[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXAMINING IRS CUSTOMER SERVICE CHALLENGES
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON
GOVERNMENT OPERATIONS
AND THE
SUBCOMMITTEE ON HEALTH CARE,
BENEFITS, AND ADMINISTRATIVE RULES
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 8, 2017
__________
Serial No. 115-2
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
__________
U.S. GOVERNMENT PUBLISHING OFFICE
25-233 PDF WASHINGTON : 2017
----------------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
Committee on Oversight and Government Reform
Jason Chaffetz, Utah, Chairman
John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland,
Darrell E. Issa, California Ranking Minority Member
Jim Jordan, Ohio Carolyn B. Maloney, New York
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Justin Amash, Michigan Columbia
Paul A. Gosar, Arizona Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee Stephen F. Lynch, Massachusetts
Trey Gowdy, South Carolina Jim Cooper, Tennessee
Blake Farenthold, Texas Gerald E. Connolly, Virginia
Virginia Foxx, North Carolina Robin L. Kelly, Illinois
Thomas Massie, Kentucky Brenda L. Lawrence, Michigan
Mark Meadows, North Carolina Bonnie Watson Coleman, New Jersey
Ron DeSantis, Florida Stacey E. Plaskett, Virgin Islands
Dennis A. Ross, Florida Val Butler Demings, Florida
Mark Walker, North Carolina Raja Krishnamoorthi, Illinois
Rod Blum, Iowa Jamie Raskin, Maryland
Jody B. Hice, Georgia Peter Welch, Vermont
Steve Russell, Oklahoma Matt Cartwright, Pennsylvania
Glenn Grothman, Wisconsin Mark DeSaulnier, California
Will Hurd, Texas John Sarbanes, Maryland
Gary J. Palmer, Alabama
James Comer, Kentucky
Paul Mitchell, Michigan
------
Jonathan Skladany, Majority Staff Director
Rebecca Edgar, Deputy Staff Director
William McKenna, General Counsel
Jack Thorlin, Counsel
Kevin Eichinger, Professional Staff Member
Kiley Bidelman, Clerk
David Rapallo, Minority Staff Director
Subcommittee on Government Operations
Mark Meadows, North Carolina, Chairman
Jody B Hice, Georgia, Vice Chair Gerald E. Connolly, Virginia,
Jim Jordan, Ohio Ranking Minority Member
Mark Sanford, South Carolina Carolyn B. Maloney, New York
Thomas Massie, Kentucky Eleanor Holmes Norton, District of
Ron DeSantis, Florida Columbia
Dennis Ross, Florida Wm. Lacy Clay, Missouri
Rod Blum, Iowa Bonnie Watson Coleman, New Jersey
------
Subcommittee on Health Care, Benefits, and Administrative Rules
Jim Jordan, Ohio, Chairman
Mark Walker, North Carolina, Vice Raja Krishnamoorthi, Illinois,
Chair Ranking Minority Member
Darrell E. Issa, California Jim Cooper, Tennessee
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Scott DesJarlais, Tennessee Columbia
Mark Meadows, North Carolina Robin L. Kelly, Illinois
Glenn Grothman, Wisconsin Bonnie Watson Coleman, New Jersey
Paul Mitchell, Michigan Stacey E. Plaskett, Virgin Islands
C O N T E N T S
----------
Page
Hearing held on March 8, 2017.................................... 1
WITNESSES
Mr. John Dalrymple, Deputy Commissioner for Services and
Enforcement, Internal Revenue Service
Oral Statement............................................... 3
Written Statement............................................ 5
Mr. Russell Martin, Assistant Inspector General, Returns
Processing and Account Services, Treasury Inspector General for
Tax Administration
Oral Statement............................................... 16
Written Statement............................................ 18
Ms. Jessica Lucas-Judy, Acting Director, Strategic Issues, U.S.
Government Accountability Office
Oral Statement............................................... 31
Written Statement............................................ 33
APPENDIX
Statement for the Record of Nina Olson, National Taxpayer
Advocate, submitted by Chairman Meadows........................ 62
Get Backs from The Hon. John Dalrymple, Deputy Commissioner for
Services and Enforcement, Internal Revenue Service............. 77
EXAMINING IRS CUSTOMER SERVICE CHALLENGES
----------
Wednesday, March 8, 2017
House of Representatives,
Subcommittee on Government Operations, joint with
the Subcommittee on Health Care, Benefits, and
Administrative Rules,
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittees met, pursuant to call, at 2:10 p.m., in
Room 2154, Rayburn House Office Building, Hon. Mark Meadows
[chairman of the Subcommittee on Government Operations]
presiding.
Present from the Subcommittee on Government Operations:
Representatives Meadows, Hice, Jordan, DeSantis, Blum, and
Connolly.
Present from the Subcommittee on Health Care, Benefits, and
Administrative Rules: Representatives Jordan, Meadows,
Grothman, Mitchell, Krishnamoorthi, and Plaskett.
Mr. Meadows. The Subcommittee on Government Operations and
the Subcommittee on Health Care, Benefits, and Administrative
Rules will come to order. And without objection, the chair is
authorized to declare a recess at any time.
The IRS is the Federal agency that the average American
probably interacts with more frequently than most other
agencies in the Federal Government. And as we look at customer
service at the IRS and how most Americans experience the
Federal Government, we owe it to them to make sure that their
experience is clear and helpful. And if the taxpayers can get
help from the IRS to understand some of the often more
complicated tax obligations, the IRS then does not have to
spend as much time looking or providing resources for audits or
enforcement.
Unfortunately, the 2015 tax season had one of the worst
customer service records in IRS history with only 38 percent of
the taxpayers who called the IRS assistance line actually
getting a representative. And thereafter, the average wait time
was well over 30 minutes.
And so as we look at this, as the IRS calls for more
resources, Congress indeed did grant them $298 million in for
the 2016 tax season with $176 million specifically marked for
taxpayer services. As a result, the 2016 filing season was
better but still not as good as it was a decade earlier.
So as we look at today's hearing, I am going to keep my
opening remarks very brief because we are expecting votes here
in just a few minutes. And we will certainly yield to a number
of the other members as they have questions. And I will include
some of that in my questioning. And the entire written
statement will be made part--or opening statement will be made
part of the record.
Mr. Meadows. So with that, I will now recognize the ranking
member for his opening statement.
Mr. Krishnamoorthi. Thank you, Chairmen Meadows and Jordan,
for holding this important hearing on a topic that is so
familiar to so many Americans: IRS customer service.
Many of the individuals I represent encounter challenges
when dealing with the IRS. The individuals are hardworking,
honest Americans who are doing everything they can in order to
comply with their tax obligations. I have seen some of these
individuals go to great lengths to fulfill their
responsibilities: contacting the IRS and others for help,
providing what seems like an endless stream of documentation to
their agency and their employers in order to get on an
installment plan, and in some cases even digging into their
hard-earned retirement savings to pay their outstanding tax
debts. So while IRS says that it is working hard to improve
customer service, it can be difficult for many of my
constituents to believe in some cases.
As our nation's tax code becomes increasingly complex, the
burden placed on those trying to maintain tax compliances also
increases. It is absolutely critical that the IRS have the
appropriate channels to assist these well-meaning taxpayers and
processes in place to rectify situations in which these
channels fail.
For that reason, and as a former small businessman, I hope
we can shed some light on the processes currently in existence
at the IRS for assisting customers before, during, and after
the filing season. All customers deserve to have their
questions answered in a timely, effective, and respectful
manner.
What does it take to make that happen? As the Oversight
Committee, we have a responsibility to ensure that government
works effectively and efficiently and is responsive to the
citizens it serves. We should encourage agencies to take a hard
look at themselves and identify areas that are working, as well
as those that need improvement. We should encourage agencies to
adopt best practices from other areas of government and the
private sector, and we should certainly encourage agencies to
listen to feedback from those on the other side of the table.
Only after doing that can we have a meaningful discussion of
what needs to be done and what resources need to be devoted in
order to make our system succeed.
I hope that these are discussions we can have today, and I
look forward to the testimony of our witnesses. Thank you. I
yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentleman from Ohio, Mr. Jordan,
for his opening statement.
