exactly what you want, but everybody enjoyed working with him. dave and stewart is a good man with all admire the work he has hope that the next speaker paul ryan will use him, he is a talented man. and mrs. pelosi's able negotiator. let me say word about speaker pelosi before i move on. admire this woman. in the housewart of representatives and will go down in history as one of the

great leaders of that body. hermire her and appreciate friendship and extend anyone within the sound of my voice, my appreciation for what she did on this bill. indicated that the present did a wonderful job on but he assigned two really good people. katie is a woman that we all know in the senate, she worked for senator schumer, for the democratic policy committee. we admire her very much and she was so helpful.

so, mr. president is now time for this important legislation passed. have to admit i was skeptical when mr. boehner said he wanted to clean out the foreign before he left. he passed the debt limit and two-year budget agreement which should go a long way to return the appropriations project to the weight should work. i will always consider him my friend. his final remarks on the house floor were very moving. boehnert just speaker who shed a tear. cut a number of us who watched the tear or two to.

there is a lot of talk about the appropriations process. center -- a brand-new senator. the appropriations committee is not as it used to be. i can say to my republican , let's get rid of these foolish riders that they stick on the appropriation bill. there is a time and place to do that. don't mess up the appropriations process. we would be happy to set up individual negotiations bills. thoseg as they get rid of

billsceptions, the riders that have nothing to do with it. on commerce state justice something on doing away with the environmental protection agency. examples, but let's get to doing away with these things the way we are used to. republicanthe colleagues get rid of those foolish, ideological amendments. morning, theay senate approved the spending bill. deadline on tuesday. you can watch both the house and senate debate and other programs related to the discussion by

going to our website c-span.org. >> being baby-like does not require silence. why should my husband's job, or yours, prevent us from being ourselves. believe that being first lady should prevent me from expressing my ideas. [applause] mind,ty ford spoke her was pro-choice, and his supporter of the equal rights of minute. life, shef her public struggled with alcohol and drug dependency. betty for on c-span's original series, "first ladies."

examining the public and private lives of the women who filled the role of first lady. from martha washington that michelle obama. on groupse hearing applying for tax-exempt status. then, a forum on u.s. relations with israel. >> the senate finance committee held a hearing tuesday examining the internal revenue's treatment of organizations applying for tax-exempt status. the commissioner testified before the committee and discussed some of the recommendations. it was held after the justice

department announced there would be no charges against the irs for its handling of conservative groups. this is just over two hours. >> the committee will come to order and i want to welcome everyone to the hearing and thank those who are here today. treasured3, the secretary-general announced that in the run up to the 2012 election, the internal revenue service targeted certain organizations applying for tax exempt status based on their names and political views. needless to say we took this matter very seriously and at the time, both republicans and democrats condemned the agency's actions.

august 5 of this year, we released a 375 page bipartisan investigative report that included approximately 4700 pages of exhibits. this report is the definitive record of what occurred at the irs and why. last week, the department of justice stated publicly that they would not be pressing criminal charges. argue thatd some to the justice department is corrupt or biased in some way. i believe the committee report speaks for itself. i believe we would do better to focus on what we know actually happened to make sure that it

doesn't happen again. included 10e report including various recommendations for changes the agency should make. the purpose of today is to hear directly from the irs about the response to our report and there progress in adopting our thankendations want to the commissioner for being here today and the thoughtful response. the irs indicated they have implemented all of the bipartisan recommendations within the agency's control, as well as the separate recommendations. our overall goal should be to restore the credibility of the irs and to ensure they treat all americans fairly. while i want to commend them

what they have made thus far, it is my understanding that most of the changes have been procedural and little has been done to make changes to the structural changes. hope to hear more details as to why these changes are being delayed. they should be considered a statutory changes that will improve upon the status quo. there was bipartisan agreement on the need to update the hedge act with regard to political activities iris employees receive the same considerations as employees of other highly sensitive agencies like the federal election committee. noted, and as i stated i had serious concern about the influence of labor union activity at the irs.

we know that two thirds of irs workers are represented by unions that are very politically active. i'll think it is such a stretch to say a strong union presence could've contributed to a politicized environment. prohibits federal employees from being revisited by unions, congress has made several exceptions. while i expect there to be some resistance, it is only reasonable that we determine whether the irs should be placed in a similar category. can have a good discussion on these and other proposals. the thing i want to stress the most today is accountability.

our reports rarely show that the targeting resulted from a number of bad decisions by officials. only some of them have been held accountable about others have received bonuses and even promotions. this lack of about accountability i am more concerned that the irs tax the structural mechanisms to ensure that it remains accountable. we areommendations committed were designed to provide this kind of accountability and i look forward to discussing our ideas in more detail today. which allow them to enact new regulations regarding the new activities. this is an issue that deeply concerns a number of people throughout the country, including members of this committee. we have regulations that were criticized by people and

organizations and subsequently withdrawn. that proposal would have created nonsensical rules and dubious speech restrictions. have created stricter standards than exist for public charities which would be a perverse reversal of roles. while the issue is not directly thated, it is fair to say the agency still carries with it a cloud of perceived political bias. i would caution the commissioner, and others in the administration, to focus on actions to restore the irs's credibility, and to abandon any effort to inject more rules and restrictions into the process. i expect members of the committee will want to discuss this matter today as well as

once again it is an issue on the minds of many people. with that i will turn to our distinguished cochairman for his opening remarks. >> in early august, the finance committee released the final report on the bipartisan inquiry that we overtook very -- overtook. the investigation looks back at the period between 2010 and 2013. reviewed one point 5 million pages of e-mails and documents and conducted interviews with more than -- 1.5 million pages of e-mails and documents and conducted interviews with officials.

between 2010 and 2011, a total of 290 applications had been set aside for review. only two applications have been resolved successfully. not 200. two. the investigation did not find any evidence of criminal wrongdoing. both tookatch and i time to speak about our views when the report was issued. we want to make sure this type of management never happens again. 18 recommendations were democratic,12 or

and six were republican. the institute of standard policy that employees must reach a decision within 270 days of when they are filed. three, create a position dedicated solely to help organizations applying for tax-exempt status. i would like to thank the commissioner for responding to those recommendations. my take away is that it is the ismissioners view that there genuine progress being made to clean up the mess. while the commissioner is here, went to address the problem that occurred in martinsburg,

virginia. several employees deleted backup tapes that likely contained e-mails within the scope of the committee while it was ongoing. that mistake was unacceptable and inexcusable. again.nnot happen i want to hear what the irs is doing to fix it. friday the committee received a detailed letter concerning their investigation into the matter. last point chairman mentioned this question from the 5014 c groups. the vast majority of americans want disclosure in political spending.

