[Senate Hearing 114-283]
[From the U.S. Government Publishing Office]
S. Hrg. 114-283
SENATE BUDGET COMMITTEE FIELD HEARINGS FISCAL YEAR 2016
=======================================================================
HEARINGS
BEFORE THE
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
June 8, 2015-PERSPECTIVE ON BUDGET PROCESS REFORM: S. 1495, FAIRNESS
FOR CRIME VICTIMS ACT OF 2015
August 26, 2015-FIELD HEARING ON TAX-RELATED IDENTITY
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
___________
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COMMITTEE ON THE BUDGET
MICHAEL B. ENZI, WYOMING, Chairman
CHARLES E. GRASSLEY, Iowa BERNARD SANDERS, Vermont
JEFF SESSIONS, Alabama PATTY MURRAY, Washington
MIKE CRAPO, Idaho RON WYDEN, Oregon
LINDSEY O. GRAHAM, South Carolina DEBBIE STABENOW, Michigan
ROB PORTMAN, Ohio SHELDON WHITEHOUSE, Rhode Island
PATRICK TOOMEY, Pennsylvania MARK R. WARNER, Virginia
RON JOHNSON, Wisconsin JEFF MERKLEY, Oregon
KELLY AYOTTE, New Hampshire TAMMY BALDWIN, Wisconsin
ROGER F. WICKER, Mississippi TIM KAINE, Virginia
BOB CORKER, Tennessee ANGUS S. KING, JR., Maine
DAVID A. PERDUE, Georgia
Eric Ueland, Republican Staff Director
Warren Gunnels, Minority Staff Director
(ii)
C O N T E N T S
__________
HEARINGS
Page
June 8, 2015-PERSPECTIVE ON BUDGET PROCESS REFORM: S. 1495,
FAIRNESS FOR CRIME VICTIMS ACT OF 2015......................... 1
August 26, 2015-FIELD HEARING ON TAX-RELATED IDENTITY............ 55
STATEMENTS BY COMMITTEE MEMBERS
Chairman Enzi
Ranking Member Sanders
WITNESSES
Peg, J. Dierkers, Ph.D, Executive Director, PA Coalition Against
Domestic Violence
Honorable J. Russell George, Inspector General for Tax
Administration, Department of the Treausy
Honorable John A. Koskinen, Commissioner, Internal Revenue
Service
Chistropher Lee, Senior Attorney Advisory, National Taxpayer
Advocate Service
Diane Moyer, Legal Director, PA Coalition Against Rape
Abbie Newman, RN, Executive Director and Chief Executive Officer,
Mission Kids Child Advocacy Center of Montgomery County, PA
John C. Walker, Enrolled Agent, J. Walker and Company, LLC
Lori Weeks, Straford, Tax-Related Identity Theft Victim
John Whelan, District Attorney, Delaware County, PA
QUESTIONS AND ANSWERS
Questions and Answers
PERSPECTIVES ON BUDGET PROCESS REFORM: S. 1495, FAIRNESS FOR CRIME
VICTIMS ACT OF 2015
----------
MONDAY, JUNE 8, 2015
United States Senate,
Committee on the Budget,
Washington, D.C.
The committee met, pursuant to notice, at 10:00 a.m., in
the Martin G. McGuinn 67 Ceremonial Courtroom, Second Floor,
Villanova University School of Law, 299 North Spring Mill Road,
Villanova, Pennsylvania, Honorable Pat Toomey, presiding.
Present: Senator Toomey.
Staff Present: Adam Kamp, Chief Clerk; and Gregory Dean,
Republican Chief Counsel.
OPENING STATEMENT OF SENATOR TOOMEY
Senator Toomey. Good morning. I will call to order this
hearing of the Budget Committee of the United States Senate.
I want to, first of all, welcome everyone for being here,
for joining us this morning. I want to thank our witnesses. I
will provide an introduction and more formal acknowledgement
and thanks in just a minute, but I really appreciate your being
here and making this possible. And, a big thanks to our host,
the Villanova Law School. I really, really appreciate their
willingness to provide an outstanding facility so that we can
do this.
Just for your information, I am a member of the Senate
Budget Committee and the committee has rules that permit
individual members to have field hearings across their
respective states, but it is unusual to do it. It has to be
approved by the leadership of the committee. And, this is the
first field hearing that I have done since I have joined the
Senate and joined the Budget Committee. But, I have chosen this
topic because I feel very, very strongly about it. I think the
problem that we are going to discuss this morning and the
remedy that we have developed is really very, very important,
and I hope that through the discussion this morning we will be
able to shed some light on this and call some attention to the
situation that we face. So, thank you for helping us to
accomplish that.
The fact is, every single year, victims of child abuse,
sexual assault, domestic violence, and other crimes do not
receive the full services that they need. The fact is, abused
children sometimes wait weeks before they can receive the full
medical and emotional services that they need. There are rape
victims who are not able to obtain the medication that can
prevent them from contracting HIV/AIDS. There are victims
fleeing domestic abuse who are unable to find beds for
themselves and their children.
And, this does not have to happen this way. Every year, the
federal government takes hundreds of millions of dollars,
sometimes billions of dollars, that under federal law are
required to go to the victims of crime and the government
instead diverts those monies to other discretionary spending
programs. And, none of this money comes from taxpayers in the
first place.
So, you are probably asking yourselves, how can this
happen? Well, it happens through the Crime Victims Fund, and I
am going to describe this. Back in 1984, Congress created the
Crime Victims Fund based on a simple principle, and the
principle is that money that the federal government collects
from those convicted of crimes should be used to help those who
are victims of crime. The Crime Victims Fund receives no
taxpayer dollars at all. It is funded entirely by criminal
fines and penalties collected in federal courts.
So, even though money deposited in the Crime Victims Fund
is supposed to be used only to assist crime victims, for over a
decade, Congress has withheld billions of dollars from victims
and instead used that money to offset other discretionary
spending programs.
For instance, from fiscal years 2010 through 2014, the
Crime Victims Fund collected $12 billion, but dispersed to
victims only $3.6 billion. Congress used the $8.4 billion
difference as an offset for other discretionary spending. And,
through a budget gimmick, a gimmick in the rules by which
Congress accounts for its spending, Congress represents that
this money, money that has already been spent, is still
available to the Crime Victims Fund and, therefore, still
theoretically available for victims.
Well, this gimmick is troubling from a transparency point
of view. It is just dishonest budgeting and it allows Congress
to under-report the amount of money that is being spent. But
even more troubling is the problem from the victims' services
standpoint. As I said, victims of child abuse, sexual assault,
domestic violence, and other crimes are routinely unable to
access the help that they need because the funds have not been
dispersed as they should.
So, we have made some progress in recent years. I was
pleased to see, in response to pressure that many of us were
putting on the appropriations process, the fiscal year 2015
budget, the Crime Victims Fund allocation was $2.3 billion,
versus $745 million the previous year. So, we about tripled the
allocation from the Crime Victims Fund.
And, in addition, the budget resolution that we just passed
a couple of months ago, at my insistence, it dramatically
curtails this gimmick for the next fiscal year. So, in 2016,
according to our budget resolution, the Crime Victims Fund will
disperse about $2.5 billion. Again, we are holding--actually
increasing modestly from last year's level, which is itself
three times higher than previous years.
So, what is the impact in Pennsylvania? In 2014,
Pennsylvania crime victims services organizations received $17
million. Next year, that will be $70 million. So, it is a big
increase. It is a good start. It is movement in the right
direction.
But, it is only a start because these provisions that
caused the increase in fiscal year 2015 and 2016, they are
temporary. They expire when the funding expires. They expire at
the end of those fiscal years. So, what we need is a permanent
legislative fix that simply requires that we end this injustice
and we start allocating the funds in the Crime Victims Fund
each and every year as the law has always contemplated, but not
delivered.
So, to do this, I have introduced a bill. It is called the
Fairness to Crime Victims Act of 2015. It is S. 1495. And, it
would provide a permanent fix. The bill would ensure that,
henceforth, money deposited into the fund goes to crime
victims, not to other discretionary spending or budget
gimmicks. It would require specifically that each year, the
Crime Victims Fund disperse the average of the past three
years' collections. So, it smooths out the amounts deposited
into the funds each year. That would be over $2.6 billion for
2016. I have six cosponsors on my legislation, Senators Ayotte,
Corker, Crapo, Gardner, Hatch, and Johnson.
And today, I am grateful that we are joined by four
advocates for victims of crime, advocates who can inform our
committee of the needs of crime victims, the way that they
serve crime victims, and including those victims listed as
priority groups under the Crime Victims Fund, which are
specifically the victims of sexual assault, victims of child
abuse, and victims of domestic violence.
So, my hope is, again, that we will shine a bright light on
the true cost of this budgetary gimmickry that Congress has
undertaken and the true cost is the lost service to crime
victims who need this service. If we are successful in shining
that light, it is my hope that we will build support in the
Senate Budget Committee. I expect that we will have an
opportunity to pass this legislation in the committee as soon
as the next several weeks, and then it will be a fight to get
this on the Senate floor so that we can pass it into law and
implement this.
So, again, big thanks to our witnesses. I am going to
introduce our--I will introduce each of the witnesses and then
I will ask for your testimony, and then we will have time for
some questions at the end.
Let me start with Jack Whelan. Jack Whelan is the District
Attorney of Delaware County. Jack has been dedicated to
criminal justice for decades. Back in the 1980s, when he was an
Assistant District Attorney in Delaware County and a trial team
leader, he led the respected law firm of Whelan, Doyle, and
Pressman. He served two terms as Chairman of the Delaware
County Council, where he made public safety a top priority.
Since 2011, when he became the District Attorney for Delaware
County, Jack has led on several issues, including founding the
Delaware County Heroin Task Force to raise awareness about
prescription drugs and heroin abuse.
He has received many honors from victims' rights groups and
victim advocacy groups. I am very pleased that in April, the
Delaware County Children's Advocacy Center had its official
opening, and I know that the Children's Advocacy Center
appreciates having a talented and dedicated ally in Jack
Whelan.
Next, we will hear from Abbie Newman. Abbie is the
Executive Director and CEO of Mission Kids Child Advocacy
Center of Montgomery County, and Abbie has been a tireless
advocate for children. She began her career as a registered
nurse practicing pediatrics. But after graduating from law
school, she in time became the founding Executive Director of
the Mission Kids of Montgomery County and served as the group's
Executive Director and CEO to this day. Ms. Newman also served
as President of the Pennsylvania Chapter of Child Advocacy
Centers from 2012 to 2014, when she was elected as First Chair
of the External Affairs Committee of the State Chapter, in
which position she continues today.
I want to thank Abbie very much and the other advocates at
Child Advocacy Centers throughout Pennsylvania. I have had an
opportunity to tour probably six or eight Child Advocacy
Centers in Pennsylvania and I have been very, very impressed at
how devoted these folks are to serving kids who are the victims
of some of the most horrendous circumstances. They really do a
wonderful job, and Abbie, I want to thank you for joining us
today.
Next, we will hear from Diane Moyer. Diane is the Legal
Director at the Pennsylvania Coalition Against Rape. Diane is a
fighter and she has been fighting for victims of sexual assault
for decades. She served for 18 years as the Legal Director of
the Pennsylvania Coalition Against Rape, which is the oldest
anti-sexual violence coalition in the nation. The Pennsylvania
Coalition Against Rape oversees 50 Rape Crisis Centers in
Pennsylvania. I had the opportunity to visit one of these, the
Pittsburgh Action Against Rape Center, and saw firsthand the
valuable work that they do.
Diane is a board member of the National Crime Victims Law
Institute and the National Alliance to End Sexual Violence. She
has worked on many pieces of legislation to achieve justice for
victims of sexual assault, including legislation on HIV testing
of sex offenders, extending civil statute of limitations for
child sexual abuse, denial of bail for violent predators, and
many others. Diane has also received awards from numerous
organizations reflecting the great work that she has done over
many years, and she has been invaluable in helping to craft the
Fairness for Crime Victims Act. I appreciate all of your help,
Diane.
And then, finally, Peg Dierkers. Peg Dierkers is the
Executive Director of the Pennsylvania Coalition Against
Domestic Violence. Peg is dedicated to providing the best, most
innovative and comprehensive service possible for victims of
abuse. She has been the Executive Director of the Pennsylvania
Coalition Against Domestic Violence, which serves nearly
100,000 victims in Pennsylvania each year, and serves on the
Victims Services Advisory Committee for the Pennsylvania
Commission on Crime and Delinquency.
Peg and her policy advisor, Abigail Hurst, have been very,
very helpful in drafting the Fairness for Crime Victims Act and
I look forward to continuing to work with you, Peg, to prevent
and assist victims of domestic violence.
So, with that, we will begin our testimony, and first, I
would like to hear from District Attorney Jack Whelan.
STATEMENT OF JACK WHELAN, DISTRICT ATTORNEY, DELAWARE COUNTY,
PENNSYLVANIA
Mr. Whelan. Thank you, Senator. I want to start by saying
it is an honor for me to appear before you today, and I want to
take the opportunity to thank you for your leadership, not only
today for the Fairness for Crime Victims Act, but your past
leadership, for example, as you mentioned, in regard to our
heroin epidemic here in Delaware County, for your bipartisan
efforts on the National All Schedules Prescription Electronic
Reporting Reauthorization Act, as well as what we will be
talking about a little bit today, the sexual abuse and how you
were sponsoring the Protecting Students from Sexual and Violent
Predators Act, all which will be very important in Delaware
County.
Unfortunately, we are here in Delaware County and it is
unfortunate to the extent that we probably are the third
highest county in the State of Pennsylvania with our crime
hitting 10,000 cases a year and 4,000 separate juvenile cases.
So, we are, we believe, statistically speaking, we are third in
the state. We have the largest District Attorney's Office after
Philadelphia, Pittsburgh, and then we are third in regard to
personnel in our efforts to combat crime.
We are very fortunate, though, that we have advocacy groups
that we partner with. Those advocacy groups, some of them are
here today. Joyce Dale is here with us from Women Against Rape,
and the Family Support Line that is running our Child Advocacy
Center, Pat Krasinski, and our Domestic Abuse Project. These
are victim advocacy agencies, nonprofit groups that work on a
daily basis. They work each and every day to support crime
victims. We in the District Attorney's Office are fortunate to
be able to partner with them so that when we are prosecuting
the case, we know that there is a victim advocate for each and
every victim of a crime.
To put it in, I guess, a form of a perspective, if you
drove here today and you drove and you pulled into Villanova
University in your vehicle, and when you leave these hearings
today, if you went out and your car was stolen, that would
affect you. It is going to seriously inconvenience you. You are
a victim of a theft, an auto theft, and it is going to bother
you.
But one thing I am told by people that have their car
stolen, although it has not been a devastating crime or a
devastating impact, each one person that has had their car
stolen will never forget the fact that they had their car
stolen, and will never forget the fact that when they left
Villanova at the Senate committee hearing, that they went out
and their car was taken from them and the inconvenience that
they suffered.
Now, when you look at that with a simple theft crime and
how you feel victimized, and now you compare that to an
individual that has been sexually abused, or an individual that
has been raped, an individual that has been beaten violently,
these individual victims will never, ever forget. Not only will
they never forget what happened, but they will never be the
same when that crime occurs to them. For the rest of their
life, they will never, ever be the same.
So, it is critical to have our victim advocacy groups.
These are groups of individuals that operate 24-hour hotlines
that the victim can call, even sometimes before the police are
involved. It is important, because not only do they encounter
that victim, follow that victim through the criminal justice
system, they provide services to that victim that no other
entity can provide, for example, counseling, whether that
counseling be support groups or psychological counseling. All
of this is money that is very well spent.
But, one of the complaints or concerns of all of these
victims' rights advocacy groups is the fact that we do not have
enough resources. We can always use more resources to help the
victims here in Pennsylvania. They do an incredible job, and
they make ends meet with what they have, but they need more
resources.
Recently, as you indicated, the Child Advocacy Center here
in Delaware County was opened up and they are now still needing
additional resources to help these children. Unfortunately,
what we have seen when the Child Advocacy Center opened up is
an onslaught of individuals that now are being interviewed. We
have a couple of trained forensic interviewers. One is here
with us today. However, we need more interviewers. We need more
people ready and willing to help to deal with these impacts of
child abuse, because the children deserve more. They deserve to
be taken care of, into the criminal justice system.
Many times when we thrust these young victims into a very
difficult scenario, a situation where they are being placed
into a courtroom and we are directly examining them, and then
they are cross-examined, then it becomes difficult. The Child
Advocacy Center lessens the impact of these individuals. So, it
is very important.
We are also happy here in Delaware County that the Internet
Crimes Against Children Unit is housed right in Delaware
County, in our Criminal Investigation Division, and that is
funded by the Department of Justice. And, for many, many years,
under the leadership of Congressman Meehan, we have been able
to support that through federal funding and continue to go
across the State of Pennsylvania, partner with affiliates to
make sure that children are not being victimized additionally
with Internet applications.
So, when we look at different scenarios that occur,
unfortunately, whether it is rape or it is child abuse or it is
domestic violence, we are in the throes of all of this and it
is important that we continue to be advocates of these victims,
and it is important to make sure that the resources are
available for all of our victims' groups.
And, I thank you for having this opportunity to address
you.
[The prepared statement of Mr. Whelan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Toomey. Thank you, D.A. Whelan. Thank you very much
for your testimony. Your written testimony, I appreciate, as
well, as I read that last night. That will be submitted for the
record and I appreciate it.
Next, Ms. Newman, thank you for joining us. Your written
testimony also will be submitted to the record, but I invite
you now to give us your oral testimony.
STATEMENT OF ABBIE NEWMAN, R.N., EXECUTIVE DIRECTOR AND CHIEF
EXECUTIVE OFFICER, MISSION KIDS CHILD ADVOCACY CENTER OF
MONTGOMERY COUNTY, PENNSYLVANIA
Ms. Newman. Good morning, Senator Toomey, and thank you. I
do not think that my voice carries quite as far as Mr.
