[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
H.R. 4735, A BILL TO AMEND TITLE 5, UNITED STATES CODE, TO PROVIDE THAT 
 PERSONS HAVING SERIOUSLY DELINQUENT TAX DEBTS SHALL BE INELIGIBLE FOR 
                           FEDERAL EMPLOYMENT

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON FEDERAL WORKFORCE,
                    POSTAL SERVICE, AND THE DISTRICT
                              OF COLUMBIA

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

                               H.R. 4735

 TO AMEND TITLE 5, UNITED STATES CODE, TO PROVIDE THAT PERSONS HAVING 
    SERIOUSLY DELINQUENT TAX DEBTS SHALL BE INELIGIBLE FOR FEDERAL 
                               EMPLOYMENT

                               __________

                             MARCH 17, 2010

                               __________

                           Serial No. 111-86

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform




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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York         DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts       JOHN J. DUNCAN, Jr., Tennessee
WM. LACY CLAY, Missouri              MICHAEL R. TURNER, Ohio
DIANE E. WATSON, California          LYNN A. WESTMORELAND, Georgia
STEPHEN F. LYNCH, Massachusetts      PATRICK T. McHENRY, North Carolina
JIM COOPER, Tennessee                BRIAN P. BILBRAY, California
GERALD E. CONNOLLY, Virginia         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               JEFF FLAKE, Arizona
MARCY KAPTUR, Ohio                   JEFF FORTENBERRY, Nebraska
ELEANOR HOLMES NORTON, District of   JASON CHAFFETZ, Utah
    Columbia                         AARON SCHOCK, Illinois
PATRICK J. KENNEDY, Rhode Island     BLAINE LUETKEMEYER, Missouri
DANNY K. DAVIS, Illinois             ANH ``JOSPEH'' CAO, Louisiana
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
JUDY CHU, California

                      Ron Stroman, Staff Director
                Michael McCarthy, Deputy Staff Director
                      Carla Hultberg, Chief Clerk
                  Larry Brady, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 17, 2010...................................     1
Text of H.R. 4735................................................     6
Statement of:
    Kelley, Colleen, national president, National Treasury 
      Employees Union; J. Ward Morrow, assistant general counsel 
      for legislation, American Federation of Government 
      Employees, AFL-CIO; Richard Oppedisano, national secretary, 
      Federal Managers Association; and Christopher Rizek, 
      general counsel, Caplin & Drysdale, Chartered..............   113
        Kelley, Colleen..........................................   113
        Morrow, J. Ward..........................................   121
        Oppedisano, Richard......................................   130
    Rizek, Christopher...........................................   139
    Tucker, Beth, Wage and Investment Deputy Commissioner for 
      Support, Internal Revenue Service..........................    13
Letters, statements, etc., submitted for the record by:
    Chaffetz, Hon. Jason, a Representative in Congress from the 
      State of Utah, employee tax compliance analysis............   102
    Kelley, Colleen, national president, National Treasury 
      Employees Union, prepared statement of.....................   115
    Lynch, Hon. Stephen F., a Representative in Congress from the 
      State of Massachusetts:
    National Taxpayer Advocate 2009 Annual Report................    21
        Prepared statement of....................................     4
    Morrow, J. Ward, assistant general counsel for legislation, 
      American Federation of Government Employees, AFL-CIO, 
      prepared statement of......................................   123
    Oppedisano, Richard, national secretary, Federal Managers 
      Association, prepared statement of.........................   132
    Rizek, Christopher, general counsel, Caplin & Drysdale, 
      Chartered, prepared statement of...........................   141
    Tucker, Beth, Wage and Investment Deputy Commissioner for 
      Support, Internal Revenue Service, prepared statement of...    15


H.R. 4735, A BILL TO AMEND TITLE 5, UNITED STATES CODE, TO PROVIDE THAT 
 PERSONS HAVING SERIOUSLY DELINQUENT TAX DEBTS SHALL BE INELIGIBLE FOR 
                           FEDERAL EMPLOYMENT

                              ----------                              


                       WEDNESDAY, MARCH 17, 2010

                  House of Representatives,
Subcommittee on Federal Workforce, Postal Service, 
                      and the District of Columbia,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:08 p.m. in 
room 2154, Rayburn House Office Building, Hon. Stephen F. Lynch 
(chairman of the subcommittee) presiding.
    Present: Representatives Lynch, Norton, Cummings, Connolly, 
Chaffetz, and Issa.
    Mr. Lynch. Good afternoon. The Subcommitee on the Federal 
Work Force, Postal Service, and the District Columbia hearing 
will now come to order. I want to welcome our ranking member, 
Mr. Chaffetz, and members of the subcommittee, all of our 
hearing witnesses, and all of those in attendance. The purpose 
of today's hearing is to examine H.R. 4735, a bill to amend 
Title 5 of the United States Code to provide that persons 
having seriously delinquent tax debt shall be ineligible for 
Federal employment.
    The Chair, the ranking member, and the subcommittee members 
will each have 5 minutes to make opening statements, and all 
Members will have 3 days to submit statements for the record.
    Mr. Lynch. Again, thank you all for being here. The 
subcommittee convenes today to examine and discuss H.R. 4735, 
which was introduced by my friend, the subcommittee's ranking 
member, Representative Jason Chaffetz, on March 3, 2010.
    In short, H.R. 4735 prohibits individuals who have a lien 
placed against their property by the IRS from being hired for 
Federal civilian service, and also requires any Federal 
employee subject to an IRS lien to be immediately terminated 
from employment.
    While the equitable and robust enforcement of our tax laws 
is commendable, there are serious weaknesses in H.R. 4735 which 
call its objective and its efficacy into question. Under 
current executive branch regulations on standards of ethical 
conduct for employees, the Office of Government Ethics requires 
that Federal workers, ``Satisfy in good faith their obligation 
as citizens, including all just financial obligations, 
especially those such as Federal, state, or local taxes that 
are imposed by law.''
    In short, this means that a condition of employment there 
exists an expectation and a requirement that Federal employees 
demonstrate the highest degree of integrity in tax matters by 
both filing as well as paying their tax obligations. In 
furtherance of this policy, there are currently enhanced 
statutory provisions to allow the IRS to garnish wages of 
Federal employees at rates of recoupment that are in excess of 
those required of non-government workers.
    While the U.S. Tax Code may be complex, the weaknesses of 
H.R. 4735 are not. Simply stated, H.R. 4735 defines the 
offending status as, ``a seriously delinquent tax debt,'' as 
the existence of a lien against that employee's property. 
Pursuant to H.R. 4735, the existence of an IRS lien amounts to 
a legal fact requiring termination or prohibition of hiring, 
and against which no rights of due process exist to challenge 
the validity or the amount of that lien before an impartial 
third party.
    Of course, it may argued that the Federal employee may 
challenge the validity and the amount of the lien from her 
place in the unemployment line after her termination, if she 
has sufficient resources to do so. However, the unemployed 
Federal worker is put at a marked disadvantage and has far less 
opportunity to challenge the IRS decision that is afforded to 
the individual taxpayers generally.
    Moreover, if it is indeed the objective of this legislation 
to recoup taxes by Federal employees, one may reasonably ask 
would it not be easier and more profitable to attach and 
garnish the wages of an employee who works for the Federal 
Government than to terminate him or her.
    Last, while H.R. 4735 exempts military personnel who owe 
large amounts of delinquencies, it ignores the fact that there 
are thousands of State Department, Treasury Department, 
Department of Agriculture, Drug Enforcement Administration, 
FBI, CIA, and Department of Justice employees who are also 
serving in hardship assignments who could be subject to 
termination under this bill. Just as with our military 
families, those civilian Federal assignments have put extreme 
financial pressure on these workers and their families.
    While I understand and in some ways agree with the 
gentleman's interest in promoting the importance of tax 
compliance, I simply find myself unable to support the approach 
he is suggesting, as outlined in H.R. 4735. In fact, the 
measure if enacted as written might actually diminish the 
likelihood that the IRS will recoup any tax debt by leaving the 
delinquent taxpayer unemployed and therefore unable to generate 
any income to satisfy the debt through an installment program 
or a Federal levy.
    In closing, it is my hope that these issues and questions 
concerning the IRS's collection procedures and potential costs 
and impact of H.R. 4735 will be elaborated on further by 
today's witnesses. To that end, I thank each of you for joining 
us today, and I look forward to your testimony.
    I will now recognize our ranking member, the sponsor of 
H.R. 4735, the gentleman from Utah, Mr. Chaffetz, for 5 
minutes.
    Mr. Chaffetz. Top of the morning to you, Chairman, and 
thank you for the hearing in such a timely manner. I do truly 
appreciate it. I would like to ask unanimous consent to enter 
three documents into the record. One is the so-called FERTI 
report, the Federal Employee Retiree Delinquency Initiative, as 
well as the TIGTA, Treasury Inspector General Tax 
Administration, document, as well as President Obama's remarks 
regarding paying of taxes for contractors that was made on 
January 20th of this year.
    Mr. Lynch. Hearing no objection, those records are entered 
into the record.
    [The prepared statement of Hon. Stephen F. Lynch and the 
text of H.R. 4735 follow:]

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    Mr. Chaffetz. Thank you. I would also like to note for the 
record that Mr. Christopher Rizek of Caplin & Drysdale, is one 
of our witnesses today. Today is the first time that I have met 
Mr. Rizek, but it should be noted that my campaign has used 
Caplin & Drysdale for some minor campaign issues. I have had no 
interaction, nor did I have any interaction on the selection of 
this witness, but I do think it is proper to note that for the 
record.
    Mr. Lynch. We will not hold it against him.
    Mr. Chaffetz. Thank you. At the heart of this matter is an 
issue of fairness. And I happen to concur 100 percent with 
President Obama, and I am going to read a few comments that he 
made on January 20th on the signing of a memorandum blocking 
tax delinquent applicants from obtaining government contracts. 
From President Obama, ``All across this country, there are 
people who meet their obligations each and every day. You do 
your jobs. You support your families. You pay your taxes you 
owe because it is a fundamental responsibility of citizenship. 
And yet somehow it has become standard practice in Washington 
to give contracts to companies that don't pay their taxes.''
    Further, he went on to say, ``The status quo then is 
inefficient and it is wasteful. But the larger and more 
fundamental point is that it is wrong. It is simply wrong for 
companies to take taxpayer dollars and not be taxpayers 
themselves. So we need to insist on the same sense of 
responsibility in Washington that so many of you strive to 
uphold in your own lives, in your own families, in your own 
business.''
    That principle is true for contractors, and I think that 
same principle should be true for Federal employees. The 
language that has been presented in this document in much was 
lifted, if you will, or patterned after H.R. 572, which I have 
asked to be joined on as a co-sponsor. I think it is a good 
piece of legislation. I am proud to be a Republican joining on 
as a co-sponsor of this Democratic initiative. I think it is 
right. I support it. And I think we should hope and expect that 
it would pass.
    My simple point that I am trying to make is that the same 
principle for contractors should be true for Federal employees. 
Now the overwhelming majority of Federal employees do the right 
thing. They pay their taxes. They work hard. They contribute to 
the good of the United States of America. But we have a few bad 
apples. And as lawmakers, we have a duty and responsibility to 
hold them to a high standard. Many would argue, including me, 
we should hold them to a little bit higher standard. If you are 
going to have the privilege of working for the United States of 
America, I think you have a duty and obligation to pay your 
taxes.
    Now if somebody is trying to do the right thing, the 
intention is not to just simply lob off their head and ruin 
their lives. There are two fundamental and distinct outs, if 
you will, in this bill, that I do take issue with what has been 
said previously and characterizations of this bill I think are 
inaccurate. There are exceptions to when you would be 
terminated.
    No. 1, a debt that is being paid in a timely manner 
pursuant to an agreement. So if you are trying to dig out from 
under a rock, you are trying to make good, if you are trying to 
actually do the right thing, and you are on a payment plan, of 
course it would not be in the best interest of the United 
States of America or for that person individually for them to 
be fired. So if you are doing the right thing and you are 
trying to pay your obligation and you have a payment plan in 
place, there is no reason to terminate that employment.
    The second part is a debt with respect to which a 
collection due process hearing is requested or pending--there 
is some language in between there--but if you have a request 
for a hearing, or if you have a hearing pending, again under 
this law, under this bill, there would be no reason and no way 
for your employment to be terminated. I think that is fair.
    I am obviously very open to suggestions. But, Mr. Chairman, 
at the core of what I am trying to convey here, is that it is a 
principle that the President has articulated I agree with. Most 
people are not going to be affected by this. If you pay your 
taxes, there will not be a problem. But if you are a Federal 
employee, and you are not paying your taxes, and you are not on 
a plan to do so, then I think you should be fired.
    Thank you, Mr. Chairman.
    Mr. Lynch. I thank the gentleman, and the Chair recognizes 
from the gentle lady from the District of Columbia. Ms. Eleanor 
Holmes Norton, for 5 minutes.
    Ms. Norton. Thank you, Mr. Chairman. I think we have more 
to be thankful to you today that you called this hearing, given 
the markup out of which this hearing developed. I want to say 
Happy St. Patrick's Day to all. I claim admission, not 
necessarily by heritage, but I have a son born on St. Patrick's 
Day.
    When we agree on basic principles, that ought to be the 
first thing we say. And I believe that the overriding principle 
at the markup that all agreed upon was that if you were getting 
paid out of a pot of the taxpayers, you ought to pay in to your 
taxes. Nobody likes to pay taxes, but there is something very 
one-sided about depending on the taxpayers of the taxpayers of 
the United States and being unwilling to do your share.
    With that understanding, we quickly found ourselves plunged 
into factors about which there was no information. To be sure, 
who could disagree that depending on the circumstances--and by 
the way, there was very little information on what kind of 
circumstances should obtain, but depending on the 
circumstances, everybody who works for the Federal Government 
gets paid out of that pot and should have paid the taxes before 
dipping into that pot for your own wages.
    But it was Chairman Lynch who had done so much homework 
that he saved us from the law of unintended consequences. We 
were put to the test of whether we should vote for a bill where 
a hearing had been proved necessary by the abundance of 
questions coming from members of the committee. I was 
particularly concerned because we were dealing with two 
rarified of sections of Federal law. One is the unendingly 
complex and specialized civil service law that is administered 
by OPM. The other is an even more specialized set of law and 
regulations, and that is the tax code itself.
    So anybody who wants to jump off the cliff without a 
hearing on what is going to happen to somebody, whether he 
keeps his job or not, without knowing the consequences in both 
those sets of law is, it seems to me, immediately engaged in a 
project that could result in unfairness that he never intended. 
The least we can do when there are questions raised that were 
as abundant and as meritous as the questions that obtained on 
that day just perhaps 2 weeks ago is to do what the chairman--
who was perhaps chiefly instrumental in laying on the table 
some of what many of us did not know.
    Let us settle those matters. This is not something that 
will bury the country if we have a hearing first. Here we will 
call and put our side to have a hearing in our own 
subcommittee. What could be more to our advantage than that? 
And I am very pleased that Mr. Chaffetz, who raised the issue 
for contractors, those who raised the issue for Federal 
employees are now able so quickly after those questions came to 
the fore to have a hearing which I believe will satisfy all 
concerned.
    Thank you, Mr. Chairman, again, particularly for your 
interventions at the time of the markup.
    Mr. Lynch. I thank the gentle lady. The Chair now 
recognizes the ranking member for the full committee, Mr. Issa, 
for 5 minutes.
    Mr. Issa. Thank you, Mr. Chairman, and thank you for 
holding this important hearing. I might note that this hearing 
today is on H.R. 4735. Since it was not noticed that way, I 
would like to suggest that we hold a similar hearing on H.R. 
572. As the chairman may know, H.R. 572, the bill that prompted 
this, never had a hearing.
    One of the challenges I think that the chairman and myself 
as ranking member faced in the markup was that we had not 
vetted many of the issues that were brought up related, 
particularly by the majority, related to the Federal employees. 
The amazing thing, of course, is every time somebody on either 
side of the aisle says ``Federal worker,'' we immediately 
realize that what is good for the goose is good for the gander.
    A Federal worker and a Federal contractor have many 
similarities. Since I served on the House Select Intelligence 
Committee, I was very exposed to the fact that we have a huge 
amount of what are contract status employees in the clandestine 
world, but they are really a company of one. And under the H.R. 
572, they would find themselves, if you will, if you were a CIA 
contractor of one, you would find yourself fired over, without 
protection, under H.R. 572--you would find yourself fired 
without protection on exactly what the gentle lady from the 
District of Columbia and others have said we want to have as 
protections not currently in this bill.
    So, Mr. Chairman, I hope today as we go through this 
hearing, that all of us will have both sides of our brain on, 
the one that says ``contractor,'' and the one that says 
``person,'' because ultimately a great many of our contractors 
are either individuals or very small groups who enjoy all the 
same problems and burdens that Federal employees have. 
Additionally, as it was noted in the markup, Federal workers 
most often run into tax problems because they have small 
businesses or their family has small businesses, or something 
outside of their direct Federal employment.
    I believe that if we on a bipartisan basis work together 
here at the subcommittee, and then at the full committee, we 
can find a harmonized bill, one that provides appropriately 
near or absolute protections for the contractor, thinking in 
terms often of a contractor of one, and for the private person. 
The due process that we ask for a Federal worker to have is 
very appropriate, and making sure that we never have a 
situation in which a person finds themselves willing to catch 
up over time on their taxes, on a voluntary or an agreed basis, 
but at the same time wanting the opportunity to dispute taxes 
they believe they do not owe, and to have all of the normal due 
process, while still enjoying a paycheck.
    So I would join with the gentle lady from the District of 
Columbia and say, when we leave this, we have to leave 
understanding that a large company or a small company that has 
a dispute with the IRS should not find themselves out of a 
contract and thus unable to afford their own defense. Well, in 
fact, if they are given the opportunity to go through the 
process, they may well be vindicated. Certainly for a private 
individual who is a Federal employee, the same is true, and 
probably more obvious.
    So as we go through the hearing today, which I appreciate 
us having, hopefully we are looking in terms of harmonization 
of two sets of Federal workers, the individual Federal worker, 
and the Federal worker under contract. And although they are 
hugely different in many ways, they are from a standpoint of 
not paying their taxes ultimately the same. They can only pay 
their taxes if they have income. We only want to make sure that 
they are in the process of leading to paying their fair taxes. 
And as long as they are, I would assume that the chairman and 
myself are in total agreement we would want them to continue 
being vendors or employees of the Federal Government, as long 
as in fact they are making a good faith effort to either pay 
their taxes or to dispute them, as all of us have a right to 
do.
    I thank the gentleman and yield back.
    Mr. Lynch. I thank the gentleman. It is the custom of this 
subcommittee to swear all witnesses who are to offer testimony. 
So, Ms. Tucker, could I ask you to please rise and raise your 
right hand.
    [Witness sworn.]
    Mr. Lynch. The record will indicate that the witness has 
answered in the affirmative. I would like to just offer a brief 
introduction of Ms. Tucker. Ms. Beth Tucker is currently the 
Wage and Investment Deputy Commissioner for Support for the 
Internal Revenue Service. In this position, Ms. Tucker has 
oversight over all wage and investment support organizations, 
including electronic tax administration and refundable credit 
strategy and finance, business modernization, communications 
liaison, and equal employment opportunity and diversity. 
Welcome, Ms. Tucker. I would like to offer you the chance to 
submit an opening statement for 5 minutes.
    Could you please pull that mic very close to you? It does 
not work very well. Let us just see if it is on. I am not sure.
    Ms. Tucker. I think that is better.
    Mr. Lynch. There you go. Thank you.