they want all sides to be more straightforward on these issues. decision toith knock down some of the key limits on political campaign spending. if there is no oversight, meeting anyone can get it and political donor list, spending will be hidden deeper in the shadows. my request to you is that you all work with this committee, democrats and republicans, in a bipartisan fashion. >> thank you senator wyden. the 48 witness is commissioner of the internal revenue service. he was confirmed in december 2013. prior to his appointment, he served for four years at freddie

mac or he served as the acting chief executive officer. before that time, the commissioner held various high-profile positions including president of the u.s. soccer foundation. deputy mayor of the district of columbia. chair ofdent clinton's the president's council on the year 2000 conversion. the commissioner spent two decades in the private sector. we welcome you back to the senate finance committee. we want to thank you for being here today. you can proceed with your opening remarks, and i ask you to limit your opening statement for five minutes. opportunity for the

to discuss the work that the irs has been doing the correct the mistakes associated with the determination status. my belief thate the irs must continue to do everything possible to make sure that all individuals and organizations can be confident they will be treated fairly. they need to know they will receive fair and unbiased treatment regardless of their political affiliation and who may have supported in the last election. when someone hears from us, they need only understand that it is because of something that is or should be on their return and no other factors. if someone else has an issue they will hear from us as well within the limit of our budget resources. audit morel still than one million taxpayers and the need to be confident they

will be treated fairly. the situation described in the may 2015 report should never have happened. we are doing everything possible to make sure the mistakes do not happen again. as part of our work to move forward, we have implemented all of the recommendations from the ig. they noted our efforts in a report this year. as to the finance committee's investigation, i am pleased to report that the irs has accepted all other recommendations in the report within our control. we have already made significant progress in implementing those recommendations. ensure taken steps to the tax exempt status is transparent. reduced the processing

times for applications for tax-exempt status and are committed to resolving all cases within 270 days. the cycle time right now as a result of the work we have taken is down to 112 days. we continue to develop new training and work for employees on a number of critical issues. we have established procedures to ensure applications undergo a neutral review assess. this includes training employees on the proper way to request additional information when needed. to ensure accountability, the

irs has done a number of things including requiring managers to conduct periodic workload reviews on employees. information on the time needed to complete cases is regularly shared up the chain of command. include leaders now work in the same location as the employees who process applications. ensure taken actions to that risks are managed more effectively. agencywide an enterprise risk management .rogram to ensure we properly respond to requests, we are developing standard procedures for employees to use when they search for information. as recommended by the committee

and the gao, we are tightening internal controls for the process we used to select once we are certified. gao found no evidence of selections, we agree that tightening the controls will reduce the risk that any unfair selections would occur in the future. another issue is to improve our record retention process. tohave initiated a process secure the e-mails of all employees of the agency. while we continue to implement , werecommendations appreciate their bipartisan efforts on critical issues. these issues include accelerating due dates for information returns, allowing

the irs to require minimal reinstatingns, and certain authorities. i would also recommend giving the irs correctional -- correctable error authority in certain cases. this concludes my opening statement. appreciate the way that your agency has worked with this committee, but i also want to that there remain several open issues on the targeting of conservative groups. i understand there is at least one group caught up in the targeting that is still waiting on determination. can you confirm your using all expediency to remove all of

these? >> i cannot confirm any particular one but there are just a handful. some are in litigation and in some cases we are waiting for responses, but we have reduced the backlog and a new application today will get obsessed and 112 days. >> i mentioned the treasury department's proposal to restrict the free speech certain 56-year-oldwriting rules. the irs subsequently withdrew them. disagree on the need for changes to the rules, and i know that you have committed that no new rules will thateffect for 2017, leaves open the possibility that

the irs will make proposals this , and certainyear groups ability take place in certain actions like nonpartisan voter registrations or candidate forms. can you tell the committee if any new proposals will be released before 2017? >> we are following up on a recommendation by the inspector general said that the facts and circumstances standard is confusing and was part of the inblem that employees had interpreting their applications across the spectrum. it was just before my confirmation hearing when draft regulations went out that generated 160,000 comments, all of them suggesting changes and many of them agreeing that

restricting bipartisan or nonpartisan get out the vote campaigns are things that should not be done. but it is clear to us that what we are trying to do is not change the rules of the game but to make them clear or for those organizing these organizations and those operating them. when you are running one of these organizations you ought to be confident that you know what the rules are and that no one will second-guess you based on their interpretation of what the facts and circumstances are. i do think that the ig was right. it is important to clarify the rules under which they operate. >> can you tell the committee whether any new proposals will be released and when you expect that to be.

>> we will continue to review those comments and the total statutory framework that congress has set up. them, in the new open toit will be public comment for 90 days. we will keep the committees updated on the progress. we would hope that we would be able to provide these new rules them coulde work on ,e completed well in advance but i would stress that the work we are doing now is focused on clarifying the rules. out, peoplethose

will understand much better what about withinalking the existing standards. with the irs unable to answer taxpayer phone calls, i strongly urge you to stop spending agency time on such proposals. waysave mentioned several that the irs adjusted its operations to serve better and more fairly. need to where they , thenue to do better information that the irs maintains. they also need to do better at preventing stolen identity refund fraud. you mentioned that the regulation of paid tax return

preparers. just one last question, will you commit today that should the iris be given authority to thatate pay tax preparers, the irs will use the framework already in place and not create a new regulatory regime? and will you commit to cooperating with this committee? >> i am happy to commit to both we fullypositions intend to use that existing framework and if we were given the authority to require minimum qualifications we would run it the same way we did in 2010. we have no intention of expanding that or changing it.

the legislation you are talking about would simply make clear that we have the authority. there will be no surprises because people will know what it looks like. >> thank you mr. chairman and i appreciate you pointing out this question of the tax preparers. on the question the 501 c4 rules. i think it is very much in the that the agents clarify the rules to work with us on a bipartisan basis. that's what is so important if

you will come up with an approach that is substantively right and sustainable. the chairman and i have been following these news reports. the press reported yesterday that they received support for a simulator device which works by mimicking the network. this comes on the heels of reports that many companies have taken to tracking employee movements through cell phone trackers in order to avoid triggering a taxable presence in foreign countries. obviously the irs has an important role to play in money laundering and drug trafficking, idea that enforcement and

protection of mutual privacy must not be mutually exclusive. toit primarily allows you see point to point where the communication is taking place. texting, but i would stress that it follows the justice department rules, and requires probable cause. it is not used in. civil matters at all >> how frequent have these investigations gone forward?