Whelan's, so I am going to have to move closer to the mic over
here. Thank you for the opportunity to testify here today on
how we can continue working to help heal and obtain justice for
Pennsylvania children who have been victims of sexual
predators. You are a great leader on the issue of preventing
child abuse and helping survivors of child abuse have access to
all of the services they need to heal.
My Child Advocacy Center, Mission Kids, is an accredited
member of the National Children's Alliance. We proudly support
your Protecting Students from Sexual and Violent Predators Act,
which seeks to help keep child predators out of our nation's
schools. The bill also bans ``passing the trash,'' that
terrible practice where a school can knowingly help a predator
get a job someplace else so they become another district or
state's problem.
We also appreciate your cosponsorship of the Justice for
Victims of Trafficking Act, which President Obama just signed
into law. This law gives law enforcement additional tools to
find traffickers and increases fines and penalties and reserves
the money to fund services for trafficking victims, and we very
much appreciate that the first $2 million collected will go to
Child Advocacy Centers to help fight this, as well.
And, we are very excited to work with you on the Fairness
for Crime Victims Fund Act. I would like to speak for a moment
on how the Crime Victims Fund could help Child Advocacy
Centers, which in shorthand are known as CACs, across
Pennsylvania and the country by explaining the purpose of CACs
and the difference that CACs make.
CACs are designed to help victims of child abuse through
every step of the justice system and to obtain medical and
emotional care. The need for CACs is best explained by one
adult survivor of child sexual abuse. This person saw an ad
that we created and the ad simply said, ``Imagine living the
worst day of your life over and over and over.'' When this
person saw the ad, he came to me and he said, ``I saw that and
what clicked in my mind is that it was actually two worst days,
the day of the abuse followed by the day of the
investigation.''
Child sexual abuse is a crime of secrecy. Child abusers
groom their victims and take months or years to make the child
that increasing touch is acceptable behavior. By the time the
abuse takes place, the child may feel that they are to blame,
and since 50 percent of the time the abuser is a family member,
and over 90 percent of the time it is someone in a close
relationship to the family, who is going to believe if they
tell anyway?
The mission of the CAC is to achieve healing and justice
for victims of child abuse. At a CAC, police, prosecutors,
social workers, medical and mental health professionals, and
child advocates work as a team to help that child at every
step, from investigation through prosecution to receipt of
specialized medical help and mental health counseling. The goal
is to limit additional trauma to the child and ensure that the
child receives specialized needed services as quickly as
possible.
In communities without a CAC, if a child is brave enough to
report abuse, they are often required to retell and, thus,
relive the abuse through multiple repetitive interviews with
social workers, prosecutors, police, victims' services,
medical, mental health counselors, and they do it in places
like an emergency room or a police station. Think about it.
When you are a kid, you go to the police station because you
are a criminal or you are bad.
The child does not understand that somebody there is trying
to help them, and often, because the adults are not properly
trained, they use techniques which are very much more like
interrogations than something designed to actually get the
child's story from the child. And, too often, the child is not
receiving the needed medical attention and mental health
counseling, and the result is that the very professionals that
are trying to help this child end up retraumatizing them over
and over again.
There is another danger to this typical approach of
multiple interviews, and I am sure that Mr. Whelan and every
other prosecutor who has prosecuted a child abuse case has
found it, which is that when you have slightly differing
testimonies and slightly different statements, which happens
whenever different people hear it--we all hear things
differently--then you have different statements that a defense
attorney can pick apart later on in a courtroom.
If the case reaches trial, the child often does not have
the strength to tell their story again, this time in a
courtroom not dissimilar to where we are sitting, with a judge
in a big black robe, 12 strangers, and the abuser staring at
them, and then undergoing cross-examination by the defense
attorney. The prosecution will often fall apart and the child
and family are left in a much worse situation than before the
abuse was even reported.
CACs make the child the focal point. All of the
professionals come to the child, as opposed to making the child
travel to the separate agencies. The child's experience starts
when they are greeted by a professional, child-friendly staff
at a center, which often resembles a pediatrician's office or
after-school environment to make them feel comfortable. The
child is then interviewed by a highly trained forensic
interviewer. Forensic interviewers are responsible for
obtaining a statement in a manner that is developmentally
appropriate, using open-ended and non-leading questions that
will not taint the interview further.
Members of the multi-disciplinary team, made up of police,
social workers, and prosecutors, are able to observe the
interview live, often on closed circuit TV in the next room, so
that they can see the nuances of a live interview. They can see
the child's reaction. They can see facial expressions. And then
they get a chance to sit and talk with each other, because one
of the best things about a CAC model are watching these
professionals share information in that observation room,
because prosecutors and police and social workers all come to
this process from different backgrounds, and all of a sudden,
things and statements that are black and white to them as
individuals become gray as they talk to each other. All of the
result is a better investigation for all of them and a better
outcome for the child.
Victim advocacy services are begun as soon as the child
arrives and a relationship of trust begins to build. While the
child speaks to the forensic interviewer, the family members
meet with a trained advocate. Many families are so overwhelmed
by what they are going through that they do not even understand
the need at the time for mental health services for themselves
and their child, and the advocate will help them to understand
that need and set them up with the very specialized services
that they need.
Children often react in different ways to child abuse. The
reactions can be severe, such as depression or suicide, or they
could be very vague--bed wetting, becoming introverted, or
promiscuity, a decline in grades, or an over-achiever. Or, they
may not even--the symptoms may not manifest themselves until
sometime later in life when some life event triggers what
happened to them and their experience.
Bluntly put, CACs need more funds. Every child victim
desperately needs help, but due to funding shortfalls, that is
not always possible. The prevalence of child abuse is
staggering. At Mission Kids alone, which serves only Montgomery
County, Pennsylvania, we have done over 2,300 forensic
interviews in five years. Between ten to 20 percent of all
children will be victims of child sexual abuse before the age
of 18. In Pennsylvania, 23 counties have a CAC, but 44 do not,
often due to inability to fund a CAC. Nationwide, 1,000
counties have no access to CACs. Some counties are attempting
to begin a center like Mission Kids or use services of CACs in
nearby counties, and some still have no CAC services at all.
Many of the nation's CACs have one or two victim advocates
for 900 children. It is not uncommon to hear in Pennsylvania,
as you noted, that there may be a wait time of three to six
weeks for mental health services or two to four weeks for non-
emergency forensic interviews.
Your Crime Victims Fund bill will make a huge difference to
the abused children of Pennsylvania and across the country.
Thank you for your help and caring about the most vulnerable
victims in our society.
[The prepared statement of Ms. Newman follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Toomey. Ms. Newman, thank you very much for your
testimony.
Next, we will hear from Ms. Moyer. Again, your written
testimony will be included in the record and I welcome your
oral testimony.
STATEMENT OF DIANE MOYER, LEGAL DIRECTOR, PENNSYLVANIA
COALITION AGAINST RAPE
Ms. Moyer. Thank you, Senator, and thank you for being a
champion on not just VOCA, but so many other issues that other
elected officials find it either too difficult to deal with or
they are interested in other things. But, you have been a
champion for those who cannot speak for themselves and I
appreciate that and will never forget your devotion to this
issue.
I am Diane Moyer and I want to thank Chairman Enzi, Ranking
Member Sanders, and you, Senator Toomey, for the opportunity to
testify here today. The Senator talked about what sounds like a
lot of work, and was, but after 18 years, if I did not have a
lot of marvelous things to say about having helped victims,
then I would not be doing my job.
I want to thank you, Senator Toomey, for your unwavering
commitment to victims of sexual assault, and I do want to read
this into the record.
The Pennsylvania Coalition Against Rape is proud to support
the Protecting Students from Sexual and Violent Predators Act,
the bipartisan bill introduced by you and Senator Joe Manchin
of West Virginia. The bill works to stop sexual predators from
infiltrating our children's classrooms by requiring schools
that receive federal funds to conduct background checks on
employees. When you say that sentence out loud, it just seems
so absurd that we do not do that already, when we trust our
children with these teachers every single day. The bill also
forbids a school from allowing a child molester to resign
quietly and then find a new teaching job elsewhere, and that
has happened nationwide.
We thank you for cosponsoring the Justice for Victims of
Trafficking Act. It is another issue that people are reluctant
to talk about that happens all the time. And, I would like to
acknowledge Villanova's own Shea Rhodes, who is here, for her
work on trafficking, which is groundbreaking and necessary. The
President recently signed that into law. Human trafficking is a
modern form of slavery. Vulnerable people, often women and
children, but also men and boys, are forced into prostitution,
often raped hundreds or thousands of times. We appreciate your
leadership in ensuring that traffickers are punished and that
additional funds are available for victims of trafficking.
We are also happy to have the opportunity these past months
to work with you in drafting the Fairness for Crime Victims
Act, which will ensure a steady increased funding stream--
sensible--from the Crime Victims Fund. While some of our
elected officials voice support for victims of sexual assault,
you have acted. While others join the occasional bill and then
forget when they face any opposition, you have been unrelenting
in fighting for victims of sexual assault, continuing to fight
on both the Protecting Students Act and restoring fairness to
the Crime Victims Fund, despite unbelievable opposition and
obstacles.
I would like to talk about some of the unmet needs of PCAR
and its member programs, and I would also like to acknowledge
the presence of some of the directors of our premier programs,
Barbara Clark and her policy person, Julie Dugery, who does
policy work in addition to being one of the best advocates in
the state. Mary Onama and Barbara Clark, these women have
dedicated their lives to victims of sexual assault, and I
wanted to give them recognition. Thank you for indulging me in
that.
PCAR and our network of programs have consistently been
good fiscal stewards of funding. However, as the identification
of new issues and institutions addressed grows with our
knowledge of victimization, the demands on services, education,
and community awareness are stretched to the limit. We realize
that outreach and messaging to different populations must occur
in order to achieve our goal to eliminate sexual violence.
As I have noted earlier, Senator Toomey has been a champion
for victims of trafficking, who have an incredible continuum of
needs that far exceeds most victims, including housing,
addiction, alternatives to incarceration, trauma informed care,
and accompaniment to medical and legal proceedings. We have
always provided services to men, but appropriate outreach must
ensure that these victims--that they will be treated with the
dignity and care that they deserve.
We have worked extensively with military victims, and our
CEO, Delilah Rumburg, was a civilian co-chair of the Defense
Task Force on Sexual Assault in the Military Services, and it
is incredible what the military has been able to do in
addressing the issue of sexual assault and as a leader for the
rest of the nation. Ms. Rumburg was also on the Task Force on
Child Protection in Pennsylvania as well as a member of the
White House Advisory Council on Violence Against Women.
Our leader has provided cutting-edge knowledge of sexual
assault to these issues and has brought to the Commonwealth an
urgency to treat the spectrum of victimization to programs in
Pennsylvania and across the nation. Our programs have indicated
just a few issues, the need for SANE Nurse programming,
prevention education needed to reach boys and men--we know that
it is different than the outreach that we have been doing for
decades to women and girls and it is so important that every
victim have access to services--collaboration with CACs and
multi-disciplinary teams, counseling services under PREA, cyber
crimes, prevention education at universities, storage,
analysis, and victim notification about the testing of rape
kits, transportation costs in our rural programs--people do not
realize just how rural Pennsylvania is, that it is just not
Pittsburgh and Philadelphia, we have quite a few counties in
between--and the hiring and retention of qualified advocates.
We know that you do not get rich doing this work, and you
have to do it with a certain amount of heart and passion, but
we believe that some of this Crime Victims Fund money should go
to establish and maintain qualified staff and prevent turnover,
because we need consistency in the treatment of these victims.
And, we hope we can--I know you are not supposed to ask for
money for salaries, but these people commit their lives to
working with traumatized people every day, and I know they do
at the CACs, as well. And, I know even though the District
Attorneys may not admit it all the time, it is pretty intense
for them, too.
Finally, we have learned from providing services to victims
that victims' compensation must be allowed to cover HIV
medication to prevent this deadly disease. This medication is
costly and usually not something that victims have the ability
to pay for up front. Also, victims are often charged later for
ambulance services that they did not call for, and imagine the
trauma when the bills arrive for that service weeks after the
assault. I urge the coverage of these costly but critical
services for victims who through no fault of their own face
financial retraumatization.
We applaud the leadership of our Senator, Pennsylvania's
Senator, in funding for crime victims and those brave advocates
who provide services in our Commonwealth and across the
country. I urge Congress to join Senator Toomey and his really
marvelous staff in the swift and certain passage of this
legislation.
Thank you, sir.
[The prepared statement of Ms. Moyer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Toomey. Thanks very much, Ms. Moyer, for your
testimony.
Dr. Dierkers, your written testimony, as well, will be
included in the record, and I invite you to share your oral
testimony with us.
STATEMENT OF PEG J. DIERKERS, PH.D., EXECUTIVE DIRECTOR,
PENNSYLVANIA COALITION AGAINST DOMESTIC VIOLENCE
Ms. Dierkers. Good morning. I also would like to thank the
committee leadership and you for conducting this hearing and
for inviting me to represent the interests of our 60
Pennsylvania Domestic Violence Centers and the thousands of
victims and children they serve every day.
At this time, I would like to recognize the hard working
and dedicated advocates who have joined us here today: Mary Kay
Bernosky from Berks County Women in Crisis; Maria Macaluso,
Women's Center of Montgomery County; Linda Thomas and Lauren
Bucksner from A Woman's Place in Bucks County; Sally Casey,
Schuylkill Women in Crisis; Beth Sturman, Laurel House,
Montgomery County; Elise Scioscia, Director of Public Policy at
Women Against Abuse in Philadelphia; and Kristen Wooley at
Turning Point of Lehigh Valley.
PCADV is an alliance of independent, private, nonprofit
organizations that provide services and advocacy on behalf of
victims of domestic violence and their minor children. The
coalition was established in 1976 and is actually the oldest
statewide domestic violence coalition in the nation. And since
then, we have helped each state in the union establish their
own state coalition, and now the six U.S. territories have
State Domestic Violence Coalitions, as well.
We have grown over our 40 years of service to a membership
of 60 centers that provide services to every single one of the
67 counties in Pennsylvania. Our member organizations are
required to provide a range of holistic services, including
emergency hotlines, shelters, counseling programs, safe home
networks, legal and medical advocacy, and transitional housing,
not only for the direct victim of abuse, but also their
children. During the last fiscal year, as you said, our centers
helped more than 85,000 Pennsylvanians, including over 7,000
children.
Unfortunately, 141 people lost their lives due to domestic
violence homicide in 2014, 60 percent by the use of a gun, and
we must do more to keep guns out of the hands of abusers.
The Victims of Crime Act funds provide vital resources for
both the victim and for the people trying to assist them, as
you said, with no additional burden to taxpayers. In
Pennsylvania, they are used for a wide range of critical
services for victims of domestic violence, including crisis
counseling, emergency legal advocacy, shelter and transitional
housing, emergency financial assistance, and emergency hotline
response.
PCADV strongly urges the Pennsylvania Commission on Crime
and Delinquency, who disburses these funds to our various
counties to continue funding for these basic services that I
just described while also considering emergency issues and
unmet needs.
I want to amplify the emerging issues that Diane Moyer has
mentioned, the first being the issue of human trafficking, both
nationally and at the state level. The General Assembly signed
Act 105 into law during this last legislative session, and
there is a great need in Pennsylvania for us to create a model
of service and to train law enforcement as well as victim
service providers to be able to help these minor victims and
adult victims of human trafficking, and they have very unique
needs that will require many more resources.
Again, as Diane mentioned, we are more and more aware that
serving male victims of crime, especially in cases of domestic
violence and sexual assault, call for additional resources,
both for staffing as well as to outreach men and help them
overcome the social stigma and the barriers that they face.
Regarding unmet needs, the Coalition and its 60 centers
have been forced to live with less as a result of nearly a
decade of flatlined funding by the state, as well as the loss
of some federal funds, as well. As a result, we often cannot
meet the growing requests for services from our communities.
Last year alone, our 60 Domestic Violence Centers reported
6,152 unmet requests for shelter due to the increased demand
from increased public awareness about the issue of domestic
violence and the inadequate resources to serve these victims.
Every year, our national network participates in a one- day
census, the results of which have just been published for 2014,
and they are staggering. In one day in Pennsylvania, our
network of 60 centers helped 2,498 victims of domestic
violence, including 713 children. Of these services provided in
that one day, 80 percent of the victims received emergency
shelter, 80 percent received legal advocacy. However, in that
same day in Pennsylvania, there were 252 unmet requests for
services which could not be provided because programs, although
they have the expertise, did not have the resources to meet the
need.
And, although our advocates do not always know what happens
to victims who are turned away, and we do everything we can not
to turn them away, our centers report that 60 percent of
domestic violence victims for whom there are no services that
day return to their abuser. Thirty-two percent become homeless,
and eight percent are forced to live in their cars in order to
escape the abuse. These numbers provide the realistic answer to
the too common and unfortunate question of, ``Why doesn't she
just leave?''
Releasing additional VOCA funds can do so much to ensure
that there will be adequately funded services available to help
each time the victim has the courage to seek help.
When there is an unmet need in the community, PCADV
recommends that VOCA funds be used first to expand existing
capacity before new organizations are developed. It is an
efficient strategy that will reduce overhead in communities
while investing in agencies with a proven track record of
success, many of whom are here with us today.
We also hope that VOCA funds will support services that are
broad and holistic, that ensure confidentiality and a sole
allegiance to the victim.
We would also hope that VOCA funds can continue to be used
to provide services regardless of whether a victim chooses to
involve the criminal justice system. For domestic violence
victims, this is especially important, as most of the justice
they receive actually comes through the civil system and not
always through the criminal system. These preferences empower
and protect victims while honoring them as experts as to the
safest way to support them in a journey to become survivor.
