for the government to raise the same revenue it would have collected if everyone paid their taxes in full. there are many causes of the tax gap, including intentional underreporting, failing to file taxes or math errors on those taxes that are filed. because of this we need a

multi-facetted approach to achieve an effective and appropriate response and to close the tax gap. using third party information to verify tax returns could increase voluntary compliance. the treasury department has recommended increasing penalties for those who fail to comply with tax laws. simplifying the federal tax code could also help by making it easier to file taxes and reducing the opportunity to commit willful tax evasion. we will hear more from our witness today about solutions and how we can close the tax gap and better serve all of our taxpayers. this hearing will also address identity theft related tax fraud. identity theft affects thousands, as we're learning more and more hundreds of thousands of taxpayers each year. and has a significant impact on its victims. identity thieves steal names,

social security numbers and addresses. with this information the thieves can file fraudulent tax returns with the irs and receive the refunds that are owed to the legitimate taxpayer. victims may not even know they have had their identity and tax return stolen until they go to file their own return and the irs notifies them that somebody has already filed on their behalf, fraudulently filed on their behalf. it can often take months for the irs to resolve these cases and issue refunds to the legitimate taxpayer, the victim of the crime. identity related tax fraud is a serious and rapidly growing problem that has been the focus of two prior subcommittees. while significant work is being done to address the problem, we must do more to protect taxpayers from criminals who steal their identities and their refunds and do harm to not just that individual victim but also to america and the hard earned tax dollars of lawful citizens.

>> just this week authorities reported that a man working for a health care nonprofit stole the identities of more than 50 brain injury patients to steal funds from the american people through fraudulent returns. the american people deserve a government that protects the taxes they pay and fairly and equitably enforce the law. we need to ensure taxpayers are not unduly burden because others do not pay their share. today we are joined by four experts regarding these issues, who have extensive knowledge about the problems that exist within the federal tax system. i look forward to the testimony of our witnesses and to continuing to work with each of them and all partners, including here within the subcommittee to better prevent tax fraud and fairly administer the tax code. with that i yield to the previous chairman of the full committee and the ranking member

of the subcommittee and the previous chairman of the subcommittee, my good friend and colleague from new york for the purpose of an opening statement. >> thank you very much, mr. chairman. let me thank the witnesses as well. this is a very timely hearing. this is the third hearing in a series held by this committee to examine how the irs handles identity theft and tax fraud. as of march the 3rd, 2012, the irs had already identified over 440,000 tax returns with $2.7 billion claimed in fraudulent refunds. today the irs is doing a better job of protecting the taxpayer and the treasury from criminals than ever before and we salute you for that.

but more is required of us to stay ahead of the criminals and to help the victims. one of the first priorities we must address is the quality of assistance given to taxpayers victimized by employment or tax refund fraud. the inspector general does not paint a pretty picture of how the irs will be able to handle this problem going forward. it seems as if taxpayers will have fewer walk-in help centers with shorter business hours and longer homemade time on the phone with irs agents. budget cuts are the primary reason but i hope we can find alternate solutions to these issues. today we will also focus on the $450 billion tax gap. this tax gap equals nearly 20% of our forecasted deficit for

this physical year. we simply cannot afford to look the other way and just not do anything. part of the tax gap is the result of tax cheats who simply refuse to comply with the law, which increases burdens on the rest of us, but a portion is due to taxpayers' confusion and unintentional errors as well. i am sure that we can all agree that the tax code is extremely complex. this complexity makes it hard for taxpayers who honestly want to pay their taxes to figure out what they actually owe. and as a result they can accidentally overpay or underpay. we must do more to understand the sources of the tax gap and compliance burdens. so we can make progress uncovering new creative

solutions. we cannot close the tax gap by enforcement against the average american who is doing their best to comply with the tax laws. we all have to share the burden and do more and let us work to reform our tax code in a way that will help us collect more of the taxes that are owed. but not paid. and let us continue our work to make the tax code more fair and simple. in order to do that, we must work together. i thank our witnesses today, inspector general miller, for while, mr. olson, mr. george, i think all of you for being here and i look forward to the testimony with great anticipation. we need to make certain that people are protected and that is

our obligation to and responsibility to do it and i think they're working to the we can do a lot better than what we're doing. this is not a committee here to blame you and you blame us. this is a committee to come up with some solutions. thank you so much, mr. chairman. >> thank the gentleman and would echo your final comment there as well that we're about working with you and all to solve problems, not to play gotcha and all the more we appreciate our witnesses being here with us today. we will keep the record open for seven days for any additional statements or extraneous materials to are submitted for the record but we're now glad to move to our witnesses and we are honored to have four very dedicated public servants who day in and day out seek to serve the american people will great distinction and honor and who bring great expertise to the benefit of the subcommittee today. so we thank each of you for being here. we're honored to have mr. steven miller, deputy commissioner of