how frequently are they obtaining location data about the people? >> i don't know how frequent it is, i just know it is used primarily in cases of money laundering, terrorism, and organized crime. >> can i have that in 30 days? >> you can. >> i have tried to make clear that the way the irs handled the applications was an unmitigated disaster. screeningthods for applications let them pile up for what seemed like a trinity. certainly the agency made unacceptable mistakes in its response to congressional inquiries, particularly taking months to inform the committee when it was discovered that the hard drive had failed. i would like to start this

morning because i appreciate the letter that you sent to chairman hatch. in your view, what is the most important change that you have made in terms of responding to our bipartisan recommendation? change was important to encourage or require the free flow of information. what we are trying to ensure is, if there is a problem anywhere about anything, they will feel responsible to note that problem, reported to their managers and if they feel that is not appropriate, the reported up through the organization. each one has its own independent line of communication. i have talked to 17,000 irs employees telling them i want them all to view themselves as

individual risk managers. box that i-mail suggestions from employees trying to say they should feel comfortable 70 problems concerns or suggestions. one of the problems that led to that inordinate and unexampled delay was that they never moved all the way up the chain of command. it was stuck in the middle. there were people in cincinnati and washington who didn't have very good communication. medication works better if there are regular reports. if there are issues that we know where applications are stuck, that information should be shared and not hidden. >> one last question for you commissioner. it deals with records and record-keeping. obviously backup tapes were erased that should not have been. reports thaten

employees did not own up to their mistakes when investigators came knocking. ensure the irs doing to that its employees in the future keep the nelson records safe all, wefirst of discovered it was a mistake that should not have happened and it obviously did not help our response to the investigation. when we have a document and protection request, cleveland you cannot rely a sending out that it top and assume will automatically be transmitted accurately. we've made it clear that going forward those retention requests will go individually through the chain of command. secondly, we are training our employees as to what it means to maintain all media within a particular area. the broader issue we are dealing

with is we should not eat dealing with individual hard drives or a backup system. three years ago there were a bunch of constraints made not to upgrade our e-mail system. we should have a standard e-mail system that retains the records automatically that is easily searchable. we should not have to spend $20 million year to respond to legitimate inquiries. someone a make sure that whenever there is a document goesst we are satisfied it into front-line managers and they understand what it means. we will also provide training for the first time so all the i.t. people will know exactly the media that should be retained. linesople on the front and as the ig in his report noted, nobody purposefully did this but this was viewed as

junk. but we need to make sure is when we retain media, it is all media. however old or just usable it is. so we think going forward that will work, but the better solution in the long run is not to rely on backup recovery tapes or individual hard drives but inspect -- instead have a readily searchable backup system. >> will defer until after senator brown completes his question. >> commissioner, thank you for joining us. i would like to shift the focus the committee had an opportunity with just last month but was unable to do because of partisan fighting and influence trade the irs is able to regulate pay tax preparers in the irs has been

repeatedly order to protect our preparers from identity theft. they must also perform due diligence. especially for credits that assist low and income families, earned income tax credit and child tax credit. 57% ca returned, coming from paid preparers, 3/5 of home receive no oversight. they are not required to register with the agency. there are no requirements of the must meet four assisting this group of taxpayers. andeaves an enormous hole with the infrastructure it is estimated that 68% of the claimants turn to these preparers help file likely because of the complex eligibility requirements place within the tax code. they have up to a 40% higher chance submitting and popular return.

despite what my colleagues might say about their inaction, the agency tried to bring these preparers in line with minimum qualification standards. d c circuit court overturned the effort and instruction -- instructed congress that is our ability to provide your agency with the authority to do this. last month, some of my colleagues all at the idea of granting your agency this crucial authority. through why walk us it is so important for congress to take action and to help improve tax enforcement for this group of taxpayers and since 2010 you have made steps increase compliance, and reduce error rates. if you would walk us through the whole idea of why it is important for congress to take action.

sinceat you have done 2010. >> as i advised the chairman, we're talking about just requiring them qualifications. we're not talking about a regulatory regime, sibley that they ought to talk but the memo and capacity to the tax code. it is particularly important in low income and immigrant areas where people are hanging out shingles say coming with me and i will get you a bigger refund. the vast majority are honest and try to do a good job. we handle over 10,000 preparers that came and spent several days with us. what we are proposing is what we started to do and ran for almost a year. the minimum tingling education and minimum qualifications for taxpayers to really in areas where the majority of the

returns come from preparers and a significant are erroneous something because they do not have a real understanding and have had no education about how the credits work. we think that it would be a significant step forward and provide greater protection to taxpayers and especially in low income areas have some level of confidence that when they pay a preparer to prepare the return have some knowledge of the tax code rather than somebody's brother-in-law someone in the community center area some are unethical say come with me i will get you a big refund. sometimes some of them are collecting the refunds themselves. when i went to get crooks out of the world, but if people take the time to become educated about what the tax laws are about to it is a better indication that they are serious about doing it well. the rate of proper payments and

the volume of improper payments is among the most tractive weblem that we deal with you have a significant problem with identity theft but just created a new partnership with the tax commissioners and are making progress on identity theft, but we need more tools. i appreciate the support for getting more w-2s earlier so we could match the returns that we are getting. we need access to the new database. ands a complicated problem ultimately goes toward the complexity of the eligibility requirements in the statute and well statutory framework is not my gain -- domain. you and thank you to the senator. in my state, united way's played a major role in staffing which made a major difference. one last brief question.

if we were to take some of these actions, i assume that you can say with some certainty that improper payments -- the rate of them would be reduced. knows, when i started to this was a problem, i said what everyone who knows about this problem to say why have we not made more progress. we're try to range of things. i said i wanted to be a blank slate what would we need and they said you would need to have the ability to require minimum both locations. final piecer in the which i asked the committee to consider is limited correctable error authority. we can see what's on his claimed a child erroneously but if we cannot correct that we have to send a notice and we have to audit and there is a limit to

our ability to do that. correctionsth error with educational tax credits, if you went to a university not on the list, we have to pull the return and deny the credit or we and we let it go through don't have enough resources to audit our way out. told 1.5s what i was years ago and that is why we have been working with and appreciate this can more -- this committee on all of those areas. if we had more we think we would make a significant dent in the volume of improper payments. tax credit and the additional child tax credit. >> we can work together on that as we negotiate. . >> thank you for holding this very important hearing.