We do recognize, also, the national need for a designated
Tribal funding stream, and although Pennsylvania is not home to
Tribal nations, many indigenous people live in our
Commonwealth. PCADV supports the funding for Tribes in light of
our work to overcome oppression for all people.
As I bring my testimony to a close, I would like to talk
about one more service, one of the most requested services of
domestic violence victims and one that we hope can be expanded
with the expanded resources of the Victims Crime Act. Whatever
data point we look at, legal services is one of the most
requested supports by survivors of domestic violence. The
tactics of abuse create safety, economic, and child safety
issues that can only be corrected with knowledgeable legal
assistance and the help of the courts. And, again, as I said,
often, it is the civil court system.
Yet, we only have the resources in Pennsylvania to operate
legal services in 15 counties, leaving victims and their
children in 52 counties without help. Our 15 civil legal
representation sites helped more than 4,000 victims last year
at a low cost of $317 per case. Impact and value like this is
rarely seen in the human services system.
One of our Domestic Violence Centers that are here today,
Women Against Abuse, was able to provide legal assistance to a
survivor named Kendra in a custody case against her child's
father. Before Kendra came to Women Against Abuse, she already
had a protection-only order against her abuser, Mike, for a
long history of abuse. Mike started arguing during a visit with
the child and Mike put Kendra in a chokehold and wrestled her
to the ground with one arm while holding their three-month-old
child. Kendra was eventually able to get up and run into the
bedroom to call 911. The police arrived on the scene of assault
and arrested Mike.
Kendra was shortly thereafter connected with Women Against
Abuse, where an attorney in the civil legal project was able to
assist in modifying her protection order to include no contact,
and importantly, to file an expedited custody order to also
help the child escape abuse, and Kendra was granted immediate
primary custody of her baby. Women Against Abuse continues to
help Kendra, because custody cases are very long. This is not a
legal need that can be performed typically with pro bono
services. And, Kendra has remained safe--Kendra and her child
have remained safe from her abuser.
So, we, too, urge Congress to pass your Fairness for
Victims Act, S. 1495, and to disburse the Crime Victims Fund
with the average of the past three years' deposit. With that
ample balance that you described in the Crime Victims Fund, now
is the time to create a stable and sustainable funding formula
and to release that additional money for the purpose Congress
intended and for which it has been collected.
Again, I want to thank you for the championing of many
issues, including this one, and your support of victims.
[The prepared statement of Ms. Dierkers follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Toomey. Thank you very much, Dr. Dierkers.
I would like for my first question to ask Ms. Newman and
D.A. Whelan both to give their perspective. It seems to me, and
having toured a number of the CACs, there are multiple
objectives that you are trying to accomplish when a child is
brought in for an interview. You want to determine what type of
treatment this child might need, what kind of harm has been
sustained. There is the interest in trying to protect the child
from future abuse of whatever kind. And, of course, there is
the interest in prosecuting the perpetrator. These are very,
very different objectives and different goals, and as I
understand it, you would try to achieve progress on all of
these in one place through one or a brief number of interviews.
So, my question to Mr. Whelan, who comes at this from a
prosecutorial background, and Ms. Newman, who comes from a
nursing background, very, very different backgrounds with a
very different sort of focus, how does it work? How well does
it work when you try to achieve these very different objectives
in the same place at the same time?
Mr. Whelan. Well, certainly, from the prosecutor's
standpoint, we want to take dangerous criminals off the street.
We want to take child abusers off of the street and prevent
them from re-offending to prevent the crime from occurring
again. But, we also have to realize the compassion associated
with these type of crimes, and the compassion is dealing with
the victims of these type of crimes, whether they are children
or adults.
That is why we have been advocates of these centers. These
Child Advocacy Centers are important, because they are
important because they protect the child. As Ms. Newman alluded
to during her comments, she had indicated--and this is what we
are experiencing--if the child is a victim, that child then
reports it typically to the parent or trusted adult who call
the police. The police come in and then the child tells their
story, exactly what occurred, to the police. Then they may go
to the hospital, tell their story again. And then we have
detectives interviewing the child again, and it goes on and on
with the child being interviewed multiple times.
The problem is, as was pointed out by Ms. Newman, every
time the child deviates, even slightly deviates, from what they
explained to the previous provider, then the defense attorney
in the criminal case will try to make the child sound like they
are lying through cross-examination.
Senator Toomey. And, just to be clear, the deviation might
be just remembering things one time that were forgotten a
different times and that sort of deviation.
Mr. Whelan. Correct, or remembering more than they did
before.
Senator Toomey. Right.
Mr. Whelan. Now, all of the sudden, they remembered more,
and all of the sudden they are being faulted for remembering
more, or maybe the first interviewer did not conduct a thorough
interview and now the defense attorney is going to twist--and
they are doing their job under the Constitution, but they are
going to twist the words of the child and they are going to try
to convince the jury who sits up in these courtrooms that the
child is not being sincere, and in those particular cases, our
burden of proof is beyond a reasonable doubt, and in those type
of cases, many times the jurors have doubt and those
individuals are acquitted. Then they go back to re-offending,
typically, and we are back to square one.
Where Child Advocacy Centers bring a multi-disciplined
approach and bring all together the disciplines of that
children, they bring in the psychology, the CYS worker, the
police officer, the detective, the Assistant District Attorney.
The child is interviewed. The interview is taped and then the
taped interview is turned over to the defense attorney. And
what we have found, statistically speaking, in those
jurisdictions that have Child Advocacy Centers, our
prosecutions are much more successful.
Senator Toomey. So, I think that is a really, really
important point. So, you are arguing that the existence of the
Child Advocacy Center, the process that they follow, that
actually leads to a higher likelihood of getting a successful
prosecution of the perpetrator?
Mr. Whelan. Which is important, but equally important is
that it protects the child--
Senator Toomey. Right.
Mr. Whelan. --from being further victimized in the criminal
justice system.
Senator Toomey. Right. Well, and putting perpetrators
behind bars makes it impossible for them to victimize the next
child, so--
Mr. Whelan. Correct, Senator.
Senator Toomey. --that is really important.
Ms. Newman, now, your background is as a pediatric nurse.
Ms. Newman. Yes.
Senator Toomey. In your experience, how has this process
worked for individual children that you have seen in your
facility?
Ms. Newman. Let me back up a minute and say that because
the CAC is neutral in fact finding, when a case comes in--when
a child comes in for an interview--when the interviewer does
the forensic interview, conducts it, there is no pre-set
determination that something had to have happened. The
questions are specifically asked in age- appropriate, open-
ended fashion so that the child tells the story, if indeed
there is a story to tell, in their own words. And, nobody has a
better day than when the team sits in the room and watches that
interview and the child says in a very credible fashion,
without anybody leading them on, that there was a mistake, that
somebody did not see what they thought that they saw, and there
is no further investigation.
But, then you have all those other cases that come in and
you have a child that has been victimized, no matter how
slight. It could just be something--and I do not want to get
too graphic, but something just over the clothes to something
much more brutal and horrible. And, in all of those cases, that
is when the CAC works really well.
As D.A. Whelan said, you have one statement. It is
recorded. There is no question that it is not leading. What we
often see, and I think Mr. Whelan may be able to confirm this,
is that what happens is that there are plea bargains that
before may never have occurred because you have a defense
attorney and a defendant, you cannot prove anything, it is just
a child that gave that statement, and the experience in
Montgomery County has been that the district attorney will hand
that defense attorney the DVD and say, ``Why do you not go
watch that,'' and lo and behold, not long afterwards, they come
forward and have a plea bargain struck, and that is a great
day, too, because then that perpetrator is off the street and
that child never has to enter a courtroom, never has to go
through that experience again.
Also, because of the CAC set-up, what you have are victim
and family advocates and referrals to specialized medical and
mental health treatment, and that is really important, because
the dynamics of child abuse are very different from adult rape
and domestic violence. As I said in my statement, child abusers
put themselves in positions of being close to children, and
most of the time, it is not a sudden act of violence. It takes
place over time. The abusers take the time to groom their
victims. They start with touch. I remember from the Jerry
Sandusky testimony, and I know people, especially in
Pennsylvania, are tired of going back to that, but one of the
witnesses said, ``You know, you knew when you got into a car
with Coach Sandusky that his hand was going to be on your
thigh.'' That is how abusers work, slowly.
And, in the 50 percent of the time that it involves a
family member, the dynamics of the family become so skewed. The
family often would rather not say what is going on, because if
it is a mother's father or brother or husband or significant
other, as it may be, who wants to see that that person who is
so close to you is really a monster who is doing this to their
child. And, there is often the mistaken thought that we can
handle this at home. We can do this as a family and just keep
the perpetrator away from the child.
But, number one, that often does not happen, because they
cannot do that. And, number, two, it just leaves this person
out there, as in the recent news reports about the Duggar
family, where the older son--and I am just reading from the
papers here--was brought back into the home and abused
additional children, if those allegations are true. But, that
would certainly fit the pattern of what we see.
Specialized mental health treatment is important for this.
It is evidence-based. It is not just going to any old
counselor, so that is important. Specialized medical treatment
with pediatric sexual assault nurse examiners are very
important for these children.
Sometimes for older children--and I will wrap up here, I
know I am going on--it is important for them to have this
medical examination just so they can be told, you are okay.
Nobody can see what happened to you unless you choose to share
it with somebody. That is often as important as anything else
that we can possibly do at a Child Advocacy Center. Thank you.
Senator Toomey. Thank you very much.
Now, let me go right to one of the arguments that I have
heard from people who are not supporting my legislation, which
is, as you know, designed to increase the amount of funds that
are distributed to the various crime victims' groups, and maybe
Ms. Moyer could lead off, but I would like to ask each of you
to address this, and this argument is, well, it would be a big
bump-up in funds and you really probably cannot spend it very
well. So, maybe you could address that and share with us for
the record exactly how you would put these resources to work if
you had the knowledge that you had a sustained funding level at
this higher level that would be commensurate to the amount of
money that is actually going into the fund each year.
Ms. Moyer. Well, first of all, Senator, thank you for the
question, because I believe we debunk that myth. I think there
is a special Internet place where they have things like that,
that, oh, those people could not possibly spend that money. Of
course, we can. We have executive directors taking pagers home
and responding to two o'clock in the morning calls instead of
doing community awareness and managing an organization.
And, let me just--I will leave you with one situation that
particularly moved me, although, as you can tell, this is my
passion. Women Organized Against Rape in Philadelphia, they
were under construction, and because of a lack of funds, they
were unable to do individual child counseling and they had to
do group counseling. And, it was in the reception area. The
place was under construction. And, all these kids were sitting
and standing and laughing and playing, as kids are wont to do,
and the construction workers came in and said, ``Gee, I did not
realize you were running a day care center.'' And, the ED
explained to them that this, in fact, was a group of children
who had been sexually abused. One of the children was a four-
year-old who would live with a colostomy bag for the rest of
her life. And, I apologize for being graphic, but sometimes I
think we need to be, because these children are living their
lives with this constant reminder, physical or emotional, and
there is no way to undo that.
I appreciate our collegiality with CACs and our dedication
of our district attorneys and our sister coalition in child
abuse cases, but if you have a group of children acting as if
it were an ordinary day at a day care center, and if you could
see the rooms where play therapy happens, it looks like a day
care center, but it is a place where children who have been
raped by monsters go to heal, I think there would be no doubt
in your mind that we could find good use for this funding.
We need more prevention educators. We need outreach to men
and boys, and in an intentional way. Prevention is no longer a
dirty word. I think we realize that it does work. And, as a law
enforcement officer once said to me, ``Diane, these are one-man
crime waves,'' and we need all these resources to get these
monsters off the street, and with your help, Senator, I think
we can do that very easily.
Senator Toomey. Thank you.
Dr. Dierkers, would you care to address the question.
Ms. Dierkers. Yes. As I mentioned in my testimony, housing
is a particular concern for domestic violence victims and we
need various forms of housing. Often, economic abuse is a
common tactic used, and it may take a survivor some time to
recover economically and be able to support themselves and
their children. Legal services, because when children are in a
domestic violence home, often, the children are being abused,
and we know from research now, longitudinal research, the
children who even witness abuse will sustain life-long impacts
if there is not support, help, and healing for them.
We were really gearing up in terms of our children's
services, because, as I mentioned, we do see thousands and
thousands of children through our Domestic Violence Centers
every year. We were just gearing up specialized services when
the recession hit. So, that is an area that we would definitely
dedicate money to, as well, as well as legal services.
Senator Toomey. And, Ms. Newman, my understanding is the
large majority of Pennsylvania counties do not have their own
Child Advocacy Center, so victims have a long way to go to get
to the nearest one in many cases. I assume additional funding
would help lead to the development of additional facilities, is
that true?
Ms. Newman. Absolutely. In Pennsylvania, there are only 23
counties that actually have Child Advocacy Centers. the
Pennsylvania Task Force on Child Protection in 2012 said that
the number one priority for the safety of Pennsylvania's
children from sexual predators should be to have a Child
Advocacy Center, and they said within two hours of every child.
District Attorney David Heckler, who chaired that task force,
said that had there been a CAC in Centre County, again, at the
time of Jerry Sandusky, that he would have been stopped after
victim number one. So, how many children would that have saved
who came forward? We do not even know how many never came
forward.
It costs money for these centers. Two hours is a long way.
That is a long time, especially if you have parents that are
taking off from work that have to go, that may have to use
public transportation to get there. They may have other
children that they need to bring with them to the center. At
the State Chapter of CACs, we would like to see that brought
down a lot closer to an hour, and even that is a long way,
because, again, you have children. They get tired. They are
already traumatized. The family is already traumatized. We do
not necessarily have to have a CAC in every county, as was
alluded to. There are a lot of rural areas in Pennsylvania.
But, certainly, regional centers need to be developed and built
to help all of the children have access. Thank you.
Senator Toomey. And just so that everybody understands, you
folks are not dealing with abstractions. You are dealing with
real human beings, people who have been victimized. And Dr.
Dierkers gave a great example of a woman named Kendra and her
circumstances.
Ms. Moyer or Ms. Newman, is there maybe a brief story of a
particular victim that you would like to share with us so that
we can sort of see exactly the kind of person and the
circumstances in which the work that you do is so helpful?
Ms. Newman. Do you mind if I go first?
Ms. Moyer. No, not at all.
Ms. Newman. Thank you. I am just--I am particularly
passionate about one story. He is actually the inspiration and
the reason that Montgomery County has a CAC. His name is Sasha.
He grew up on the Main Line, very close to where we are sitting
right now. Child abuse knows no economic boundary, zip code, or
religion.
When he was a young child, he was in an intact family,
mother, father, younger sister. Uncles came down to visit,
father's brothers, one of whom was a very well known cantor up
on the Upper East Side of New York in a large synagogue there.
For people that may not be familiar, a cantor is a cantor rabbi
in the Jewish faith.
Sasha went from being a very normal child to, as his mother
describes, one that she had to try to keep alive, because he
suddenly walked around with underwear over his head and a knife
to his throat, tried to jump out of moving cars while she was
driving. She brought him to numerous therapists who had no idea
what was going on. And, as Sasha tells the story now as an
adult, he said he was finally able to disclose to one of the
many psychiatrists that they were bringing him to when he saw
his uncle go in and attempt to abuse his younger sister. And
that was what finally allowed him to disclose the terrible rape
that had been happening to him over and over and over again.
Sasha's mother, when she told her husband about it, his
response was, ``I probably should have realized what was going
on because they did the same thing to me when I was a child.''
Again, the dynamics of intra-familial sexual abuse. It can be
generational, as well.
They were brave enough to report it. The mother went to
Risa Vetri Ferman, our current District Attorney in Montgomery
County. She was an Assistant District Attorney at that time.
Ten years, from when Sasha was seven until he was 17 years old,
before that case finally ended with a low plea deal for the
cantor.
I remember before I was ever involved with this movement
watching on the 11 p.m. news, busing in supporters of the
cantor from the Upper East Side of New York to say to the
District Attorney of Montgomery County, ``How dare you
prosecute our clergy, our member, our leader.''
Sasha went to college. He moved out to Montana to get to
this area. And, I have had a lot of memorable days at Mission
Kids. I think that one of the ones that sticks out most in my
mind is the day that Risa sent him to Mission kids to see,
because of what he had been through, what developed. And he
came into the center and I saw this rough, just graduated
college student melt back into a little boy, and he looked at
the stuffed animals around the room and he said, ``Oh, my God,
I would have loved this place. You feel like you are enveloped
by the stuffed animals in here.''
And we had a bowl of just snacks on the table, pre- wrapped
snacks for the kids when they came in. And he said, ``Oh, those
are great. I am so glad you do not have vending machines.''
And, I was really surprised, and I said, vending machine? Why?
It never occurred to me one way or the other, but why? And, he
said, ``Because I cannot tell you how many dozens of times I
was at police stations and the District Attorney's office and I
was there for hours and I was hungry and the only thing to eat
was in the vending machine.''
That is my story. Thank you.
Senator Toomey. Thank you.
Ms. Moyer.
Ms. Moyer. Yes. I would like to talk about--we have not
talked about the campus sexual assault, and I am happy to say
that we are addressing that more fully, as well. But, we had a
victim and the campus judicial hearing did not go well. But,
she knew that she had a place to go. What I always tell our
advocates is that we do not make promises we cannot keep. We
have confidential services, but we have a duty to report, but
we always believe our victims.
The only respite this individual had from what was a
botched--clearly, a botched hearing at the campus level, and it
was very problematic. The District Attorney and I, on the side
of right, of course, were trying to help this victim, but there
was a lot of push-back from the campus. But, what the victim
did have was belief in her story and the offer of safety and
services, trauma-informed, and the courage to go on with her
life and move to another campus and successfully graduated
because she did not get the justice that she deserved, and that
does happen to victims quite a bit. But, what we do give them
is belief, help, hope, and healing, and that is what every
victim deserves.