     STATEMENT OF BETH TUCKER, WAGE AND INVESTMENT DEPUTY 
       COMMISSIONER FOR SUPPORT, INTERNAL REVENUE SERVICE

    Ms. Tucker. Chairman Lynch, Ranking Member Chaffetz, and 
members of the subcommittee, I am pleased to appear before you 
this afternoon to discuss the IRS collection procedures as they 
relate to Federal employees. Today's hearing was called to 
examine H.R. 4735 that would make persons with seriously 
delinquent tax debt ineligible for Federal employment. However, 
I am not here to comment on that legislation, but rather to 
discuss our tax collection process.
    Mr. Chairman, the collection process is the same for all 
individuals. There are no special rules for Federal employees. 
If the taxpayer does not respond to the first or subsequent IRS 
notices of late payment, the account becomes delinquent, and 
the IRS will try to resolve the issue with the taxpayer over 
the telephone or in person. There are a number of payment 
options for those who cannot pay their taxes on time, such as 
extension of time to pay, installment agreements, or offer in 
compromise.
    If a delinquent taxpayer does not cooperate, than the IRS 
may take and force collection action. Enforcement action can 
include serving a notice of levy to attach taxpayer's income or 
assets, such as bank accounts. A levy is a legal seizure of the 
taxpayer's property to satisfy a tax debt, and in some cases 
can include the seizure and sale of real or personal property.
    The IRS may also file a notice of Federal tax lien to 
secure the government's interest in the property the taxpayer 
owns, while establishing priority as a creditor. However, as 
discussed in greater detail in my written testimony, IRS seeks 
to provide the taxpayer an opportunity to pay the tax debt 
voluntarily, making arrangements to pay or supply information 
to show that the payment would create a hardship. Enforced 
collection actions are taken only after repeated attempts to 
contact the taxpayer. The taxpayer can also request a hearing 
with our Office of Appeals, and has the right to appeal certain 
other collection actions.
    The Federal Employee Retiree Delinquency Initiative 
[FERTI], promotes Federal tax compliance among current and 
retired Federal employees. Each year the IRS sends letters to 
the human capital offices of Federal civilian agencies and 
departments participating in the data matching program to 
provide current information on previous year's delinquency 
rates and request the agency's support in promoting tax 
compliance within their work force.
    The letters also raise awareness about the importance of 
timely and accurate returns, reporting all income, having the 
proper amount withheld, providing all required information and 
good recordkeeping. The IRS is also providing Federal agencies 
the tools they need to communicate with their work forces about 
the importance of tax compliance.
    We have drafted generic materials for all agencies, and at 
the request of HUD just this year, tailored them to those 
employees struggling to pay their taxes. We have also provided 
links to IRS communication products, YouTube videos, public 
service announcements that HUD can use to communicate with 
their employees on the Internet and through their own internal 
communication venues.
    The IRS has also made these outreach and education 
materials accessible to a broader audience, ensuring them with 
90 other Federal agencies. We will begin a more comprehensive 
and aggressive outreach campaign this fall based on the lessons 
we have learned this year.
    Mr. Chairman, thank you for the opportunity to testify 
today. We believe that IRS rules and procedures, along with the 
current tax law and regulations, allow for Federal employees to 
rectify their tax obligations. I would now be happy to answer 
any questions you might have.
    [The prepared statement of Ms. Tucker follows:]

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    Mr. Lynch. Thank you. Just for the record, I would like to 
get unanimous consent to submit into the record the National 
Taxpayer Advocate 2009 Annual Report. It reads ``2009 Annual 
Report,'' but it is actually submitted December 2009, so it is 
a fairly recent report.
    [The information referred to follows:]