>> for management led to the mistreatment of the groups the scene applying for the status. it is clear to me from the report that political biases and poor management went hand-in-hand with politically motivated behavior, continuing unchecked. the targeting scandal coupled with poor customer service has shaken what confidence taxpayers have in the irs. to move beyond this, congress and the irs are going to have to move to make the necessary changes to ensure that abuses can never happen again. i think the time is right to once again revisit the issue of taxpayer rights and structural reforms. bipartisan report has a number of good recommendations and want remind my colleagues that senator stone and i introduced the taxpayer

enhancement act to further beef it up. i have three short questions. for taxpayers to move beyond the targeting scandal, they need to know that those who allowed it to occur have been held accountable. my understanding is that few if any disciplinary actions were taken against managers involved in the targeting area -- targeting. who was neverer disciplined, but received a bonus and was promoted. so how can taxpayers, applying for tax-exempt status, feel confident they will be treated fairly when individuals remain in place and were never disciplined and in some instances promoted? >> as i noted in my testimony, the chain of command started down five levels.

as the justice department noted, the interviewed 100 employees and found no evidence that any employee acted with regard to political bias sort is from a nation. finding that an individual exercised political bias in selecting applications for review. it is a situation that should not have happened. the categorization was erroneous, that in terms of discipline, the chain of command has changed. there are new people who have gone through and we have confirmed appropriate disciplinary review as needed but it is important for the public to know that the justice department has seen up to 100 individuals. none of them indicated that anyone had done anything based on political bias. then into something

that senator biden discussed with you about the cell site simulators. follow-up would be in the past two months with the justice department and the department of homeland security have publicly issued policies that require greater fourth amendment detections and greater transparency when these devices are used. so my question is, whether you can commit to using such a statement by a date certain. >> are criminal investigators follow the justice department policies and if they are updated we follow those i'm happy to say we will follow that justice policy. >> this bipartisan report was significantly hampered by poor electronic record retention. my understanding is the irs has been working -- working with national are quite -- archives to recommended management approach notice capstone and to come into compliance with an executive directive mandating

e-mails be managed in an accessible electronic format at least by december 31, 2016. does the irs expect to be in full compliance with the executive director by december 31 next year? if not, why not and what procedures to have in place presently to ensure that what happened is that happen again in the meantime. >> and will be in compliance effect we're almost there now. have the top 400 senior executives there now catalog and preserved. on our goal is to not depend hard drives and individual computers were disaster recovery tapes but to automate our e-mails with what everybody else is using to have not only a backup system separate from the normal e-mail systems, but also

when the easily searchable. we're moving in that direction as noted we have a plan we are in compliance plan and the timeline and by the end of next year we hope not only to beat the capstone issues but to be moving even with limited resources toward upgrading our i.t. systems we never have these albums again. >> earlier senator wyden asked a question about the most country -- consequential change you made in response to our report. your employees, can now e-mail you in a new special e-mail box just created. that was the most consequential thing you had done. >> i think i said the most consequential thing i've done try to get every employee to

review themselves at the risk manager. the fifth any questions they should immediately report it to directly to our risk management officer or they should report it directly to me. so we have done a whole range of things and my testimony is full of those. i do think that for us to avoid these kind of problems we need a situation where no problem gets hidden. >> i want to move on to my question. believe the answer you gave still with recommendations and suggestions based on your limited ability to move forward that there is a new e-mail system in place. >> that is an improper characterization. >> but why are we here.

it's important to remember why we're having this conversation. agency in the irs, an with a amazing power of intimidation there was has been and hopefully no longer is a culture of discrimination. it is this culture of his permission that focused and targeted conservative plus and ins 300 addition to that audited individuals who were making conservative contributions. today because there was a culture of discrimination and the agency that has the power of intimidation in the way that no other agency in the federal government has and used that power of intimidation against

conservative organizations and other was a cover-up. that's why we were having a hearing today. if you think about the fact that those organizations waited years, to years, 600 receive an irs determination, we should seriously consider what actions are necessary to make sure that culture never again exist. you were brought in as a turnaround man to turn this around. and as the senator asked, who has been fired? what are the disciplinary measures you have taken? do you have the power to fire the employees? we know that we have the power to promote some of these employers.

that as arned culture that is still as inconsistent with the right direction as the old culture. my concern for the 8000 south carolinians who had their information exposed is just on top of the concern i had for this culture that seems to target individuals, based on this notion that america is a nation of free speech. if they don't like it, there is no one in the irs with contempt it down.

>> should you ask for the ability to take the 200 employees working full-time on union activities, should you , thethe 600,000 hours yearly,hours invested should you redirect if you have the power the $27 million of taxpayer resources, in a different direction to meet the obligation of the irs as it relates to dealing with -- taxpayers? and if you don't have that authority, should a part of your response be asking for the authority? we need the legislation that will empower you to complete the job as the turnaround guru but

i'm sure you can be. and if you need that action, tell us what it is so we can work with you in making sure that the irs is the premier agency within the federal government that emboldens people to have great confidence in the outcome and the process. i would love to partner with you in that journey. >> if i could respond. >> briefly as to commissioner, senator roberts is next. >> i appreciate the offer of support. you mentioned is a fact the culture of discrimination but there is no evidence to support there was a department of discrimination. the irs interviewed 100 different employees some who identified as conservatives, some as republicans and none of them said political bias have entered into any institution.

anyone who has claimed to be targeted, the inspector general is looked at over 100 of those cases i found not one where anyone was targeted. so, we need to deal with the program that we to characterize it appropriately. committed toand implementing all of those recommendations within our control. we remain committed to making sure situation doesn't happen again. people should not have to wait anddays to get notification it should be noted that you can set up a c4 organization without the approval of the irs, so anyone who wants to set up tomorrow morning can become one without our approval. part of the reason that they need or seek our approval is

that the rules are complicated and they want to be able to have us review that which is why i think, if we could clarify and not rely on facts and circumstances it would be much set up andthose to operate with a set of confidence that the rules are clear and no one will second-guess it area >> i do need to respond to what he said. >> very briefly. compares to the approach to intimidate tax-exempt organizations. proper intervention into the audit ross as described in section two c five b. they've proven how they may have the audits of the crossroads.

>> want to thank you for holding this important hearing. it has been almost 2.5 years since the finance committee opened its bipartisan investigation into the social welfare groups. the question we have to ask at this point is what have we of our? in the words ranking members, the dysfunction. the believe that we do american people a disservice if we apply the inexcusable behavior to incompetence. the fact that the culture at the irs allowed employees to believe that they could let their personal political views guide how they treated taxpayers. simply put, we need a change at the irs. the american taxpayer should

expect a culture of accountability and impartiality. no taxpayer ever again should fear they will be discriminated against based on their political or ideological elites. i believe that more needs to be done. the taxpayer bill of rights enhancement act of 2016. these measures the whole the iris accountable. of course the irs wants to trucks the american people and doesn't have the incredible -- the ability to make the necessary reforms on its own. confirm that there are real consequences when they are abused. -- as congress considers new taxpayer protections. i would like to get your view on a few of what are the commonsense proposals we have in our legislation to make the irs once again accountable. i will

read through these and ask you to hold off on commenting until i get to the end. want to get these questions in. the first one is that last year the irs proposed its own rights and would you move to codify these to make sure that irs employees are familiar with these rights. in the 10 deadly sins created by the irs restructuring commission that requires mandatory determination by employees. would you support amending the 10 deadly sins to include threatening to audit or perform the official action or political purposes? in your recent letter to the committee you stated that the failure to preserve records was clearly unacceptable and you noted the irs was implement in improvement. do you support legislation to

ban employees from conducting personal business by e-mail? and do you support legislation that would codify the deadline by which the national archives has require them to put up document retention policies in place. policy keeping in mind that some conservative groups were stuck in limbo for up to five years on their application. would you support granting 501 file on ability to their application if the irs has not acted on it. all of the measures that i just mentioned are included in the andayer bill of rights others that the committee might consider to restore the credibility and the integrity. thatay keep track of all

it's a degree that you can comment on that we will certainly welcome that. >> i would be delighted to give you a more detailed answer. i would note the changes on our own are the changes in response of recommendation of the bipartisan report as well as the recommendations in a majority of the minority reports and these are not ideas we have just by ourselves. we've said we will take all of the recommendations we have control over that this committee has recommended is necessary to make sure that the delays don't happen again. so we're doing everything you asked us to do. together over a year ago we spent a lot of time trying to make sure that taxpayers have employees are aware of those. they are already codified in statute. importantk it is because we provide training for the employees.