Mr. Jordan. I want to just thank the chairman for helping
us put this important hearing together. As we are heading into
tax season or into tax season, I think this is going to be some
hopefully valuable information for the folks we get the
privilege of serving and representing.
So with that, I would yield back and look forward to the
witness' testimony.
Mr. Meadows. I thank the gentleman. We will hold the record
open for five legislative days for any member who would like to
submit a written statement.
I will now recognize our panel of witnesses. I am pleased
to welcome the Honorable John Dalrymple, deputy commissioner
for Services and Enforcement at the Internal Revenue Service.
Welcome. Mr. Russell Martin, deputy inspector general with the
Treasury, inspector general for the Tax Administration,
welcome. And Ms. Jessica Lucas-Judy, acting director of
Strategic Issues at the U.S. Government Accountability Office,
welcome.
And pursuant to committee rules, all witnesses will be
sworn in before they testify, so if you would please rise and
raise your right hand.
[Witnesses sworn.]
Mr. Meadows. Thank you. Please be seated. And let the
record reflect that all witnesses answered in the affirmative.
In order to allow time for discussion, we would ask that
you please limit your oral testimony to five minutes, but your
entire written testimony and statement will be made part of the
record.
And so, Mr. Dalrymple, we will recognize you for five
minutes.
WITNESS STATEMENTS
STATEMENT OF JOHN DALRYMPLE
Mr. Dalrymple. Thank you. Chairmen Meadows and Jordan,
Ranking Member ----
Mr. Meadows. Maybe just pull the--yes, a little bit closer
to you there. Yes.
Mr. Dalrymple. I thought I was loud enough. Sorry.
Chairmen Meadows, Jordan, and Ranking Member
Krishnamoorthi, and members of the subcommittees, thank you for
the opportunity to testify on IRS's taxpayer service efforts.
The IRS spends a significant amount of time and resources
on this part of our mission because every taxpayer contact is
important to us. The most visible taxpayer service the IRS
provides is the delivery of a smooth, problem-free tax filing
season so people can file their returns and receive their
refunds as quickly and easily as possible. I am pleased to
report that, so far, the 2017 filing season has gone smoothly
in terms of tax processing and the operation of our information
technology systems.
As of February 24, the IRS received more than 53.2 million
individual returns on the way to a total of about 152 million.
We've issued more than 41.3 million refunds for more than $127
billion. The average refund so far is more than $3,000.
During the filing season and throughout the year, the IRS
provides assistance to taxpayers to help them meet their tax
obligations. With over 150 million individual taxpayers, we
realized there is no one-size-fits-all in terms of delivering
service to them.
We offer a mix of service channels and are always looking
for ways to improve service delivery. Over many years, we've
been working to expand our online service offerings because our
research tells us that taxpayers increasingly prefer to
interact with us through digital channels. Last year, taxpayers
visited our website, IRS.gov, more than 500 million times. They
used IRS.gov to find helpful tax information, check on the
status of their refund, and perform transactions such as paying
their tax bill.
We've also been working to develop an online account at the
IRS where taxpayers or their representatives can log in
securely, get information about their account, and interact
with the IRS as needed. We recognize that there will always be
taxpayers who prefer not to interact with the IRS online. For
that reason, we will continue providing and improving service
on our other channels.
One of these is phone service. The IRS receives more than
63 million taxpayer calls a year on our toll-free lines. A very
challenging year in fiscal year 2015 the level of service
provided on the phones improved significantly in 2016 as a
result of additional funding from Congress. I'm pleased to
report that during the 2017 filing season we are again seeing
an even improved phone service.
The IRS also provides in-person help to millions of
taxpayers who visit our Tax Assistance Centers, or TACs, as we
call them. Each of these contacts is also important to the IRS,
and to cut down on long lines at our TACs, the IRS in 2015
began testing the idea of letting people make appointments in
advance. We extended the appointment process to call--I'm
sorry, to all TACs as of this year. Doing so has dramatically
cut wait times, and we've had no reports of any lines outside
TACs so far this filing season.
Another way the IRS provides in-person help is by
supporting nearly 12,000 volunteer income tax assistance and
tax counseling for the elderly sites around the country.
Volunteers at these sites provide free tax preparation help to
eligible individuals. Along with the service we provide on
these channels, the IRS also processes nearly 8 million pieces
of correspondence from taxpayers each year, and these taxpayers
are also important to us.
The IRS remains dedicated to improving taxpayer service
across all of our channels. Chairmen Meadows and Jordan,
Ranking Member Krishnamoorthi, this concludes my statement, and
I'd be happy to take questions.
[Prepared statement of Mr. Dalrymple follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you so much for your testimony. As
Murphy's law would have it, they called votes just about the
time that you started speaking. And so what we are going to do
is go into recess. And for planning purposes, it will actually
be subject to the call of the chair, but for those of you that
may want to get a cup of coffee, if you will plan on being back
here no later than 10 till 3:00. It may be later than that but
certainly--the subcommittees stand in recess subject to the
call of the chair.
[Recess.]
Mr. Meadows. The subcommittees will come to order. Thank
you all for your patience and willingness to stay with us
throughout this.
Mr. Dalrymple, I want to congratulate you on your upcoming
retirement. A little birdie told me that you were retiring in a
couple of weeks, so we will try to make this as painless as
possible. How about that?
Mr. Dalrymple. You can't imagine how I appreciate that.
Mr. Meadows. And before I recognize you, Mr. Martin, I want
to recognize Mr. Sapp who is here from Drake Software, a good
friend and constituent from back in North Carolina, who
actually deals with these kinds of issues. And so it is good to
have you here as well.
So, Mr. Martin, you are recognized for five minutes.
STATEMENT OF RUSSELL MARTIN
Mr. Martin. Thank you. Chairmen, Ranking Members, and
members of the subcommittee, thank you for the opportunity to
testify on IRS's efforts to provide customer service to
taxpayers, including those who are victims of identity theft.
For the 2017 filing season, taxpayers have multiple options
to choose from when they need assistance from the IRS. Examples
include the toll-free telephone lines, face-to-face assistance,
the mail, self-assistance through IRS.gov, and social media
channels such as Twitter and Facebook.
Despite other available options, taxpayers continue to use
the telephone as the primary method to seek assistance from the
IRS. The IRS is projecting a 75 percent level of service for
the 2017 filing season, an increase from 72 percent reported
for the 2016 filing season. The level of service represents the
relative success rate of taxpayers who call the IRS for
assistance.
As of February 11, 2017, the IRS reports it answered
approximately 2.5 million calls and provided an 82 percent
level of service. Each year, millions of taxpayers also seek
assistance from one of the IRS's 376 walk-in offices known as
Taxpayer Assistance Centers or TACs. Although the IRS reports
there are 376 TACs for the 2017 filing season, 24 are not open
because they have not been staffed. The IRS estimates that the
number of taxpayers it will assist at its TACs will continue to
decrease. The IRS plans to assist more than 3.4 million
taxpayers at its TACs in fiscal year 2017, a 22 percent
decrease from fiscal year 2016.
Taxpayers also interact with the IRS through the mail. The
IRS's ability to timely process taxpayer correspondence remains
a challenge. IRS management stated that the reduction in
available staff is the most significant factor in not timely
responding to taxpayer correspondence.
In response to increased demand for online self-assistant
options, the IRS continues to increase the services they
provide online. However, as we have reported, the risk of
unauthorized access to tax accounts increases as the IRS
expands its focus on delivering online tools. Therefore, it is
critical that the methods the IRS uses to authenticate
individuals' identities provide a high level of confidence that
tax information and services are provided only to individuals
who are entitled to receive them.
Much of the IRS's ability to serve taxpayers require
staffing. Beginning in fiscal year 2015, the IRS made some
resource decisions, which significantly affected the level of
service provided to taxpayers. This included shifting a
significant portion of the user fees it collects to operation
support to implement other obligations required by law. In
fiscal year 2016, the IRS received $178 million in additional
funding by Congress. As a result, it has increased its level of
service substantially from its low of 38 percent in fiscal year
2015.