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    Mr. Lynch. Ms. Tucker, according to the National Taxpayer 
Advocate, they list serious problems with the IRS in terms of 
the taxpayer's position. And it is not meant to be critical of 
you, it is just red flags that the National Taxpayer Advocate 
raises. The most serious problem that they cite is the sheer 
complexity, as the gentleman from California remarked, the 
sheer complexity of the tax code, and the number of disputes 
and difficulties that taxpayers have in just complying.
    The second most serious issue that they raise here in the 
National Taxpayer Advocate is the fact of automatic liens, 
automatic liens against taxpayers without personally dealing 
with the individual taxpayer. Are they off-base here, or are 
those valid, serious concerns?
    Ms. Tucker. Chairman Lynch, I guess first let me address 
the observation about complexity of the tax code. I think for 
any of us that have looked at all of those different volumes, 
obviously it could use may be a little streamlining. I think 
you have also heard our Commissioner talk about the fact that 
he supports simplification.
    I do think, as a former enforcement employee myself, we do 
see situations where the complexity of the tax code does have 
an obvious effect on people's ability to voluntarily comply. So 
that is an area we would seek your support as well, since as 
you know, IRS administers the tax code that Congress passes to 
us.
    The other thing that I would say--you know, I laid out our 
collection procedures in my written testimony. And we believe 
that the process we go through, from the establishment the tax 
delinquency through the first, second, third, fourth notice, 
where we are communicating with the taxpayer, and then also 
giving that taxpayer the opportunity to work with us on a levy 
if there is a source to levy. You know, we believe that we are 
following due process and communicating clearly prior to the 
filing of that lien.
    This is an area that we have ongoing discussion with the 
Taxpayer Advocate about as well. But to the question of----
    Mr. Lynch. Is it a problem? They seem to be saying it is 
your second most serious problem from a taxpayer standpoint, 
that the automatic liens----
    Ms. Tucker. But I think the----
    Mr. Lynch. The automated lien process is----
    Ms. Tucker. The point I would make is we have to go through 
the due process prior to the filing of the lien.
    Mr. Lynch. Now when you say ``due process,'' that is you 
reviewing your own decisions, right?
    Ms. Tucker. That is the collection process where at the 
time a delinquency or balance due is established, then we go 
through a----
    Mr. Lynch. Established by the IRS.
    Ms. Tucker. Correct.
    Mr. Lynch. But this is all--you know, I am a taxpayer. You 
tell me I owe X amount of money. I appeal back to you, though. 
It is not to a third party. You are reviewing your own 
decision. I still say you are wrong.
    Ms. Tucker. Right.
    Mr. Lynch. You say you are right. That is the appeal 
process.
    Ms. Tucker. Yes.
    Mr. Lynch. So it is not like there is a third party coming 
in here and saying, OK, here is the IRS over here, I want to be 
impartial. You are actually your own decisions when these 
notices keep going out. There is no neutral third party here 
that is reviewing this decision. This is not a judicial review. 
This is you reviewing your own situation.
    Ms. Tucker. Correct.
    Mr. Lynch. I think that is what they are getting at from 
the Taxpayer Advocate's point of you that the second most 
serious problem here is the automatic lien issuance. And it 
gives me great pause when I now see a situation where an 
employee, a Federal employee, is going to get a lien, and then 
also that is going to be it for that person.
    Ms. Tucker. But just to clarify, I mean, the taxpayer, 
whether a Federal employee or a private citizen, does have the 
ability to appeal the lien.
    Mr. Lynch. To you.
    Ms. Tucker. To the Internal Revenue Service----
    Mr. Lynch. Right. That is what I am getting at. The first 
time that they get a third party to look at this is tax court. 
And under Mr. Chaffetz's scenario, that Federal employee would 
be fighting it from the unemployment line. That is my problem 
with this. I do not think that is a fair opportunity when you 
are fighting, you know, a tax lien from the unemployment line. 
And I think there is a distinct difference between the 
contractor situation--and we have contractors of all sizes. And 
the problem with trying to address that situation is difficult 
as well. But, you know, for the most part, these large 
contractors and medium-sized contractors, if they do not get a 
government contract, they are still a contractor with 1,000 
other opportunities.
    The comparison here with one Federal employee who has one 
job and gets fired from their one job, and now is in the 
unemployment line, I think that person is in a much more 
vulnerable position.
    But let me ask you, I have been told--we met with the IRS 2 
weeks ago when this issue came up, and we were told that in 
some cases garnishment works very well with the employees, and 
there are a lot of people under the FERTI that are actually 
counted as delinquent who are actually in garnishment. Their 
wages are being garnished by the IRS.
    I am also told that in conjunction with that, oftentimes 
the IRS will file a lien just in case that person comes into 
money, they sell their home, and it protects the position of 
the taxpayer. So you get garnishment coming out every week, but 
in the event that person comes into money or sells their 
residence and now has liquid assets that you can attach, the 
lien is in place so that you can grab that money when it 
becomes available.
    But under this scenario, if that person was in garnishment, 
and then had the lien put on to protect the taxpayer's 
position, that person would be terminated. And I am just 
wondering if you think that will increase our ability to 
recover back taxes from these employees or decrease it?
    Ms. Tucker. To talk about our current process, you are 
absolutely correct in your information, that for Federal 
employees that are in the FERTI program now, that the ability 
to put them on a track to compliance exists in our current 
system by the levy program. So when we have the information 
that says there is a Federal employee that is delinquent--let 
me stress again we are talking about under a 3 percent of the 
Federal work force--then because we have a good levy source, 
then we attach to that. However, if that wage levy will not 
full pay the account within the collection statute, you are 
absolutely correct. I mean, the Federal law states that we 
would then file a lien to protect the government's interest 
should some funds come into play.
    Mr. Lynch. And we would have to fire the employee. So all 
right. Thank you. I yield 5 minutes to the gentleman from Utah, 
Mr. Chaffetz.
    Mr. Chaffetz. I will try to frame my question here by also 
noting that there are two places within this piece of 
legislation that is very specific to the idea and the notion 
that if they are on a payment plan in a timely manner, and No. 
2, as another opportunity, if they have a debt with respect to 
which the collection due process hearing is requested or 
pending, that employee would not be fired.
    Mr. Lynch. Would the gentleman yield?
    Mr. Chaffetz. Sure.
    Mr. Lynch. Garnishment is not an agreement under the Tax 
Code you do not cover a garnishment in your bill.
    Mr. Chaffetz. I use the exact same language from Bill 572 
in H.R. 4735. I do recognize and understand----
    Mr. Lynch. We would not garnish a contractor.
    Mr. Chaffetz. The language that is being used is, I 
believe, exact--there are obviously differences in other parts 
of the bill. And if there are technical changes that need to 
happen in accordance with that, I am totally open to it. But to 
repeatedly state, as if it were a fact, that the person would 
automatically be terminated under this bill I think is 
mischaracterization of what I intended to do and of what is 
literally written in what is a page and a half bill.
    So my question, which I know I need to get to at some 
point, has to do with the time that transpires through this 
process. Some characterizations at the markup were such that 
the IRS just wakes up one morning, and the employee think he is 
good and fine, and shows up 1 day, and the next thing you know 
not only does he have an IRS problem, but he is also fired from 
his job.
    I recognize the variance in how wide the cases and 
situations are. But can you give us a general sense of how much 
time transpires between the first time this taxpayer knows that 
they have some sort of issue with the IRS and the final 
determination as to whether or not that taxpayer is actually 
delinquent? And I know that is a complicated answer, and we 
have a very short amount of time. But I would appreciate you 
taking a stab at it.
    Ms. Tucker. Now let me see if I can lay this out. So once 
the delinquency is established, the balance due then we begin 
the notice process that I referenced earlier. So IRS begins a 
series of four contacts with the taxpayer, where we are mailing 
them the notice, saying here is your balance due, please 
contact us; we want to work this out; here are your options.
    From that point in time, from that first notice, a time 
elapses, generally 5 weeks between the notices, where the 
notices progress to say, please contact us; here is your 
balance due; we need talk to you; please work it out with us, 
all the way through to the fourth notice. The fourth notice is 
then the point in time where we have exhausted all of the 
processes and we begin to look for the levy source to begin to 
do the garnishment.
    I think it is important to note that a large percentage of 
taxpayers, whether it is the civilian taxpayer or even a 
government employee, a large number of folks during that four-
notice process voluntarily come in before we get to a levy or a 
lien situation and say, let me work an installment agreement, 
which that is exactly how we want the process to work.
    Mr. Chaffetz. So that range of time is----
    Ms. Tucker. Roughly, I would say 4\1/2\ to 5 months of 
contact with the taxpayer saying, here is your balance due; 
please try to get this worked out with this before we go to the 
levy action.
    Mr. Chaffetz. OK. And at what point can the IRS file a 
notice of Federal tax lien?
    Ms. Tucker. You know, at the point in time--and I will give 
you the simplest scenario. When we get to the end of the four 
notices, then we look at the balance due. In the case of the 
Federal work force, because we do have a levy source, we 
immediately go to the 15 percent levy. If that 15 percent levy 
will pay off the balance due before the collection statute 
expires, we let that full pay.
    However, if that wage levy is not going to full pay before 
the collection statute, we have a couple of options. We can 
pull that 15 percent levy back and go for a full wage levy. We 
can begin to levy other bank accounts. If that is not going to 
satisfy the obligation, then at that point we could also file a 
Federal tax lien to protect the government's interest.
    Mr. Chaffetz. Do you know off the top of your head how long 
a period that levy can be in place?
    Ms. Tucker. Well, you know, I think a lot of it is 
dependent on the amount of the deficiency.
    Mr. Chaffetz. Right.
    Ms. Tucker. And if we can work that out before the 
collection statute expires. But if we can see readily that it 
will not, then we would file the lien.
    Mr. Chaffetz. OK. Thank you, Mr. Chairman.
    Mr. Lynch. Thank you. The Chair now recognizes the gentle 
lady from the District of Columbia for 5 minutes.
    Ms. Norton. Thank you very much, Mr. Chairman. I just want 
to note for the record, especially in light of the Ranking 
Member Chaffetz's notion about sauce for the goose and sauce 
for the gander, about which I would not differ, that Mr. 
Chaffetz offered the bill. There were not particular questions 
raised about the contractor side. It was only when we got to 
the employee side that a flurry of questions began to be 
raised.
    I would note also for the record, Mr. Chairman, that a 
hearing has been held and the Congress passed a bill that would 
enforce the very matter that Mr. Chaffetz has before us. It is 
called the Contractor Tax Enforcement Act. It would prohibit 
delinquent Federal tax debtors from being eligible for contract 
with Federal agencies.
    The problem is we passed in the House, but as is the case 
usually, they did not get to the Senate, which is why we are 
here now, and I think in agreement that we should have both 
sides of the coin involved.
    How many employees have been fired at the IRS for 
delinquent tax?
    Ms. Tucker. As you may know, IRS has a stringent employee 
tax compliance program that we have had in place for many 
years. We take our tax obligation as tax administrators very 
seriously. Since the inception of RA-98, which placed an even 
higher standard on IRS employees, we have had 448 removals.
    Ms. Norton. Now what percentage of the work force would 
that amount to?
    Ms. Tucker. Well, at any given time, we have roughly on 
board 100,000 employees. And so if you look at the 448 over the 
life, it is a very----
    Ms. Norton. Tiny percent. And I take it that this--now we 
are talking about mandatory termination, are we not, even for 
minor infractions of the code? And are not we talking about 
that as the only disciplinary action that is available?
    Ms. Tucker. Actually, under the Employee Tax Compliance 
Program, our overall broader program that was in place even 
before Section 1203, which is the harsher interpretation, we do 
have processes where if there is an identification that maybe 
an employee has something questionable on their return, it is 
researched by our own employee tax compliance unit. If it is 
not--and a large number in fact, 75 percent, of those are 
resolved just in communications with----
    Ms. Norton. What percentage was that again?
    Ms. Tucker. 75 percent are resolved with no finding between 
the employee and our employee tax compliance unit.
    Ms. Norton. Now this policy was adopted, I take it, because 
of the specialized nature of the IRS in collecting taxes and 
the embarrassment to the agency and to the government if people 
collect taxes that have not paid their own taxes.
    Ms. Tucker. I think that is a fair statement, that our 
employee tax compliance program, the original longstanding 
program even in advance of 1203, was intended because we do 
have a higher standard because of the nature of our work.
    Ms. Norton. Understood. On page 1 of your prepared 
testimony, you speak of a number of payment options for 
taxpayers who cannot pay their taxes on time. And you speak of 
them--many of us are familiar with them--extension of time to 
pay, installment agreement, delaying collection, or offer of 
compromise. Are these options available to IRS employees?
    Ms. Tucker. IRS employees obviously have the option for 
installment agreements. The other thing that--you know, to walk 
you on through the 1203 provision, which is the provision we 
talked about that resulted in the 488 removals, the way 1203 
reads, if we have employees with the willful failure to file or 
a willful understatement of Federal tax, that is what triggers 
the removal. So the payment issue----
    Ms. Norton. Oh, willful is a very important word there.
    Ms. Tucker. Right.
    Ms. Norton. Indeed, it is the operative word.
    Ms. Tucker. But, no. Our employees do have the option of 
working out installment----
    Ms. Norton. So, for example, the average American can file 
on time, let us say, by or before April 15th, file for an 
extension for the rest of it and pay what he can pay at that 
time. An IRS employee could do the very same thing.
    Ms. Tucker. Yeah.
    Ms. Norton. Finally, do you think that--you have testified 
that IRS, of course, has a very special place, and the policy 
applies, I take it, only to the IRS for that reason. Should 
this policy of mandatory firing apply to every agency, even 
agencies that have nothing to do with tax collection?
    Ms. Tucker. No. As I have stated earlier, you know, as IRS 
administers of the Tax Code, we are really not here to comment 
on the merits of the legislation. But I would say, obviously, 
we believe that every American should file and pay their fair 
share.
    Ms. Norton. But you are unwilling to say----
    Ms. Tucker. But we all say----
    Ms. Norton [continuing]. That the mandatory firing notion--
you are unwilling to say that should be applied governmentwide 
without other options available?
    Ms. Tucker. What we want to say is we believe our current 
collection process allows for us to deal with all taxpayers, 
including Federal employees, to reach resolution of----
    Ms. Norton. You are not here arguing that the present 
policy in place for the IRS should put in place for every 
agency, yes or no.
    Ms. Tucker. No.
    Ms. Norton. Thank you.
    Mr. Lynch. Thank you. The Chair now recognizes the 
gentleman from California for 5 minutes.
    Mr. Issa. Thank you, Mr. Chairman. Ms. Tucker, is the IRS 
arbitrary and capricious?
    Ms. Tucker. I would think not.
    Mr. Issa. Heavy-handed?
    Ms. Tucker. I would hope note.
    Mr. Issa. Do you deal with corporations, LLCs, 
partnerships, or individuals in a substantially different way 
as to your collection policy?
    Ms. Tucker. Our collection policy applies across the 
spectrum, but obviously, you know, as we are dealing with 
individual taxpayers that maybe do not have full understanding 
of the process, yeah, we do spend additional talking with them, 
trying to explain the options as opposed maybe to a large 
corporate taxpayer that is heavily represented.
    Mr. Issa. So you provide more overhead, more counsel, more 
help to the small and individual because they need it, where a 
larger corporation tends to be much more of a business-to-
business type of----
    Ms. Tucker. But at the same time, I mean, if anyone needs 
help understanding the collection process, obviously that is 
what we are here for.
    Mr. Issa. So the contractor who has a concession at Camp 
Pendleton who is making hummus and baba ghanoush and Middle 
Eastern sandwiches for my Marines, her and her husband, they 
are unincorporated, they are a little shop that has this long 
line of Marines wanting to get good Middle Eastern food that--
they do not miss the Middle East, but they miss the food. She 
is going to be treated the same as the Federal worker that 
works on the base, the civilian employee, right?
    Ms. Tucker. The same process for notices, communication 
before we would move to a levy.
    Mr. Issa. OK. Well, I would like to get under something--
and I do not want to cross over your comfort zone from how you 
want to explain policy, but we have two pieces of legislation 
here that we are really dealing with, 572 and 4735. One is 
dealing with the individual, the other is aimed at contractors. 
Each of them presumes that we need to fire that entity if they 
do not comply. It sounds to me--and correct me if I missed 
something in your earlier explanation--you have all the tools 
you need to at the end of the day collect from somebody just 
easily if they have assets if they are an individual or a 
contractor. Is that correct?
    Ms. Tucker. Let me just, if I could, clarify one point.
    Mr. Issa. Sure, of course.
    Ms. Tucker. You know, the levy process--we go through the 
four notices, and then we place a levy. It is obviously--we 
look at all of the available sources, but the wage levy in the 
case of the Federal employees, I mean, we know where the 
employees work. But in your situation that you described for 
someone maybe that is a contractor, we would do the same thing. 
We would still go in search of levy sources.
    Mr. Issa. Right. But uniquely, the IRS has the right to 
pierce the corporate veil to anyone, whether they are an owner 
of a business or simply somebody who preferred other creditors 
over the IRS. In other words, someone that writes a payroll 
check and signs it and knowingly does not have the taxes paid, 
you can go right around the corporation and you can go after 
them personally. Is not that true?
    Ms. Tucker. That is correct.
    Mr. Issa. That is sort of unique to the--and since you came 
from the enforcement side. So I am going to ask you not a 
conclusion, but a bit of a rhetorical question. We have two 
pieces of legislation. They both presume that only by firing a 
contractor or only by firing an employee can we get their 
attention to pay their bill. Is not it sort of a reasonable 
conclusion that both of these probably should be scraped in 
favor of you have the ability to do it, you are doing your job. 
The awareness of this large number of Federal employees--and I 
am not trying to undercut my colleague here.
    But we have these billions of dollars that have not been 
paid by Federal employees. But they are basically all in the 
process of being collected by you, and ultimately you will 
eventually collect from them. And then if we have a contractor 
who has a tax dispute and loses, or does not take their payroll 
deductions and turn it in, whatever it is, you also have all 
the tools you need.
    So I do not want to reach a complete conclusion because it 