we think it is important for taxpayers and employees to know what those are. codifying those would be cut a fine the rights that exist. we would be delighted to support that those become an important part. what we have done is to be able to make it easier for taxpayers to find them. with regard to official business on personal computers, that is a policy we already have. senti first started, i testimony to my home computer to edit it and the next day i got a note saying you are not supposed to do that. someone said we assume your editing testimony and the next thing i got was an office computer for my home so i would not send anything to that computer. that is a policy we enforce very stringently, and have security issues associated with it. it is a policy, and if you want to put it in legislation, we

would be happy to do that. i'm not sure that we need new rules. otherwise to get back to you, it is clearly impermissible for anyone to use their political beliefs, doing any business at the irs. i don't know what most people political elites are at the irs -- political beliefs are at the irs. but the justice department talked to 100 employees. several identified themselves as conservatives and republicans. no one identified a single instance in which they were instructed, or anyone took an action in line with their political beliefs. political police have no place and no role in the operations of the irs. even people who did not like

that thoset feel views influenced it. >> senator roberts. chairman to thank half, thank you for this report on the irs actions. others, the suppression of oral activities did you go out the scope of the white house. having noted was clear that this was the effort and i remain deeply concerned that words do not have any confidence until we can make a final determination. more important safeguards to protect first amendment rights to as has been said by senator wyden from the report, there was gross mismanagement of the application process for these targeted groups and in fact, the

committee agrees that at the minimum there was a heightened litany from -- heightened certain from -- of organizations which cause to simply cease operations. the committee also found that the agency function was a politicized environment and that this allowed for the processing of applications from targeted organizations. the committee aims to drop any pretense against conservative groups and coordinated with the white house and other federal agencies including the department of justice and the federal election committee to suppress views whose -- groups whose views do not coincide with the white house. in my reading, there was a systematic suppression of free speech rights. which i think is ongoing. >> it has been pointed out by senator scott and others.

it said --up or abhorrent situation relative to the committee investigation. the irs saw fit to mislead the committee about the existence of backup data and set on information about computer crashes and lost backup tapes for weeks. you have been on board. bear a direct responsibility , which you obviously have said responding to the oversight requests of this committee. steps ton a number of address some of the issues and recommendations identified in the report. these appear process oriented and very technical. you are talking delays, we are talking targeting.

there is much more that we can do. there are some very commonsense changes we should consider, senator grassley and others who have given us a full legislative prescription. we have other sound ideas offered by committee members. grassley and the bill of rights, senator portman on gifts to c4's come a protection proposal and my legislation to put a stop to further action on the c4 regulation relight area i would like to see a real rewrite that could take care of the politics of this. these are all good first steps getting the irs away from a political posture. i look forward to working with my colleagues and you as indicated by senator scott

through the committee as expeditiously as possible. you have just stated that the justice department interviewed 100 folks but there was some suspicion of being targeted on a political basis and not one was involved in any politics. as senator scott just eluded to this, i find this incredulous because the people i talked with had been targeted and targeted for years and it is without question, a situation where politics was involved. so given the remarks of senator scott and the remarks of others and you have gone over a discipline review effort and given that american citizens were targeted for extra scrutiny and the exemption application process and then the denied first amendment right so eloquently stated, i think it is comparable seeing you to tell

terry and country, take your pick. has anyone involved in the targeting been fired, reprimanded, or even talked to in a stern manner? >> as i said in response to senator scott. they looked for instances of political bias targeting anyone and none of the reviews have come up with a single case. i don't want to minimize the delays. we have apologized to people for the delays. it shouldn't happen. but continuing to characterize it as though there is a politicized atmosphere, if we say that enough there will be a lack of public confidence. the independent investigations have not found a single instance

of that. you have a bipartisan report after 2.5 years, which is terrific. we responded quickly and we think the recommendations that we have control are important and thoughtful. our hope is that our response positively to the committee will restore whatever confidence has been lost. again, it isay important for the public to understand that while they may field a have been targeted, there is no objective review that has found that to be true. we are doing everything that we can to assure taxpayers that when they hear from us it is because of an issue on their tax return. >> my time has run out, but i thank you for your very optimistic take on this. agreek i probably would

that the people i have talked to who are very irate, it tends to be anecdotal evidence. you would say to the gao and justice department, lord knows how many others have investigated this with over 100 folks and found nothing wrong. that is just not the case with regard to people that i know in kansas who have been targeted. audited.targeted, but i find it rather incredulous that these two things don't match up. >> let me say one thing if i could. even with limited resources, we will do a million audits this year. we will audit independence and conservatives people who go to church and don't. >> probably some members here. >> and all of those people will be selected by objective criteria and all of them need to

feel that the only reason they are hearing from us is because of an issue with their return. >> that was not the case with lois lerner. now she has been cleared and is just collecting a pension. which gets a to my question has anybody involved in fired, find, denied a bonus, or even spoken to in a stern manner. you say everything is fine. >> it is not fine but it is not the problem of political targeting but a fact that the recommendations you make or we are implementing is we need to have a better operation to ensure it doesn't happen. she had political views that she has a right to let had no right to have them expressed during working hours. the justice department talk to 100 employees that was no one influenced by her views and it is important to understand what the facts are. i would not minimize the impossible or unacceptable way that the applications were

delayed. we are committed to lowering that time down to 112 days. >> my time is up which means your time is up now. tenacity, and i admire your position. organizationeat that you ought to take part here in washington called the flatter society. chairman, several colleagues have now made the point about targeting and political bias and with your indulgence i want to be very brief to respond. the inspector general audit that spurred our inquiry found zero evidence of targeting or the lyrical bias. so what we did, we sent our irsstigators to ask every employee directly involved in the review applications whether