Senator Toomey. Thank you very much.
We are getting to the end of our allotted time here, and I
just wanted to make sure if any of our witnesses had a final
point they wanted to make that they felt we did not have a
chance to develop earlier, this would be a good time. Does
anybody have any last points?
Mr. Whelan. No, just to thank you for hosting this event
today, Senator.
Senator Toomey. Well, thank you.
So, let me--really, I want to thank each of our witnesses
very much. This is very, very helpful and powerful testimony
and it will help us to make the case for why we need to do the
right thing, stop the dishonest budgetary gimmicks and start
allocating the resources that ought to be going to crime
victims' advocacy groups.
I want to thank people who are in the audience. I know many
of the people here are working in the front lines, helping to
support and help the victims of all kinds of crime. So, I
appreciate the work that you do day in and day out. I know how
hard that work is and I am grateful to you for being here.
I do, once again, want to thank Villanova Law School for
making this wonderful facility available to us and being kind
enough to invite us in to have this hearing.
And, I just want to assure everybody, this is a high
priority of mine, and as a member of the Budget Committee, I
will be able to ensure that we take this up in the committee. I
am confident that we can pass the legislation in committee, and
that will give us a chance to bring it to the Senate floor. My
hope is that this year, we will find a vehicle that will allow
us to enact this legislation and provide the certainty of
funding going forward at this much higher level that is, after
all, only commensurate to the amount of money that criminals
are putting into this fund every year.
So, I really thank you for all your help. I am going to
need to continue to ask you to help and keep the pressure on my
colleagues so that we can get this done. But, I am confident we
will get this across the goal line.
So, thank you very much, and with that, the hearing is
adjourned.
[Whereupon, at 11:12 a.m., the committee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
FIELD HEARING ON TAX-RELATED IDENTITY THEFT AND FRAUDULENT TAX RETURNS
Wednesday, August 26, 2015
U.S. Senate
Committee on the Budget Manchester, NH
The committee met, pursuant to notice, at 2:00 p.m., in
Room 201, UNH Manchester Campus, 88 Commercial Street, Hon.
Kelly Ayotte presiding.
Present: Senator Ayotte.
OPENING STATEMENT OF SENATOR AYOTTE
Senator Ayotte. I just wanted to welcome all of you here
today. My name is Senator Kelly Ayotte, and I'm very glad to
have the opportunity today to hold an important field hearing.
I serve on the Budget Committee in the Senate, and one of
the important topics that we have dealt with not only on the
Budget Committee but, another committee I serve on, the
Homeland Security and Government Oversight Committee, is tax-
related identity theft and fraudulent tax returns.
So I'm going to call this hearing to order.
For my constituents that are here today, this will be part
of the official Senate record. We're having this as a field
hearing, but it will be part of the Budget Committee's official
record. So that's why you see me here with the gavel in this
setting, and also I've got some staff members here from
Washington, the Budget Committee, as well as my own staff.
So I'm going to call this hearing of the Budget Committee
to order.
We have on the first panel two witnesses with us, Ms. Lori
Weeks from Strafford, New Hampshire; and also Mr. John Walker,
from New Hampshire as well.
I will begin this hearing by giving an opening statement,
and then I'm going to turn to our witnesses to provide us with
information and to give their opening statements.
I want to thank all of you for joining us today for this
important field hearing of the Senate Budget Committee. I would
like to thank all the witnesses on both panels that you'll hear
today for their time and for their willingness to participate
in this important discussion.
We're here today to discuss a growing problem not only in
New Hampshire but across the country, and that's tax-related
identity theft. Tax-related identity theft is a very serious
problem that's growing, unfortunately, at epidemic proportions.
According to the Treasury Inspector General for Tax
Administration, about 2.4 million taxpayers' names or Social
Security numbers were used to file fraudulent tax returns in
2013, when this data was looked at. That's a 10-fold increase
from 2010, and we've seen further activity in 2014 and beyond.
With major data breaches occurring more frequently, most
recently with the Office of Personnel Management, when millions
of people who have gone through a Federal background check had
their personal information breached. I'm concerned that we will
see additional cases of tax fraud that impact even more
taxpayers in the future.
Filing a tax return should be easy, but for an increasing
number of taxpayers, they find themselves victims of identity
theft. This is too often the beginning of a frustrating and
burdensome process that can take even months or years to
resolve. These innocent taxpayers frequently find themselves in
a confusing and frustrating maze of bureaucratic red tape. I've
heard stories from my constituents, some of whom are here today
and some of whom couldn't be here today, who have been caught
up in this maze of frustration.
Not only do taxpayers have to spend too often countless
hours collecting and submitting the necessary documents to
prove their identities, they're often given conflicting
instructions and inconsistent messages from the IRS.
Or worse, they've had a lot of difficulties reaching the
IRS. Instead of focusing on regaining and safeguarding their
personal identities, tax fraud victims spend hours simply
trying to prove who they are actually to the IRS, and that's
wrong. I'm very glad to have the IRS Commissioner here today.
We must do more to address this issue and better assist
taxpayers who are facing this problem.
One of those taxpayers we have here today is Lori Weeks
from Strafford, New Hampshire, and I want to thank Lori for her
willingness to share her story today and for her courage. Lori
has endured something that no mother should ever have to
experience, and that's the loss of her daughter, Madison, in a
tragic car accident. That heartbreaking loss was compounded
when Lori's her husband learned that Maddi's identity had been
stolen and used to file three fraudulent tax returns.
But when Lori asked the IRS for copies of the fraudulent
returns so that she could find out how much of her family's
personal information was compromised, the IRS said it could not
provide her with information or a copy of the fraudulent tax
return, citing privacy concerns.
Tax fraud victims shouldn't be left in the dark regarding
the full extent of what personal information was stolen, and
the least the IRS can do is to provide them with copies of the
fraudulent returns so that they can understand how their
information was manipulated and used fraudulently.
On behalf of Lori and other New Hampshire families I wrote
to Commissioner Koskinen--who is here with us today, and he
will be testifying on the second panel--this spring and asked
the IRS to change its policy and to provide victims of tax
fraud with copies of fraudulent returns filed on behalf of the
tax fraud victim.
In response, the Commissioner has agreed to establish a
process in which identity theft victims can obtain copies of
fraudulent returns, and I look forward to hearing an update on
where that policy change is today. I thank the Commissioner for
agreeing to change that policy, and I certainly urge the agency
to get this process in place as soon as possible.
I've also heard from several tax fraud victims in New
Hampshire who continue to struggle to get their refunds from
the IRS, even after having proven their identities to the
agency. One constituent from Bath told me that the IRS told him
that he should receive a refund within six weeks of proving his
identity. When eight weeks passed without any progress, he
called the IRS again to follow up. After waiting on hold for 45
minutes, this individual was told that processing his case
would take up to six months.
The IRS' mission is to provide America's taxpayers top-
quality service by helping them understand and meet their tax
responsibilities, and by applying the tax law with integrity
and fairness to all. However, these examples demonstrate the
IRS is falling short of fulfilling this mission.
In her latest report to Congress, Nina Olson, the Taxpayer
Advocate, notes that the IRS continues to view itself as an
enforcement agency first and a service agency second. I know
the IRS is taking some important steps to reduce fraud that
have been recently announced. I appreciate those efforts, and
we want to hear about those efforts today, including enhanced
collaboration with representatives of tax preparation and
software firms and other tax industry partners, and a new
policy to earlier match W-2 information received from employees
and employers. However, it is clear that much more must be done
to prevent fraud from occurring in the first place to make sure
that people aren't victims of identity theft and to better help
victims when fraud does occur.
Congress can also play a very important role to the extent
that legislative fixes are needed to reduce fraud. Earlier this
year I worked with Senator Ron Johnson from Wisconsin, who is
the chairman of the Homeland Security Committee, and Mark
Warner of Virginia to help introduce the bipartisan Social
Security Identity Defense Act of 2015. This proposed
legislation would require the IRS to notify an individual if it
has reason to believe that someone's Social Security number has
been fraudulently used. So notifying victims is incredibly
important. It also requires the IRS notify law enforcement, and
requires that the Social Security Administration to notify
employers who submit fraudulently used Social Security numbers.
This bill adds civil penalties and extends jail time for those
who fraudulently use an individual's Social Security number.
The purpose of our hearing today is to take a critical look
at how the IRS handles tax-related identity theft cases, with
the goal of identifying necessary steps the IRS must take to
improve its response to this growing problem.
I want to welcome our first panel, Lori Weeks of Strafford,
and John Walker, a tax preparer based in Concord, who will
share his experience working on tax-related identity theft
cases for his clients.
During the second panel we will, hear from the IRS
Commissioner, John Koskinen. We will also hear from the
Inspector General, J. Russell George, from the Treasury
Department. We appreciate the Inspector General being here
today. We will also hear from Mr. Christopher Lee of the
National Taxpayer Advocate Service, to examine the IRS'
administrative practices and look at ways on how we can improve
service to taxpayers and make sure that we're more responsive
and can take steps that need to be taken to prevent identity
theft in the first place.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Again, I want to thank all of you for being here today, and
now I would like to call on our first witness.
Again, I want to thank Lori Weeks for being here to offer
her opening statement.
Ms. Weeks.
STATEMENT OF LORI WEEKS, STRAFFORD, TAX-RELATED IDENTITY THEFT
VICTIM
Ms. Weeks. Good afternoon. My name is Lori Weeks, or, as I
prefer to be referred to, Maddi's mama. This is my daughter,
Madison Charlotte Weeks. Madison was born on June 23, 2006. She
was our first child. Through the years, Madison grew into a
precocious little thing with a brilliant mind and an empathy
for people that is rarely seen in a child her age. That empathy
pushed her to continuously thank each and every veteran we
passed on the street, to raise money for the fight against
childhood cancer and to volunteer for the March of Dimes, the
organization that helped save her baby sister when she was born
prematurely.
Like I said before, Madison had a brilliant mind and in 2nd
grade tested at an end of 5th grade reading, writing, math and
science level. We were so proud but not surprised. Madison was
a talented dancer and was well loved by every person she had
ever met.
Madison was a Girl Scout, an artist, an animal lover, a big
sister, a best friend, my best friend. She had dreamed of
opening a veterinarian's office when she grew up that offered
free care to those who could not afford it.
On February 19, 2014, on our way to dance class, in the
middle of her 6th year of dancing, we hit black ice. I hit
black ice. We went off the road. We were okay, but in the blink
of an eye another motorist, distracted, did not see our vehicle
and did not slow down. She hit our car and took the life of our
precious daughter. Our lives are irreparably destroyed.
In March of 2015, my husband and I prepared to file our
taxes. As we walked in I was having trouble breathing. Tears
were already welling in my eyes. As we sat and reviewed our tax
documents, I could not stop crying. This would be the last
time, legally, on paper, that I could say I am the mother of
two daughters. I finished up this painful process and later
that day my husband went to sign our documents. This is when we
found out. What we had left, that fleeting moment in time, had
been stolen. Madison's identity had been stolen and someone
else had claimed her on their taxes.
When your child goes on before you, all you have left is
their memory, their identity, and you will tirelessly work to
protect it. All I could hear in my head was that I had failed
to protect Maddi's life, and now I had failed to protect her
identity. Our tax preparer could offer little assistance. She
was kind but completely unaware of what our next step should
be.
We filed a police report with our local police department,
only for them to treat us like we were crazy for doing so and
telling us that it was unnecessary. I spent hours and hours on
the phone trying to figure out what to do. Most of that was
spent on hold. I spoke to multiple agencies and multiple
representatives within each of those agencies, most of whom,
their calls led me back to another agent who just couldn't help
me. Many encouraged me to file without Maddi on our return so
we could get our money. It was never about the money. I had to
get Maddi's name back. It's all we have now. So we just kept
searching for answers, searching for someone to help us.
That is when a friend reached out to me and told me to
contact Senator Ayotte's office. From there the ball really got
rolling. We were put in contact with the Tax Advocate's office
and they were able to see that Maddi's name had been filed at
least three times, all of which had been rejected. Despite
these attempts to fraudulently claim our child, we were never
contacted by any IRS representative to make us aware that this
had happened.
With the help of Senator Ayotte's office and the Tax
Advocate we were able to go through the proper avenues to
protect her name further, stop any kind of continuing fraud
using her Social Security number or otherwise, and we were able
to file our taxes, as a family of four, for the very last time.
We received our return, and then that was it, nothing to
tell us what these disturbed individuals who would raid a
deceased child's identity knew about our daughter. Was it just
her Social' Did they know anything about her medical history'
Do they have personal information about her death' Do we know
them' It was quite literally, 'Here's your check and be gone
with you.'
After a newspaper article about our family and a few
television interviews, we were told the IRS is going to be
giving victims access to the fraudulent returns and the
information contained within them. That was months ago and we
still are no closer to knowing what we must know than we were
the day we found out Maddi's identity had been stolen.
More than 50 percent of grieving parents, parents whose
children passed away before their 13th birthday, will have
their child's identity stolen. And many will never even get as
far as we have. We are not the rule; we are the exception. And
it seems like the bad guys win in every case because although
we got our daughter's name back, we do not know what they know
about our daughter, and they will likely never face punishment
for the crimes committed against our family.
It's time we step up and we empower our citizens to protect
themselves and their children against these predators and to
say enough is enough. Thank you.
[Applause.]
[The prepared statement of Ms. Weeks follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Ayotte. Thank you. Thank you so much. I know all of
our thoughts and prayers are with you for your courage. Thank
you for being willing to be at this hearing today to help other
parents so that they don't have to go through this.
I would like to also welcome Mr. John Walker. Mr. Walker is
here to talk about his experience as a professional and his
work with many clients who, unfortunately, have dealt with
identity theft issues and theft of their personal information.
Mr. Walker, thank you for being here.
STATEMENT OF JOHN C. WALKER, ENROLLED AGENT, J. WALKER &
COMPANY LLC
Mr. Walker. Thank you, Senator, and thank you for holding
this hearing. My name is John Walker. I am an enrolled agent in
private practice. I was asked to testify today from the
perspective of an enrolled agent and the impact tax-related
identity theft is having on the professional community.
Just to clarify, for those who are not familiar, when we
talk about the professional community, I'm referring to the
four groups of tax professionals that we generally talk about:
enrolled agents, CPAs, attorneys, and then all other preparers.
Generally, it is enrolled agents like myself, CPAs and
attorneys who are authorized by Circular 230, which is the
Treasury regulations, to represent taxpayers before the
Internal Revenue Service. Other preparers, with a few very
limited special exceptions, do not represent taxpayers.
I represent taxpayers such as Lori and others who have
problems dealing with the IRS, have these experiences, have
jobs, family, responsibilities that they must move forward
with, and they turn to someone like me, or an attorney, or a
CPA, to handle the dealing with the IRS, do the investigation,
because we know the system.
As a professional, I am a member of the National
Association of Enrolled Agents, the National Association of Tax
Professionals, the National Society of Accountants, and I'm
currently on the Board of the New Hampshire chapter of the
National Society of Accountants.
On a monthly basis I participate with members of the IRS
and 15 to 30 other tax professionals from around New York and
New England in what are called IMRS telephone conferences. IMRS
is the IRS' own Issue Management Resolution System.
In addition, twice a year I participate in taxpayer liaison
meetings, one of which we host here in New Hampshire, and that
is two dozen tax professionals and IRS managers meeting for
half a day to discuss in depth the issues in our tax system.
So with that as a background, I can tell you the issue that
I am hearing over and over and over again from other
professionals is that as a result of tax-related identity theft
and the escalation of fraudulent returns, tax professionals are
increasingly finding themselves shut out of being able to get
the information they need to help their clients, to help the
victims of these identity thefts.
It's regrettable, but in their haste to respond to the
explosion of fraudulent returns, the IRS has severely
restricted or blocked entirely access to taxpayer information
by those three professional groups--enrolled agents, CPAs and
attorneys--who are responsible for representing those victims.
As a representative, just like an attorney, we speak for the
victim. We step into their shoes, we put in the time, the
hours, to try to find solutions.
This is happening even when a taxpayer has specifically
authorized us on a Federal power of attorney, which is an IRS
document, to represent them in the identity theft matter. I
recently had one that was filed in August, and it is
continually rejected for being posted because their 2014 tax
year has already been flagged as having had an identity theft.
The general consensus of so many professionals right now is
that we feel like the IRS, instead of working with the
professional community to speed resolution of these cases, is
making it increasingly difficult and sometimes impossible to
help these clients.
Furthermore, and this is terribly important from a
professional point of view, the victims of identity theft are
still expected to comply with all other aspects of the tax law,
to timely file their returns, pay their taxes, make estimated
tax payments, continue installment payments, and fulfill
obligations under an Offer and Compromise, if they have one.
Ordinary, routine tax problems will arise in those other
compliance issues--the estimated payments posted to the wrong
account or the wrong year, just to give you one example. To
assist the taxpayer with any of those problems and do it
quickly and efficiently and get it corrected requires that we
continue to have access to the same information we had before
the identity theft occurred.
On a case I'm currently working now, the taxpayers came out
of bankruptcy last year. As part of their bankruptcy plan,
they're paying on past tax debt. I cannot get any records to
find out if those payments are being correctly applied to their
past tax debt, and that is something that we used to have
routinely as a matter of being able to represent people.
Normally, a representative would have online access to a
client's tax information using a tool that's very different
from the tool that was out there and became such a problem
earlier this year. The professional tool works much more like
what most of us use to manage our personal bank accounts,
perhaps even our medical accounts, make our utility payments,
credit card accounts, insurance, student records, and the like.
In other words, access to it is known only to us.
What makes this all the more frustrating for tax
professionals is that very often a representative or someone
posing as a representative, or someone claiming to be the
taxpayer, can call the customer service number. Granted, they
have to sit on hold anywhere from an hour to two hours, so it
becomes an endurance contest. They get a customer service rep.