The IRS also continues to devote significant resources to
assist victims of identity theft. In July 2015 the IRS created
a centralized unit to combine the skills of employees working
identity theft cases in multiple functions into one
directorate. This has resulted in improvements in case closure
time frames and a reduction in case closing errors.
To help protect identity theft victims and improve
authentication, the IRS began issuing unique identification
numbers to eligible taxpayers in fiscal year 2011. The issuance
of these numbers to confirmed victims of identity theft reduces
IRS's resources needed to resolve identity theft cases.
Specifically, this number helps the IRS verify a victim's
identity at the time their tax return is filed and, as a
result, not delay the processing of the taxpayer's return or
issuance of their refund.
However, TIGTA has identified that confirmed victims of
identity theft tax accounts were not always consistently
updated to ensure that these identification numbers were
generated as required. This results in the need to
unnecessarily use additional resources to review future tax
return filings.
TIGTA has reported that the trend of lower budgets and
reduced staffing has affected the IRS's ability to deliver its
priority program areas, including customer service and
enforcement activities. The allocation of limited resources
requires difficult decisions to balance customer service with
enforcement activities.
This ends my statement, and I look forward to your
questions.
[Prepared statement of Mr. Martin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you, Mr. Martin.
Ms. Lucas-Judy?
STATEMENT OF JESSICA LUCAS-JUDY
Ms. Lucas-Judy. Chairmen Meadows and Jordan, Ranking
Members Connolly and Krishnamoorthi, members of the
subcommittees, thank you for this opportunity to discuss GAO's
recommendation for improving IRS customer service. My statement
today focuses on two areas: IRS's performance in 2016 compared
to prior years and its efforts to improve service for victims
of identity theft.
During the filing season, millions of taxpayers contact
IRS. The service also processes most of the approximately 150
million tax returns it receives during this time and issues
more than 100 million refunds. The scale of these operations,
as well as IRS's declining resources, have raised concerns
about its ability to provide service to taxpayers. Maintaining
quality customer service is important because it helps
taxpayers comply with the tax code.
Regarding the first area, performance, IRS provided better
telephone service to callers during the 2016 filing season
compared to 2015. More people who wanted to speak to an
assister were able to get through. In fact, it was the highest
level of service for a filing season since 2011. However, IRS
performance during the full fiscal year remained low.
In addition, wait times were much shorter than in 2015, 11
minutes rather than 23 minutes on average. Total calls where
taxpayers abandoned the call, were disconnected, or received a
busy signal declined about 10 percent. These improvements were
because IRS devoted additional resources and staff to answering
calls, as well as offered overtime to staff after receiving
additional funding and allocating user fees.
However, IRS does not make customer service information,
including average wait time, easily available such as through
an online dashboard. Without this information, taxpayers are
not well informed on what to expect when they're requesting
services from IRS. Accordingly, we recommended that IRS display
customer service standards and performance online, and the
agency agreed.
The second area is customer service for victims of identity
theft refund fraud. IRS estimates it paid at least $2 billion
identity theft refunds in 2015. Such fraud also burdens honest
taxpayers because authenticating their identities can delay
processing their returns and their refunds.
We found IRS has overall improved aspects of service for
victims of this fraud. For example, IRS reduced its backlog of
cases and began consolidating inventory and better managing its
case flow. However, we did find three things that IRS could
further improve. First, IRS's file retrieval and scanning
processes contributed to delays and unnecessary document
requests. We reviewed a sample of 16 identity theft cases, and
in two of those cases it had taken six weeks or more for IRS to
retrieve and scan the requested documents, during which time
the assisters closed the cases without receiving the documents.
This leads to the question whether or not they were even
needed. We recommended IRS review its retrieval and scanning
procedures for improvements, which IRS agreed to do.
Second, we found potential weaknesses in IRS's internal
control processes could lead to IRS paying refunds to
fraudsters. In discussion groups, IRS assisters and managers
told us some assisters may release refunds even if indicators
on the account show the tax return was under review for
identity theft. We recommended IRS improve its data or collect
new data to monitor how and why assisters might be releasing
refunds before closing these types of cases.
IRS disagreed, stating that the problem was not widespread
and current processes are sufficient. However, we maintain the
data IRS was using had weaknesses and were not sufficient to
make that determination.
In response to our draft report, IRS sent us an analysis
that they said showed this type of error does occur but may not
be as widespread as the discussion group participants
suggested. We'll continue to work with IRS on this important
issue.
Finally, we found IRS does not notify taxpayers when a
dependent's identity appears on a fraudulent return. By not
doing so, IRS is limiting taxpayers' ability to take action to
protect its dependents' identity. We recommended IRS revise
notices to victims to include information such as whether
dependents were claimed on the fraudulent return, and IRS
agreed with this.
In summary, as taxpayers file their returns for 2016, it's
important that IRS ensures timely, quality service. IRS can
increase transparency and accountability by implementing our
recommendations to provide performance information, improve
file retrieval and scanning, determine how assisters might
release refunds, and notify taxpayers when dependents'
identities have been used fraudulently.
This concludes my prepared remarks, and I'll be happy to
answer any questions that you may have.
[Prepared statement of Ms. Lucas-Judy follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you all.
The chair recognizes the gentleman from Ohio, Mr. Jordan,
for five minutes.
Mr. Jordan. Thank you, Mr. Chairman.
Mr. Dalrymple, why has taxpayer service at the IRS been
terrible?
Mr. Dalrymple. Taxpayer service at the IRS has been
improving, in fact, I think this year is a perfect example of
where taxpayer service could be going forward given the
resources necessary ----
Mr. Jordan. Taxpayer advocates said that taxpayer service
is the number one most serious problem at the Internal Revenue
Service. The current Commissioner, someone who, frankly, I am
not a big fan of, said it was ``abysmal.'' Mr. Meadows, the
chairman, indicated in his opening comments that 38 percent of
the callers asking for assistance, only 38 percent actually got
to a representative.
Mr. Dalrymple. That was in 2015. In ----
Mr. Jordan. That is why I said why has taxpayer service at
the IRS been terrible?
Mr. Dalrymple. Well, it's--it was clearly a resource issue,
Congress.
Mr. Jordan. Resource issue?
Mr. Dalrymple. Yes.
Mr. Jordan. Could it be your priorities were misplaced?
Could that be a problem?
Mr. Dalrymple. I don't think so. I think the real issue
here is how the budget actually works. You know, the IRS
receives its budget in three specific categories: taxpayer
service, enforcement, and operation support. And in order to
move money from--between those appropriations, it has to ask
for permission from Congress to do so.
And in 2015 actually we moved $30 million from enforcement
into our taxpayer service operation. So I don't think that's --
--
Mr. Jordan. And you asked Congress for that ----
Mr. Dalrymple. And we asked Congress to do that, and they
allowed us to do that.
Mr. Jordan. Why didn't you ask for more? Why didn't you ask
for it more often ----
Mr. Dalrymple. We had ----
Mr. Jordan.--to offset this terrible performance ----
Mr. Dalrymple. We--if ----
Mr. Jordan.--with 30-minute wait times, only 38 percent
actually talk to a representative.
Mr. Dalrymple. The ----
Mr. Jordan. Your own Commissioner said it was abysmal.
Mr. Dalrymple. It was abysmal. There's not enough money to
go around for anything. The audit rates at the IRS have also
dropped ----
Mr. Jordan. Well, let's talk about ----
Mr. Dalrymple.--dramatically. It's ----
Mr. Jordan. Let me just give you one example of what I
would argue is mismanagement of taxpayer resources at the
Internal Revenue Service. You know a gentleman named Terry
Milholland?
Mr. Dalrymple. I--he was the former CIO.
Mr. Jordan. He was former what?
Mr. Dalrymple. The former CIO.
Mr. Jordan. Chief information officer?
Mr. Dalrymple. Yes.
Mr. Jordan. Okay. And was he chief information officer when
the IRS targeted conservative groups? Was he functioning in
that role at that time?
Mr. Dalrymple. I'm not certain when he became CIO.
Mr. Jordan. Yes, between 2008 and 2016 he definitely was.
Was he chief information officer when Lois Lerner's hard drive
crashed?