would not be fair to you, but are not both of these bills sort 
of preempting the eventuality of your collecting them, meaning 
if we keep the contractor on, you are going to collect the 
money from them. If we keep the employee on, you are going to 
collect the money from them, and you are going to give them the 
due process since you told me you are not arbitrary and 
capricious--you are going to give them the due process that 
Congress has decided that you have.
    You know, the chairman probably was not on the committee, 
and neither was I, that gave you all those authorities. But the 
amazing thing is we gave you all these authorities, including 
the right to pierce the corporate veil, to lien against 
individuals and so on. Is there sort of a question here that 
both of these bills seek to do the same thing against two 
different groups over whom you have the same reasonable 
authority and you treat them the same?
    Ms. Tucker. You know, I think the short answer to your 
question is do we apply the same collection processes to all 
groups. Yes. I think where the distinction comes in, you know, 
the availability of access to funds could be different because 
if we have a wage levy source, that is much easier to attach 
to.
    Mr. Issa. OK. Well, of course, a government contract is a 
pretty good revenue source, too. One final exit question, if I 
could, Mr. Chairman, in your opinion--and I realize this may 
not be the opinion of the IRS--if one or both of these pieces 
of legislation in some format--you understand the spirit of the 
legislation even if the details are not worked out--if one or 
both of these were passed, would it substantially help you in 
the process of collecting revenue or making revenue out of 
taxes in arrears?
    Ms. Tucker. You know, if I understand both provisions, our 
collection process does not necessarily change because we would 
still continue to go through our first, second, third, fourth 
notice.
    Mr. Issa. Well, actually, the question was more if we fire 
the contractor and/or the employee, does either of those 
actions help you in the collection of taxes.
    Ms. Tucker. You know, the point would be even if someone 
was removed, we would continue to look at all available levy 
sources and attach bank accounts or whatever income source 
there might be.
    Mr. Issa. So nothing is better by firing them, and then we 
could debate whether or not if they lose their salary or they 
lose their contract it would be worse. OK. My time is more than 
expired. I appreciate your indulgence, and I appreciate yours, 
Mr. Chairman. I yield back.
    Mr. Lynch. I am absolutely happy to do that. Mr. Connolly 
from Virginia is recognized for 5 minutes.
    Mr. Connolly. Thank you, Mr. Chairman, and welcome, Ms. 
Tucker. And I am going to plead with you to speak into that 
mic. I cannot hear you.
    Ms. Tucker. OK. Oh, I am sorry.
    Mr. Connolly. Is not there a fundamental difference between 
a situation where a contractor is seeking to get a contract, 
and we say, well, as a precondition of that, you cannot be 
seriously delinquent in your taxes versus a Federal employee 
who may be found to be delinquent in his or her taxes. A, there 
is a difference in terms of their status. And B, is not there a 
difference in the remedies available to the Federal Government 
in both cases?
    Ms. Tucker. From the remedy standpoint, I am not 
understanding the question.
    Mr. Connolly. Ms. Tucker, I cannot hear a word you are 
saying.
    Ms. Tucker. I am sorry. It may be my southern accent 
perhaps.
    Mr. Connolly. No. I promise you that.
    Ms. Tucker. Can you hear me now?
    Mr. Connolly. Yes. It is speaking into the mic.
    Ms. Tucker. All right. No. My question was I am not sure 
what distinction you are asking me to comment on. So I am 
sorry. Maybe I did not understand the question.
    Mr. Connolly. Well, if I am a contractor seeking money from 
the Federal Government, and I say, well, in order to qualify 
for that, you cannot be delinquent, seriously delinquent, in 
your taxes, that is a precondition for getting something.
    Ms. Tucker. Correct.
    Mr. Connolly. If I am already a Federal employee, and for 
whatever reason I find myself in a situation where I am behind 
in paying my taxes, the Federal Government has a whole 
different set of remedies for dealing with me than a 
prospective Federal contractor. Is that not true?
    Ms. Tucker. That is correct.
    Mr. Connolly. Right. Now tell me about this program FERTI. 
FERTI only applies to Federal employees.
    Ms. Tucker. Correct.
    Mr. Connolly. So it is a unique remedy unique to the 
Federal work force.
    Ms. Tucker. Correct.
    Mr. Connolly. Is it available to corporations of Federal 
contractors?
    Ms. Tucker. Well, the FERTI program is unique in that is 
how we track Federal employee delinquencies.
    Mr. Connolly. Right. But what I am getting at, Ms. Tucker--
excuse me. If I am a Federal contractor, not a Federal 
employee, does FERTI track me?
    Ms. Tucker. No.
    Mr. Connolly. No. So is there already in place something 
that clearly distinguishes a Federal employee from a Federal 
contractor.
    Ms. Tucker. Correct.
    Mr. Connolly. Because I thought I heard my good friend from 
California just now trying to conflate contractors with 
employees. We ought not to impose those on either one of those 
categories because it is self-defeating. And I guess I am 
suggesting, based on your testimony, they are quite different 
categories. They are different--we have different statuses 
here, and we have different remedies available to us. And in 
the case of the legislation proposed by my friend from Utah, it 
seems to me it is a remedy in search of a problem because we 
already have in place for Federal employees lots of tools for 
knowing who you are and knowing how much you owe, if you owe 
anything. Is that not correct?
    Ms. Tucker. That is correct.
    Mr. Connolly. Is it also not true that when FERTI was 
deployed, most recently we found in 2008 a total of $3 billion 
in delinquent taxes in some status of delinquency owed to the 
Federal Government from the Federal work force.
    Ms. Tucker. That is correct.
    Mr. Connolly. And that almost half of that, 1.3 billion, 
was in fact owed by military retirees.
    Ms. Tucker. That is correct.
    Mr. Connolly. Well, would we fire military retirees? Let me 
ask you a question. What is the IRS, or what your understanding 
is, of ``seriously delinquent.''
    Ms. Tucker. You know, the ``seriously delinquent,'' is not 
a designation that we typically use. But for understanding of 
this hearing, we understood that meant----
    Mr. Connolly. Would you repeat? I am sorry. I cannot hear 
you.
    Ms. Tucker. The term ``seriously delinquent'' is not part 
of our nomenclature at IRS, but----
    Mr. Connolly. So here we have some legislation without a 
definition, so you would have to come up with a definition if 
we made this law.
    Ms. Tucker. Well, I think the discussion points that we 
looked at was your definition of ``seriously delinquent'' would 
be the actual filing of a lien. But obviously, many of our 
accounts move into the collection cycle. We could in theory 
file a lien when there is an active levy in place just because 
there was the potential to further protect the government 
interest.
    Mr. Connolly. My final question, because my time is going 
to be up, and I am going to abide by the 5-minute rule--would 
you say that it might be self-defeating, with the best of 
intentions, if we fire people who owe us taxes? Their ability 
to pay what they owe would be severely impaired.
    Ms. Tucker. You know, we see this a lot, even in the public 
sector in general, that absolutely if someone is not employed, 
it does not impact their ability to pay their taxes.
    Mr. Connolly. Thank you. My time is up.
    Mr. Lynch. I thank the gentleman. The Chair now recognizes 
the gentleman from Maryland, Mr. Cummings, for 5 minutes.
    Mr. Cummings. Thank you very much, Mr. Chairman. And, Ms. 
Tucker, thank you very much for being with us. I wanted to just 
go back to my colleague's question with regard to seriously 
delinquent. I want to just try to figure out some things here. 
You said that is a term that you all do not use?
    Ms. Tucker. No. The term ``seriously delinquent,'' we 
understood that to be the definition of the filing of the lien 
for purposes of the legislation.
    Mr. Cummings. I am sure we have a number of people who may 
file, not just Federal employees, but others will file on April 
15th, and in the situation that we find ourselves today, and in 
my district, and all over the country, you have people who 
maybe in January, there were two breadwinners, and now there is 
only one. So they file on April 15th. They owe money, they owe 
money. They had not anticipated that they would be losing half 
the income, and so they do not have the money to pay.
    Some of them may be losing their homes at the same time. 
And so what would a person like that do? I mean, if you were 
advising them, what would you--maybe you would tell them to 
file on time.
    Ms. Tucker. Correct.
    Mr. Cummings. So we will start with that. Now what else 
would you tell them to do?
    Ms. Tucker. You know, this is actually a topic that is 
fairly common now. And in fact, I believe it was just last week 
our Commissioner issued a press release talking about all of 
the assistance options we have for folks that are unemployed or 
dealing with financial difficulties right now. And within that 
information, I mean, we have created a whole host of new 
outreach materials trying to tell people, you know, there are 
assistance options available.
    So once folks file, and their situation has changed, as you 
explained, we ask that they contact us and let us work with 
them to see, do they have the ability to pay, do they have 
appropriate income levels for us to work out some kind of 
installment agreement. Do they have a hardship that makes that 
account currently non-collectible, where we all agree that this 
is not something that you have the ability to pay right now, 
and we will actually suspend the collection action.
    The other tool we have is an offer in compromise, where the 
taxpayer may say, look, this is what I have. This is the 
availability of my assets, and can we settle or compromise that 
tax debt for a lesser amount? So to your point, absolutely, we 
try to work with folks based on changes in their financial 
situation to find a resolution to that collection issue.
    Mr. Cummings. And when you find--you know, and I talk about 
people in this situation because, you know, some people think 
that there are folks who just do not want to pay the taxes. But 
I guess you are beginning to find--and I guess the IRS is 
beginning to prepare for people who may want to pay, but just 
do not know what to do because they just do not have the 
resources. And these are people who may have had--and correct 
me if I am wrong--all the way up to now a consistent pattern of 
paying their taxes and paying them on time and doing--just good 
American citizens.
    Ms. Tucker. Absolutely. I think the heartening thing is the 
majority of taxpayers, they do file and pay on time. That is 
one of the foundations of a voluntary tax system, that the 
majority of folks do come in and file and pay. The other thing 
that we see--and actually, in some ways, the Federal work force 
is a microcosm of the entire population. We do see Federal 
employees, much like folks in the public sector, that have life 
events, whether it is the spouse losing a job, an illness, that 
does result in folks running into some difficulties, saying I 
need a little help. I need some time to pay, or my situation is 
such I am not going to be able to pay for the foreseeable 
future. And we do everything we can to work with folks to try 
and resolve that.
    Mr. Cummings. Now let us say a person is trying to do that. 
They have cooperated. They have requested some leeway to pay. 
What kind of status do you--what do you call that? I mean, you 
do not call it ``seriously delinquent.'' But what might you 
call that?
    Ms. Tucker. So that--and by the way, that is a great 
question. I was trying to figure out how to work that into my 
testimony. You know, if someone is under a good payment 
agreement, in our mind, they are compliant. I mean, they have 
acknowledged their tax liability, and they are saying here is 
what I am doing to get current with that. So we look at that as 
someone in good standing. We have worked an agreement with 
them. They are putting it off, or they are in good standing if 
we say at this point in time you have a hardship, you do not 
have ability to pay, but then at the point in time we see 
income being generated again, in other words, they are 
receiving a W2, then we will go back and say, hey, your 
situation has changed, let us talk.
    Mr. Cummings. The document that you talked about just a 
minute ago, the one that you said where you are laying out all 
of the options and everything, how is that circulated? And the 
reason why I am asking this series of questions is because I 
just want us to be cognizant of the fact that we got some 
people going through some difficulties. There may be people 
that may not know about the things you just said. But then they 
fall into this seriously delinquent situation, and then the 
next thing you know, they have lost their job. Then they cannot 
pay.
    Ms. Tucker. Right.
    Mr. Cummings. But I want to make sure that we are--and I am 
very glad, by the way, to hear the IRS doing that. That is a 
good thing. But I was just wondering--so you think that is a 
good option, the things that you just laid out there?
    Ms. Tucker. Absolutely. The other thing that we are very 
focused on is using a lot of non-traditional ways to get that 
information out. So in addition to the regular ways, the 
posting on our Web site, we are reaching out to community 
coalitions. We are reaching out to the State unemployment. Say 
folks might actually be coming into file unemployment. We are 
reaching out to other Federal assistance links where people 
might be coming in, you know, to get other types of assistance.
    But obviously, the additional help in getting the word out, 
we would appreciate.
    Mr. Cummings. And actually, I see that my time is up. But 
it would be also helpful--and I know you are probably already 
doing this--if you reach out to Members of Congress so we can 
have that on our Web sites to help our constituents.
    Ms. Tucker. Absolutely. If we have not done that, we will 
do that immediately.
    Mr. Cummings. Thank you very much.
    Mr. Lynch. Thanks, gentleman. I yield myself 5 minutes. I 
realize that this is a technicality, but lawmaking is all 
technicality. I have gone over the bill, and the sections that 
provide an exception to termination, a debt that is being paid 
in a timely manner under 6159 of 7122 of the code, or a debt 
with respect to collections under section 6330 or 6015, none of 
that, none of those sections, covers garnishment. So as 
written, this would require the termination of a person who was 
having their wages garnished because none of these exceptions 
covers a person who is having their wages garnished. That is 
just one point. It is a point of law, but it is a point 
nonetheless.
    Second, I know you have said previously that we treat 
everybody the same--I thought Mr. Connolly raised a great 
point, that we track Federal employees. And I know you have 
your hands full doing that. I also want to point out that H.R. 
572, which deals with contractors, has a waiver from debarment 
that can be considered. There is no such waiver of termination 
in H.R. 4735.
    Let me turn to the practicality issue, though. Right now, 
you do this for IRS employees, right?
    Ms. Tucker. Yes, sir.
    Mr. Lynch. How many folks do you have over there the IRS?
    Ms. Tucker. Right now, because it is filing season, we are 
running, I think, roughly around 90,000 employees.
    Mr. Lynch. 90,000?
    Ms. Tucker. Yes, sir.
    Mr. Lynch. OK. H.R. 4735, my friend Mr. Chaffetz's bill, 
would require us to do the same thing you are doing, tracking 
employees, for every Federal employee, every Federal retiree, 
every Postal employee, and every applicant for a Federal 
position. Now forget applicants for Federal positions for a 
minute. But I did the math here. Five million people. Five 
million people, plus all the people who apply for a position 
with the Federal Government, you would need to vet them. Let us 
forget the privacy issues here for a second. You would need to 
track the tax status of every single person.
    What does it cost you now to do 100,000? We are going to 
expand this by 70 times. Multiply by 70 what you are doing now 
for the IRS under this bill.
    Ms. Tucker. You know, of course, there are a lot of 
unknowns about, as you mentioned, the disclosure issues.
    Mr. Lynch. Could you speak into that mic a little bit? 
Thank you.
    Ms. Tucker. Sorry. You know, our current process for our 
employees is a direct data match. How we see this a little bit 
differently, it would almost be like the tax checks that we do 
for some other Federal agencies right now, where they have to 
secure consent from the taxpayer. And so, for example, some of 
the government loans that are given, they will ask for a 
consent to be filed by the individual that is supplying. We do 
the check, have they filed, have they paid, and we send it back 
to that agency.
    So that was the closet program that we currently 
administer.
    Mr. Lynch. Yeah.
    Ms. Tucker. That program--our guesstimate is that it is 
roughly $2.25 per transaction. So we had looked at the fact 
that there is roughly 9 million current Federal employees and 
retirees. And so if you assume the $2.25 per duration of a 
transcript--and this is very rough, very ballpark--you know, we 
are talking about $22 million if it was administered with the 
consent-based program, only giving a transcript back to the 
agency.
    Mr. Lynch. So you think you would be able to investigate 
the tax status of every single Federal employee and every 
single applicant for a Federal position?
    Ms. Tucker. No. What we would be able to do under the 
existing system is much like we do for other Federal----
    Mr. Lynch. Can you do this with existing staff?
    Ms. Tucker. Oh, absolutely not.
    Mr. Lynch. Well, $22 million is not a big number. I am just 
asking you physically. You are not scaring me with $22 million 
to investigate 9 million Federal employees. And I am asking 
you, if that is all it is, that is a pretty reasonable request, 
putting all those other issues aside. What would you need to 
do, the manpower----
    Ms. Tucker. I do not think we know, Chairman Lynch. The 
figure that I cited is based on the fee that we charge right 
for generating a transcript, which is actually--you know, we 
are then counting on the agency that we give that transcript 
back to to be able to interpret what it means, which I think 
that would be a concern as well.
    Mr. Lynch. OK. My time has expired. I am going to let that 
go. The Chair recognizes the gentleman from Utah, Mr. Chaffetz, 
for 5 minutes.
    Mr. Chaffetz. Thank you, Mr. Chairman. No doubt we have a 
multibillion dollar problem, and we are just trying to make it 
better.
    My understanding is that wage garnishment is a levy, not a 
lien. Would that be accurate? Wage garnishment. If we were 
garnishing an employee's wages, that is a levy. It is not 
necessarily a lien against them. Is that accurate?
    Ms. Tucker. A garnishment is part of the levy program.
    Mr. Chaffetz. So it is actually not a lien.
    Mr. Lynch. She did not say that.
    Mr. Chaffetz. Well, the language is pretty clear about a 
lien as opposed to a levy, but--and I do think we owe an 
obligation to--and again, there are different people in 
different categories. Certainly I think it is prudent--and I am 
in, I think, total agreement with the President's philosophy 
and principle here that we ought to be looking closely at 
applicants. And again, I would go back to the quote, and given 
the essence of the time, I would just encourage people to look 
at the President's comments of January 20th. And I am somewhat 
mystified by the so-called logic that says, well, of course 
they have more ability to pay if the government is paying them 
more money. The same is true with the Federal employee. The 
same would be true with the contractor. Of course if we gave 
the contractor a multimillion contract or whatever it might be, 
they are probably going to have more ability to pay.
    But I do not think that logic holds water. It does not for 
contractors, and I do not think it does for Federal employees. 
When you have millions upon millions of people who are doing 
the honest thing, the right thing, I think we have a higher 
obligation to those people.
    I understand the concerns and the questions about seriously 
delinquent. I guess my--and I think that is a valid thing that 
we should continue to flush out, which should be also for H.R. 
4735, as well as H.R. 572, because everybody wants to get this 
right and not have to do a fix. And I really do appreciate the 
hearing because I think we are actually making a lot of 
progress here, and I do appreciate it.
    I would ask unanimous consent to enter into the record this 
employee tax compliance analysis that was done.
    [The information referred to follows:]