there had been any attempt to do this targeting to exert partisan influence. not one employee said there was any political bias. you have heard me characterize this whole effort as one involving massive bureaucratic dysfunction but there is no effort of political bias. >> you would have to be nuts to read all of this and not conclude there was political bias. lois lerner herself -- i don't care what is said about it. we know that there was political bias. we all find fault with lois lerner, and we ought to find fault with her. was it criminal work? they say no. i accept that. >> mr. chairman, just before we go, our investigators, our bipartisan investigators, this is not somebody else, our people

talked to every employee and they said no political bias. >> i don't think our side said that. >> thank you for holding this hearing. i want to thank the ranking member for following up on the cell phone tracking issue and i hope that you do not take today 's response as an answer. i would anticipate that it would of that rogue member irs group to take an issue like this and to expand it far beyond what the scope of it was intended. but thank you for being here and thank you for taking your time. areow that some of these pretty strong comments and they will not stop with me. i understand that this is the

purpose of the hearing today and we will continue that. report on the irs targeting conservative groups and the recommendation from the committee -- there is a lot of concern i am hearing from people back in my state. and i believe we have an obligation to the american people and taxpayers to show that the irs lives up to its mission providing top-quality service and also enforcing the law with integrity and fairness to all. i know that you don't disagree , and live by that as much as you can, but the way i see it the irs is not living by those particular standards. to say i am disappointed with the political decision that the justice department would not seek terminal charges against lois lerner or ever -- anyone else for the controversy is an understatement.

it is unacceptable that a government agency has yet to take action against mid-level managers that refuses to hold accountable employees who use their political influence to impact daily operations of the u.s.. commissioner, you have been there for two years. >> seems like longer. >> i bet it does. i know that you believe you are ultimately responsible and account for these actions. i have a couple questions for you. i will start by saying that the public trust is critical to the .rs's success i completely hear from those from nevada questioning why they should have faith in your agency. you made statements in the past about your agency. ors is not the irs of 2010 2011 or 2012. i find it hard to explain why

those from nevada who trust the irs when commissioners such as yourself have continuously misled both houses of congress. stonewalledhas also congress's investigation by repeatedly failing to preserve and locate records, make inaccurate statements up the existence of backup data and failed to disclose to congress the fact that records were missing. you do feel believe you have a personal responsibility for these failures. >> i certainly am responsible for everything that goes on under this organization. i told employees if there is a problem, it is my problem and i am comfortable being in charge of that. i think that one of the issues has been raised about the delay and disclosure about the hard drive crash of lois lerner at the time, when i was advised

in april that there was a crash, it seemed to me that the appropriate thing to do was to determine what e-mails had been lost and which we could find. concerned about the fact that i knew in april and we did not provide the full report until june the thought was the right thing to do. but since then we have taken a position that if there is an issue while we are investigating we will advise the committee and the public. know the full week but we immediately let the chairman know and the committee that we had a problem. >> do you believe the irs broke any laws in not backing up lois lerner's e-mails? >> i do not believe we broke any laws. we had an antiquated system. there is no need to rely on individual hard drives. andad an antiquated system

a decision was made not to upgrade and we should have done that, even with budget constraints. >> the me ask for the third time. this question has not been answered yet. have any of the staffers involved been fired? >> i cannot talk about individual cases publicly, but what i can say is that the entire chain of command, five levels from supervisors are no longer there. >> no longer with the agency? >> no longer with the agency. they have all left and i can give you the details of how that happened, but not in public. >> thank you, mr. chairman. >> senator cowan's. >> thank you, mr. chairman and

ranking members. you have heard about the continued frustration that many of us have had. it is no secret there has been a loss of trust in government. not just your agency. but many agencies. it is the function of government and its leadership. it has been reflected in the primaries on both sides. people are just disgusted and set up with our dysfunction. massiveed about dysfunction within an agency that people fear the most that has the most power over individuals. so whether it is just incompetence or total dysfunction, or the fact that government has grown to the point where it simply cannot

handle the issues that it needs to handle, my colleagues have stated that and i certainly think there is no other agency that more fed into the narrative than what happened at the irs. there is no trust from the department of justice either. the former attorney general appeared to be nothing more than private counsel to the president of the united states. the decisions that came out of there did nothing to restore their trust. that, i what to go to a specific issue. if you can address the issue or are in the process of addressing the issue. my understanding of this is that while the irs takes identity

theft seriously, while it involves tax fraud, it does not do so when names and social security numbers are stolen. this is a live example and there are others but this happened to someone in my state and it was brought to my attention by this investigative reporter. one undocumented worker might submit using his own number but attaching w-2 form with someone else's name and number. when the irs discovers this, the legitimate account gets an identity theft indicator but the return is still processed and the perpetrator suffers no ill consequences. in the meantime, it can cause a night pair -- nightmare for a legitimate taxpayer who might get harassed with letters accusing him of not reporting

income. they may even lose income related and if it's and one hoosier taxpayer who could not get health insurance for several months because he was a victim of this kind of theft. , is thetion i have is irs aware of this issue? is it taking steps to address this issue? if it is prohibited by law of taking actions to stop the fraud, we need to know that. is, when the irs discovers employment with any theft it still processes the tax return and sends any refund to the perpetrator, it doesn't link the account to the file or who submitted false information to the account of the victimized taxpayer. the irs does not inform the

employer at the worker submitted a false name and security number. it does not notify law enforcement that the filer submitted false information in order to stay in employment and i guess my question is, can we fix >> it is an important and complicated situation, as you can imagine. use general matter, the of social security numbers for employment purposes, our role as tax collectors -- there are a lot of immigrants here. whether they are illegal or not documented immigrants who work, they also -- many of them want to pay taxes. if there is ever an amnesty, demonstrate they paid them. e, and that isl

sufficient. we are fine with it. sometimes it is relative, sometime it is stolen social security numbers to get the job. the w-2 is a process that the -- our social security job is that if someone wants to be compliant with tax obligation, even though they have citizenship challenges, we collect a very significant amount. there are sometimes refunds. but generally, because they are not eligible for refunds, we collect the appropriate taxes from those who are working. even if you are in an undocumented status. we try to work with a significant number, whether they are borrowed or use from relatives or someone else, we do not know where they have come from or why. and our view is, if we start -- and we have started talking with ins -- if we start pursuing

employers and undocumented aliens, no one is going to file taxes. that would be another exposure point. the decision was made so long before i got here, it was in the government's interest to pay taxes to the extent that they want to and want to provide support for the services they receive. >> should not it be in the government's interest to care for the victim? put something in place that will give the victim official notification that they have -- their social security number has been stolen. their tax id has been stolen and used for false purposes. not sitting in front of an employer saying, there has been fraud here. and so forth and so on. because it has an impact on individuals who have been the victim. irs shouldnot the pursue this or not, some function of government should.