They can answer a few simple questions, Social Security number,
address and so on, and the representative will mail, fax, or
even read the information to them over the phone.
So from a professional standpoint, the information that we
used to be able to get in 5 or 10 minutes online and get a
problem solved, now we may be able to get if we're willing to
sit for two hours on the phone and talk to someone. It's
delaying the whole process, and that is creating a backlog of
unsolved, routine problems in addition to and over and above
and beyond the identity theft problems, which are exploding.
One specific example, a suggestion I can make to the IRS,
is that with the professional community, they ought to be doing
exactly the opposite. They should be requiring professionals to
get the information online, beef up the security around that
tool, and that would relieve some of the burden on the phone
system, which does have to be there to service taxpayers who
are not represented.
For example, recently I had to get a copy of a bank
statement on my personal account. There were only two ways I
could get it. I could not get it by calling the bank and saying
please mail it to me. I had to either show up at a branch
office with a photo identity and prove who I was and they would
print it for me at that office, or I could go online to my
account where I have set up the security, three security
questions and so on, and answer the various security protocols,
submit a request, and it would be mailed to me at the address
on record.
I'd like to point out that enrolled agents, CPAs and
attorneys are all professional individuals who have made a
substantial investment in both obtaining a professional license
and maintaining it on an annual basis. We are known to our
various licensing agencies, and we have often been the subject,
depending on the agency, of criminal background checks and even
fingerprinting. In the case of enrolled agents, we've been
vetted by the IRS itself. So if the IRS does not have
confidence in letting us have access to the information,
they're saying they don't have confidence in their own vetting
process.
Furthermore, we know our clients personally, usually
through many years of working with the same client, sometimes
decades. As a result, we also have access to a substantial
amount of financial detail. This is a resource that the IRS
could be using to quickly identify who is the real John Walker
or Lori or Bill or Joe or Susie, and they're not doing it.
Instead, taxpayers are being told that once they file an
identity theft affidavit, that it may take six months to a year
before the IRS does its own investigation. That seems totally
unnecessary.
Furthermore, I think the delay is absurd because in far
less time you can get a passport. In four to six weeks, the
State Department can determine with a high degree of certainty,
even in this post-9/11 era, who somebody's identity is. And if
they need to expedite it, they can do it in two or three weeks.
In the case of tax-related identity theft, one very obvious
and I think simple solution to establish who is the real
individual would be to ask them to show up at an IRS office and
present their passport. And if they don't have a passport, they
can get one in less time than the IRS conducts those
investigations. The length of that investigation frustrates our
clients terribly because they hear nothing for months, and they
wonder if they're going to come back and say, well, we don't
believe it's you. Meanwhile, they don't know what else is going
on with their financial lives.
There are a number of further examples I can give you, the
kinds of difficulties we run into dealing with the IRS, and I
have a great deal of respect for everyone at the IRS I deal
with. We are professionals. We understand they are dedicated
people trying to do a very difficult job.
One case I'm currently working provides some good examples.
Chris and Jane Stevens--not their real names--are a couple in
their early 60s. They got into financial difficulty because
they tried to keep a business running in New Hampshire during a
downturn in the economy. They got way over-extended on their
mortgages, ended up in a bankruptcy that dragged on for several
years, finally came out of bankruptcy last August. Chris, by
the way, was identified with inoperable but treatable throat
cancer, so he was out of work. His wife continues to work, Jane
continues to work.
In February they received a check in the mail from Sunrise
Bank in California for $9,855. The accompanying paperwork
explained that this was their 2014 Federal tax refund, which
was listed as $9,945 less $90 in processing fees. The letter
explained that the bank had tried to direct deposit it to the
account specified on the return but for some reason was unable
to do so, so they mailed them a paper check.
The Stevens' immediately knew this was wrong because we had
not even begun to prepare their 2014 return, and they are very
honest people. They also knew and were already worried about
the fact that their identities had been stolen in the Anthem
data breach just a few weeks earlier. So they contacted me and
we quickly prepared and filed the identity theft affidavits
with the IRS. We have received one communication indicating
that they have received the paperwork, and that was filed in
February.
Meanwhile, this looked like we had caught it early and we
should be able to solve this situation really easily because we
had the check, the money was not stolen, it was not gone. I
began investigating how the fraudulent funds could be returned
to the Treasury, and apparently it's a lot easier to get money
out of the Treasury than it is to get it back in.
[Laughter.]
Mr. Walker. No one had any answers. So I reached out to one
of my contacts in the IRS stakeholder liaison, which is a group
that interacts extensively with the professional community, for
help in answering that question, how do we get the money back
in. It actually took her a little over a month to find a door
to put the money back in. She got the name and address of an
IRS office in Fresno, California where we could send the check.
So on April 15th--maybe that was a bad omen--we mailed the
check with a cover letter explaining the situation, included
all possible identification. Incidentally, much of that was
also printed on the check. We mailed it Priority Mail,
signature required, and within a few days we received the name,
signature, and identity number of the person who signed for it
at the IRS office.
We filed their 2014 tax return, which had a balance due,
and we thought we were pretty well done. One of the obvious
problems in this whole story is this was someone who already
had a tax debt. They had a balance due on their 2014 return,
and yet somehow somebody imitating them with their stolen
identity was able to get $9,945 shipped out of the U.S.
Treasury without ever checking the balance due on that identity
number.
The first week of August, the Stevens received a call from
a revenue officer in Holtsville, New York. Because I was their
representative, I returned the call to Holtsville, spoke with
this revenue officer, and she wanted the Stevens to return the
check. That's why she was calling. I explained to her that we
had mailed the check back in April and how we'd done it and how
we got the address, where we had sent it and so on.
Well, she checked--no sign of it on the system. She didn't
believe it had been returned, or if it had been, it had been
lost. Her words. There was no record of it. So I said, well,
look, I convinced her to let me fax over the same package we
had, the cover letter, a copy of the check, all the
identification information, the signature of the person who
signed for it, postal transcript of every place it went between
New Hampshire and California.
I sent that fax within the hour, never heard from her. Two
or three days later I called. Her only response was that she
hadn't received the fax. She hadn't bothered to call and say
she hadn't received the fax, which is something normally one
professional would do with another. I work with attorneys and
CPAs all the time. If I say I'm going to fax something and I
don't, or they say they're going to fax something to me,
there's a follow-up call: 'Hey, I didn't get your fax.' Didn't
hear anything.
The revenue officer instead shipped the case over to exam
with a comment that they could pursue the client for the money,
and that was the extent of her involvement with it.
Just a few days later we received a letter, this time from
the Kansas City campus. So now we've got California,
Holtsville, New York, and Kansas City involved. Kansas City is
demanding--this letter demands that the Stevens' either return
the check or pay the $9,855. The letter was dated August 12.
They have until September 3rd to do one or the other. We
obviously can't return a check we've already returned and
that's been lost by the IRS.
So at that point, Jane Stevens and I--and it was necessary
for both of us to get involved so the bank could be sure of
this--got in touch with Sunrise Bank, their fraud department,
and we were able to establish that the check, in fact, had
never been cashed, which was fortunate. We also learned that
the funds are still in the account at Sunrise Bank, and Sunrise
Bank is only too happy to return them. The bank does actually
have a process because Sunrise Bank, as many professionals will
recognize, is an outfit that processes tax refund third-party
products for a lot of software companies. They actually have a
process in place to get funds back to the Treasury.
Jane authorized them to proceed with that. It will take at
least 15 days to get that, but it does require first that they
get cooperation from the IRS and an agreement that they will
accept the return of the funds. Then we have the small issue of
making sure they get credited to the Stevens' account.
In the meantime, however, the bank's fraud department can't
provide us with any written confirmation to explain to Kansas
City what actually is happening. That responsibility falls to
me.
As I was about to end the conversation with the fraud
department, the representative said she had one other thing she
had to point out to me. They are required before they return
the funds to try again to deposit the funds in the bank account
specified by the thief on the fraudulent return. I won't say
anything about that.
[Laughter.]
Mr. Walker. The disturbing part in that, however, is that
the IRS has the power to subpoena the bank records and see all
it can from that account, see whatever they can learn about it.
They also have the power to levy that account and seize those
funds before they go back to the thief, by chance, because if
they don't get them back, what they are going to do is turn
around and in the next few months they will be sending my
client notices that they're going to levy their accounts to get
the money back.
That's a fairly typical situation that as professionals we
have to deal with, and we're frustrated because we are
professionals. We are willing to work with the IRS. We have a
wealth of information about our clients. It's a resource that's
not being put to good use.
Thank you, Senator.
[The prepared statement of Mr. Walker follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Ayotte. Thank you. It's pretty shocking when you
hear that's a typical story, what you've done just for these
two clients.
I want to thank both of you for your testimony, and I just
have a few follow-up questions, and then we'll get to the
second panel.
I want to ask you, Ms. Weeks, in terms of what you've been
dealing with, how did you first learn that Maddi's Social
Security number was actually used in a fraudulent return' What
happened to you when you did learn that and tried to call the
IRS'
Ms. Weeks. We were basically kind of given the run-around
by each office. I don't think it was necessarily intentional. I
really think that everyone we spoke to had no idea where to go
next. Specifically because she was a minor and because she had
passed away, people didn't know what our next step should be.
They were mostly thinking that we were concerned with our
return and getting the money, but that was not our primary
concern.
We could have easily filed and gotten the return back and
then gone through the process, I was told anywhere from six
months to a year at that point, to regain Madison's identity,
but that was never an option for us. We were not going to let
them--not the IRS but the thieves--take from us the last chance
we had on paper to say that Madison was our child, that we had
two children in our family, in our hearts for the rest of our
lives. We are a family of four, but this was the last chance to
say on paper that we were a family of four.
So when we called the offices and pretty much everyone
said, well, why don't you just file, it can go through, it was
just a big run-around. It was impossible to prove that she was
ours, but it was super easy for someone to take her away from
us. That part didn't make sense to me. I had to provide not
only my identifying information with a birth certificate,
Social Security card, driver's license, but I also actually had
to send over my daughter's death certificate to the IRS to
prove that she had passed away, as if I would call and state
that my 7-year-old child was gone when she was not. I had to
provide multiple copies of that information to multiple
agencies.
Senator Ayotte. Different people.
Ms. Weeks. Different people within the same agency.
Senator Ayotte. So you were never assigned one point of
contact.
Ms. Weeks. Never. The only time I was was when I started
working with your office and the Tax Advocate's office was
assigned to me. Other than that, I just kept getting pushed
from one person to the next person to the next person, and
online there was very little help as well. It wasn't even a
resource that says, okay, this has happened to you and these
are the steps you need to take. It was all over the board and
no one website could give us concrete steps as to your child's
identity has been stolen, this is what you need to do next,
after this you do this, make sure you keep copies of this.
Like I said, the police department made us feel like we
were being kind of silly filing a police report with them. But
then speaking with someone in the IRS office, they said, oh, if
you hadn't gotten that, we couldn't have moved forward. But
even the police department, our tax preparer, none of them were
100 percent sure if we even needed to do that, but we wanted to
cover all of our bases, so we did.
Senator Ayotte. And I know that, as I understand it, you've
heard from other families that have gone through this as well'
Ms. Weeks. Many.
Senator Ayotte. Unfortunately.
Ms. Weeks. Yes. I am a part of several online support
groups for grieving families, and when we started going through
this, just like I do a lot, I shared on the website what we
were going through, and very quickly the page filled up with
'Us too, us too, us too.' And if it wasn't their child, it was
their sister's child's identity had been stolen. Multiple
friends on Facebook and through personal conversations spoke to
me about their family members going through very similar
things.
A friend of mine, her cousin passed away several years ago
when he was 19 years old, and his identity was stolen, and the
IRS refused to correct the fraudulent return because a check
had been mailed and the person who stole his identity had
cashed it, and they told his parents, his grieving parents,
that they couldn't prove that they weren't the ones that
received the check and cashed it, so they refused to correct
the situation. It's been five years and they are still fighting
for their son's identity. It's not about the money for them,
just like it wasn't for us. It was about saying that this child
is ours and somebody taking that from you.
Senator Ayotte. Thanks.
Mr. Walker, you had referenced the history of having your
professional history and dealing with this, how things have
changed. When has this changed' You used to be able to get
better access for your clients to be able to help manage their
day-to-day tax issues, but also resolve issues. So can you give
us some perspective on----
Mr. Walker. Yes. In the last 18 to 24 months is when we
started seeing this freeze come on. When you work a client's
issue for multiple years, as I do, you're constantly going back
to make sure payments have been made and applied to the right
year and so on. So you need that access to see those records.
Senator Ayotte. And how has the response time been, as
someone who is a professional? You talked about an hour or two
trying to get through. Has that been your historical
experience, or do you think that----
Mr. Walker. Phone service has always been time-consuming.
There are certain times of the day, if you time it carefully,
you can get through faster than others, and as a professional
you learn when those times are.
One of the problems, of course, with the phone service is
that the call gets routed anywhere, all over the country.
You're never talking to the same individual, so you don't get
the same answer. In fact, you can call as a professional trying
to settle a payment plan, and they'll tell you they want the
information on a 433A. You call back when you've got that
financial information on a 433A and that person says, oh, I
only work a 433F, and on it goes.
I had one client who owed money. He made seven calls to try
to pay the balance due and find out what he had to do. He got a
different story from every collection agent, and then he came
to me. It took me five calls. This was somebody who wanted to
pay in full his tax debt in four years, and it was an argument
over whether his financial information was going to be on an A,
a B, an F, or one of the others. There are five different
433's.
Senator Ayotte. And how do you think we could resolve that'
It sounds like getting back to allowing professionals to have
tools that they've had in the past to communicate on behalf of
their clients, and also more consistency in terms of who you're
dealing with when you call, as opposed to being bounced around?
Mr. Walker. Yes. There should be, when you're working these
cases, it would make sense to have one point of contact.
Senator Ayotte. Assigned to you.
Mr. Walker. Yes. It would speed things up. If we had access
to the online tools, the thing is we have the knowledge and the
experience to read those transcripts, to know what's going on,
to do the investigation. So when we call we're not saying, hey,
we've got this problem. We're calling saying the estimated tax
payments for 2013 were applied to 2008 and they shouldn't have
been, that's supposed to be these payments. We call with
solutions.
Senator Ayotte. Well, I want to thank both of you for
taking the time to be here today to testify before this
committee. It's very important to hear the perspective of what
are the difficulties that taxpayers are facing, and I know that
there are many of my constituents who are here, who have
written me, who have experienced, unfortunately, similar
situations where they feel that they've gotten the run-around.
So I want to thank both of you for being here, and I'm
going to call the second panel up, and I'm glad that our second
panel certainly were able to be present and hear directly your
experiences because they're in a position where, hopefully,
they can address these concerns. So thank you both very much
for spending the time here.
Ms. Weeks. Thank you for this opportunity.
Senator Ayotte. Thank you.
Mr. Walker. Thank you, Senator.
Senator Ayotte. Appreciate it.
[Pause.]
Senator Ayotte. I want to thank you for being here today,
and I appreciate that you had the opportunity to hear from Ms.
Weeks and Mr. Walker and hear the experiences that they've had
with identity theft, either themselves, unfortunately, or on
behalf of their clients.
First I would like to welcome the IRS Commissioner, John
Koskinen, as well as the Treasury Inspector General, J. Russell
George, for Tax Administration for the Department of the
Treasury, and Mr. Christopher Lee, a Senior Attorney Adviser
for the National Taxpayer Advocate Service, and thank all of
you for being here today.
I would ask you, I know we have your written testimony, and
certainly you can summarize that if you'd like to.
So I would ask the Commissioner of the IRS to offer his
testimony first.
Mr. Koskinen.
STATEMENT OF HONORABLE JOHN A. KOSKINEN, COMMISSIONER, INTERNAL
REVENUE SERVICE
Mr. Koskinen. Thank you, Senator Ayotte. Thanks for the
opportunity to discuss the IRS' efforts to combat stolen
identity refund fraud and to protect taxpayer information from
cyber-security threats.
Securing our systems and protecting taxpayer information is
a top priority for the IRS. Over the past few years we have
devoted as much time and attention to this challenge as
possible, even with our constrained resources. Since 2010, we
have increased our dedicated spending in this area from just
over $20 million to $430 million, and we've been making steady
progress both in terms of protecting against fraudulent refund
claims and prosecuting those who engage in this crime.
Thanks to the work of our Criminal Investigation Division,
over 2,000 individuals have been convicted on Federal charges
related to refund fraud involving identity theft, over the past
few years. We currently have about 1,700 open investigations
being worked by more than 400 IRS criminal investigators. And
since 2013, we have initiated more than three dozen cases that
involve one or more victims who are New Hampshire residents.
The total number of identity theft-related convictions and
open investigations is actually larger than what I just
described, when you factor in the important work being done by
law enforcement agencies at the state and local level, in New
Hampshire and around the country. The IRS works in close
collaboration with those agencies.
During calendar year 2014, the IRS protected more than $15
billion in refunds, including those related to identity theft.
We continue to improve our efforts at stopping fraudulent
refunds from going out the door. For example, we have improved
our processing filters, allowing us this year to suspend about
3.2 million suspicious returns and hold them for further
review, an increase of over 500,000 from the year before.
And we continue to help taxpayers who have been victims of
identity theft. The IRS has 3,000 people working directly on
identity theft-related cases, and we've trained more than
35,000 employees who regularly work with taxpayers so that
these employees have the tools to help with identity theft
situations when they arise.
In addition, we recently completed our efforts to
centralize victim assistance with our new Identity Theft Victim
Assistance Organization. This has allowed us to consolidate
work being done by four different parts of the IRS into one
business operating division. It's also important to note that
we provide taxpayers, victimized by identity theft with a
single point of contact at the IRS via a special toll-free
telephone line. Taxpayers who become identity theft victims in
2015 can expect to have their situation resolved in less than
120 days, far more quickly than in previous years when cases
could take over 300 days to resolve. I am a little concerned
about references made to six months or longer to resolve those
cases. That's not our experience overall.