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    Mr. Chaffetz. It basically says that before--sorry, let me 
get this right here. The Internal Revenue Service Restructuring 
and Reform Act of 1998--you know, there are multiple factors. 
And I am not trying to oversimplify this. But I do want to 
highlight the fact that between 1993 and 2007, in the IRS 
employees, before they had this new program, there was a high 
of 19,163 people that were having tax compliance issues at the 
IRS, and reached a low of 8,298 in 2005.
    I recognize that the stats within this chart are--you do 
not necessarily have them right in front of you, and they are 
somewhat complicated. But I would like to enter it into the 
record because I think what you will see is the Restructuring 
and Reform Act of 1998--that statistical average of the number 
of IRS employees complying, not falling into this category of 
having delinquent taxes, is significantly lower, in fact 39 
percent lower, than before it was in there.
    I for one do not find that there is a coincidence on the 
fact that, yeah, there are more difficult consequences. 
Consequently, you got a lot of people's attention. And a lot of 
people said, wow, I got to take this seriously. I think that is 
a benefit on not only the contractor side. I think that is a 
benefit on the Federal employee side.
    And I do think, Mr. Chairman, that there is something--and 
I am running out of time here. This idea that somebody is 
trying to do the right thing, somebody is trying to dig out 
from the hole that they are in--but the IRS maybe in the code 
does not have enough time. I think we should look at maybe 
extending that time. If somebody is willing to take a good 
portion of their paycheck, and they have a wife and kids, and 
they have--I am totally open to extending the amount of time 
because if the IRS is testifying here today--is saying, look, 
there are some people, when you cap it out at 15 percent, you 
look at the number of years, and we come out with a formula, 
that does not meet the obligation. We are going to have to do 
something more drastic.
    Given the economic times that we are in, I think we need to 
relook at that formula because I want to be compassionate. If 
somebody is doing the right thing, I will bend over backward to 
help them. It is the people that are cheating the system that I 
want to fire.
    But I think if the IRS is being held to a standard where 
that formula is just not working because we do not have time, 
then let us introduce some legislation in a bipartisan and 
extend that period of time so they can continue to pay off 
their debt over a longer period of time, and we do not ever 
have to get to the point where we have to put a lien on 
somebody. That is the last thing we want to do.
    With that I will yield back. Thanks for my time.
    Mr. Lynch. I thank the gentleman. If I could just respond. 
If the gentleman's bill lays out the definition of ``seriously 
delinquent tax debt,'' and establishes that when a lien is 
issued, pursuant to that, that person will be terminated, but 
as he says, it provides two exceptions. None of those 
exceptions addresses the tax code with respect to garnishment. 
It is just the way the law works.
    He has cited specific sections, none of which deals with 
garnishment. Now it could be cured. I admit, it can be cured. 
But I am just saying, the way the bill is currently written, it 
does not provide an exception for a person whose wages are 
being garnished. That is all I am trying to maintain.
    The Chair recognizes the gentle lady from the District of 
Columbia, Ms. Eleanor Holmes Norton for 5 minutes.
    Ms. Norton. Very important distinction you have raised, Mr. 
Chairman, because the government is getting its money if 
garnishment is occurring.
    I was pleased that the ranking member did indicate 
flexibilities, not only in light of the present economy, but in 
light of the fact we are talking about individuals whose 
circumstances we cannot know very much about because they are 
bound.
    I think what is most important for me is to use what we 
have in place as the; I should say about what we have in place 
as the only program in place now in which Federal employees do 
get some sanctions. And if the IRS has been doing that for 
reasons Ms. Tucker has testified that have to do with its 
specialized nature, I would think we want to make clear before 
we spread that to annuitants across the more than 2 or 3 
million employees in annuitants who have nothing to do with the 
code, we want to be very clear about the distinctions, and to 
apply what we have learned from what amounts to a pilot 
project, because it does inform us.
    As to contractors, I do want to say that Ranking Member 
Issa is fond of using the very smallest contractor, and of 
course that person is like you and me, and he might be selling 
paper clips to the government. OK. That is not what the average 
taxpayer has in mind when they hear a contractor is not paying 
his income tax. And we might want to look at the difference 
between large and medium-sized contracts and the very small 
contractors that are indeed akin to individuals.
    On garnishment, at the IRS, are you fired if your wages are 
being garnished?
    Ms. Tucker. You know, I am not--let me think through how 
our 1203 works. The automatic removal, the 1203 statute that we 
have talked about, is for willful failure to file, and then 
willful understatement. So no, if your wages are being levied, 
garnished, that is not a removable.
    Ms. Norton. You are talking about the IRS----
    Ms. Tucker. At the IRS.
    Ms. Norton. This is a distinction that I ask us to keep in 
mind, that even at the IRS, if the government is getting its 
money, then the notion that has been raised here, how are you 
going to pay if you get fired, begins to disappear. And even at 
the IRS, there has been some understanding that the government 
is getting its money. And willfulness, of course, has been 
taken care of.
    Now one of the problems that came up--garnishment has 
importance for us to bring out here because there is a great 
distinction between the government getting nothing and 
garnishing your wages, and you are getting it. And that IRS 
employee can remained employed.
    But we had a lot of trouble at our hearing on this lien 
business. And I know why we had it, because under the code, if 
the lien is filed, then courts have held you could proceed 
immediately. And we had lots of trouble in understanding 
whether at the IRS or otherwise the government would proceed 
immediately.
    You testified that the lien is to protect the government's 
right.
    Ms. Tucker. Uh-huh.
    Ms. Norton. Now that may be before you know if it is 
willful, for example. Can you establish that if a lien is filed 
that even at the IRS there would not be an automatic firing of 
the employee?
    Ms. Tucker. The lien is filed to protect the government 
from----
    Ms. Norton. And only for that purpose.
    Ms. Tucker. And at the point in time we were looking at the 
collection statute. So even if someone is one a wage levy or we 
are levying bank accounts or other income streams, if it looks 
that the sources will not full pay the debt before the 
collection statute runs, then they put the lien in place to 
protect the government's interests.
    Ms. Norton. This is very important. If we understood--if 
there were regulations where we understood that the lien was--
if I can use an old-fashioned term--comes at the end of the 
exhaustion of remedies, it would make some of us feel more 
comfortable than what we understand the code means by lien. And 
what the courts have said--a lien is there; I do not have to do 
anything else. Again, regulations could clear that up. It seems 
to me before we even considered going to the rest of the 
workplace, we would have to understand that.
    I would like to give an example. A lot of folks file but 
they want to contest or dispute. Now you could be with the IRS 
if you wanted to do that, too. If you do not believe that you 
owe the government the money, are you required to pay it, even 
if you are contesting?
    Ms. Tucker. No.
    Ms. Norton. And are willing to pay it if you, ``lose?'' Are 
you required to put that money up front?
    Ms. Tucker. The thing that is in my written testimony, it 
talks about the four notice process.
    Ms. Norton. The what?
    Ms. Tucker. In my written testimony, it talks about our 
four notices. Then it talks about the point in time when we 
begin the levy or lien procedures. The taxpayers always have 
the opportunity to appeal. And I think to Chairman Lynch's 
point. It is an appeal process within the----
    Ms. Norton. But I am talking about paying. You know, they 
say I owe $2,000. I say I owe $1,000. I got to pay the $2,000 
and then come back or lose my job at the IRS?
    Ms. Tucker. No. So you are talking about IRS process.
    Ms. Norton. I am, because I am learning from the IRS what 
to do with other employees.
    Ms. Tucker. You know, we will have to get back with you on 
that one as far as the extra process of the lien filing with 
our employee because I want to make sure I give you the right 
answer. So can submit that for the record?
    Ms. Norton. I would ask you would within 30 day get to the 
chairman what to do when you may think that you are being 
overcharged by the IRS, and you do not have the money. Your 
accountant says, look, pay what you can, what you believe you 
owe, but be on notice you may have to pay more if you lose the 
appeal. I am concerned with whether you have to pay up front, 
Mr. Chairman, or whether you get garnished or get your lien 
right there.
    Ms. Tucker. And we will be glad to provide that.
    Ms. Norton. Thank you very much.
    Mr. Lynch. Thank you. I guess, I do not want to beat this 
lien thing any more, but in my earlier discussions with the IRS 
they said that they use sort of a belt-and-suspenders approach 
when there is that tax delinquency out there.
    So they may have, they may have approaches, such as 
garnishment and other things, that they are trying to work. But 
in many cases I was told, just to be sure that the taxpayer is 
protected, that lien goes in place. And the taxpayer advocate 
was saying that it is almost like a mantra; it is an automatic 
thing that is done over at the IRS, that we put the lien in 
place to protect the taxpayer's position. Is that true, or is 
that not true?
    Ms. Tucker. It is true. To go back to the notice process, I 
mean, we do not go out and file a lien automatically. We look 
at the four-notice process, we get to the end of the time. We 
begin hopefully discussion with the taxpayer, because at that 
point we are still hoping they will come in with a voluntary 
installment agreement.
    As we look, then, to say do we need to start filing the 
levies, and we look at the levy sources. If it does not appear 
that those levy sources can full pay within the collection 
statute period, or if we have better reasons to think well, 
gee, the taxpayer is going to begin discharging himself of 
their property, then we will put a lien in place to protect the 
government's interest, while we continue to either pursue the 
other levy sources.
    And the reality is--and I do not have the data with me, we 
can get this back to you--the number of Federal tax liens filed 
in the scope of our overall collection program is, it is truly 
not a huge number compared to the collection interactions we 
engage in.
    Mr. Lynch. OK. So you get more from non-lien activity than 
you do lien activity.
    I know this is a big ask, and I am willing to give you 2 
weeks to come back with this. But I would like to, you know, we 
are talking about, in this bill, investigating the tax status 
of every single Federal employee, every single retiree, every 
single person at the Post Office, every single person that 
applies for a Federal position.
    I happen to think that the cost of that will be staggering, 
in terms of if you are going to do it right, apart from the 
privacy issues. Can you get me a number, in terms of how many, 
I want to know how many new employees you are going to have to 
hire to run that program. And you know, the training costs, the 
hiring costs, office space, equipment, full-time equivalencies 
required, and any other, any other costs that you might, you 
might have in implementing that. Because I seem to think it is 
going to be more than $22 million, you know, especially with 
all the work you have to do right now.
    But I really want to see that. And if you could break it 
out so that we do the Federal employees' costs, and then 
applicants for Federal positions, so we can figure out----
    Ms. Tucker. One of my colleagues, Chairman Lynch, is 
pointing out that the cost that we talked about, the $22 
million, that is just for pure generation of the straight 
transcript. And so----
    Mr. Lynch. Yes, it did not sound to be that much in depth. 
We are talking about making sure that these people are in 
compliance.
    Ms. Tucker. Right.
    Mr. Lynch. I want to know every single Federal employee, 
whether they are in compliance with the Tax Code. And if they 
are filing jointly, I need to know if their spouse is compliant 
or behind. And the same thing with every single person at the 
U.S. Postal Service. And I need to know every single person 
that applies for a government position, in the Federal 
Government. And if they are filing jointly, I need to know what 
their spouse is doing, OK?
    So if you can just spit out that number and tell me what 
the cost is there, because boy, we are going to get to the 
bottom of this and find out who these people are that are not 
paying their taxes. It may cost us more than we bring in, but 
by God, we are going to get to the bottom of this.
    Mr. Chaffetz. Mr. Chairman, if I may.
    Mr. Lynch. Sure, I will yield.
    Mr. Chaffetz. My understanding is we have a spreadsheet, 
broken out by departments with very specific numbers, down to 
the dollar for each department, and where they are at, and what 
percentage of compliance. I would hope that is not going to be 
a major exercise.
    If you came up, and you said, for instance, that the 
balance owed, let us take here Administrative Office of the 
U.S. Courts, $9,549,207, and at a delinquency rate of 2.24 
percent. The calculation of that number would be rather simple.
    I think obviously, moving forward on this, the scoring of 
any types of things would obviously be part of the equation in 
passing any sort of legislation. And I think it is a very fair 
question.
    I do see the Office of Personnel Management actually having 
to deal more with this than necessarily the IRS. I mean, I 
think part of the principle is here that we are going to deal 
with Federal employees and Federal contractors and the general 
public in an equal footing.
    But there is going to be a burden, if you will, of the 
Office of Personnel Management. It is going to have to actually 
implement this, and put it into their programs and disseminate 
that out. I think that is a legitimate cost. But I think that, 
at least from I am just thinking off the top of my head, I did 
not know you were going to ask that, they are the ones that are 
probably going to have more of an impact than necessarily the 
IRS. Because they have policies and procedures they have to 
deal with. They deal with millions of people.
    Ms. Tucker. If I might, though, the data that we report 
through FERDI, because we are talking about very serious 
consequences as far as have you filed or have you paid, our 
data is from a snapshot in time; typically, on September 30.
    Mr. Chaffetz. Right.
    Ms. Tucker. To do the complete tax check, much like we do 
for other agencies where it is not just for providing the 
transcript, for someone to interpret, to look at a transcript 
and say did you file and pay. A more comprehensive tax check, 
where we actually go in, we analyze the transcript, IRS is 
doing the analysis, and we write back to the agency saying--and 
I will pick on my colleague, Mr. Williams over there.
    If we were to actually have to write back to Mr. Williams's 
employer and say we have completed a tax check on Mr. Williams 
for the period of time X, Y, and Z, then we will be spending 
additional resources to say yes, he filed on time, but by the 
way, he owed $200, but he is under a good installment 
agreement. Then we would also, if he was not under an 
installment agreement, we would be obliged to say he filed, but 
he is in, he is currently not in compliance with collection.
    So there would be, I think to clarify your point, Chairman 
Lynch, the giving of a transcript to another agency, for them 
then to interpret what it means is the $2.25 cost I talked 
about, where we are just producing a transcript.
    To do what I believe you are asking, where you would want 
us to do the analysis and do an individualized report on each 
Federal employee, that would have a far greater impact on our 
resources and ability to do that I think in a manner that would 
be fair to the Federal employees we were reporting on.
    Mr. Chaffetz. Mr. Chair, if I can just----
    Mr. Lynch. Sure, go ahead.
    Mr. Chaffetz. And I appreciate your generosity here. I 
think privacy is of the utmost concern. The only people that 
should be classified in this are people that have a lien. And 
that is a much significantly smaller population than doing 
something on each and every single employee.
    Certainly doing a brief background check to make sure that 
a prospective employee does not have a lien is something that I 
do think we should engage with. But you know, again, I just 
want to, for the record, I want to make sure that we are also 
looking into concerns of privacy.
    Mr. Lynch. Let me just claim some time here. We cannot do--
and Ms. Tucker, you can help me with this. I do not believe we 
can do a snapshot in time of people who are, and have a vetting 
of people who are applying for a Federal position. It does not 
work that way. They are not known entities; they are new 
entities.
    You would need to do what you are asking for in this 
legislation is to determine the tax compliance on one tax 
compliance status of that applicant, just as you are asking for 
the same information for every Federal employee and every U.S. 
Postal Service employee.
    Mr. Chaffetz. We are simply trying to ask whether or not 
they have a lien. Do they have a lien, do they not have a lien.
    And my understanding is a lien becomes a public document. 
These other interactions that they are having with the IRS are 
confidential in nature, and should remain so.
    Mr. Lynch. But you are missing the point here. In order to 
fire a person who has a lien, you have to do a, you know, today 
they have no lien, next month they have a lien.
    In order to catch that--you are asking that when people 
have a lien, they get fired. And so you need to track that 
employee so you know when they have a lien, they get fired.
    Ms. Tucker. Maybe I came up with the super statute, because 
I do not think I put this into my testimony. So for 2008 or 
basically any other years, just to give you a percentage notion 
of how many of the folks that are in FERDI actually really 
moved to a lien status, it is roughly only 12 percent. Most of 
the folks that we are identifying through FERDI, we move them 
into compliance, full compliance, through the wage levy or levy 
of other sources. So I just thought that was important for you 
to understand.
    Mr. Lynch. That is on that one date, the snapshot in time 
that you took, right?
    Ms. Tucker. Correct. So----
    Mr. Lynch. Not tracking these people all the way through 
the system.
    Ms. Tucker. No, sir.
    Mr. Lynch. OK. All right. Ms. Tucker, I think you have 
suffered enough, but let me just ask----
    Ms. Tucker. It has been a pleasure. Just like with 
everybody at work. [Laughter.]
    Mr. Lynch. Yes, I am sure. If there are no further 
questions, I would like to just allow Ms. Tucker to go. And we 
thank you for your willingness to come before the committee and 
help us with our work. Thank you very much. Have a good day.
    Ms. Tucker. Sure, my pleasure.
    Mr. Lynch. Thank you.
    Ms. Tucker. Thank you.
    [Pause.]
    Mr. Lynch. I would like to welcome our next panel of 
witnesses.
    [Recess.]
    Mr. Lynch. Be seated. Welcome. Before we swear our 
witnesses, I will first offer some brief introductions.
    President Colleen Kelley is the President of the National 
Treasury Employees Union. Welcome back.
    The Nation's largest Federal independent Federal sector 
union representing employees in 31 different government 
agencies. Ms. Kelley, a former IRS Revenue Agent, was first 
elected to the union's top post in August 1999.
    Mr. J. Ward Morrow is an assistant general counsel for 
legislation for the American Federation of Government 
Employees, the AFL-CIO. Before joining AFGE, Mr. Morrow served 
as an assistant State's attorney for Baltimore City, and 
special assistant U.S. attorney.
    Mr. Richard Oppedisano was elected national secretary of 
the Federal Managers Association in March 2004, a position he 
has held since that time. Prior to his retirement from the 
Civil Service in 2004, Mr. Oppedisano served as Operations 
Officer and Chief of Staff in the Office of the Commander at 
the U.S. Army Watervliet Arsenal in Watervliet, NY.
    Mr. Christopher Rizek is a member in Caplin & Drysdale's 
Washington, DC, office, where he represents taxpayers and all 
types of Federal, civil, and criminal tax controversy matters; 
and also guides clients through IRS audits, prepares 
administrative claims, and litigates tax and tax-related cases. 
Welcome to you all.
    Let us see, why do not I do this first, and we will get you 
all sworn in. And then we can allow you to offer your opening 
statements. Could I ask you all to rise and raise your right 
hands?
    [Witnesses sworn.]
    Mr. Lynch. The Chair now recognizes President Kelley for 5 
minutes.