can we set up a process by where a commitment to the agency that can do that, if you cannot do that? or something put in place so the irs scandal college that. >> you raise many facets of the problem. we would be delighted to talk further and figure out how we can deal with both aspects of it. allowing people to pay taxes, so that when it becomes an issue for citizenship, they will have an issue. it. protecting taxpayers is an important issue for us. >> i appreciate you saying that. if we give you the authority to do it, mr. chairman, that is something we should pursue. there ought to be something in place that protects the victims, as well as going after the perpetrator. >> i would be delighted to talk you further about that. i hope we can move on that, mr. chairman. one way or another, we not only

have to think about prosecuting a person that is stolen numbers or falsely using them, a person has been hacked or is a victim of all of this, it needs to have name.bility to clear his and not be denied job opportunities because of the situation. >> thank you, senator? >> thank you mr. chairman. as you know, this is an issue of particular concern. it is a concern to all l ohians. oans. when we were being asked inappropriate things, the document did not seem to make sense. we sent the first letter on this back in thmarch of 2012. there is a group called unite for action that has still not

received tax-exempt status decision. just to remind us while we're here, the report and our bipartisan report, not a republican report -- they all said the same. there were words used to screen 504 applications like patriot, tea party -- 70% of those cases were tagged for additional review. and to quote our report, consistent with what the ig said, such groups were disproportionately impacted. no question about it. to remind everybody why we are here, that is the issue. of course, there is distrust when that happens. and of course there should have been consequences. i will focus a little on fostering the sense of accountability you talked about. i cannot agree with you more. and real accountability comes from real consequences. i am one of the people on the

committee believe my constituents are suffering from a lack of funding at the irs. i think taxpayers service is important. i would like to see us increase the funding. but it is very difficult to have any kind of increased funding for anything at the iris as long as there is lack of -- at the irs as long as there is a lack of account ability. let me be specific. thatalked about the fact we need to make sure this happens in the system. you answered questions today that you sensed that irs employees now feel more comfortable in being able to talking to you and going through the command. let me ask you this question. for those who were involved in say,ismanagement, shall we the conservative group filings, were there any consequences? any consequences?

>> the entire chain of command, starting with the commissioner down five levels are all no longer with the agency. >> they have all retired with full pensions and have been reassigned? >> i can talk with you in rivate. >> that is what the public records as. says. before your time, 323 employees were rehired. >> those are primarily temporary and seasonal employees. we change of policy to make sure that doesn't happen in the future. >> ok, this goes accountability. i'm glad you change the policy. you should know i was a s canthor of this, the ir

willfully terminate. employees that willfully violated tax law -- 61% were handed lesser sentences. most receive promotions. again, the sense of accountability has not had consequent is. prior response reflects practices. we make clear there will be no promotions and awards made in a year where there is an inability to comply. there will not be awards. another 40% were dismissed. and i would be delighted to get

you that information. >> that would be helpful. you know about this? we talked about it today. the backup cases were destroyed sometime in 2014. they were the subject of a litigation hold. your cfo is actually called the destruction more significant than the loss of lois lerner's hard drive. >> the justice department notes, there is further activity going on. i would be delighted to keep the committee advised as to what happens beyond that. but again, those are individual cases. iga general matter, both the and the justice found that no one purposely destroyed those tapes. they thought of them as junk.

they did not understand the litigation or the document retention program. for that has been thoroughly investigated by both the ig and the department of justice. both of them found we are doing the right thing. >> no consequences for not honoring the litigation hold. ure request, if it had been responded to properly, we could have avoided a lot of this. it was not responded to properly. these documents could have kept the scandal from happening. sufficient,ch was the responsive documents -- again, is there any attempt to respond to those who can stop this whole thing in the first place? >> that was sometime ago, and i would be happy to get you that information. you are right. my sense of this before i

started, was that somebody in 2012 has said we had a problem. we're trying to learn the issues. it had gone up the chain of command, and we could have avoided the unnecessary expense. >> i just have two quick questions. multiple mistakes made by various employees on the list, have any mid managers been reprimanded? >> real quickly, you have been waiting a long time. employee behaved improperly with regard to political bias or doing something that was that out of the ordinary. >> our bipartisan report says multiple mistakes. 101,n fact, based on case some were promoted. so again, culture of accountability needs to be in

place for us to begin this process of regaining the trust of my constituency and the american people. thank you very much. toator hatch: i was led believe that please forgive us. > thank you for your work today. your public service -- you have a hard job. in a difficult time. part of the focus i want to question the resources that we have. this happens on a regular basis in this town, where folks in congress will say the irs or any other agency has to do x, y, or z. sometimes pointing the q3 finger but not -- the accusatory finger not providing the resources that are essential. as you know, mid-september, i

and four other members sent a letter to secretary lou talking about these. i want to read the whole letter, we talk about the consequences of shortsighted budget cuts to the irs. we give examples, and these examples of the impact, i should say. the examples are taken from treasury inspector general, and i'm quoting here from part of the letter. during the 2015 filing season, only 38.5% of callers received assistance, compared to 75% the year before. having problems with not the resources. so whether it is addressing the tax gap, improving tax service, and limiting data mining

procedures to combat identity theft, address and proper payments, that depends on resources. it has been my experience in state and federal government that you cannot improve a service by magic. you have to have the tools and resources. so, the focus we were bringing in that letter was the result of getting the resources that the president as recommended for the fiscal year 2016. can you walk through some of the impacts of those resource constraints, and how that impacts your ability to fill your response abilities? secondly, steps you are taking to prevent identity theft and improve taxpayer services? it is ahort answer, critical problem. i have testified that my confirmation hearing two years ago, it was the most critical problem facing the agency. since the budget has been cut

further, if you look at the information, basically -- the ocd just put out a report looking at the cost of tax administration. half,s spends almost other words slightly more than half, of what the oec developed countries do to collect a dollar of taxes. germany, france, england, australia -- they spend three times we spent to collect taxes. we are already the most efficient tax agency in terms of of theion of any agency major developed countries of the world. secondly, since 2010, but it has been cut by over $1 billion. at the same time we have 7 million more taxpayers. we have been giving unfunded mandates -- the affordable health care act. shortly after our budget was cut, we were asked to limit the professional employees act.

since then, we have been asked to government the health care act. informationey on technology, including cyber protection and identity theft. and general operations and make. as our budget has been cut every year over five years, the money has to come from somewhere. we had an abysmal level of service last year. in terms of enforcement, the osingrs show we are l over $4 billion a year because we have 3000 fewer revenue agents. they collect over a million dollars a year. so to save $1 billion in funding, we are losing over $4 billion in tax revenue collection. it is costing the government four times the amount of savings. in terms of information technology, we are dealing with cyber criminals around the world