Mr. Dalrymple. I think he probably was.
Mr. Jordan. He was. And was he chief information order--
officer, excuse me, when 422 backup tapes were destroyed at the
IRS, tapes under subpoena?
Mr. Dalrymple. I think he would have been the CIO at that
point.
Mr. Jordan. Yes. And was he the gentleman who issued the
preservation order to not destroy those 422 backup tapes?
Mr. Dalrymple. He could have been.
Mr. Jordan. He definitely was. I have seen it. And did Mr.
Milholland live in Washington, D.C.?
Mr. Dalrymple. I'm not sure where Mr. Milholland lived.
Mr. Jordan. Yes. He lived in Texas. In fact, in 2015 alone,
$55,000 was spent by Mr. Milholland, taxpayer money, for him to
commute to Texas, come up here to Washington, and 30 weeks of
commuting back and forth, the guy who is in charge of
maintaining--keeping the records, the guy who gave the
preservation order that wasn't followed, backup tapes
destroyed, $55,000, $18,000 for lodging, $7,000 for meals and
incidentals, $2,500 for airport parking, 14--$1,100, excuse me,
for mileage and toll reimbursement, $1,500 he charged for taxi
service. He probably took taxis instead of Uber.
Mr. Dalrymple. I'm not sure when Uber even began,
Congressman.
Mr. Jordan. Well, it was certainly in 2016, 2015. So maybe
it is that the IRS doesn't have the priorities in the right
place. Do you know what is streamlined critical pay authority,
Mr. Dalrymple?
Mr. Dalrymple. Streamlined critical pay authority allows
the IRS to be able to direct hire skilled individuals that we
need to, particularly generally in our IT functions to be able
to ----
Mr. Jordan. Allows you to pay them more than they would
otherwise get, right, more than the top salary allowed under
the pay schedule for Federal work?
Mr. Dalrymple. For SES, that's correct.
Mr. Jordan. Yes. Was Mr. ----
Mr. Dalrymple. And--but also in addition to that, it allows
us to directly hire them quickly because these people ----
Mr. Jordan. Okay, quickly.
Mr. Dalrymple.--have skills that don't ----
Mr. Jordan. You hired this guy quickly, but he couldn't
move here in eight years. He still lived in Texas charging in
one year alone $55,000, couldn't take Uber, took a taxi
instead. Was Mr. Milholland getting critical pay?
Mr. Dalrymple. I believe he was.
Mr. Jordan. I know he was, right? So he was getting paid
more than any other Federal worker, couldn't live here, $55,000
in one year, hanging out at the Hyatt, taking taxis, reimburse
him for everything you can imagine it looks like here. And
while he is the chief technology officer, the guy who is
critically important, we have got to pay more than we pay
anyone else in the Federal Government under his watch, the
chief technology officer, Lerner's hard drive crashes, 422
backup tapes are destroyed even though he personally gave the
preservation order to preserve all communication. And here is
the kicker: He purchased some $12 million email archiving
system that these guys at GAO said he never even implemented,
$12 million just thrown down the drain. And you are telling me
that it is improving and it wasn't pathetic and it wasn't
terrible?
Mr. Dalrymple. You asked me about the taxpayer service
activities, not about the IT organization. And by the way, they
don't work for me.
Mr. Jordan. Was this taxpayer dollars that were used for
Mr. Milholland?
Mr. Dalrymple. I assume that they would have been, of
course ----
Mr. Jordan. Of course, right?
Mr. Dalrymple.--appropriated dollars.
Mr. Jordan. And you just told me you can ask to have money
transferred and that we have already given the authority to do
that in situations to actually better serve the taxpayers. All
I am saying is it could be priorities are a little out of place
at the IRS, and that is contributing to the pathetic taxpayer
treatment, customer service, or lack of customer service that
the hardworking taxpayers of this country have been receiving.
I went over time, Mr. Chairman. I appreciate the indulgence.
Mr. Meadows. I thank the gentleman. The chair recognizes
the gentleman from Virginia, Mr. Connolly, for five minutes.
Mr. Connolly. I thank the chair, and I would ask ----
Mr. Meadows. A generous five minutes.
Mr. Connolly. I thank the chair. I ask that my opening
statement be entered into the record without objection.
Mr. Meadows. Without objection.
Mr. Connolly. I thank the chair. Welcome to the panel.
Well, in listening to my friend Mr. Jordan--and I will say
this underscores for me why it makes sense to have the seat of
government here in Washington and limit some of this remote
location for some of our key hires.
Why was Mr. Milholland traveling back and forth from Texas,
Ms. Lucas-Judy?
Mr. Dalrymple. I really don't know what Mr. Milholland's
arrangement was with the IRS.
Mr. Connolly. Do you know, Ms. Lucas-Judy?
Ms. Lucas-Judy. No, I don't.
Mr. Connolly. Okay. Mr. Martin?
Mr. Martin. No, I do not.
Mr. Connolly. Okay. I guess I want to shift the subject a
little bit to the--well, the budget and the IT budget in
particular, which you brought up, Mr. Dalrymple. Ms. Lucas-
Judy, how much has IRS budget been cut in the last six or seven
years, about $1 billion or more?
Ms. Lucas-Judy. It's been about--a decline of about $900
million.
Mr. Connolly. I am sorry?
Ms. Lucas-Judy. About $900 million since 2011 I believe.
Mr. Connolly. Okay. And how many--in terms of numbers of
personnel, what has been the reduction or increase net?
Ms. Lucas-Judy. I don't have the precise figures. I'd be
happy to get those to you. But I know it's--the number of full-
time equivalents has gone down across ----
Mr. Connolly. Rather significantly, has it not?
Ms. Lucas-Judy. Yes.
Mr. Connolly. Do you know, Mr. Martin?
Mr. Martin. I would agree it's gone down rather ----
Mr. Connolly. No, I am not asking ----
Mr. Martin.--but I don't have the--I don't have a specific
number.
Mr. Connolly. Mr. Dalrymple, do you know? I can't hear you,
sir.
Mr. Dalrymple. Seventeen thousand employees over that span.
Mr. Connolly. Fewer?
Mr. Dalrymple. Fewer.
Mr. Connolly. Net?
Mr. Dalrymple. Net.
Mr. Connolly. Seventeen thousand. Well, that is a number
worth GAO's attention, Ms. Lucas-Judy. I mean, it is has not
just gone down a bit. Seventeen thousand by any account is a
lot.
Ms. Lucas-Judy. Yes, and that is something that GAO has
noted in a number of our reports, and we are looking at ----
Mr. Connolly. But, I mean--but isn't that ----
Ms. Lucas-Judy.--capital management ----
Mr. Connolly. Isn't that about 20 percent of the workforce?
Ms. Lucas-Judy. Yes.
Mr. Connolly. Well, that is a lot of people. And your
budget has gone down almost by $1 billion. I mean, even if
everyone whistled while they work, I would think those kinds of
reductions might have some effect on productivity and on the
ability to provide high-quality customer service. Fair
statement, Ms. Lucas-Judy?
Ms. Lucas-Judy. Yes, sir.
Mr. Connolly. From a management point of view. Now,
sometimes we do more with less. Sometimes we make ourselves
more efficient. But when I look at IRS, given the, you know,
unceasing war on the IRS and the constant drumbeat about Lois
Lerner and the so-called attack on certain political
orientation of various organizations, it has all seemingly been
a justification for gutting the IRS, an agency we don't like
because it is big and it is the vehicle that finances the
enterprise, which we also apparently don't like.
Would you say, Mr. Dalrymple, that these cuts have had an
appreciable effect on the ability of the IRS to fully perform
its mission?
Mr. Dalrymple. Absolutely. Taxpayer service has been in
some instances abysmal. I mean, the Commissioner was right
about that. We haven't been able to answer the telephones when
we should. We haven't been able to answer correspondence as--at
the speed we should. We haven't been able to develop online
services at the rate we should for taxpayers. Our audit rates
are down dramatically. Our collection--our collections are down
over time. There ----
Mr. Connolly. Just speaking of collection so people
understand, how much money is left on the table do we estimate
every year really owed to the government but not collected
because of lack of resources?