service and enforcement at the internal ref newspaper services, miss nina olson, taxpayer advocate, russell george, deputies inspector general for tax administration and james white, director of strategic issues at the united states government accountability office. we have had a chance to review your written testimony and appreciate your submitting that ahead of time. it allows me to go through and i'm famous for my blue marker and making notes on things i want to try to get to in the time we'll have. we do appreciate having that in advance and we welcome your testimony today. if we can try to stay to about the five-minute window and that hopefully will allow us to get through all of your opening statements before running to the floor for votes and coming back for questions. if could i ask all four of you to stand pursuant to our committee rules, i need to swear you in. if you could stand and raise

your right hand. do you solemnly squawear or aff the testimony you are will to give this committee will the truth and nothing but the truth? let the record show all witnesses have affirmed. you may begin. >> my name is steve miller. i appreciate the opportunity to testify on the tax gap today and update the subcommittee on our identity theft work. the tax gap is the difference between the amount of tax owed by taxpayers for a given year and the amount paid voluntarily and on time the amount includes the complete spectrum of behavior from confusion to fraud. the tax gap analysis itself is best seen as a directional tool to provide insight noose areas where noncompliance exists and the means by which we can impact compliance. as better explained in my written testimony, our work shows compliance is most prevalent where there is withholding and/or third party

reporting. the irs recently received an updated tax gap study covering the year 2006 which shows the nation's compliance rate for that year is a little over 83%. this is essentially unchanged from the last review in 2001. the net gap in dollars for 2006 was $380 billion. underreporting is by far the largest portion. the largest portion is where there is little withholding or third party with holding. in our view, any discussion on how to reduce the tax gap must consider three guiding principles. first, both unintentional taxpayer error and intentional taxpayer evasion must be addressed. thus both enforcement and service are necessary. second, different sources of noncompliance require different

approaches. and, third, any major attempt to address the tax gap by legislation, regulation or through increased enforcement must be considered within a context that fully recognizes taxpayer burden and takes pair rights. our strategy involves not only increasing enforcement activities but also educating taxpayers about their tax obligations, improving customer service in order to make it easier for individuals and businesses to get the help they need to meet their filing requirements, reducing opportunity for tax evasion, expanding compliance research and improving information technology. with respect to enforcement, the irs is making significant headway in increasing tax compliance. over the last decade, tax collections have gone up significantly and audit rates have risen but some of these gains are deteriorating as our budget atrophies. thus we would ask for your support for our 2013 budget. we believe the best way to impact the tax gap is through a

combination of responsible discussions on legislative change and responsible investments in the irs. turning now to identity theft. in november i testified before this subcommittee and described our ongoing work. in my written testimony i approach described an update on irs actions. what you'll see is that we have implemented the many initiatives we outlined in november. as before our approach is two pronged. first, we need to stop false refunds before they get out. second, we need to help those who have been victimized. we're in fact stopping much more refund fraud generally and identity theft specifically. we have put various new identity theft screening filters in place to improve our ability to spot false returns before they're processed, before a refund is issued. the numbers are in my african-american and i'm -- testimony and i'm obviously more willing to discuss any area.

we've expanded a program for identity protection, personal identification numbers or pins. for the 2012 filing season we issued ip-pins for 250,000 victims i which will allow unfettered filing for those victims. we increase staffs for those 250,000 victims. again, i will say that we are not done but we've made real progress in the area. mr. chairman, this concludes my oral testimony. i'd be more than happy to answer any questions. thank you. miss olson? >> chairman pratt and ranking members of the subcommittee. thank you for inviting me to testify today about the subject of tax gap and tax related identity they. both of these issues present challenges to tax administration. regarding the tax gap, the irs

recently released an updated tax gap estimate of $385 billion in 2006. and the size of this estimate has understandably attracted considerable attention. there are many causes, inability to pay due to financial hardships, misunderstanding of the law and deliberate understatements of tax. i believe the complexity of the tax code is the cause for consider noncompliance and i have repeatedly you all simplify the code. while you are working on that, the irs should be given resources improve taxpayers services the the percentage of calls the irs answers has been declining in recent year. for the year to date about one out of every three calls seeking

to reach an irs representative hasn't got i don't know through. when taxpayers have managed to get through, taxpayers have waited an average of about 14 minutes on hold. the irs is also lined in time live processing taxpayer correspondence with half of all correspondence overage by the end of fiscal 2011. there is no doubt in my mind that some taxpayers give up in frustration or anger when they find nobody is home and simply don't file or pay. the state of affairs may cause the tax gap to increase by converting former live compliant taxpayers into noncompliant ones simply because the irs doesn't time live pick up the phone or look at its mail. second, while the irs will never be the government's most popular agency, i believe its funding level should be substantially increased. overall the irs is an extraordinary investment. on a budget of $12.1 billion, it

collected $2.4 trillion in tax revenue last year bringing in about $200 for every dollar invested yet congressional budget rules generally require the irs being funded like all other spending programs, with no direct credit given for the funds the irs brings in. that makes little sense. in my view simplifying the tax code, improving service and giving the irs sufficient funds to expand enforcement programs in the proper way would go a long way toward maximizing the tax compliance. regarding tax related identity theft, the irs has made significant progress in in area in recent years including adopting many of my office's recommendations opini recommendations. combatting identity theft poses challenging for the irs. three points deserve emphasis. first, the irs should continue to work with the social security administration to restrict