-- organize, isaac is it, --highlyed sophisticated, well-funded. we have been unfortunate that identity theft has gotten more and more sophisticated. forget our transcript regarding unaddressed access. sophisticated criminals already have significant detailed information about taxpayers so they can masquerade more effectively as the taxpayer. to protect against all that as you say, takes resources. if the budget is flat, nothing will get better. to wondere need million does to pay for the pay raise in inflation. and we no longer have any give. no one cares more about the poor level of taxpayer service that our employees who provide that service. they view their mission is to help people. when i is recall, they feel good about solving a problem. they feel as badly as the

taxpayers but the lack of funding. we have not enough people to answer the calls. we do not want to go backwards and hire the 15,000 people we have lost. when he to do is stabilized and go forward to provide better service digitally. a cost us $43 to answer a phone call, $52 to deal with someone when they walk to the offices, $.25 if we can answer the issue online digitally. and we need to move in a direction as we go. with regard to identity theft, it is accommodated growing problem. complicated, growing problem. what we have done is bringing the software offers and payroll providers and administrators and created a partnership. as i told them at a time when the purpose was not to tell them what to do. it was too great a partnership where the private sector, the states, and the irs would work together jointly. we have announced just last week

that we have limited significant improvements across the tax system to deal with and fight identity theft this year. but going forward again, for our systems to continue to keep up, have to invest in them. our budget continues to be cut, we will not have the money to do that. and taxpayers are going to suffer, revenues will suffer, the agency will suffer. >> commissioner, thank you for that. if we are going to ask you to do a lot more, we cannot give you less. we are grateful for the answer. senator hatch: senator nelson? senator nelson: a lot of discussion about whether or not there was intimidation could be obviated if we would just go 4 andon the 501(c) administer them. what the original statute set, which is civic leagues or

organizations, not organized for profit but operated exclusively for the promotion of social welfare. in 1959, there was a regulation to implement that statute. but they changed the word exclusively to primarily. set, anegulation organization is operated exclusively for the social promotion of welfare. if it is primarily engaged in promoting some way the social welfare. flap that we this unnecessaryrough is if the irs would follow the

welfarethat the social organizations, 501(c)4 would be exclusively for social welfare. course, it is interpreted differently. and that is why we had the chaos that we have today in our campaign finance system. where all of this, and it is now termed dark money, comes in to influence elections. dark because it does not have to be reported who who was giving the money. the whole idea of mccain feingold was, and this is the

campaign-finance reform about a decade ago, a whole idea was to open up the process and let the people know who is influencing elections because they would know who is giving the money. but now, we see that it is nothing that a candidate for over $100is raising million through 501(c)4. and the public does not know who is financing that. and that money is not being used as a statute requirement for a social welfare purpose. it is being used to influence an election. we can change this whole thing, mr. commissioner. what do you think about all of this? think it is accommodated situation.

we have felt at a minimum, as i have said, when i was a chairman i think amid a clear, but as a minimum we need to clarify what the standards are. is, we do notues think we have the ability to change the statutory framework that has been established. our job is to figure out how to rationalize it. >> i agree with you. but the statutory framework says exclusively for social welfare purposes. now i understand you are going trying to figure out some guidance on this. so what are you doing in issuing the guidelines? >> we are looking at three questions. one, what is the definition of political activity? second, how much can you do? c organization

should apply? the definition, as they say, we think it should not include nonpartisan, voter registration, canada forms, get out the vote campaigns. the question to which organization should they apply, we think you have to look at the group to see what it should be up to an organization to pick which of those categories and wants to be in. we should not be driving that by our determination. but i would say that primarily, 27.is a standard used for 5 and that statute was passed in the 1970's in the context of recognizing what was primarily the standard. there are limitations on what we can do looking at only one statute. we have a look at all of them in

the framework. primarily, and he buted all of the statutes, you do not say the 501(c) four that do not hav4 that do not hao disclose. what are you doing? >> some of the provisions by congress were passed by using the context where was the standard since 1959. the question is, to rationalize that in light of what the congressional activity is, what the framework is, we are reviewing all the comments. we are a very close look at this. but it is not a slamdunk to change the way the process went. as a general matter, i don't think we would change the rule of the game. i don't the chairman disagrees with me. but it is important to clarify the rules of the game. >> i don't understand what you just said. [laughter]

>> maybe the better way to say it is we are reviewing all of this, trying to review and we come up with a neck strap, it is understandable, sustainable, fair to everybody. and is not an easy answer. >> do you agree that things have gotten out of control with regard to the interpretation of the rule primarily used for social purpose? >> i think what i would agree with our concern is that the facts and circumstances of how you fit into that category, what you are doing, what is primarily social welfare and what is political activity, designed and studied and assessed on facts and circumstances, could not be less clear. what is into clarify one pocket and what is in the other. how much you can do a be there is a separate question.

but the lack of clarity goes to the heart of the problem. that is what the ig said, they found and are less regulation was they should provide clarity. we should make clearer what the rules are, even if we are not able to change the rules. >> if you would just do this, that i think you will be doing your constitutional duty. when you look at primarily a social purpose, those words, and you stack that up against a commercial paid tv advertisement that advocates for the election of a candidate or against the candidate,against a then if you would understand that it does not primarily serve a social purpose. that is a political purpose. it is there that the whole

statute has been bastardized. someoneur view is that running one of these organizations are setting it up and they clearly understand what is political activity, intervention, and what is welfare. people say it has been around a long time, fax and circumstances. but the issue of political active and engagement by c4s is occurrence. recent the ig agreed with that. we think everyone would be better off, as you know, when you ran an ad, it will be clear which side of the line fell on. right now, when you do whatever you are going to do, your subject to our interpretation -- our attempt to be fair under standard circumstances with that of the provides and clarity at all. it doesn't fact lead to come at you said, the complicity of

trying to lead who is on which side. how much you can do is important. but the definition of what you're doing is also equally important if you're going to provide clarity and be fair to everybody. >> when is the clarity coming? notwithstanding the encouragement and never show up with, we like to make sure that we can provide and introduce the suggestion, hold the 90 days of public comment, and it all done before the next election. so i think the chairman is right. so there's not a lot of confusion, but it will be clear so everybody has time to adjust. we made it clear from the start. it will not influence the effective election, it would be effective the next year. to be effective next year, it has to be started sometime early this you. and again, our goal be to do it in a timeframe outside of the act of presidential campaign, certainly after next up to her.

>> so when you decided, it would be effective for the following election cycle -- not the election cycle of 2016. >> righ. t. stuck with talking about the misunderstanding of facts and circumstances. there is a misunderstanding that we are not pursuing our statutory sponsor abilities. we are processing and trying to provide standards but to the extent in the ordinary course we will be auditing organizations as to whether there performing appropriately the standard that we have to use this fax and circumstances. say that we will not change the rules we would just like to make them clearer. >> mr. chairman, i would conclude by saying that the american