Mr. Dalrymple. Well, the tax gap is estimated at about $450
billion, and that's just ----
Mr. Connolly. A year?
Mr. Dalrymple. A year.
Mr. Connolly. Wow. That is a lot of money. Okay. One thinks
about what one could do with that amount of money if you had
it.
And on the IT side, last time we looked at this I want to
say the average age of computers at the IRS was about seven
years. I assume it is now older. Is that about right, Mr.
Dalrymple?
Mr. Dalrymple. I can't comment on that. I'm not a--I'm not
familiar enough ----
Mr. Connolly. Ms. Lucas-Judy, do you know?
Ms. Lucas-Judy. I do know that we have recommended that IRS
needs to modernize a lot of it systems ----
Mr. Connolly. Right.
Ms. Lucas-Judy.--that that will go a long way towards
helping the organization.
Mr. Connolly. But, I mean, if you are replacing computers
every seven or eight years, that is not the industry standard.
The industry standard is more like two to three years, is that
right?
Ms. Lucas-Judy. Right. And they are relying a lot on legacy
systems.
Mr. Connolly. Correct. And so--that is right, on top of
that. So part of the problem, what could go wrong with that?
Well, a lot of hard drive crashes like that which occurred in
the IRS that was certainly the focus of hearings in this
committee, is that not correct?
Ms. Lucas-Judy. I'm not--I have not looked at that specific
instance.
Mr. Connolly. Well, I am not asking about that specific
instance. I am generally saying when computers are that old and
----
Ms. Lucas-Judy. They do become unreliable.
Mr. Connolly. Right. And we have problems. And the guidance
in some parts of the IRS anyhow--correct me if I am wrong--was
in order to archive material, the instructions were print and
save. Ever hear of that, Mr. Dalrymple?
Mr. Dalrymple. I have, and that's ----
Mr. Connolly. That is astounding. And we have, what, 81,000
employees, something like that?
Mr. Dalrymple. Something in that neighborhood ----
Mr. Connolly. Yes.
Mr. Dalrymple.--including all of the full-time folks plus
temporaries and seasonal ----
Mr. Connolly. Right.
Mr. Dalrymple.--et cetera.
Mr. Connolly. And we have got data on every single tax
filer, which is several hundred million, right?
Mr. Dalrymple. That's correct.
Mr. Connolly. So what could go wrong with that? So at the
very least, hopefully, we here in Congress, if we are concerned
about customer service, if we are concerned about the very
issues that have been cited, maybe we could make a smart
investment in IT to make the IRS more efficient, doing more
with less, and we can close that gap of the amount of money
owed but not collected, my shorthand, I think obviously could
make an appreciable difference in financing other investments,
including the new President's defense initiative, which is $54
billion, a small part of the $450 billion you referred to.
So with that I yield back. Thank you, Mr. Chairman.
Mr. Jordan. [Presiding] Mr. Martin, just real quick, my
good friend from Virginia said the so-called targeting. When
TIGTA did its report, did it use the term so-called or did it
say targeting took place at the IRS?
Mr. Martin. We said inappropriate criteria was used.
Mr. Jordan. Okay. I appreciate that. I appreciate that.
The gentleman from Georgia is recognized.
Mr. Hice. Thank you, Mr. Chairman.
Mr. Dalrymple, let me just go with you here. I am shocked--
actually, not shocked. Probably all of us have experienced
these kind of statistics with the IRS, but in 2015, less than
10 percent of the callers whose returns were flagged as
suspicious for possible identity theft, less than 10 percent
were able to get through an IRS helpline. What is that number
now?
Mr. Dalrymple. Well, our levels of service right now on our
helplines is right around 80 percent. We're scheduling about 75
percent for this filing season and about 70 percent overall.
Mr. Hice. More than 60 percent could not get through the
National Taxpayer Advocate phoneline that is the safety net.
What is that figure now?
Mr. Dalrymple. I have no idea what the--what it is.
Mr. Hice. In 2015 the IRS received more calls than ever. Is
that true?
Mr. Dalrymple. Yes. And the reason for that--that's true is
because people call back over and over if they can't get
through so ----
Mr. Hice. Okay. Well, it doesn't matter to me what the
reason is but they received more calls than ever and answered
fewer calls ----
Mr. Dalrymple. That's correct.
Mr. Hice.--than ever. Do you know what official time is?
Mr. Dalrymple. I do know what official time is.
Mr. Hice. Do you have any idea how many people with the IRS
are on official time?
Mr. Dalrymple. I couldn't tell you that number. I have no
idea.
Mr. Hice. Could you get that number and provide it for me?
Mr. Dalrymple. Yes, we can.
Mr. Hice. All right. I would like a divided in those that
are 100 percent ----
Mr. Dalrymple. Sure.
Mr. Hice.--versus those that are part-time.
Mr. Dalrymple. Absolutely.
Mr. Hice. Thank you for that.
Mr. Hice. In 2012, our reports show that the IRS approved
62 people to be 100 percent on official time as contact service
representatives. These are people answering phones, that type
of thing, approved 62. I am assuming that is 62 more than what
perhaps were on official time before. Now, official time means
that they are hired to do IRS work but they end up doing union
work. In 2012 you had 62 of them that you approved who were
customer service reps that went to 100 percent. In addition to
that, there were another 70 that were approved for other IRS
jobs. Any idea how many phone calls those 62 people could have
answered?
Mr. Dalrymple. I couldn't tell you that. I ----
Mr. Hice. Our calculations show that those 62 people could
have answered approximately 11,000 phone calls a week. That is
over half-a-million phone calls a year, and yet you were not
able to answer phone calls. People were waiting in line. And I
am quite confident that there are more people on official time
now at the IRS then there were five years ago. Is that a fair
assessment?
Mr. Dalrymple. I have no idea how many people were on
official time.
Mr. Hice. Okay. But we are going to find out that, and like
I said, I'm confident. Was there any discussion during 2015 on
those who were on official time 100 percent of their time--was
there any discussion saying that a crisis was underway of
getting people who are on official time to come off and go back
to work?
Mr. Dalrymple. No. That's governed by our union contract.
So no, there was no discussion ----
Mr. Hice. So who allows these people to go on official time
to begin with?
Mr. Dalrymple. Well, if they're in a position--a specific
position with the union that allows for them to be on 100
percent official time, that's governed by our union contract.
Mr. Hice. So you have no say-so--no one at the IRS has any
say-so whatsoever as to how many people are on official time?
Mr. Dalrymple. We have--they have to justify their official
time based on the amount of time that they're expected ----
Mr. Hice. And you are not able to justify your reason for
them not to be on official time because you have a crisis with
people not being able to get in to the IRS?
Mr. Dalrymple. I have to say I'm not familiar enough with
the union contract to be able to say that we couldn't move them
to work status ----
Mr. Hice. So so far as you know there is no mechanism in
place for the IRS to retrieve people who are on official time
to come back to work?
Mr. Dalrymple. I'm not aware--it's possible that the union
contract allows for that but I'm not certain.
Mr. Hice. Don't you think that might be something to be
certain of if there is such a catastrophe where people are not
able to get answers?
Mr. Dalrymple. I think that it's probably something I
should know but I don't.
Mr. Hice. I think it probably is, too. I have just got a
couple of seconds left. You know, we hear of these kind of
issues over and over, and the IRS has come before this
Congress, this committee over and over, and always the answer
is we need more resources. I am absolutely convinced the IRS
does not need--you don't have a resource problem; you have a
waste problem. You have got people right there who were hired
to do the job who are going off doing union work rather than
the job for which they were paid to do. That seems awfully
wasteful to me on the backs of taxpayers and on the backs of
people who need answers to their tax returns.
Mr. Chairman, I yield back. Thank you.
Mr. Jordan. I thank the gentleman.
I now recognize the gentleman from Illinois for his five
minutes of questions.
Mr. Krishnamoorthi. Thank you, Mr. Chairman.
Mr. Dalrymple, after your experience here, are you still
planning to retire in two weeks?
Mr. Dalrymple. If not earlier.
[Laughter.]
Mr. Dalrymple. Just kidding.