While this marks a significant improvement, we are
continuing to work to find ways to shorten this time and ease
the burden identity theft places on these victims. In 2014, the
IRS worked with victims to resolve and close approximately
826,000 cases of identity theft.
While the IRS has improved its ability to stop individuals
from perpetrating stolen identity refund fraud, we continue to
see an increase in organized crime syndicates around the world
engaging in these crimes. These cyber-criminals have been able
to gather significant amounts of personal information as a
result of data breaches at sources outside the IRS, which makes
protecting taxpayers increasingly challenging and difficult.
A good illustration of this problem is the unauthorized
attempts to gain access to our Get Transcript application
earlier this year. In this instance, the criminals already had
accumulated large amounts of stolen taxpayer information from
other sources which allowed them in some cases to access
individual prior year tax returns. We shut down the Get
Transcript application and it will remain disabled until we
make modifications and further strengthen security for this
application.
To improve our efforts against this complex and evolving
threat, the IRS held an unprecedented sit-down meeting in March
with the leaders of the electronic tax industry, the software
industry, and state tax administrators. All of us agreed to
leverage this public-private partnership to help battle stolen
identity refund fraud. Motivating us was the understanding that
no single organization can fight this type of fraud alone. We
spent 12 weeks studying what needed to be done, and in June we
announced new steps to provide stronger protections for
taxpayers and the nation's tax system. The critical point for
taxpayers to understand is that new protections will be in
place by the time they have to file tax returns in 2016.
The result is that the Federal Government, states and
private industry will stop more fraud related to identity theft
up-front, and to the extent fraudulent returns do get through,
we will have better post-filing analytics to determine ways to
adjust our security filters. We will also continue to enhance
our methods of tracking down the criminals and add to those
2,000 individuals already serving jail time for Federal tax-
related identity theft.
Going forward, the IRS and its partners will continue
collaborating to address longer-term issues and build lasting
changes.
Congress, as you note, has an important role to play in the
fight against stolen identity refund fraud. Adequate funding
for the IRS is critical. Congress can also help by passing
several legislative proposals. One of the most important of
these would accelerate the due dates of third-party information
returns such as W-2's that would allow us to match these
documents against income tax returns earlier in the tax-filing
process, and would help us more quickly spot errors and detect
potential fraud.
Senator Ayotte, this concludes my statement. I'd be happy
to take questions.
[The prepared statement of Mr. Koskinen follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Ayotte. Thank you, Commissioner.
We will now hear from the Treasury Inspector General, J.
Russell George, for the Tax Administration Department of the
Treasury.
STATEMENT OF HONORABLE J. RUSSELL GEORGE, INSPECTOR GENERAL FOR
TAX ADMINISTRATION DEPARTMENT OF THE TREASURY
Mr. George. Thank you, Senator Ayotte, for hosting this
hearing and the opportunity to provide testimony on the
important subject of identity theft and the impact it has on
both the Internal Revenue Service and taxpayers.
The Treasury Inspector General for Tax Administration, or
TIGTA, has provided ongoing oversight and testimony on tax
fraud-related identity theft. Our audit work shows that while
the IRS is making progress in detecting and resolving identity
theft and assisting victims, improvements are still needed.
My comments today will focus on the results of our prior
audit work and our ongoing work to assess the IRS' progress on
this issue.
The IRS continues to make progress on both preventing
fraudulent tax returns from entering the tax processing system
and on detecting fraudulent tax returns during processing. The
IRS reported that in processing year 2014, and that's when they
consider the tax returns from 2013, it detected and prevented
over $24 billion in identity theft refund fraud.
The IRS continues to expand the number of filters used to
detect identity theft refund fraud at the time tax returns are
processed. For example, the IRS increased the number of filters
from 80 filters during processing year 2013 to 114 filters
during processing year 2014. As of September 30th, 2014, these
filters were used to detect over 830,000 tax returns and
prevented the issuance of over $5 billion in fraudulent tax
refunds.
TIGTA has previously identified large volumes of undetected
potentially fraudulent tax returns with tax refunds issued to
the same addresses or deposited into the same bank accounts. In
response, the IRS developed and implemented a clustering
filter. Using this tool, the IRS reported that as of early
October 2014, it had identified approximately 517,000 tax
returns and prevented the issuance of over $3 billion in
fraudulent tax refunds.
In addition, beginning with the 2015 filing season, the IRS
implemented restrictions to limit the number of deposits to a
single bank account. TIGTA is currently evaluating whether this
is working as intended.
Notwithstanding improvements in its detection efforts,
access to third-party information, both income and withholding,
is the key to enabling the IRS to prevent the continued
issuance of billions of dollars in fraudulent tax refunds. Most
of the third-party income and withholding information is not
received by the IRS until well after tax return filing season
begins. So, for example, the annual deadline for filing most
information returns--we're talking about the W-2s and the
1099s--with the IRS is March 31st. Yet taxpayers can begin
filing their tax returns as early as mid-January each year. For
the 2014 filing season, the IRS had received over 90 million
tax returns as of March 28th, 2014. Legislation would be needed
to accelerate the filing of the information returns.
One practice that is designed to protect taxpayers from
being victimized again the following year is the issuance of
identity protection personal identification numbers. However,
TIGTA reported in September 2014 that over 530,000 eligible
taxpayers were not provided these numbers as required.
Additionally, we have previously reported that identity theft
victims experienced long delays in resolving their tax
accounts. We found that in Fiscal Year 2013, the IRS took an
average of 278 days to resolve the tax accounts. Our review
also identified that the IRS made errors on the tax accounts of
victims of identity theft, resulting in delayed refunds and
requiring the IRS to reopen cases and take additional actions
to resolve the errors.
Recently, the IRS announced that unauthorized users were
successful in obtaining access to over 350,000 taxpayer
accounts using its Get Transcript application. The IRS believes
that some of this information may have been gathered to file
fraudulent returns during the upcoming 2016 filing season.
TIGTA continues to investigate this incident, coordinating with
other Federal law enforcement agencies. TIGTA has an audit
ongoing to evaluate the IRS' assistance provided to victims of
the Get Transcript data breach.
We at TIGTA, Senator, remain concerned about the ever-
increasing attempts to defraud taxpayers through identity theft
and other scams. Because of the importance of these issues, we
plan to provide continuing audit coverage of the IRS' efforts
to prevent tax identity theft and will continue to investigate
any instances of attempts to corrupt or otherwise interfere
with the nation's system of tax administration.
Senator Ayotte, thank you for the opportunity to provide an
update on our work on this critical tax administration issue
and to share my views.
[The prepared statement of Mr. George follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Ayotte. Thank you.
Mr. Christopher Lee, Senior Adviser Attorney for the
National Taxpayer Advocate Service.
Thank you, Mr. Lee.
STATEMENT OF CHRISTOPHER LEE, SENIOR ATTORNEY ADVISER, NATIONAL
TAXPAYER ADVOCATE SERVICE
Mr. Lee. Senator Ayotte, thank you for inviting me to speak
today about tax identity theft. When I joined the Taxpayer
Advocate Service in 2004, one of my first assignments was to
look into how the IRS was dealing with the small but growing
problem of identity theft. Since then, the National Taxpayer
Advocate has included identity theft as the most serious
problem in nearly every annual report she has delivered to
Congress.
Today, identity theft cases account for approximately one-
quarter of all TAS case receipts. These cases are usually very
complex, often involving many years and involving multiple
issues. In TAS, we assign a single case advocate to work with
the taxpayer from day one until all related issues have been
resolved. The taxpayer has the case advocate's direct phone
number and deals solely with this case advocate throughout, no
matter how many IRS employees are involved in the back end.
I am pleased to report that TAS resolves identity theft
cases in about 66 days. To get an accurate sense of how long it
takes the IRS to work an identity theft case, TAS reviewed a
representative sample of approximately 400 identity theft cases
closed by the IRS during the month of June 2014. We found that
the average cycle time was 179 days, or about six months. We
reported this and other key findings in Volume II of the
National Taxpayer Advocate's 2014 Annual Report to Congress
that we released in December.
Apart from the time and aggravation in having to prove
one's own identity again and again, the most significant impact
to a victim of tax-related identity theft is the delay in
receiving his or her refund. With the average refund amount
being approximately $2,700, getting access to their tax refund
is a big deal, particularly for low-income taxpayers, which is
why we have been pushing the IRS to resolve these cases
promptly.
Some victims also experience consequences when other
Federal agencies or private businesses rely on IRS data. For
example, the IRS generally will not release account transcripts
while an identity theft case is pending, so students applying
for financial aid and homeowners applying for a mortgage may
face additional obstacles.
Despite a memo from the IRS Office of Chief Counsel
concluding that the IRS may share with the victim a copy of a
return filed by an identity thief, the IRS continues to deny
such requests. Commissioner Koskinen recently committed that
the IRS would allow identity theft victims to obtain redacted
copies of tax returns filed under their SSN. We support this
decision and look forward to the adoption of the new
procedures, and we thank you for your involvement in this
decision.
In many instances, the IRS is the first to learn of the
identity theft. In 2011, we recommended that when the IRS
discovers that a taxpayer's SSN is used without authorization
to file a tax return, it immediately notify the SSN owner.
Last summer the IRS conducted a pilot program and notified
approximately 25,000 taxpayers that their SSN had been misused
for tax purposes. The IRS is currently evaluating
recommendations from the pilot, and we urge the IRS to adopt
the recommendation that it systemically issue letters to
taxpayers informing them that someone has attempted to file a
tax return using their SSN.
Thus far, I have focused on the victim assistance aspects
of identity theft. Now I will share some thoughts on what the
IRS is doing to prevent identity theft from occurring in the
first place.
The IRS uses targeted filters to suspend the processing of
tax returns that it suspects were filed by identity thieves.
While we support the use of data-driven models to detect
suspicious tax returns, the IRS has an obligation to
sufficiently test these filters prior to rolling them out. This
filing season approximately one out of three returns suspended
by one such program, the Taxpayer Protection Program, were
false positives, meaning that hundreds of thousands of
taxpayers who had filed legitimate returns had to spend time
contacting the IRS to verify their identity. This resulted in a
severe backlog of calls to the Taxpayer Protection Program
phone line, and in some weeks only 1 in 10 callers got through
to an assister. We cannot afford to have a repeat of this
filing season when far too many legitimate filers were
inconvenienced and then were unable to reach an assister when
they called the number instructed.
All this does not paint a pretty picture, but there is some
good news. The IRS has recently reorganized its identity theft
victim assistance units, moving toward a more centralized
approach for which our office has long advocated. TAS will be
involved in the reengineering of identity theft victim
assistance procedures this fall, and we will reiterate our
recommendation that when a case involves multiple issues, one
IRS employee should oversee the case to make sure the problems
are handled in a coordinated manner.
I appreciate the opportunity to testify today and would be
happy to answer your questions.
[The prepared statement of Mr. Lee follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Ayotte. Thank you, Mr. Lee.
Commissioner Koskinen, first of all--you heard Ms. Weeks'
testimony, and I wrote to you, really at her urging, to ensure
that taxpayers could get a copy of their fraudulent return. You
have agreed now to do that. I have to tell you, since you
agreed to do that, people across the country have been
contacting my office on this issue. So when will this happen'
Because I know not only Ms. Weeks, but many taxpayers, they
want to know how their information was misused so that they can
take steps to protect themselves, and obviously I think all of
us, if we were a victim, would want to know the full extent of
how such personal information is being abused.
Mr. Koskinen. And as you know, we support that need. We
think taxpayers do need to be able to have access to that
information, if for nothing else, as Ms. Weeks noted, just to
close the circle and to understand what's been involved.
Senator Ayotte. I think it can also help you understand
what you need to do to protect yourself, too.
Mr. Koskinen. Yes. For instance, with Get Transcript, we
immediately, as soon as we found there was an issue, notified
taxpayers. I do think that taxpayers need to get notice. I
think they need to have access to the information.
Since you and I talked it has turned out that, like
everything, it's more complicated to get the system to work
than I had hoped. Part of it is because we have an obligation
under Section 6103 to protect taxpayer information. So the
complication is--and we're talking about, as you know, hundreds
of thousands of identity theft cases a year--that when a return
is filed, there may be more than one taxpayer's Social Security
number involved. For instance, in Ms. Weeks' case, where a
child is taken as a dependent, what's happening at the top of
that fraudulent return is that there are other stolen
identities. So that information can't be provided because those
are real people. It's just that somebody has stolen that
information and impersonated them. So we can't provide that
information to any of the other taxpayers on the return.
Similarly, attachments, whether they're W-2's or other
forms, oftentimes have stolen information from other taxpayers.
We are not allowed to share, for instance with Ms. Weeks, the
other taxpayer who has had their information stolen.
To do it manually, if you think about it, you'd say, well,
I could redact that information pretty quickly. But what we
need is a system that will do that automatically so that we can
regularly provide this information.
I had hoped we'd get that up sooner. I am told that in a
few weeks we will be able to, as a regular matter for any
taxpayer, be able to provide that.
If your identity is stolen and it is the identity used for
filing the return, then that information is all available to
the taxpayer.
Senator Ayotte. They can get everything if they're using
their identity.
Mr. Koskinen. If you're using your identity. In cases like
Ms. Weeks', where it's simply a stolen identity to add to a
deduction but it's not the return, that's where it gets more
complicated as to how much information is there. In Ms. Weeks'
case, for instance, the only use of the identity, and that's
generally the case for a child, is just to use the child's
Social Security number. There is no other information about the
child on that return. She's been a good catalyst for all of us
to try to get this problem solved. In her case, when she gets
the copy of the return, the information will all be redacted
because the data belongs to the other taxpayer-victims----
Senator Ayotte. So what kind of investigation is being done
to ensure that the taxpayer information at the top isn't just
another innocent taxpayer who has been stolen but someone who
may be involved in some way in the perpetration' Is there a
follow-through done'
Mr. Koskinen. Yes.
Senator Ayotte. Because I think, at the end of the day,
we're all appalled at what's happened to the Weeks family, and
we want to make sure we get those who have committed this
horrific crime and hold them accountable.
Mr. Koskinen. Yes. The challenge for the entire economy in
a digital age is the tremendous amount of personal data that's
available to criminals. The estimate is over 100 million
Americans have data out in the hands of criminals. The Dark
Net, as it's called, the underside of the Web, has an estimated
five times as much information as the entire Public Web. There
are criminal syndicates in Russia, for instance, reputed to
have 1 billion user identity's and passwords.
So what's happening with children, children's identity's
and Social Security numbers are used in schools, they're used
in hospitals, they're used with regard to health care. On
certificates, when children or adults die, that information is
available. Congress supported us and we shut down the
availability of the Death Master File, because what criminals
want is to file a return where there isn't going to be a
competing return. They increase their chances of getting
through. So that's why they like people who are deceased, poor
people who are not likely to file, elderly people who are not
likely to file.
In any event, the bottom line is taxpayers deserve to have
as much information about that false return as we can provide
them. As I say, within the next few weeks I am advised, because
I've asked this question again, that we will have a system that
will allow people automatically to get that information.
Senator Ayotte. So, Commissioner, in the next few weeks,
what can I expect as a deadline?
Mr. Koskinen. Well, I asked that question, and we have a
lot going on. Our people have said that they would like to
certainly before October is over. In other words, in the next
six to eight weeks we should have that system. It's already
being built. We've got the legal authority for it. We hope to
then regularly be able to provide that information before we
get very far into the fall. I could not pin them down any
further because we're also doing all of the IT work to get
ready for the next filing season.
Senator Ayotte. All right. I need you to pin them down.
Mr. Koskinen. All right, I will.
Senator Ayotte. Because this is important.
Mr. Koskinen. I will start by saying that if it's not ready
by the end of October, I will want to know. If we can get it
earlier than that, we will do that.
Senator Ayotte. Well, we'll be following up.
Mr. Koskinen. And that would be fine.
Senator Ayotte. Because this is incredibly important, not
just to Ms. Weeks, but I know many of the taxpayers that are
here today who want more information about how their personal
information has been misused.
Mr. Koskinen. Right.
Senator Ayotte. So this is one where I hope you'll make it
a top priority to get this done.
Mr. Koskinen. Right. And one of the things we are concerned
about is that this is information that the criminals have
gotten from somewhere else. So when they get enough information
to file a false return, or to access a Get Transcript account,
our major concern for taxpayers is to understand that data is
out there and they need to know what's on the tax return, but
more importantly, they need to then take steps to protect their
information.
Senator Ayotte. Absolutely.
Mr. Koskinen. It goes to changing your identity, changing
your passwords, not using the same----
Senator Ayotte. It's a huge process and a big rigmarole.
When you become the victim of identity theft, all your credit
information, everything is impacted.
Mr. Koskinen. Yes. And so whatever we can do to be helpful,
we are going to try to do. It's a traumatic event for
taxpayers.
Senator Ayotte. It is. I'm going to hold you to that.
Mr. Koskinen. That's fine. I'm happy to be held to that.
Senator Ayotte. I appreciate it.
So, I wanted to follow up, with Mr. Lee, and Inspector
George. I know the Commissioner says we're going to assign one
point of contact now, and that sounds new to me on this,
because we heard the story from Ms. Weeks, we heard the story
from Mr. Walker as well, about the jumping around and the
rigmarole that people are going through when they're trying to
correct the record--in Mr. Walker's case, when his clients
actually tried to return money to the Treasury.
So when will this get in place?
The other question I have is I know you said 120 days, but
just listening to everyone here I heard 120 days, and then I
heard 278 days, and then I heard 179 days. I bet you if I went
out into that audience and asked folks out there that were
victims of identity theft, they'd be talking about hundreds and
hundreds of days, unfortunately.