  STATEMENTS OF COLLEEN KELLEY, NATIONAL PRESIDENT, NATIONAL 
  TREASURY EMPLOYEES UNION; J. WARD MORROW, ASSISTANT GENERAL 
  COUNSEL FOR LEGISLATION, AMERICAN FEDERATION OF GOVERNMENT 
  EMPLOYEES, AFL-CIO; RICHARD OPPEDISANO, NATIONAL SECRETARY, 
 FEDERAL MANAGERS ASSOCIATION; AND CHRISTOPHER RIZEK, GENERAL 
             COUNSEL, CAPLIN & DRYSDALE, CHARTERED

                   STATEMENT OF COLLEEN KELLY

    Ms. Kelley. Thank you very much, Chairman Lynch, Ranking 
Member Chaffetz, and distinguished members of the subcommittee. 
I appreciate the opportunity on behalf of the National Treasury 
Employees Union to provide comments on H.R. 4735, which would 
require the Federal Government to fire workers who have Federal 
tax liabilities, and prohibit job applicants with serious 
delinquencies from being hired.
    NTE firmly believes that each and every Federal employee 
should pay their taxes in a timely manner. But we believe this 
legislation would deprive them of the right of due process 
afforded to other taxpayers.
    Furthermore, we believe that terminating their employment 
or preventing them from obtaining gainful employment would only 
serve to worsen that financial situation, and lessen their 
ability to repay any taxes owed, or to be compliant in the 
future.
    Under H.R. 4735, a prospective or current Federal employee 
would be prohibited from Federal employment based on the 
issuance of a lien, which has been discussed in great detail, 
which is not a final determination of tax liability. When the 
IRS files a notice of Federal tax lien to secure the 
government's interest as a creditor in competition with other 
creditors in certain situations, such as bankruptcy proceedings 
or sales of real estate, a taxpayer has a right to challenge 
the issuance of a lien.
    H.R. 4735 does not include any minimum tax delinquency 
threshold that would trigger the mandatory termination 
provisions. I would note that H.R. 572, the Contractor Tax 
Delinquency legislation that is also under consideration by the 
subcommittee, would only prohibit the awarding of contracts or 
grants that are in excess of $100,000.
    We also have a number of concerns about how the process for 
determining the eligibility of an applicant for Federal 
employment with a tax debt would work.
    In particular, as has been discussed, who would be 
responsible for investigating an applicant's tax situation, and 
making the determination of whether or not they are eligible 
for Federal employment? Where would the funds come from? And 
would an applicant have a right to respond to any problems that 
are found?
    There are laws and regulations in place that address tax 
debts owed by Federal employees. Under 5 U.S.C. 2635, agencies 
can take disciplinary action against employees for failure to 
satisfy their just financial obligations, including their 
obligation to pay Federal, State, and local taxes. These 
disciplinary actions can range from counseling to removal.
    In addition, in 1997 Congress enacted legislation 
authorizing the establishment of the Federal Payment Levy 
Program, which the IRS discussed in detail, allowing the 15 
percent levy of certain Federal payments made to delinquent 
taxpayers. This list of Federal payments, as we have heard, 
does include Federal employment retirement annuities and 
Federal salaries.
    This has been a very successful program, especially with 
regard to withholding payments from Federal salaries. NTEU has 
experience with mandatory termination rules for tax 
infractions. Commonly known as the 10 deadly sins, Section 
1203, which has been discussed, of the IRS Restructuring and 
Reform Act, outlines 10 infractions for which IRS employees 
must be fired. One of the 10 infractions is the untimely filing 
of Federal income taxes, even when a refund is due.
    N.T.E.U believes mandatory termination for even minor tax 
infractions is unduly harsh, and should not be the only 
disciplinary action available. The system in place at the IRS 
takes away discretion from managers, and requires large amounts 
of resources to administer.
    Mr. Chairman, as I have said throughout my testimony, I 
believe that everyone should pay the taxes that they owe. There 
are penalties under the Tax Code for those that do not, and 
there are processes for recouping tax debts from Federal 
employees that are very effective. Requiring the firing of 
Federal employees that owe back taxes, and creating a huge new 
program to check the tax status and lien status of all Federal 
job applicants, is not the best way to address this problem.
    Some may owe taxes because of the actions of a spouse, a 
previous failed business enterprise, or financial hardship and 
illness. Denying them Federal employment that they are 
otherwise qualified for will certainly be unfair in some 
situations, and in many situations will lead to a higher 
likelihood that the government will never receive the taxes 
that it is owed.
    Thank you again for this hearing, and I welcome the 
opportunity to answer any questions.
    [The prepared statement of Ms. Kelley follows:]

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    Mr. Lynch. Thank you. Mr. Morrow, you are now recognized 
for 5 minutes.

                  STATEMENT OF J. WARD MORROW

    Mr. Morrow. Mr. Chairman and subcommittee members, my name 
is J. Ward Morrow. I serve as assistant general counsel for 
American Federation of Government Employees. We represent more 
than 600,000 Federal and District of Columbia workers.
    I am pleased to appear before you to discuss the issues 
related to H.R. 4735.
    AFGE does not support singling out of Federal employees who 
face tax problems. Federal employees are patriots who are 
engaged in public service so that they can contribute to 
helping other fellow Americans. Many civilian employees of the 
Department of Defense serve in supporting roles for deployed 
military personnel.
    Others honorably serve our country in the Department of 
Homeland Security. Others care for wounded veterans. But all 
Federal employees serve the citizens of the United States.
    Sometimes people end up in disputes with the IRS because 
their tax situation is complicated, by a divorce, death of a 
loved one, or other difficult circumstances. Each situation 
must be reviewed on a case-by-case basis.
    Currently Federal employees may be disciplined, up to and 
including termination, for tax misconduct. The Merit Systems 
Protection Board has upheld adverse actions for tax impropriety 
against even non-Treasury employees where they have found a 
nexus to Federal employment.
    For example, in the James A. Mitchell v. United States 
Postal Service, 32-MSPR-362-1987, the U.S. Merit Systems 
Protection Board upheld an Administrative Law Judge's finding 
of the nexus between conduct and the efficiency of the Service.
    Some circumstances, such as employment that required a 
security clearance, or perhaps a suitability determination, a 
serious delinquency may result in the termination of an 
employee due to the nature of that type of employment.
    We believe agencies currently have sufficient authority in 
these areas to make such determinations in appropriate 
circumstances. The matter of a lien being imposed may not be a 
sign that an employee is in a deliberate default.
    It is vital that Federal employees be afforded all of their 
due process rights that Title 5 allows. Some situations may be 
far more intentional and severe than others. Some situations 
may be appropriate for a lesser penalty or other type of 
outcome. It is also possible in this day and age for a 
situation such as identity theft to take place, or other type 
of error that the agency may make. In those cases the Federal 
employee may be incorrectly or unfairly identified as being 
seriously delinquent in their tax payments.
    We believe Federal employees must be given sufficient 
opportunity and due process to show that they are not seriously 
delinquent, as defined by this legislation; and/or that 
termination is not the appropriate penalty in specific 
circumstances.
    We can only speculate as to the variety of situations, 
particularly in this economy, that might exist, so we can be 
clear that a one-size-fits-all penalty will not be able to be 
fairly accommodating all of these possible situations.
    AFGE does applaud the goal of getting all Americans to pay 
their legally required amount of taxes. In many, but not all, 
instances, we believe the goal is best accomplished by having 
an employee who is in default to continuing employment, so 
there is a better opportunity of payment. It stands to reason 
that if an individual is unemployed, they will be in default 
for a far longer period of time, and have less incentive to pay 
any payments.
    We believe any legislation needs to provide for the 
possibility and the type of construction manner for encouraging 
employees, where appropriate, to remain employed; and to get an 
employee who is in default to pay their taxes. To erect a 
permanent barrier to any Federal employment for someone who is 
seeking to be employed, and in good faith desires to make 
payments once employed, would be counter to the desire to get 
the debt paid.
    Since each situation is different and want different 
factors to be examined, it makes more sense to have a process 
that encourages payment, rather than one that may frustrate 
payment.
    In the exercise of their rights, Federal employees might be 
able to show that in fact they are being incorrectly or 
unfairly treated. They deserve this opportunity, rather than a 
rigid penalty, it is fair to look at each situation 
individually for a system that fails to give Federal employees 
a proper process to vindicate themselves.
    Based on the unique needs of the Federal Government, we 
believe that there may be circumstances where the specialized 
talents of an employee might be necessary, even where a tax 
debt might exist. We believe such situations, which we might 
now not even be able to articulate, may exist and could require 
the employment or continued employment of certain individuals 
for a period of time. Any law will need to have this type of 
legitimate need of government service provision to provide the 
adequate flexibility for government operations.
    Currently the IRS has a variety of powers with which to 
enforce the tax laws. We defer to them as to the variety of 
provisions that currently exist. We would note that they do 
have criminal and civil provisions to deal with those who 
deliberately and intentionally fail to pay their legitimate 
taxes.
    The agency is given discretion as to how to seek those 
enforcement provisions, and by the very nature of criminal 
enforcement, the agency has provisions to deal with the most 
severe and intentional violation.
    AFGE recognizes the legislation would attempt to allow for 
a situation--if I may finish my statement, Mr. Chairman--when 
agreement may be entered into by the IRS. This legislation, 
though, does fail to include those who may be making attempts 
to pay, but either have not or cannot agree to the terms 
required for an agreement acceptable to the IRS.
    Again, we state a case-by-case review is more appropriate 
to these types of circumstances.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Morrow follows:]

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    Mr. Lynch. Thank you, sir. Mr. Oppedisano, you are now 
recognized for 5 minutes.

                STATEMENT OF RICHARD OPPEDISANO

    Mr. Oppedisano. Chairman Lynch, Ranking Member Chaffetz, 
and members of the subcommittee. As Federal managers and 
stakeholders in this legislation, we are----
    Mr. Lynch. Mr. Oppedisano, I am not sure if your mic is 
working.
    Mr. Oppedisano. The light is on. Can you hear me better 
now?
    Mr. Lynch. All right, thank you, sir.
    Mr. Oppedisano. As Federal managers and stakeholders in 
this legislation we are discussing today, we appreciate the 
opportunity to appear before you.
    The Federal Government's most important resources is its 
work force. Federal employees serve alongside their military 
counterparts on the ground in Iraq and other conflicts abroad. 
They are on the cutting edge of disease research, energy 
initiatives, and many social programs that deliver needed 
services to millions of Americans. They are doctors, engineers, 
law enforcement officers working to secure our nation's 
borders.
    Despite their dedication to advancing the nation's 
interests, Federal employees continue to serve as a punching 
bag for the press, and this mentality has crept its way onto 
Capitol Hill. As we debate H.R. 4735, it is critical that 
Members of Congress isolate this issue from other topics 
challenging the Federal work force.
    We are here today to discuss Federal employees who have 
been seriously delinquent on their tax obligations. We are not 
here today to discuss Federal salaries, turnover rates, or a 
multitude of other issues that may deserve debate at some other 
time.
    When public figures lump these issues together, the result 
is a firestorm of anti-Civil-Service zeal that detracts from 
the debate at hand.
    Legislation introduced by Ranking Member Chaffetz would bar 
Federal employees facing serious delinquent tax debt from 
serving in the government. Let us look at the facts.
    In 2008, Federal employees, Federal retirees, active-duty 
military and retired military owed $3 billion in unpaid taxes. 
In terms of dollars, military retirees owed the most, with over 
$1.3 billion in unpaid taxes; 97,000 active Federal employees 
account for $962 million of the $3 billion owed. This 
represents less than 5 percent of the Federal work force.
    Of the individuals this legislation would affect those only 
that are seriously delinquent. It is our belief that very few 
fall within this category. However, we must carefully examine 
what seriously delinquent means.
    According to the legislation, it would affect any employee 
who has a lien filed against his or her property in order to 
recover unpaid taxes. First and foremost, as taxpayers 
ourselves, FMA members in no way, shape, or form support the 
action of Federal employees who neglect to pay their taxes in a 
timely manner. It is extremely distressing to hear stories of 
government employees who receive a Federal salary, while 
refusing to follow tax laws.
    While there are many circumstances that justify filing for 
reconsideration, those who purposely bypass the requirements to 
fulfill their tax obligation should be held accountable. When 
these individuals are civil servants, their conduct can cast a 
dark shadow over their fellow co-workers.
    FMA has several concerns with both the intent and practical 
application of H.R. 4735. It is believed that Federal employees 
should be held to the same standards as the rest of the 
American population, receiving no special treatment, while also 
avoiding the bull's eye that so often falls on their backs.
    Approving this bill would severely jeopardize the ability 
of the IRS agents to direct Federal employees down the path to 
tax settlement; instead, resorting to termination. FMA is 
concerned that H.R. 4735 may restrict Federal employees' 
ability to dispute their tax obligations, while stifling the 
IRS from pursuing payment through established channels.
    We are also concerned that this legislation could relate to 
an ongoing tax dispute that is not resolved as of the filing of 
the lien. Additionally, if a lien has been filed, yet the IRS 
is unsuccessful in its attempt to collect payment, and the 
employee is terminated, one must question how the now-former 
employee is going to repay what is owed, while not collecting a 
paycheck. Ultimately, the government would still be unable to 
recoup payment from this individual.
    We believe this legislation seeks to create a system where 
there is always an easy answer to an individual case requiring 
unique existing exemptions exist. Our tax system does not exist 
in a vacuum. IRS agents are successful because they are trained 
to evaluate each case based on its own set of circumstances.
    While there are certainly individuals who not only refuse 
to pay taxes, this legislation may impact a greater audience 
than intended. It is extremely difficult, and perhaps 
impossible, to judge an individual's intent when it comes to 
the filing of a failure to file taxes. Deliberate or fraudulent 
non-payment is vastly different than a technical mistake, yet 
both may lead to a drawn-out appeal process resulting in 
identical determinations.
    Under H.R. 4735, the employee who makes an innocent mistake 
could be deemed seriously delinquent and unfairly penalized.
    In conclusion, there is no doubt that this issue warrants 
discussion and debate. But we at FMA believe the solution of 
the problems may be realized through greater oversight and 
enforcement of tax laws currently in place. If these laws are 
deemed too lenient, new tax rules and regulations that do not 
isolate Federal employees from the rest of the American public 
should be required.
    No one should be allowed to evade paying taxes that are 
owed according to law, a point we can all agree upon. Singling 
out our nation's civil servants, however, is not the answer.
    Thank you again for this opportunity to express our views, 
and I am happy to answer any questions you may have.
    [The prepared statement of Mr. Oppedisano follows:]

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    Mr. Lynch. Thank you, sir. Mr. Rizek, you are now 
recognized for 5 minutes.