Mr. Krishnamoorthi. Well, in any case, thank you all for
coming today. I know this is not a--I think it is always useful
to have a feedback loop and obviously this hearing is part of
that process.
Look, as a former small business owner, I too have
struggled to consistently obtain quality, timely customer
service from the agency. I don't think this is just merely one
or two data points. I think that there are a lot of people who
have struggled at times. But I hope and believe that you want
to do your best to improve the level of service there.
One question I have is, you know, does the IRS survey
taxpayers to better understand, you know, their concerns? And
if so, how does that process work?
Mr. Dalrymple. We do survey taxpayers and on a fairly
regular basis. We've surveyed taxpayers individually, we survey
practitioners. So we do a fair amount of survey work and have
for quite some time, in fact, that is how we have focused our
whole view of what the future of the IRS should look like in
the work that we're doing so we know what taxpayers want and
need and how they want to get that information, et cetera. We
have that information available to us.
Mr. Krishnamoorthi. But do you do the survey or do you have
third parties do these surveys?
Mr. Dalrymple. We get them through surveys we do ourselves.
We get them through surveys that are done for us. So we have
multiple ways of getting that information and data.
Mr. Krishnamoorthi. And these percentages that you folks
quote, the 70, 80 percent, and so forth, who actually
completes--how is that percentage computed?
Mr. Dalrymple. It's a model that we've--we have that we've
agreed with our auditors on in terms of how it is calculated.
It goes back, you know, almost 20 years. And so, yes, it's a
model that we use. We know exactly how--what our demand is, how
many people try to get in, how many people weren't able to get
in, how many people got cut off, et cetera. All that goes into
the level of service number that I've mentioned.
Mr. Krishnamoorthi. Right. Let me just suggest that perhaps
you folks may want to take another look at this model of how
you survey taxpayers to determine what is really underlying
their concerns, you know, what is working, what is not working,
and with regard to what is working, learning from those best
practices. What is not working, we have to kind of deal with
it. And I know from personal experience as a former small
business owner, as well as people I have worked with, you know,
there is just a kind of a--how do I say it--kind of a
frustration that they are not being heard sometimes. And so I
think I respectfully submit that perhaps you should go back and
take a look at these customer survey methodologies, as well as
those percentages that you compute, because I am not sure that
they are consistent with how people perceive the IRS. And I
think that if you did that, it might be, you know, a salutary
benefit for all of us really.
Ms. Lucas-Judy, I have a question. Do you folks kind of try
to get a sense of what are the best practices of the IRS and,
you know, how to learn from them?
Ms. Lucas-Judy. One of the things you're talking about, the
customer service in looking at surveys and models, one of the
things that we have recommended for a long time that IRS do is
compare its phone service with best in the business ----
Mr. Krishnamoorthi. Right. Right.
Ms. Lucas-Judy.--you know, try to do some sort of
benchmarking.
Mr. Krishnamoorthi. Right.
Ms. Lucas-Judy. Initially, when we made the recommendation,
IRS did not agree with it. They thought that, okay, they're the
only ones who provide that kind of service ----
Mr. Krishnamoorthi. Right.
Ms. Lucas-Judy.--and there's nobody really comparable out
there to look at. But I'm pleased to say that in working with
IRS over the last couple of years on this, they've come around
and decided that it actually would be worthwhile to do a
benchmarking study. And, in fact, they completed the study and
we're reviewing it now to try to see-- because you can never
get to 100 percent. You would love to be able to answer 100
percent of the calls, never have anybody get a busy signal, but
that's not realistic. And so we were hoping that they can look
at what other industries do to figure out what is a good level
of service, what is a good target to strive for.
Mr. Krishnamoorthi. Yes, I think it is really important to
borrow from what we learn in the private sector about
benchmarking against the best practices out there for customer
service and just generally, you know, how do you handle such a
large volume of calls and make sure that people are treated
fairly, with respect, with dignity and responsiveness?
And so if you leave with anything today, I would just
respectfully submit that there has to be a bigger emphasis on
that going forward because at this time, I mean, given how
people perceive government and the IRS, we can't afford for
them to--their trust to further erode. And so I would
respectfully, you know, request you folks to really take a hard
look at this and do some soul-searching on this.
Thank you. I yield back.
Mr. Jordan. The gentleman from Michigan is recognized.
Mr. Mitchell. Thank you. And, Mr. Dalrymple, first let me
wish you well in your retirement. I hope it goes well for you,
sir.
Let me ask you, in 2016, Commissioner Koskinen testified
that as he computed, the return investment for enforcement
operations is roughly $4 for every $1 spent on enforcement. Can
you enlighten the committee as to how that calculation was
made? Because I understand that the number was thrown out there
but there is no description of how that calculation was--that
return investment was calculated.
Mr. Dalrymple. Actually, I'd be happy to get the
calculation and submit it back to the record. I can't describe
it specifically, but basically let me give some general ----
Mr. Mitchell. Well, rather than take up a lot of time, if
you would submit that to the committee, that would be
appreciated. I have questions, and rather than tie them up ----
Mr. Dalrymple. Sure. Certainly.
Mr. Mitchell. I would like to see that. That would be--I am
a business guy like my colleague from Illinois and would like
to know how--I believe return investment matters.
Mr. Dalrymple. Just a small point on that, it's a
compendium, so some things we have $15 or $20 to $1 return,
some we have $3 or $4 to $1 return, et cetera. So it's a
compendium and we can get you that information.
Mr. Mitchell. Have you done a similar analysis in terms of
return investment for customer service spending? And what is
that number?
Mr. Dalrymple. We've had a very difficult time finding any
way to measure that. We've tried over the years, but to be
honest, we've never come up with a legitimate measure of return
on investment for service activities.
Mr. Mitchell. Okay. Enforcement comprises about 43 percent
of your budget as of this year, $11.2 billion, which is roughly
$5 billion just doing quick a government math. You spoke of
moving $30 million from enforcement to customer service.
Mr. Dalrymple. Right.
Mr. Mitchell. With all due respect, I mean, of a budget of
$5 billion for enforcement, moving $30 million is like the
light bill for the week. I mean do we really seriously think
that is going to make an impact on it--from business, $30
million of $5 billion isn't much.
Mr. Dalrymple. Well, it's $30 million against a $2 billion
budget for taxpayer service, so it's a bigger percentage for
them. Having said that, though, it's not a huge amount. It's
what was necessary to reach certain levels of either inventory
or levels of service on the phone, et cetera. So we had the
additional $290 million that Congress gave us, which $178
million of it was dedicated to taxpayer service. We had some
monies from user fees that we put into taxpayer services, and
then in addition to that we still had a shortfall in terms of
where we wanted to be in terms of levels of service, and we
were able to move another $30 million out of enforcement into
taxpayer service. Now ----
Mr. Mitchell. And even after moving the money, you still
end up with significant shortfalls of reasonable customer
service response.
Mr. Dalrymple. Well, for this year, as I said, we're very
close to--we're between 75 and 80 percent on our telephone
level of service. Our inventories and correspondence are the
lowest they've been in four years. Generally speaking, taxpayer
services here is the best it's been in the last five or six
years. And I can't really speak prior to that.
Mr. Mitchell. Well, let me suggest that--I mean, part of
the frustration that my colleagues noted about the reputation
of the IRS is the difficulty people have, as you have already
heard, getting someone to answer the phone. Now, for the world
of the private sector, we actually had standards of that.
Mr. Dalrymple. Right.
Mr. Mitchell. Calls were answered in three to four rings.
In fact, we actually had secret shoppers that went around and
shopped it to see if calls were answered, and when they were
answered, did they get their questions responded to.
Mr. Dalrymple. Right.
Mr. Mitchell. It seems to me that you haven't set the same
kinds of standards that we would expect in the private business
world.
Mr. Dalrymple. We actually do some of that. We have quality
reviewers that shop the lines, listen for responses, whether
they're correct or not. You know, we are not in business for a
profit so we don't really want to answer the telephone in--on
the first or second ring because what that means is you are
actually waiting for the next call to come in.
Mr. Mitchell. Well, what is your standard for answering the
phone?