So can you clarify that for us and how we're going to get
more responsive here and make it easier for people?
Mr. Koskinen. Yes. Let me just clarify one thing. As noted,
we have consolidated what used to be in four different
departments of the IRS to try to get a single point of
operations and contact. The issue that the Taxpayer Advocate,
Nina Olson, and I continue to discuss is, whether within that
now centralized unit--which we think will be much more
efficient and allow us to move faster--whether you should have
an individual person answering the phone.
The Taxpayer Advocate, as Mr. Lee pointed out, suggests
that if there are complications, there ought to be one person.
Our sense is if we can build the right system--for instance,
when you call an airline and talk to someone, when you call
back you don't get the same person, but they have a system that
allows them to know exactly what you said the last time you
called. We are not quite there yet, but our hope is, with a
little bit of funding, that we can actually build a record so
that when you call the next time your previous discussion is
already readily available. Because otherwise, that's when
people think a single person is good.
The problem with a single person, the reason airlines and
Amazon don't do that, is that when you call back, they may be
on vacation, they could be at lunch, they could be on another
phone line. But I take the point, that there's nothing more
frustrating, and nothing has been more frustrating, than being
moved from one part of the agency to another.
Senator Ayotte. Right. It's like you told your story once,
and then you get someone new and they don't know anything about
it.
I wanted to allow Mr. George and Mr. Lee to comment on that
as well.
Mr. George. As it relates to the timing, Senator, the IRS
issued guidance in Fiscal Year 2013 to inform taxpayers, for
their employees, IRS employees to inform taxpayers that these
matters would be resolved in 180 days.
Senator Ayotte. Okay.
Mr. George. What we uncovered is that during that
timeframe, Fiscal Year 2013--oh, and what they also did, the
IRS informed the oversight board, the IRS oversight board that
they were resolving these matters in 120 days. So that's
where----
Senator Ayotte. So in other words, if I'm a victim of
identity theft, the IRS is saying 180 days.
Mr. George. That was the guidance that they issued.
Senator Ayotte. That was the last guidance on the issue.
Mr. George. Unless there was subsequent guidance, and that
one I can't say for the record.
Senator Ayotte. So what is really happening?
Mr. George. Well, what is happening is the information that
was reported out, the IRS eliminated an entire subset of cases
closed during Fiscal Year 2013. The information that they
relayed was cases that were open and closed in Fiscal Year
2013, as opposed to the previous cases that had come to their
attention in Fiscal Year 2012 and prior that were also closed.
So that eliminated almost two-thirds of the cases that were
outstanding that they reported out on. So that's why there's a
difference of opinion as to the number of cases.
Senator Ayotte. What are you hearing, Mr. Lee, in terms
of----
Mr. George. Or the number of days, rather.
Senator Ayotte. I'm sorry. Mr. Lee, and then go ahead if
you have more to offer, Mr. George.
Mr. Lee. Yes, I think there are a couple of things going
on. Number one, the IRS is continually improving their
processes. So I think TIGTA has looked at the cycle time of
identity theft cases in each of the past three years, and the
first year, I guess Fiscal Year 2008, before they came out in
2013 they came out with an estimate of 414 days, and then the
following year they came out with reports saying the average
cycle time was 212 days, and then earlier this year the cycle
time was reported as 278 days. So clearly, the IRS is improving
its processes.
Especially in 2013 the IRS has new processes, and I believe
even in TIGTA's report where they estimate 278 days, they used
a figure of 174 days with the new procedures. So I think six
months is the most accurate estimate. We conducted a thorough
review last summer where we looked at 400 cases selected at
random of all IRS cases closed in June 2014, and we came out
with 180 days.
We've heard reports from certain groups within the IRS
saying they were going to close their cases in 120 days, which
is great. But what we found is that the IRS often looks at
cases on a module-by-module basis. So even if that particular
function was able to close cases in 120 days----
Senator Ayotte. It's not fully closed.
Mr. Lee.--it doesn't mean that all the taxpayers' issues
were resolved in that 120 days. So I believe our estimate----
Senator Ayotte. So let's get to the bottom line here, would
we all agree that the number of days is unacceptable that
people are waiting right now? Because I'm hearing a number of
six-month stories, if not longer.
Yes or no? Mr. Lee?
Mr. Lee. Yes, I feel that six months is not acceptable, but
it's obviously much better than 278 days.
Senator Ayotte. It's all relative. But if you are a victim,
that's a long time, especially if your tax refund. We've got
constituents, people who need these tax refunds to pay
important bills to keep going.
Mr. George. And I'm sure that the Commissioner will address
this further, and there is no question that it's unacceptable,
but the IRS is restricted by resources, Senator. There's no
question about that. Additional resources would allow for more
attention to this matter. During the tax filing season,
individuals who would otherwise work on these types of cases
and assist taxpayers have to now take on phone questions,
responsibilities to respond to questions about filing tax
information, and so they have to put aside their cases working
on tax-related identity theft.
But again, I'll refer to the Commissioner.
Senator Ayotte. Commissioner.
Mr. Koskinen. Well, I don't want every problem when I
testify to be tied to the budget, but the Inspector General is
correct. Ultimately, this is a question of manpower or person
power in terms of addressing it.
I think what you've heard, we'd all agree, is the process
is much better than it was three or four years ago. As the
Inspector General said, part of what happens in the measuring
of time is the old cases took longer. If you add them into the
newer cases, which take less time, the average is still higher.
Our goal is to get it down to 120 days or less for cases
when they start. We still have cases thattake longer. Even 120
days we aren't satisfied with. But as the Inspector General
said, we think the consolidation of the four departments into
one will allow us to move more quickly. But ultimately, in the
middle of tax season when we're processing 150 million returns,
the fact that we have several thousand fewer people on the
phones means that the system bogs down.
Senator Ayotte. Mr. Lee.
Mr. Lee. Senator, I just want to mention that the Taxpayer
Advocate Service is also faced with budget constraints. But if
a taxpayer is facing economic burden, they are able to come to
us and we've been able to get them the refund in a much shorter
time, in about two months. So that is one option. We don't want
all of the IRS' identity theft cases, but when the taxpayer has
a hardship or economic burden, we are happy to take on their
case.
Senator Ayotte. I appreciate it. And I just want to also
make sure that we clarify. As I understand the resource issue,
I know that the amount committed to taxpayer services was
actually the same, because you and I have kind of gone around a
little bit on this, from 2014 to 2015. But as I understand it,
the agency chose to reallocate about $133 million in user fees
from taxpayer services to operation support accounts, most of
which has gone to implement the new health care law.
Mr. Koskinen. Correct. What's important to understand is
that we have user fees that historically have been used as a
buffer to allow us to fund unfunded issues as they come up.
This year the ABLE Act was passed in December. We don't have a
budget for that. The health coverage tax credit has been
passed, and we don't have a budget for that. Normally we'd
apply user fees.
Well, in the last three or four years, because the taxpayer
services, account has never been fully funded, we used user
fees to support it, and this last year we used $50 million to
support it. But that was about $100 million less than we used
the year before, and you're right, we had to put that into
supporting the establishment of the Affordable Care Act, both
because it's a statutory mandate and also, for taxpayers, we
had to be able to run the filing season and process 5 or 6
million returns that, in fact, reconciled the advance premium
tax credits received.
So we have enforcement, we have taxpayer service, we have
IT operations and maintenance, and as the budget has been cut
for five years, we had to balance where we put these funds.
Senator Ayotte. I just want to make sure we're clear,
though, in terms of what was allocated between 2014 and 2015
for taxpayer services. That number has remained the same, but
you had other responsibilities added.
Mr. Koskinen. That number as an appropriation remained the
same, but because of the fact that the appropriation overall
was cut, it meant that the $100 million that would have gone
into taxpayer services----
Senator Ayotte. Right. But when Congress put the money for
the services, that's where they put the same amount of money,
right?
Mr. Koskinen. Right, and when I testified to the
appropriators, I said if we were held flat our taxpayer service
was going to be at the 50 to 60 percent level. When it turned
out that we weren't held flat, that in fact our budget was cut
by $350 million, we had no choice but to take $100 million to
fund the statutory mandate passed by Congress.
Senator Ayotte. To deal with the new law, the Affordable
Care Act.
Mr. Koskinen. To deal with the new law, yes. This year we
are having to take money out of enforcement and taxpayer
services, to fund other statutory unfunded mandates. The ABLE
Act is a perfectly good act. The Health Coverage Tax Credit is
a perfectly good act. We have no money provided by Congress to
fund the implementation of those programs. We have to do it.
The only place it comes from is either enforcement, taxpayer
services, or our ongoing IT work.
Senator Ayotte. So let me ask the Inspector General, you've
made a number of recommendations that you believe the IRS could
implement to save money. What thoughts do you have on that?
Mr. George. What I'd like permission to do, Senator, is to
provide you in writing a thorough listing, but I'll just give
you what I think would be the most helpful way for the IRS to
do its mission and for the U.S. Treasury to benefit.
Senator Ayotte. Sure.
Mr. George. When the information reported to the IRS on
income is provided by a third party, we have uncovered during
the course of all the audit work that we've done and from
outside sources that the compliance rate among taxpayers who
fall into that category--and again, the category is somebody
else is reporting that the taxpayer earned $100 that year or
that pay period, that year--it's almost 98 to 99 percent
compliance rate.
At the opposite end of that spectrum are people who operate
businesses on a cash-only basis who self-report, the compliance
rate is under 20 percent.
So if there was a requirement for everyone to have some
form of information sharing by an outside or independent party,
that would tremendously empower the IRS and the American
taxpayer overall.
Another study, and this was done professionally. If you are
asked "Should you pay all the taxes you owe to the Federal
Government'' again you have a 90-plus rate, 'Yes, I should.' If
the question is changed, Senator, slightly to say, 'What if
your neighbor down the block, Ms. Jones, isn't paying
everything that she owes'' then the compliance rate goes down
dramatically, because if she isn't paying everything, then why
should I pay everything?
So the bottom line, again, is third-party reporting. Then
there's access to the new-hire database which is held in the
Department of Health and Human Services, so that too could
provide the IRS with tools to determine whether the information
they're receiving is accurate, whether the person actually did
earn what he or she said in the tax return that they filed. And
then, of course, working on a lot of the refundable credits and
the like, making sure people who----
Senator Ayotte. Additional child tax credit, earned income
tax credit. Yes, we've talked about the fraud and issues that
need to be resolved. They could be better addressed there. I
know you've issued reports about that.
Mr. George. Yes.
Senator Ayotte. And I also have legislation to address some
of that.
Mr. Koskinen. I would just add one thing, because we have
an obligation to be as efficient as we can. We have an
obligation to our employees. We have a great workforce who are
committed to providing taxpayers the best service we can.
People most frustrated by the level of taxpayer service are our
taxpayer service employees, the people in the call centers who
know the level of service they want to provide, they know the
level of service taxpayers expect, and they are frustrated
because we can't deliver. We just don't have the resources.
In the little over 20 months since I started as
Commissioner, the GAO, the Inspector General, the Taxpayer
Advocate, and the oversight board all independently have stated
to Congress that the IRS is under-funded and that, in fact, if
we continue to have budget cuts, the level of services, the
level of enforcement, the level of security will do nothing but
go down.
Senator Ayotte. Well, I would certainly like a commitment
as well. I know there have been a number of issues raised,
including the issue of when in 2014 IRS employees received
bonuses in which they were rewarded after a report done by
TIGTA revealed that the IRS had awarded $2.8 million in bonuses
to more than 2,800 employees that had broken agency rules of
conduct, including over 1,000 employees who owed back taxes
themselves. So if we're going to allocate additional resources,
we need better management also, and I have a list of issues
like that that I know have been brought up in GAO and TIGTA
reports, Commissioner.
Mr. Koskinen. If you would like to send me that list. In
that case, for instance, we have changed that rule. No longer
does an employee--they're not bonuses, they're performance
awards--even if a performance award is earned, no longer will
it be paid to an employee who has violated an obligation, a
serious obligation of the IRS, or is not compliant on their
taxes. We've advised the union about that, and they have
agreed.
Senator Ayotte. Well, I appreciate that. I'll send you a
list. I have a list.
Mr. Koskinen. I'll be happy to have the list.
Senator Ayotte. I have a list.
Mr. Koskinen. Because I agree with you. Taxpayers need to
know and be comfortable that they're going to get treated
fairly no matter who they are and no matter what political
party they belong to. We're spending taxpayer dollars, and
taxpayers need to be comfortable that we are careful about it,
that we're frugal, that we're as efficient as we can be. I
think that's an obligation we have.
Senator Ayotte. And recognize the immense power that the
IRS has, and it's important in the sense that people, when
they're interacting with the IRS, you have a tremendous amount
of power, and it can be very intimidating.
I wanted to follow up, on some of the issues that Mr.
Walker raised as well. He raised an issue of the fact that
things have changed in terms of how the professional community
is able to get basic information using electronic databases on
behalf of their clients. He described, I think, quite a run-
around of trying to best represent his clients in a way when
they've been victims of identity theft, but also the story that
he told about the check, when they were trying to correct the
record and the run-around that has been given for this poor
couple.
So what's happened that the professional community isn't
able to be part of the solution here and partner to help
represent their clients as best they can to prevent identity
theft, number one; and then hopefully if they become victims,
to correct it?
Mr. Koskinen. I was concerned about those vignettes because
our most important partners in tax filing season are, in fact,
CPAs, enrolled agents, tax attorneys, and preparers generally.
But certainly enrolled agents and CPAs, we have partnerships
with them, with the National Enrolled Agents Association. We
have standing panels. We have advisory committees composed of
preparers. I know the practitioner priority line, which is a
line specially set aside for practitioners. Again, because of
the cuts in personnel, as I said during the last year, it's an
oxymoron. It's no longer a priority. You have to stay on the
phone if you're a practitioner almost as long as taxpayers, and
that's unacceptable because, as noted, the professionals on
that line are in a position to solve problems and solve them
quickly.
This is the first I've heard that they have been declined
access or can't get access electronically. We are concerned
with electronic security, and we're dealing with very
sophisticated, well-funded, organized criminals. A target of
opportunity for them, besides retail operations, are tax
preparers. They are increasingly trying to, in fact, steal the
identity of tax preparers.
So one of the issues we have is security, but this is the
first time I've heard that they're having trouble getting in,
because they shouldn't. We should be able to provide them easy
access.
Senator Ayotte. Well, absolutely, because they are part of
the solution.
Maybe, Mr. Lee, you've run into this in some of the work
that you've done as well?
Mr. Lee. I actually haven't been that involved in the
practitioner aspect of it, so I don't think I can comment. But
I agree with the Commissioner that the practitioners need to be
included since they are----
Senator Ayotte. I hope from this hearing we can have some
follow-up to what Mr. Walker is dealing with, to help
professionals help their clients to solve these problems.
Obviously, if someone doesn't have the benefit of having
professional help, we've just got to get this right for a
person on their own to be able to resolve it more easily.
Mr. Koskinen. As I've said--and you're exactly right, we
have the possibility or the likelihood that we are intimidating
to taxpayers. As our surveys have shown, if you ask taxpayers
how they'd like to deal with this, the highest priority is not
to have to deal with us at all.
Senator Ayotte. Not to have to deal with it. Who wants to
deal with the IRS, right?
Mr. Koskinen. Right, we understand that.
Senator Ayotte. Here you have people trying to correct the
record with the IRS and----
Mr. Koskinen. So one of the things we're trying to get
people to understand and what I was surprised to learn when I
became the Commissioner is the amount of time and effort we
spend actually trying to help taxpayers. We have thousands of
people on the phone, and their only job is to help taxpayers.
So I have said, and I mean it honestly, if you have an
issue with the IRS, you're trying to correct an issue, you're
just trying to figure out how to make a payment or you have
problems, you've lost a job, you have other challenges, you
want to create an installment payment, we want to work with
you. You don't have to call somebody off late-night TV to send
them your account. If you're trying to become compliant, if
you're trying to work it through, we want to work with you.
If you're trying to avoid taxes, if you're trying to cheat,
then we're happy to be unhappy about that, and those are the
people who should be intimidated.
But we're trying to make sure taxpayers understand we
really take seriously, as you noted in your opening statement,
our commitment and our mission to provide effective and
appropriate taxpayer service. So wherever we can improve, we're
going to try to do it. As I say, with Mr. Walker, I'm going to
find out. As you noted, we have working panels all around the
country where we have IRS executives and enrolled agents
working regularly to deal with problems.
Senator Ayotte. I think you'd better include him on this
because he's got some good----
Mr. Koskinen. He's already on some of them, as he noted.
But we will find out, because I do think nobody is more
important to us than professional preparers. As he said,
they're solution providers. They can get the information. They
can work with us to help expedite solutions. But even if you
don't have a preparer, we are very anxious to help make it as
smooth a process as possible.
Senator Ayotte. Mr. George.
Mr. George. Thank you, Senator. Related to what the
Commissioner just said, the paid preparers are the vanguard
because of the amount of work and the systems they provide the
IRS and to the taxpayer. But you have to be honest when you
think about the complexity of the tax code. One of the tax
credits that is most abused throughout the tax code is the
earned income tax credit. The instructions for completing that
are 30 to 40 pages long, and the average person who takes
advantage of that normally does not have the wherewithal to
complete that him or herself.
But keep in mind, we've estimated, as has the IRS, upwards
of $20 billion a year is sent out incorrectly under that
program. Now, a lot of the people who do benefit from that are
getting some assistance preparing their taxes. I'm not going to
point to, and we're not in a position to point to any
particular source, but you need tax preparers, whether they're
paid or whether they're volunteer, to not be complicit or to
follow the rules that are required now to confirm that, yes,
this person does that have dependent and is eligible to apply
and receive this refundable credit, which means they don't need
to owe taxes in order to get the money from the Treasury
through the IRS.