                 STATEMENT OF CHRISTOPHER RIZEK

    Mr. Rizek. Mr. Chairman and members of the subcommittee, 
thank you for inviting me to testify before you regarding H.R. 
4735.
    By way of background, I am a member of the Law Firm of 
Caplin & Drysdale, and also with Professor Norton, who is 
leaving, an adjunct professor over at Georgetown University Law 
Center, where I teach tax administrative practices.
    Mr. Lynch. Mr. Rizek, I am sorry, we are having a problem 
with the microphones. Could you please pull that closer, 
please?
    Mr. Rizek. I never have that problem, usually.
    Mr. Lynch. There you go. Good man, thank you.
    Mr. Rizek. Where I teach tax administration practices and 
procedure. I think I was asked to appear on this panel to 
provide some technical and tax procedural advice, and I hope I 
can help you with that. I disclaim any expertise in Federal 
employment or government contracting law, however.
    I begin with the proposition which I do not think anyone, 
including my fellow panelists, can seriously oppose; that 
Federal employees are responsible for meeting their Federal tax 
obligations, just like any other taxpayers in the United 
States.
    However, I would argue that Federal Civil Service employees 
bear a special responsibility to the public to meet their tax 
obligations, for several reasons.
    First, when anyone cheats, it undermines the perception of 
fairness that is essential to our voluntary self-reporting 
system. Federal employees being particularly visible 
beneficiaries of government support are also thus particularly 
visible when they fail to comply with the tax laws. Such non-
compliance encourages more.
    As the founder of my law firm, Mortimer Caplin, once said, 
large and continued avoidance of taxes on the part of some has 
a steadily demoralizing effect on the compliance of others.
    It is a symbolic breach of public trust when Federal 
employees are non-compliant. We of course expect our civil 
servants to comply with all the laws, but it is especially 
galling when they are paid by our tax dollars, and yet cheat on 
their taxes, and thus fail to contribute to the general welfare 
themselves.
    That is, as I put it in my written statement, doubly 
insulting to millions of hardworking and compliant taxpayers. 
And I would add, I am a former Federal employee myself, twice, 
and I felt a special obligation to uphold the laws of the 
United States both times.
    For these reasons I support the idea of making Federal 
employees subject to special employment sanctions if they fail 
to comply with the tax laws. And to the extent that idea is 
embodied in H.R. 4735, I support it.
    However, as I describe in my written statement, I believe 
there are a number of significant technical changes in the bill 
that are necessary before it is enacted. Most importantly, as 
we have discussed, reliance on the filing of a Federal tax lien 
for the definition of a seriously delinquent tax debt is far 
too uncertain a standard to which to tie a taxpayer's potential 
for future or continuing Federal employment.
    I recognize that standard is drawn from H.R. 572, regarding 
Federal contractors. I would be prepared to answer questions 
about the parallels and differences between those two 
provisions.
    But in her year-end 2009 report to Congress, the National 
Taxpayer Advocate Report you cited, Chairman Lynch, was 
particularly critical of the IRS's lien-filing methodology, 
describing it with adjectives such as arbitrary and 
inconsistent.
    Notice of a Federal tax lien can legally be filed 
immediately upon failure to pay. And Yetta and I and I think 
most people would not consider that to be a seriously 
delinquent tax debt.
    Conversely, I have had many situations where tax debts have 
gone for very long periods of time, which have never had a 
notice of Federal tax lien filed. The purpose of the notice of 
Federal tax lien is just to protect the priority of the Federal 
tax lien, and I would be happy to talk to the panel about that.
    The one single benefit of the notice of Federal tax lien is 
that it is public; and thus, it would not require amendment of 
the Internal Revenue Code's confidentiality provision, Section 
6103. But that does beg the question of how the agency is 
supposed to know of an employee seriously in delinquent tax 
debt.
    I would note that H.R. 542 debars applicants for awards or 
applicants for employment, or applicants for grants, and 
requires them to certify and obtain a waiver of the 
confidentiality before applying for a Federal grant, and 
obtaining one. I think something similar in this regard might 
be beneficial.
    There are a number of other technical issues discussed in 
my statement, but I want to mention only one. The Restructuring 
Act, the IRS Restructuring Act of 1998, on which I worked when 
I was in the Treasury Department in 1998, contained a similar 
provision applicable solely to IRS employees.
    I believe that the severity of the only sanction available, 
termination or non-eligibility for employment, has contributed 
to that provision being used very rarely. I think Ms. Tucker 
testified that it was roughly 475 over the last 11 years.
    I would like to think that IRS employees are also 
particularly tax-compliant, and perhaps the FERDI data does 
demonstrate that.
    But I would suggest that other sanctions, such as 
disciplinary action or ineligibility for promotion or salary 
increases might be considered.
    In short, I commend the members of the subcommittee for 
seeking to address an important and symbolic area of non-
compliance with our tax laws, and I generally support the 
concept of making such non-compliant grounds for sanction, or 
even termination, of Federal employees.
    I have a number of technical concerns about the specific 
language of H.R. 4735, however, and I would be happy to discuss 
them further with the members or staff of the subcommittee.
    [The prepared statement of Mr. Rizek follows:]