Mr. Dalrymple. We would love to be at about an 85 to 86
percent level of service, which would mean basically that
people were waiting less than a minute or two to get the next
assister on the line.
Mr. Mitchell. Now, I am new here ----
Mr. Dalrymple. And we've been there before. We have
achieved that in the past.
Mr. Mitchell. When were you there last?
Mr. Dalrymple. In the--you know, I--just a little history
here. I left the--I retired from the service before in 2006.
Mr. Mitchell. And you came back?
Mr. Dalrymple. And I came back. I was asked to come back. I
was also--at one point in time the Commissioner Wage and
Investment Division, which handles all of our telephone
services. When I was Commissioner of the Wage and Investment
Division, our telephone service was in the high 80s, and at
that point in time we started to drift into the high 90s. We
actually found out that we had employees waiting for the next
call, which is not an efficient way for a government to run
their telephone systems. So about 85 to 87 percent we found out
was really the right place to be if we could get our telephone
service to that level.
Mr. Mitchell. Well, my time is expired. I thank the chair.
And let me wish you well again in your retirement, sir.
Mr. Dalrymple. Thank you.
Mr. Mitchell. Thank you.
Mr. Dalrymple. I appreciate that.
Mr. Mitchell. I yield back.
Mr. Jordan. The gentleman from Florida is recognized.
Mr. DeSantis. Thank you, Mr. Chairman.
Mr. Dalrymple, the news just broke this afternoon that two
years after the fact the IRS has located almost 7,000 documents
that are related to the targeting of conservative groups. Are
you familiar with those documents?
Mr. Dalrymple. I am not.
Mr. DeSantis. Are you familiar with the news report?
Mr. Dalrymple. I am not.
Mr. DeSantis. We would like to know on our committee if you
can get us an answer ----
Mr. Dalrymple. Sure.
Mr. DeSantis.--whether those are documents that have
previously been provided to this committee or to other
committees in the Congress ----
Mr. Dalrymple. I'll find that out.
Mr. DeSantis.--because we went through this for years and
years and there were a lot of emails that were destroyed, there
were backup tapes, and it was really, really frustrating to do
that experience.
Mr. DeSantis. We have asked, a number of us on the
committee, for the President to make a change at the IRS to
really bring in some new blood so we can start reforming the
agency. And the targeting was one of the issues and how the
agency responded to that, but there is also issues that we see
about really a contempt for the taxpayer. I mean, the agency
will go and they will, you know, try to get taxpayers dead to
rights on producing their taxes and all this other stuff, but
then you have employees--you had a single IRS employee that
spent, according to a Senate Committee on Finance report, spent
$43,000 staying at the Ritz-Carlton in Pentagon City. How is
that acceptable?
Mr. Dalrymple. I'm not familiar with a report that says
that we had an IRS employee that spent $43,000 staying at the
Ritz-Carlton.
Mr. DeSantis. It was over the course of a year. It was a
lot of stays obviously, but that is the ----
Mr. Dalrymple. Well, I have to assume that the Ritz-Carlton
was offering government rate per diem at that location is all I
can assume, but I don't know the particulars around that.
Mr. DeSantis. Well, it would be the type of thing that I
think it would be tough for that to have been the most
appropriate thing.
You also had--again, this is the same report, the Senate
Finance Committee, IRS employee rented a $1 million townhome in
Arlington for almost $5,000 a month with tax dollars. I mean,
how is that acceptable?
Mr. Dalrymple. Again, I'm not really familiar with that.
Mr. DeSantis. Okay. Well, this is I think frustrating for
us. And I know there are a lot of taxpayers that they don't
feel that they always get the benefit of the doubt from the
IRS. In fact, when Congress reduced the budget for the IRS in
response to the targeting, there was a major drop-off in
customer service. It was very difficult for the people, the
taxpayers to get through. So the bureaucracy was really not
affected. It was all put on the taxpayer. And you had people
that really couldn't get their questions answered, and that
obviously has a lot of effects for our economy and for their
well-being.
Ms. Lucas-Judy, let me ask you this. What are the metrics
that the IRS uses to assess customer service, to measure it?
Ms. Lucas-Judy. The primary one is the one we've been
talking about, the telephone level of service, but they also
for correspondence--for paper correspondence they track the
percentage of--the backlog. They track the percentage that are
what they call over-age, so those that are 45 days or older.
They track the traffic to the different services that they
provide online, as well as ----
Mr. DeSantis. Does it track whether people are satisfied
with their level of service?
Ms. Lucas-Judy. That I think would be a question that I
would defer to Mr. Dalrymple.
Mr. Dalrymple. Actually, we do--we survey every taxpayer
that we have contact with on a satisfaction survey, so the
answer is yes, we do.
Mr. DeSantis. Okay. And so you keep--do you know what
percentage of callers are satisfied?
Mr. Dalrymple. Actually, the number's quite high so--but I
don't know what it is off the top of my head, but I could get
that for you.
Mr. DeSantis. Okay.
Mr. DeSantis. Now, did we satisfactorily answer your
question? Is that kind of the way you go about it in terms of
customer service?
Mr. Dalrymple. It's a series of questions that try to get
at how satisfied the taxpayer was with the interaction that
they had.
Mr. DeSantis. Ms. Lucas-Judy, what are the GAO
recommendations, if any, about--are there other metrics that
can be used so that the IRS can better understand the issue
with customer service?
Ms. Lucas-Judy. Well, we've made a number of
recommendations, including that they have a comprehensive
customer service strategy to help them determine overall among
telephones, correspondence, walk-in, online, what they're
looking for ideally and what's the most efficient, most
effective way to get to that.
We've also made recommendations that they have other
metrics for correspondence, that they include performance
targets for their correspondence. And in addition, we've got
some recommendations--we've made some suggestions to Congress
that would help IRS as well in terms of having authority to
adjust or correct math errors that they see.
Mr. DeSantis. Great. My time is up. Mr. Chairman, these
emails, we need the answers on those emails ----
Mr. Jordan. Sure do.
Mr. DeSantis.--and see, were they responsive to us then not
provided? And they may have been provided because this is in
the context of a FOIA suit with Judicial Watch, but even within
the context of that FOIA suit, this is two years late where
they said they didn't have them and now all of a sudden they
are producing them. And so ----
Mr. Jordan. No, we will ----
Mr. DeSantis.--that obviously is troubling. I yield back.
Mr. Jordan. Well, sir, I thank the gentleman for raising
that issue and the others.
Do you need congressional authority to move user fee
dollars around, Mr. Dalrymple?
Mr. Dalrymple. No, that authority was granted to us back in
the '90s to be able to use that ----
Mr. Jordan. You can use it wherever you want?
Mr. Dalrymple. Yes.
Mr. Jordan. You can use it on customer service?
Mr. Dalrymple. Yes.
Mr. Jordan. Did you focus in on customer service or were
some of those user fees moved over to implement the Affordable
Care Act?
Mr. Dalrymple. We used--we did have to use user fees for
the Affordable Care Act, FATCA, the FAST Act, the PATH Act, the
HTCs, the human--HCTC. We've had a number of ----
Mr. Jordan. But of those acts, which one would you have
used more--which one was probably the bigger hurdle or the one
that required most of the user fee dollars? Would it be the
Affordable Care Act?
Mr. Dalrymple. It would be a guess for me to answer that. I
can find out for certain ----
Mr. Jordan. Well, give me your best guess. You have worked
there a few years.
Mr. Dalrymple. I would guess--I would have guessed it would
have been the ACA.
Mr. Jordan. Yes, so would I. So would I. So that could have
contributed to the terrible customer service that taxpayers
were receiving.
You mentioned earlier that ----
Mr. Dalrymple. But that's a legislative mandate.
Mr. Jordan. No, I understand.
Mr. Dalrymple. Yes.
Mr. Jordan. I understand.
Mr. Dalrymple. Okay.
Mr. Jordan. Yes. The ability to use the user fees or the
ACA or both?
Mr. Dalrymple. Both.
Mr. Jordan. Right. I understand that. But the ACA is one I
didn't vote for.
Mr. Dalrymple. I can't ----
Mr. Jordan. I didn't vote for the user fee, the ability to
move the user fees because I wasn't here.