So complexity is important, or diminishing the complexity
of completing your taxes.
Senator Ayotte. Absolutely. And then, of course, for the
additional child tax credit, you don't have to use the Social
Security number for the child. We know you've issued reports on
the billions of dollars that could be saved there, as well.
Mr. George. We believe, although the IRS has a very
different interpretation, that the ITIN, the Individual
Taxpayer Identification Number, is sufficient for that credit.
We don't agree with that interpretation, but the IRS has a
different point of view there.
Senator Ayotte. Well, I have legislation filed on that
piece, and I think we'll save billions of dollars if we take
the step that TIGTA has recommended on that.
I wanted to make sure that we don't leave out two important
issues. Number one, prevention. I know that we've heard that
the Get Transcript issue, I believe you testified that the
number was 350,000 potential impacts to taxpayers of personal
information from how that was infiltrated. How are we going to
prevent that in the future?
And then to Mr. Lee's point, with the added filtering that
the IRS is putting in. We want to make sure that we're doing
whatever we can to prevent identity theft. The one-in-three
false positives for people who are being flagged and then put
through a rigmarole, how are we going to address those pieces?
So what more to ensure that something like Get Transcript
doesn't happen again? And then secondly, so we don't have so
many false positives?
Mr. George. I think this is important. That 350,000 figure
I think is misleading because that doesn't include the
dependents and others whose information is also contained----
Senator Ayotte. So it's misleading in a--it's bigger.
Mr. George. It's a low-ball figure.
Mr. Koskinen. I wouldn't call it low.
Senator Ayotte. So those are just the filers versus
everyone else's information that may be impacted.
Mr. Koskinen. And we notify everyone on there about the
issues. The Get Transcript and the false positives, these are
two related issues. We could make it impossible for a criminal
to have access to Get Transcript, but at the same time we'd be
making it impossible for a legitimate taxpayer to have access
to Get Transcript.
Even with the system in place, the criminal with all of
that information still couldn't get through, but 22 percent of
the taxpayers trying to get hold of transcripts can't get
through because they can't answer their own questions.
So as we get better filters, we're going to have higher
false positives. But the other side of the one-third false
positive it means that two-thirds of those refunds stopped were
fraudulent. Had we had lower false positives, we would have had
fewer stops and more identity theft. When we stop it at the
door, it's a lot easier to resolve your account.
Senator Ayotte. Just so we're clear, when we're talking
about filters, or we're talking about how do we stop up-front,
we're talking about things like multi-step verification where
I'm asked what's my mother's maiden name, all those issues.
Mr. Koskinen. Right. But when you file your return, we want
to have a set of filters looking for anomalies to determine
whether that's really your return. This year we stopped 3.2
million returns that are suspicious. Probably a third of those
are going to turn out to have been real taxpayers and their
refund would have been delayed. The other two-thirds, a couple
of million of them, will turned out to have been fraudulent.
So the tradeoff, even on the security for Get Transcript,
is how hard do you make it for a criminal to get through, at
the same time you're trying not to make it hard for a
legitimate taxpayer to get through.
Senator Ayotte. So what do you think we can do more of in
terms of taking steps to reduce the number of false positives--
--
Mr. Koskinen. Well, with Get Transcript, for instance, when
it happened, my sense was this is a critical issue for us
because going forward, as Mr. Walker said, our goal is to be
able to have taxpayers have an account with us electronically,
digitally, where they can, in fact, access their information.
Their preparer can access their account. They can make
corrections directly on their return. They don't have to file a
paper return. But to do that, the authentication--that the
right taxpayer is accessing the account--is critical,
obviously.
So when we're looking at Get Transcript, we're not looking
at it as how do we secure that application alone. We're looking
at it to your question, how do we secure information about
taxpayers to know that they are the right taxpayer, how do we
know that the preparer is the right preparer. So we're spending
a lot of time. I told a lot of people that I would rather put
Get Transcript back up later, with more confidence that we've
solved the problem, than rushing to get it up.
One of the things we're looking at, for instance, is that
we have to make it go from wholesale to retail. That is, we're
going to make limitations that if you want to get a transcript,
only one transcript will be given to an IP address or a
computer, and probably only one a day. So if you want to go and
come back and get it again, you can't get it again in an hour.
You can't get another transcript. You have to come back the
next day. It's a little less convenient for preparers and
taxpayers, but it's a security level.
We're thinking about, and we're investigating whether we
could have you pay $2 for the transcript using your credit
card, because the credit card verification would be another
authentication. In a lot of cases in terms of verification, and
one of the reasons we have this partnership for the first time
with the private sector, is a lot of taxpayers have their
identity verified on their own. A lot of taxpayers allow their
preparers to take their W-2 information directly from the
company. If a taxpayer can do that with their preparer, we and
the preparer have a pretty good idea that that's a legitimate
taxpayer. If we can pool as many taxpayers as we can in the
legitimate pool, we'll then have a smaller number that we can
take a harder look at, and that's what we're hoping to do with
the state tax authorities as well as the private sector.
But ultimately the bottom line is, as I say, we're dealing
with organized criminal syndicates around the world. We will
never be able to guarantee you that nobody is ever going to get
through. We'll never be able to stop. We're going to always
have to be agile and quick and always testing the system and
trying to keep ahead of, if not up with, the criminals.
Senator Ayotte. So I want to make sure I get any thoughts
from Mr. George or Mr. Lee on this. But can I just add my two
cents to this idea of giving $2 for a transcript on your credit
card? With everything happening and the number of breaches that
have happened in the Federal Government with OPM and everything
else, I think people are going to be quite hesitant to want to
give their credit card. So I hope we'll look at other ways that
we can address this. That's just my two cents in hearing it.
Mr. Koskinen. But that's a good two cents. We wouldn't keep
the numbers, and it's a great way to verify who you are.
Senator Ayotte. I think at the moment there are a lot of
issues even on the other front, not only what's happened with
the Get Transcript but thinking about the OPM and the massive
amount of information that we're dealing with on the theft
there.
Mr. Koskinen. One thing we should remember, there's a big
difference between what happened at OPM or Target or JPMorgan
Chase and Get Transcript. Get Transcript is identity theft.
Criminals had the information. OPM, Target, and the rest,
Anthem, are all cyber breaches.
We're under attack, give or take a little, a million times
a week. Our system is under attack, over 50 million attacks a
year on cyber security. So it's a critical issue. It's just a
different issue than what we're dealing with in identity theft.
Senator Ayotte. I didn't know if either of you had a
comment on the prevention piece and where we should be.
Mr. Lee. I just had a comment on the $2 charge. I mean, I'm
very comfortable using online services, and I'd be fine with
that $2 charge. But I believe, as the Senator mentioned, a lot
of Americans would just be distrusting of the IRS in order to--
--
Senator Ayotte. We're giving you a lot of information to
start with, right? And a lot of dollars.
Mr. Lee. A lot of taxpayers don't have credit cards.
Senator Ayotte. That's a good point.
Mr. Koskinen. We've thought about that, the ones who are
unbanked or don't have credit cards, and we would be able to
provide them a transcript. You go online and we mail it to you.
But most people, when they're trying to get a mortgage or
trying to get student loans, wait until the last minute, and
then they need it immediately. But the point is well taken. As
I say, financial institutions can decide some of their
customers don't produce enough money and they can leave them
aside. We don't have that luxury.
Senator Ayotte. We can't leave anyone aside.
Mr. Koskinen. We have 150 million taxpayers. Even if only 3
or 4 percent of them don't like the Internet, don't have access
to it, never want to use it--my mother-in-law is that way--3 to
4 percent is 6 million people, and we need to be able to
provide them appropriate levels of service no matter what else
we do. So as we go forward in a digital economy, we're not
going to leave those people behind.
Senator Ayotte. So I want to make sure--I think prevention,
anything we can do to, obviously, improve technology, and we're
headed at least in a direction----
Mr. Lee. I've got some thoughts on prevention, and this is
probably outside the scope of what my boss would be comfortable
for me to testify about.
Senator Ayotte. That's why--he's not here, right?
Mr. Lee. Okay. I'd like to just make a comment. We talked
about moving up the deadline for information reporting so the
IRS can verify that information. But I think we also need to
talk about moving back the filing season and the issuance of
refunds. So instead of taxpayers expecting to get refunds in
January or February, I think we need to talk about having them
wait until the summer so the IRS has a chance to look at the
information that it collects in March.
Senator Ayotte. This one won't be popular.
Mr. Lee. It won't be popular, but I think that's something
we need to have a conversation about, but I don't want to bring
it to the table. You can foot that idea.
Senator Ayotte. I think the challenge there is that when
it's thousands of dollars for some families, that six months
could be something that they've planned, it could be something
that's really important to them.
I had a constituent who their family went through
difficulties, they were the victims of identity theft, and like
your office does, trying to work with them to get their refund
sooner because they thought they were going to lose their
mortgage because they just happened to go through a bump on
some other things that were happening and that was so critical,
and if they had to wait. I think that's one of the challenges
that identity theft victims are dealing with because for some
people, depending on what's happening in their lives, it's a
lot of money and makes a big difference.
Mr. Lee. Right, it's a big percentage of their annual
income that----
Senator Ayotte. That's being held. It's their money.
Exactly.
Mr. Koskinen. So again, the tradeoff is that you're trying
to protect everyone, because if we could have no one be a
victim of identity theft, that would obviously be terrific. So
it's, again, a tradeoff. There may be some inconvenience along
the way to, in fact, try to increase the protection. So before
Mr. Lee gets dismissed for his idea, people will build their
lives around when they get their refund. If in one year
everybody moved from January/February to, say, March or April,
not June, then they'd count on their refunds in March or April,
and we've begun to look at it and say what would that do? Would
that make a significant difference in our ability to protect
everybody?
There is no idea that is not under consideration, and
that's why these partnerships are wonderful, because we're open
to ideas from other people as well, because there isn't a
single silver bullet. The partnership, we hope, with preparers
and state tax agencies will give us coordinated layers that
criminals have to work through. But it will take everybody's
best thoughts for us to continue to make progress.
Senator Ayotte. And I really appreciate all the patience
and these questions. I want to make sure I follow up on all the
issues that have been raised. One of them was this issue that
those who have been victims of identity theft, many of them can
get the IP PIN number to make sure when they re-file that they
don't become re-victimized. I heard that there was a big gap, I
believe 530,000 taxpayers not provided these IP PINs that may
be eligible for it that may need them. So how is this program
working? Why aren't some taxpayers being given access to it?
One couple asked me on the way in here today if they've
been a victim of identity theft and they file the next year
with the IP PIN program, is this something they're going to be
continuing and able to do?
Mr. Koskinen. Yes.
Senator Ayotte. So it's not one year but they have that
protection if they want to have it going forward.
Mr. Koskinen. Yes. A lot of good questions in there. The IG
has been very helpful to us over the years in reviewing and
giving us suggestions, and we've adopted most of those,
implemented most of their suggestions in this entire area.
On the issue of IP PINs, the issue really was not so much
people who had actually been victims but people whose records
had been flagged.
Senator Ayotte. So it would be victims or potential
victims.
Mr. Koskinen. People where there was suspicious activity in
their account. There were 1,700,000 of those. So this year for
the first time, we took that recommendation and sent out 1.5
million IP PINs to known victims. We offered another 1.7
million Americans IP PINs where their accounts had been
flagged. They hadn't necessarily been victims but it was clear
there was an issue.
Similarly with Get Transcript, we offered everyone where
there was any access to their transcript an IP PIN. Now, your
point about it, we're considering right now that once you have
an IP PIN, it's yours and you should actually use it every
year, and each year we send you a new one. We're now looking
at, well, could we give them to you for three years so every
year you don't have to worry about if I move, does my IP PIN
follow. But if you've signed up for it, or you have to use the
IP PIN, and it goes for a while.
The other thing we're looking at is after a number of
years, and we know because we track, that even after we've
stopped a return, the next year the fraudsters come back in a
reasonable percentage of cases. So the IP PIN protection is
very important.
Senator Ayotte. Right, because once you've been victimized
once--I have to say, my uncle was a victim of tax-related fraud
too, and he wasn't just victimized once. It was twice.
Mr. Koskinen. Yes, because what happens is--and especially
when we've stopped them, you'd think, well, why would they file
again? But it's not as if there's a single person out there.
This data is out there and available to people, and it's being
sold.
Senator Ayotte. Yes, it's a criminal network using your
data because it's out in this----
Mr. Koskinen. So it may be a new network that buys a whole
pool of Social Security numbers from other crooks, and they
don't know--nobody is telling them this is a good Social
Security number. They're just selling them--here's a thousand.
So the IP PIN--we encourage people to use it.
We have a pilot program we've run for two years in Florida,
Georgia, and the District of Columbia, which are the hotbeds of
SIRF, offering everyone in those states the opportunity to----
Senator Ayotte. I'm starting to feel New Hampshire is a
hotbed, unfortunately.
Mr. Koskinen. You ought to go to Florida.
So we're running pilots. The reason we're running these
pilots is to see what the uptake is, what the cost is, what the
burden is, because it is a way, in effect, of changing your
identifier from your Social Security number to a number that
only you and we have.
Senator Ayotte. Right. And I know Mr. George wanted to jump
in.
Mr. George. Just to make this point about something
perverse with all of this. And that is, again, if you don't
have a filing obligation, and if the bad guy does assume your
identity, believe it or not, the IRS communicates with the bad
guy using the address the bad guy provides. So the senior
citizen or somebody who otherwise doesn't have a filing
obligation is just completely unaware that all of this is
happening. And I don't fault the IRS necessarily here, but they
have a very difficult job, Senator. As the Commissioner pointed
out, they have to keep up with these very smart, overseas many
of them, bad guys who are constantly thinking of new ways to
manipulate the system, and it's a very difficult task.
Senator Ayotte. This issue of the pilot, you notified
25,000 taxpayers when you learned that their Social Security
number may have been misused. Is this something that you plan
to implement with everyone? That's been a piece of our
legislation, that if the IRS knows that your Social Security
number may have been misused. Often I'm hearing from taxpayers
that they're finding it out when something happens to trigger
it, whether they're filing their tax return or some other
action. Maybe it's a credit issue or something. It's pretty
valuable information, I think, for people to know as soon as
possible to protect themselves.
So what's your thought on that?
Mr. Koskinen. As I say, this year, for anybody whose
account has been flagged but is not necessarily a victim of
identity theft, that 1.7 million we've written to and said that
there's an indication of fraud, you can get an IP PIN if you
would like one.
Similarly, the purpose of this pilot is to, in fact, see
what the burden is, what the take-up rate is, because as a
general matter the risk for a taxpayer is not--I mean, it's a
risk and an aggravation when you're an identity theft fraud
victim, but they're not getting any more information from us
about you. The risk is that they already have that information.
So what we're trying to figure out is how do we let you know
that even if you're not a victim of identity theft, you need to
know that information is out there and being used by criminals.
If you're not a victim of identity fraud, and even if you are,
it doesn't affect your relationship. We'll work it out. The
risk is it's being used also for other issues.
Senator Ayotte. Oh, it puts people at risk. So I would hope
that----
Mr. Koskinen. Our goal is to do whatever we can, and the
pilot will do that, to try to help people, even though it won't
be in relation to us. But we just feel it's important for them
to know that we have an indication that your data is out there
being used by criminals.
Mr. Lee. My understanding is that this recommendation was
raised at the executive steering committee level this summer,
so we're hopeful that the IRS will expand the program for all
taxpayers, not just the 25,000.
Senator Ayotte. Good. I hope so, too. And if not, we have
legislation that would make sure that--we want people to know
so that they can protect themselves.
You've had the opportunity to hear from Ms. Weeks and also
Mr. Walker, and I can assure you that they're representative of
many people who are in this room and what they've gone through,
but many people who can't be here today with this issue. It is
my hope that the issue of getting the fraudulent return so the
taxpayer can understand what's been used, that that will be
resolved as soon as possible. You gave me a date of October,
and we'll be following up on that.
Mr. Koskinen. We'll be talking.
Senator Ayotte. We'll be talking on that. I heard,
Commissioner, that you want to get to an issue where the
taxpayer is not getting the run-around and having to deal with
multiple people if they're a victim of identity theft, and this
seems to me a critical issue that we've got to do much better
on so that people aren't getting re-victimized after they've
gone through having their personal information stolen.
And finally, I hope that any time the IRS knows that
someone's information is being misused, that they will notify
them and that will be something that is adopted for all
taxpayers.
There are a number of other issues that were raised here,
and I think Mr. Walker has an invitation there to allow the
professional community to help solve this problem too, to allow
them to have access to the taxpayer information for their
clients in appropriate ways to be able to solve this.
So there were a number of issues that were raised today.
I want to thank all of you for being here. I especially
want to thank again Ms. Weeks and Mr. Walker. I plan to
continue, obviously, working on this issue. I feel quite
passionate about it, and we can do a lot better for taxpayers
on every front, on prevention, and also how they are treated
if, unfortunately, they become a victim of identity theft. This
is a very critical issue.
As you pointed out, Commissioner, we are facing a number of
cyber-attacks that make this continue to be criminal networks
who are misusing people's information, and I think we need to
do everything we can on the law enforcement end to go after
them as well.
So with that, I'm going to conclude this hearing. I may
leave the record open for some additional written follow-up
questions, and I appreciate your traveling to New Hampshire
today for this hearing.
Before we end, I just want to very much thank the Budget
Committee staff who have come here, Adam Kamp and Katie Smith
and my own staff member, Marne Marotta. I would also say if my
staff who are here, Anne Warburton and Jane Hirsch, they work
on these cases on behalf of my constituents, and anyone who
would like some help from our office, I do have my
representatives here today and we would very much like to help
you if you are a victim of identity theft to try, to cut
through some of the rigmarole that we've talked about today.
So, thank you all.
[Whereupon, at 4:30 p.m., the hearing was adjourned.]
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