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    Mr. Lynch. Thank you, sir. I have a quick question. We have 
votes on the floor, but I did want to ask--perhaps Mr. 
Oppedisano and Ms. Kelley might be able to answer this best, 
but Mr. Morrow, obviously, it deals with the workload that 
would be required to do a tax-compliance assessment on every 
single Federal employee and every single Post Office employee, 
and all these applicants for Federal jobs.
    You know, in talking to Ms. Tucker earlier, I think we 
might want to rename this bill the Jobs Bill, given the number 
of people it might hire. So that might be a good thing. I will 
have to rethink my opposition.
    But do you have, you know, just a sense of what this would 
require, No. 1? And No. 2, especially with the hiring process, 
and Mr. Oppedisano, as a representative of the Federal Managers 
Association, I hear a lot of complaints about the time that it 
takes to hire folks. We just went through that yesterday at 
another hearing, where we had, we had a change in the approach 
in one of our agencies in hiring more people after a layoff 
was, well, a downsizing was reversed.
    Could you comment on that, on the workload on the IRS to do 
this vetting for all these employees? And also, the effect that 
it might have on the ability of us to hire people quickly, and 
not have these interminable delays, where we have these 
vacancies for months and months and months, and falling behind 
on the work that needs to be done.
    Ms. Kelley. I think the workload would be huge. And it will 
be interesting when IRS, in accordance with your question, 
thinks through everything that really would need to be done, 
and what that would mean for the current Federal employees and 
retirees.
    When you add on top of that the applicants, one of the 
things that struck me listening to the prior conversation was, 
I know--and you can confirm this with the IRS--but the IRS last 
year, just in 1 year, received 600,000 applications for 
vacancies in the IRS. That is just the IRS.
    Mr. Lynch. OK.
    Ms. Kelley. So when I think of that number----
    Mr. Lynch. Do you know how many positions were up? Because 
I know we just had, we have a new, I think we are hiring 
20,000.
    Ms. Kelley. I believe last year the number they reported 
was they hired 18,000, and received 600,000 applications.
    Mr. Lynch. Wow, OK.
    Ms. Kelley. So you know, when I think about that in terms 
of across government, I cannot even begin to come up with the 
number of dollars or staffing that would be needed. But it 
would be huge, it would absolutely be huge. And it would 
absolutely add onto the time for hiring, which of course 
everyone is so focused on, acknowledging it needs to be cut, 
not increased.
    So there are no systems in place that would automatically 
do it today, so there would have to be new systems and new 
resources.
    Mr. Oppedisano. No disrespect to Mrs. Tucker, but I think 
her figures were a little bit on the low side. And I think your 
question was an excellent one, as far as identifying all of the 
costs that would be involved.
    Also, on my resume I was also the Chief of Recruitment and 
Placement at my site for 13 years. I did recruitment for the 
Federal Government in the Department of Army for 13 years. 
Average timeframe for hiring someone from start--and this is 
after we got out, after we received all the internal paperwork 
processed to go out to do the recruiting action--80 days. In my 
opinion, this would at least double that amount of time.
    Our problem is young people today do not want to wait 
around for 6 months to say whether or not they are going to 
have a job. We need to be able to have the ability to make sure 
that we hire these folks, and have the ability to hire these 
folks, pretty darn quick. Or else they are going to go 
someplace else to go to work.
    So to answer your question, in my opinion, it would at 
least double that timeframe.
    Mr. Lynch. Well, Mr. Morrow.
    Mr. Morrow. And if I may, I listened to that question. And 
I think Ms. Tucker in some ways can only look at it from the 
perspective of her agency. Just keep in mind that with each 
agency that they do this with, you are going to have to have 
somebody doing due diligence at the agency, instead of doing 
their regular work.
    And I do not know what the cost of that is going to be for 
all, you know, the number of people across DHS, DOD, for every 
mechanic that they are going to need to process this form on. 
And then they have to fire that individual. The work is not 
going to get done. You might have passports not getting 
stamped, you are going to have tanks not getting fixed. So they 
have to wait and go through the recruitment process. And again, 
somebody is going to have to do that, and there is a cost to 
that.
    So the cost is not simply just to the IRS to do a computer 
printout. There is a personnel cost to each and every agency to 
do the due diligence, and to send the letters, and to do the 
whatever needs to be done, the processing to get the employee 
out the door. And then you are going to have that same cost 
getting employees back in the door if, in some situations, you 
can even find a qualified employee, who then would have to go 
through this yet additional burden.
    So I mean, I think the costs are going to be far higher, 
and maybe you would have to ask almost each agency what it 
would cost to have every one of these people replaced.
    Mr. Lynch. Very good. Thank you. What I would like to do is 
yield 5 minutes to the ranking member, Mr. Chaffetz.
    Mr. Chaffetz. Thank you. Just to followup on your doubling 
of the time, where in the world did you come up with 80 days?
    Mr. Oppedisano. Where did I come up with----
    Mr. Chaffetz. Yes.
    Mr. Oppedisano. We actually tracked, in the Department of 
Army--these figures are available at the Department of Army. We 
actually tracked the timeframes for filling a vacancy once a 
52, which is a personnel action for retirement----
    Mr. Chaffetz. Oh, I believe the 80 days. What I am saying 
is you suggest that with this piece of legislation it would 
double the time. I want to know where and on what basis you 
suggest that it is going to take 80 days to find out whether or 
not a person has a lien against them.
    Mr. Oppedisano. I said in my opinion it would take an 
additional----
    Mr. Chaffetz. I know. I want to know where you got, what 
you base that on.
    Mr. Oppedisano. No. 1, as the gentleman from the AFGE just 
said, there is a staff requirement----
    Mr. Chaffetz. No, I just want to hear what you have to say.
    Mr. Oppedisano. There are staff requirements that are 
required that are a part of all of this. You have to call the 
employee in, you have to do all the additional paperwork. And 
then maybe you have to go back to the stats again, to go back 
to the beginning of the process, due to the fact that person 
may not have been qualified, or may have disgusted and just 
have walked away, and did not want to seek Federal employment 
any more.
    Mr. Chaffetz. I understand.
    Mr. Oppedisano. So my estimate would be that it would 
probably double the process.
    Mr. Chaffetz. If you would like to provide additional 
information, I would love to see it. Because I think your----
    Mr. Oppedisano. It is my personal opinion.
    Mr. Chaffetz. That is just an irrational number that is 
just plucked out of the air for your own personal convenience. 
There is no way----
    Mr. Oppedisano. That is my personal opinion.
    Mr. Chaffetz. And if you want to provide additional 
information, I would love to see it. I do not think it is 
substantiated or based on anything. Other than trying to scare 
people that it is going to take so much additional time.
    Mr. Oppedisano. My statement back to you would be until 
this law, if it ever did become law, and in fact we would have 
to wait and see what happens.
    He asked my opinion as to how much longer----
    Mr. Chaffetz. I am just asking what you based it on. And I 
do not see anything----
    Mr. Oppedisano. Based on the fact that if, in fact, 
something happens where we have to restart the process again; 
if it takes 80 days under the normal process that we have to 
restart the process, why, we would have to restart the process.
    What happens if that individual turns around and either has 
an action taken against him, or walks away from the process for 
whatever reason? You would start your recruitment action again.
    Mr. Chaffetz. You made your point, I made my point. Do you 
believe that there is any additional special responsibility for 
somebody who is a Federal employee? Above and beyond maybe what 
is happening in the private sector?
    Mr. Oppedisano. No more so than any other American citizen.
    Mr. Chaffetz. And do you believe that there is a 
significant difference between contractors and Federal 
employees?
    Mr. Oppedisano. I think there is a significant difference 
between contractors and Federal employees. Federal employees--
--
    Mr. Chaffetz. In terms of obligation. Do you think that 
contractors have a higher obligation and threshold than, say, 
Federal employees?
    Mr. Oppedisano. I would say no, they do not have a higher 
obligation.
    Mr. Chaffetz. OK.
    Mr. Oppedisano. What I would say----
    Mr. Chaffetz. Thank you, thank you.
    Mr. Rizek. I just want to add in response, I have no idea 
how long it would take. But I do have a data point, which is a 
different data point than Mr. Oppedisano.
    Almost everyone who ever applies for a mortgage in the 
United States these days has to offer a consent to the mortgage 
company to, for the mortgage company to check with the IRS to 
make sure that they are current in their tax obligations. Now, 
that can be a very limited consent, just to see if they have 
filed or have any outstanding tax debt. But there are millions 
of mortgages executed each year, and they IRS turns those 
around very quickly.
    Mr. Chaffetz. Thank you. This idea, Mr. Morrow, the idea 
that--well, let me do this. My time is coming to a close.
    Ms. Norton [presiding]. Mr. Chaffetz, particularly since 
there are five votes, if you would like to take more time and 
do all of your questions now.
    Mr. Chaffetz. Thank you, I appreciate it. My apologies, but 
we have like zero time on the clock, and we have votes on the 
floor.
    So thank you all very much. We appreciate it. If there are 
additional questions or comments you would like to make as you 
kind of think things through, I am very open to this. I just 
want to do the right thing. And I personally, as I said many 
times here before, the overwhelming majority of people, they do 
the right thing. We ought to pat them on the back and 
congratulate them for that.
    But for that small number of people who are skirting the 
system, just like President Obama has pointed out, I, too, want 
to point out. And I think we need to have more serious 
consequences.
    So I thank you again for your time. And thank you.
    Ms. Norton. Thank you, Mr. Chaffetz. I just want to say to 
those who remain that when we get through with health care 
reform, we can get on to other legislation. We hope that the 
witnesses will abide the fact that even this Member will have 
to be excused to go vote on the floor, in exchange for the 
substantial Federal income taxes paid by the residents of the 
District of Columbia without a vote on final passage.
    I am grateful that the House, in its wisdom, has given me 
the vote in the committee as a whole. And of course, I vote in 
this committee and chair a subcommittee.
    But on legislation such as that coming before the House 
now, the House is able to leave me as the majority of the 
hearing, with what remains of it. And I am pleased to play that 
role temporarily.
    I very much appreciate the testimony we have received. It 
is important to hear from the agency. But that would be a very 
one-sided notion without hearing from those who are also 
affected.
    Let me ask you, Ms. Kelley--could I have--and Mr. Morrow, 
perhaps all of you. But Ms. Kelley is particularly able to 
answer this question because of her affiliation with the IRS.
    First let us establish, when did this rule, unique rule for 
IRS employees become effective?
    Ms. Kelley. It was part of RRA-98, so it was passed in 
1998.
    Ms. Norton. So that would be 1998. Did it come up because 
there had been a significant number of IRS employees who 
somehow the agency had found that--this matter, of course, is 
usually private between the employee and the IRS.
    I am trying to understand what led to this special rule for 
IRS employees, what prompted it, what its derivation was.
    Ms. Kelley. In fact, the history of it is that the IRS did 
not even request that Congress provide them with Section 1203 
as part of RRA-98. It was not initiated by the IRS. It was 
added on the Senate floor. And it is nothing that the IRS ever 
supported.
    So from the beginning----
    Ms. Norton. The agency itself never had an opportunity for 
a hearing before this was passed on the Senate floor?
    Ms. Kelley. In fact, they said it was not necessary. Yes, 
that is true.
    Ms. Norton. Thank you, Ms. Kelley. I mean, we are somehow 
led to believe that when something happens of this kind----
    Mr. Rizek. If I may----
    Ms. Norton. Would you--yes.
    Mr. Rizek. The rest of the provisions in Section 1203 that 
Ms. Kelley is referring to were perceived as taxpayer 
protection provisions, and they were introduced as sort of a 
taxpayer----
    Ms. Norton. The rest of the provisions, meaning what?
    Mr. Rizek. Those two provisions were inserted there, I 
think, just because they were making a list of things for which 
they thought IRS employees should be terminated.
    Ms. Norton. The other provisions had to do with taxpayer 
protection.
    Mr. Rizek. For the most part, correct.
    Ms. Norton. Was this perceived of as a taxpayer protection? 
Was this conceived as a taxpayer protection?
    Mr. Rizek. Section 1203 was.
    Ms. Norton. Ms. Kelley.
    Ms. Kelley. But again, this was not supported even by the 
IRS that it be added. And I would also add, in the last 6 
years, including under the prior administration, from 2003 
through 2009, the last administration has proposed, in each of 
its budget proposals, that this Section of 1203 requiring 
termination of IRS employees for tax issues should be 
eliminated, and that provision should not be in place.
    Ms. Norton. Ms. Kelley, somebody has that in his testimony. 
I noted that for the first time. Who had this in his testimony, 
was it you? That the last administration----
    Ms. Kelley. That was me, yes.
    Ms. Norton. Yes. Itself had proposed----
    Ms. Kelley. Yes, six times.
    Ms. Norton [continuing]. Elimination of this, and replaced 
by what?
    Ms. Kelley. That it just was not necessary. To eliminate 
the mandatory termination provisions for tax issues. 
Recognizing that there were already processes in place to deal 
with them.
    The IRS dealt with, as you heard Ms. Tucker testify, they 
dealt with tax issues very seriously in the IRS long before 
RRA-98.
    Ms. Norton. Using what sorts of procedures?
    Ms. Kelley. Using their personnel procedures. It was, they 
did an education process and explained the obligation of the 
higher standard for administering the tax system. Employees 
knew that when they were hired; they knew they could face 
disciplinary action. And it could have been up to and including 
removal. Sometimes perhaps it was, you know, suspensions or 
other penalties, to make clear that they were not in 
compliance. And of course, the goal was to get them in 
compliance.
    So the IRS enforced all of that, but with an understanding 
that they could apply the appropriate penalty, rather than this 
mandatory termination that was part of 1203.
    Ms. Norton. Which all goes to show what we almost went 
through in this very committee, by pasting something onto 
legislation when there has been no hearing. Almost inevitably 
there are unintended consequences, even if you later do it. You 
need to know what you are doing.
    Ms. Kelley. That is right.
    Ms. Norton. The other remedies--I just may followup with 
Ms. Kelley, and then, of course, you will go next. But Mr. 
Morrow indicated the Merit Systems Protection Board, when it 
gets bad enough, in your testimony--the page is not numbered--
where if it gets bad enough, it can go--and you even cite a 
case--before the Merit Systems Protection Board for tax 
liability.
    Sorry, who else wishes to speak on that matter?
    Mr. Oppedisano. Ms. Norton, I need to get some 
clarification, because I am not an IRS employee. But I 
understand that the rule on the IRS for the firing for non-tax 
payment is not for all of the employees of the IRS. It is just 
for specific employees who are the tax compliance end of it. It 
is not for managerial, supervision, or clerical.
    Ms. Kelley. Actually, that is not true. It applies to all 
employees, including clerical.
    Mr. Oppedisano. OK.
    Ms. Kelley. It has been applied to grade 4s and 5s.
    Mr. Rizek. But it does not apply to non-payment. It only 
applies to willful failure to file or willful understatement of 
a liability.
    Ms. Norton. I am struck by the issue that the chairman 
raised about hiring. Now, as I understand it, the number of, 
and I do not know how many, but many who wish to be employed 
are now subjected to credit checks. And of course, a lot of 
employers do this, where they pull up the credit report. Is 
that not the case for Federal employees, Mr. Morrow, Ms. 
Kelley?
    Ms. Kelley. I do not know if it is routine. I know it is 
done in many cases, but I do not know.
    Mr. Morrow. That would be my answer. I think you would have 
to ask the agency.
    Certainly in situations for law enforcement officers, where 
suitability or national security certifications are needed, it 
would be. But for some positions it might not be. OPM might 
know the answer to that.
    Ms. Norton. This is all very serious, because all of us can 
perceive of employees at certain levels doing certain kinds of 
work where you would want no taint on the employee's record. 
Ms. Kelley has testified if you are a clerk, you are subject to 
the same sanctions, automatic firing, as I suppose somebody, 
until you get to the Commissioner, who can only be fired for 
cause. A very specific procedure.
    We also heard testimony that, as it turns out, a very small 
number have been fired, rather quintessentially small. Does 
that indicate that the IRS has, in fact, operated with some 
degree of flexibility, even with respect to its own employees, 
rather than automatic firing for so-called willful? And that it 
looks at what is willful and not willful, etc?
    We are trying to find here, I am trying to find here in 
this set of questions what I can about application of this 
automatic firing, that any of you may understand from the way 
it plays out in the field among employees.
    Ms. Kelley. I would say it is two things. And one is the 
communication and education system that the IRS engages in with 
employees. I mean, from day one on the job.
    And then there is annually a reminder of their obligation, 
of assistance that is available, of, you know, what it is that 
they need to do if they do not have the money to pay. I mean, 
it is a non-stop reminder of their obligation and 
communication.
    So my bet is that much----
    Ms. Norton. You know, if a lien occurs, for example, there 
was great discussion in this committee about what can occur 
anywhere when there is a lien, that is it. Many employers--and 
I still am not clear, particularly for the IRS--if a lien 
showed up, whether that would be automatically a trigger for 
firing by the IRS? Or whether, in fact, a lien could result in 
some of the procedures you have outlined for example, Ms. 
Kelley.
    Ms. Kelley. Well, in the, if a lien were filed on an IRS 
employee, they would be looked at very, very closely to 
determine why. And then in the end, they would get down to this 
willful question.
    First and foremost, what they want, and should want, is 
every employee to be in compliance; to, you know, be current in 
their tax filings and in their tax payments, or to be on some 
kind of a payment plan.
    If they were in a lien situation, that could raise a series 
of questions about failure to pay. And it really would depend 
on the specifics of the situation. And the IRS looks at them. 
They take them very seriously, and they look at them very 
closely.
    And I would not attribute the low number of firings that 
seem, you know, that were reported, that everyone has 
categorized as low that Ms. Tucker reported, as meaning that 
the IRS does not take this seriously. It is, they focus on the 
willful, because that is what 1203 says.
    But as I said, before there was ever 1203, the IRS dealt 
with these issues as they always should. I mean, they took it 
seriously, and they had raised the bar. It was a much higher 
standard.
    So in a lot of ways, 1203 really got in the way of them 
doing what they were trying to do, because they were exercising 
judgment on the specific circumstances in a case. Which I think 
is what we would all agree should happen.
    Mr. Rizek. The standards were intentionally set quite high 
in Section 1203, to require termination, since that was the 
only sanction permitted under the provision, only in egregious 
cases. So they required a final determination, it requires that 
the conduct be willful, and it requires that it not be due to 
reasonable cause or neglect.
    Those are all terms of art within the Tax Law, that the tax 
employees of the IRS would clearly understand.
    Ms. Kelley. But I would add that there have been problems 
with it, because willful, what you see as willful can be 
different than what I see as willful. And it is then the 
Commissioner's decision. Only the Commissioner can make the 
decision to not terminate under Section 1203, based on the 
willful determination.
    So it is not a, you know, a test that is pure, and that 
everyone agrees on in every case.
    Ms. Norton. So you would not say that the IRS has unfairly, 
strictly given its opposition in the first place, to the new 
1998 procedure; you would not say that they unfairly applied 
it.
    Ms. Kelley. I would say they worked very hard to put a new 
process in place, which they had to do. They had to create this 
panel to make recommendations to the Commissioner. And they 
worked very hard to put a fair process in place.
    That being said, there have still been a number of 
situations where we disagree that it was willful. But I would 
say in general, they worked very hard to put a fair process in 
place to apply 1203, yes.
    Ms. Norton. Well, what are the issues--Chairman Lynch 
raised this until we had to have this hearing, frankly--about 
the effect of the lien? Because he raises it knowing full well 
that a lien is a lien, and you can have steps before you decide 
to enforce a lien. But you could enforce it once that lien is, 
is there.
    And from your testimony, given willful and the rest of it, 
I gather that even at the IRS, the lien, despite its protection 
of the United States, if it chooses to use it, does not 
automatically attribute I see a lien, your job is gone. That is 
even at the IRS, much less, I suppose, elsewhere.
    At the IRS, a lien shows up. I have not had the opportunity 
to say anything about it, but it is on the books. If I worked 
for almost anybody, they had a piece of paper which they could 
enforce. I wonder if it is the testimony of all of you that 
even at the IRS, one would have to look at things like willful, 
etc.
    Mr. Rizek. It is certainly the case that the mere filing of 
a Federal tax lien against an IRS employee is not grounds for 
termination under Section 1203.
    If, however, the lien has arisen because of willful failure 
to file, they did not file a return at all, or----
    Ms. Norton. But see, you may not know----
    Mr. Rizek [continuing]. Willful understatement----
    Ms. Norton. The employee may not have had the opportunity 
to address willfulness.
    Mr. Rizek. Well, they will always know whether they had 
filed or not.
    Ms. Norton. Yes, by that point.
    Mr. Rizek. OK. So if a Federal tax lien arises because the 
IRS prepares a substitute return, and files a Federal tax lien 
pursuant to that, the taxpayer has plenty of notice about that.
    Ms. Norton. Of course.
    Mr. Rizek. Now, that does not presume that they willfully 
failed to file; they would, of course, have to do an 
investigation of the sort Ms. Kelley described.
    Ms. Norton. Yes. An application, it does not appear that 
the IRS would simply jump on the lien, although that is far 
along in the process.
    Ms. Kelley. No, I was going to suggest actually you might 
want to pose this question to the IRS.
    Ms. Norton. I tried to get it from--she seemed to step away 
from automatic firing, you know, by looking at willfulness and 
the rest of it.
    Ms. Kelley. Right.
    Ms. Norton. And I am trying to find out in practice, since 
the lien troubled many of us because of its legal effects, and 
its immediate legal effect if the entities choose to pursue it. 
We were concerned with particularly going through other Federal 
employees as to whether or not the government would say I have 
a lien, I have not got--I have a lot of work. I now if I try to 
enforce, maybe I will get the attention. The IRS could do that.
    And my question is, would it really do that, especially in 
light of the fact it did not even think that this process was 
necessary in order for it to get compliance with its own 
employees?
    Ms. Kelley. Well, the Employee Tax Compliance Program was 
in place even before 1203, and it continues today.
    When those notices are sent, the four notices that they 
talked about saying that you are delinquent, at some point--and 
this is probably what the IRS needs to answer, because I am not 
sure as to where, at what point in the four notices, and then 
the levy, and then the lien, is the manager given the 
information and told to deal with the employee; to let the 
employee know that, you know, this is--because I can tell you, 
I do not think the IRS would move slowly if they had 
information that an IRS employee had a lien filed against them. 
I think the manager would be calling that employee into their 
office yesterday.
    But I do not know exactly at what point. The manager at 
some point gets involved. And that could be a question for the 
IRS. Because I do not think they would ever be surprised that a 
lien was coming to an IRS employee, because they follow it 
really closely through this Employee Tax Compliance Program.
    Ms. Norton. So all this reference of the IRS notice 
probably well in advance of the lien, and they are trying to 
counsel with the employee ahead of time. Now, imagine that 
happening across the entire government and the annuitants. And 
we are going to counsel you, we are going to deal with you. So 
we have serious concerns about how practical any of this is.
    I have a question. This is from the testimony of Mr. 
Oppedisano. You indicate near the end of your testimony an 
expansion of authority to garnish wages should be considered, I 
take it as an alternative to looking at the, at----
    Mr. Oppedisano. The lien process.
    Ms. Norton [continuing]. What the bill proposes.
    Mr. Oppedisano. Yes.
    Ms. Norton. And why would an expansion be necessary?
    Mr. Oppedisano. First of all, we do not think expansion 
would be necessary, because the provisions of the law are 
already there. But if, in fact, in order to be able to get 
around this legislation, if, in fact, additional IRS rules, 
laws, or regulations could be implemented that would help the 
Federal employer, all American taxpayers, to be able to resolve 
their issues a little bit more judiciously.
    Ms. Norton, I would just like to say one thing. Before we 
came into this room today, I had, one of our members came up to 
me. And she is a single parent. And a few years back she had a 
difficult situation, and she had to make, she negotiated with 
the IRS a payment plan.
    What happened was the IRS failed to process the payment 
plan, the payment book to her, and she never got it. She ended 
up getting a lien applied against her.
    If this law, if this legislation action was in fact law, 
she would have had to have been fired. And that is what we are 
really against.
    Ms. Norton. Did she work for the IRS?
    Mr. Oppedisano. If she worked for any Federal agency.
    Ms. Norton. Well, no, this automatic firing is IRS 
employees.
    Mr. Oppedisano. No, I said if this legislation is passed as 
written.
    Ms. Norton. All right, all right. That is some of the 
practical realities of enforcement have come out only in this 
hearing. These were hardly raised when Members at the markup 
began to raise some of the obvious legal questions.
    I have another question for which I think we would need far 
greater information before proceeding on this bill.
    There is some very scary and bad figures cited about the 
billions of dollars owed by Federal employees. I do not know 
what in the world that means. Owed when? Subject to, subject to 
an employee, subject to contesting? Owed at what point in time? 
You know, no one has indicated what that means.
    Does that really mean, then, that people are carrying 
around years of Federal liability while drawing a paycheck from 
the Federal Government? Mr. Rizek.
    Mr. Rizek. Yes, it does. It means that the tax liability 
has been assessed, which is a formal act entering the liability 
on the books of the United States and making the taxpayer 
liable for it.
    The taxpayer has an opportunity to contest it both before 
that and after that. But if it is assessed and not paid, it is 
carried in that account.
    Ms. Norton. The operative word, Mr. Rizek, is not paid. For 
example, I suppose the example that you have just given, Mr. 
Oppedisano. She is owed that amount until it is paid. Until it 
is paid, it is slated as--I do not know if, in calculating 
these billions of dollars owed, every month they look and see 
how much of it has been paid. They look at when the liability 
was assessed, and these employees owed it. Now they have worked 
out a payment plan, and I do not have any reason to believe 
that somebody is keeping track of how much they pay down until 
they finally do not have any tax liability. Ms. Kelley.
    Ms. Kelley. I think you are right on the mark with that. 
Again, I would, at the risk of suggesting questions you ask the 
IRS, I am going to do that again. Because this is the way I 
understand this.
    They take this snapshot on September 30th each year, of 
dollars owed. So that it is a moving target; for sure, it 
changes. But on September 30th that is the money owed.
    But included in there, if I were to owe $2,000, and I am on 
a 15 percent levy of my wages, I owed $2,000 on September 30th. 
That $2,000 is in there, even though they are taking out 15 
percent every pay period.
    So the next September 30th, whatever they took out of my 
pay, it would be decreased, the amount owed. But I am paying 
that amount, but it is included in the billions that you are 
citing.
    So, you know, you could look at it at first blush and say 
it is owed, and nobody is doing anything about paying. And that 
is not the case. Because everyone who is on a 15 percent 
garnishment of their wages, those dollars are still in there, 
are being carried as due.
    But again, the IRS would really be the ones to clarify 
that, but that is how I understand it.
    Ms. Norton. And a question like that has to be submitted 
for the record. You know, at what point do you assess. And if 
anything, they probably just add ont.
    Ms. Kelley. Well, the next September 30TH----
    Ms. Norton. They add on to this year what you had last 
year.
    Ms. Kelley. The next September 30th anyone new would be 
added, and then any money that was withheld from my garnishment 
would come out.
    Ms. Norton. That would come out, if it was garnished.
    Ms. Kelley. That would come out, because it is not owed any 
more. But the $1,700 I still owe is still there. It was $2,000, 
and now it is, yes.
    Ms. Norton. Perhaps there is a distinction between IRS 
employees and others, I am not sure, especially since the IRS 
opposed the very process that has served as a pilot program for 
what some now want to do to every Federal employee.
    Given the fact that neither this administration or the last 
administration felt, has felt that the fair and reasonable 
thing to do is to apply such a process, I have my serious 
doubts about why anybody would want to proceed after what we 
have learned today.
    And the reason I have doubts is because of how I think 
every hearing should be structured. It is the obligation of an 
agency head to come and defend the agency's practices. You have 
learned nothing about the agency's practices until, as I say to 
my own staff on the committee I chair, until you have heard 
from some real people.
    You represent the real people who would be at the other end 
of the spread, of the IRS procedure across the government. I do 
not speak for any other member of this committee. But speaking 
for myself, having heard realistically how this would apply, 
now knowing that looking at two administrations who do not 
share much in common, neither believe that the present policy 
at the IRS should be in effect.
    I do not see, given your testimony, given what appear to be 
the thoughtful deliberations of two very different 
administrations, why this subcommittee, in the face of the most 
expert testimony we can find, would proceed to spread a bad 
practice across the Federal work force.
    I know I speak on behalf of the chairman when I say at 
least this much: We have benefited tremendously from your 
testimony, and we greatly appreciate your coming to testify 
before us today.
    The hearing is adjourned.
    [Whereupon, at 4:44 p.m., the subcommittee was adjourned.]

                                 
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