Mr. Dalrymple. I appreciate that. Okay.
Mr. Jordan. You mentioned earlier that the budget has been
reduced at the IRS and that, as a result of that, there is
17,000 less people working at the IRS. Is that accurate?
Mr. Dalrymple. That's accurate, yes.
Mr. Jordan. Okay. I mean, that is reflecting your testimony
in an accurate way, I think. What time frame are you talking
about, that 17,000?
Mr. Dalrymple. I believe that's between 2010 and 2016.
Mr. Jordan. And that 17,000 were because you received fewer
dollars in your budget. Were those people let go? Were they
fired? Were they said, dismissed?
Mr. Dalrymple. Most of them were either--have retired and
not hired behind or we didn't bring as many temporary or
seasonal employees on because that's ----
Mr. Jordan. So no one was actually told to hit the road?
Mr. Dalrymple. We did--there was no riff if that's what
you're asking.
Mr. Jordan. That is exactly what I am asking.
Mr. Dalrymple. No, not to my knowledge.
Mr. Jordan. Okay.
Mr. Dalrymple. Again, I didn't report back to the IRS until
2013, but I don't believe there was a riff.
Mr. Jordan. So people retired, you just didn't rehire?
Mr. Dalrymple. That's right.
Mr. Jordan. Okay.
Mr. Dalrymple. Or hire people that would have come back
from a seasonal job, so that is a bit different. If you're a
seasonal employee with us, we don't have to offer your season
back to you, and in instances like that ----
Mr. Jordan. No, I understand. You probably hire a few more
people at tax season than other times of the year I can guess.
Mr. Dalrymple. A lot more, yes.
Mr. Jordan. Right. I get that. Okay. If he is ready, we
will get Mr. Grothman. We will just be at ease for a second
while we wait for the gentleman from Wisconsin to come back. Is
Glenn coming?
The gentleman from Wisconsin is recognized.
Mr. Grothman. I know, you know, you certainly keep track of
the quality of your folks and I hope you do. Years ago, I used
to do taxes. And at the time not just me, other people felt
compared to the Wisconsin Department of Revenue, because
obviously we dealt with them both, that if you talk to your
guys on the phone, they weren't always the sharpest. They
didn't know their own laws. You know, you would call them three
times and you would get three different answers. Well, you call
them twice, you get two different answers anyway. Do you
monitor the quality of your folks? I haven't done taxes for 20
years, but do you have an opinion as to whether your folks know
what the law is?
Mr. Dalrymple. Yes. Actually, we do monitor their--every
call is--can be monitored. We have a quality review system that
statistically selects calls at random for quality assurance,
and during that process, we determine whether--one of the main
things we're looking for is did the taxpayer get the correct
answer. And actually, we do quite well there. So if you get
through to us, you're going to get pretty high quality.
Mr. Grothman. Has it improved over time?
Mr. Dalrymple. It's really been pretty stable over time, in
the high 90 percent rage.
Mr. Grothman. How long have you been monitoring it?
Mr. Dalrymple. At least 20 years. And 20 years ago it was
actually quite low. Probably for the last 10 or 15 years it's
been quite high.
Mr. Grothman. Better than 20 years ago, you have improved.
Some of the stuff they want to know here is the amount that can
be spent traveling by employees and, you know, it says here
Federal employees can spend over $7,000 per month on lodging.
Do you keep track of that or what is your travel policy for
your people when they get around?
Mr. Dalrymple. Well, first--well, travel policy isn't set
by the IRS; it's set by--you know, government-wide by ----
Mr. Grothman. Right, right, I understand.
Mr. Dalrymple.--the GSA. So we do monitor, and we actually
monitor how many people are traveling at any time and how long
they're traveling. And we don't generally have very many people
traveling for extended periods unless they're on some project.
But that's typically what we monitor.
Mr. Grothman. And how does it work? If somebody goes out
there for a week or whatever, I mean, how much are they allowed
to spend? Who determines where they stay, that sort of thing?
Mr. Dalrymple. It's based on the per diem rate, so if they
find a place to stay within the per diem rates, then, you know,
they're--we don't ask them, you know, where they're staying or
prohibit them from staying in places that are within those ----
Mr. Grothman. Okay.
Mr. Dalrymple.--rates.
Mr. Grothman. I am going to give you a more open-ended
question, and any one of you can answer it. And in part I think
of the earned income tax credit, but in any event, people are
always--you know, have ideas how to use the tax code for more
and more things. Hopefully, this time around we use it for less
and less, but historically, Congress always liked to use it for
more and more. And I sometimes think when Congressmen propose
things, they don't think how it is going to look to the
Internal Revenue Service who has to deal with it, like somebody
once came up with the earned income tax credit and they
apparently didn't think of the fact that if you fill out a form
and get a $5,000 check, fill out an easy form, a lot of people
will take a crack at it, which is why the fraud is so high.
But do you have any comments on the earned income tax
credit? Or are there any other parts of the tax forms that you
feel invites cheating or I guess I would say would require you
to spend a lot more on compliance than you would want to?
Mr. Dalrymple. Anything that is a refundable credit has
always been a challenge for the Internal Revenue Service so
whether it's the earned income tax credit or the advanced child
tax credit, anything that actually is refundable back to the
taxpayer. And by the way, there are corporate refundable
credits, too. They're not just to individuals.
Mr. Grothman. Right.
Mr. Dalrymple. They cause us difficulty from a compliance
standpoint.
Mr. Grothman. Okay. So when you retire and run for
Congress, you are going to take a swing at these things?
Mr. Dalrymple. I am not running for Congress.
Mr. Grothman. Oh. But you would take a swing at these
things?
Mr. Dalrymple. I don't know that I'd take a swing at them
because, you know, there are reasons for them I understand. But
from a tax standpoint they are challenging.
Mr. Grothman. From a compliance standpoint they require a
lot of your resources, and the reason they require a lot of
your resources is they invite fraud, right?
Mr. Dalrymple. They invite confusion and fraud both.
Ms. Lucas-Judy. The GAO has reported that EITC does have a
very high improper payment rate, and part of the reason for
that is the complexity of the credit itself. And it's also
self-reported.
Mr. Grothman. Right. It would be easy if one wanted to
cheat to try to cheat, right?
Mr. Dalrymple. Right.
Ms. Lucas-Judy. That's one of the reasons I think that IRS
does audit--a lot of audits of EITC returns.
Mr. Grothman. What happens when you find somebody has
gotten a few thousand dollars they shouldn't get?
Mr. Dalrymple. Well, what we try to do is actually find out
that before they get the money back, so we do--most of those
audits that were referred to are pre-refund audits. We do over
300,000 of those every year, so we're stopping the refund from
going out on the front end. It's very, very unlikely to get an
EITC refund back if it's given to a taxpayer.
Mr. Grothman. Once it is out, it is gone, huh?
Mr. Dalrymple. It is very difficult to get it back at that
point.
Mr. Grothman. Do you ever try to do anything with those
people?
Mr. Dalrymple. I'm sorry?
Mr. Grothman. Do you ever try to do anything with those
people? I mean ----
Mr. Dalrymple. Yes ----
Mr. Grothman.--if somebody--if it is very apparent that
somebody is claiming a credit they shouldn't get, does anything
happen to the people who do that?
Mr. Dalrymple. Well, actually, we bar them from getting the
credit then afterwards. The other thing that would be
incredibly helpful would be to have correctible error authority
around earned income tax credit in terms--because we have to do
examinations on all of these. If we had correctible error
authority, the process would be much easier to stop the refunds
when we saw them.
Mr. Grothman. What does that mean, correctible error
authority?
Mr. Dalrymple. It means that when it's an obvious error on
the return, we can actually reverse the credit that's being
asked for as opposed to having to do a full examination to be
able to stop the credit.
Mr. Grothman. Okay. I know my chairman is indulging me, but
you know I love this committee.
Mr. Jordan. That is good.
Mr. Grothman. I will give you one more--can I have one more
question?
Mr. Jordan. You sure can.
Mr. Grothman. If there is one business, refundable business
tax credit or one corporate tax credit, refundable credit that
you feel is prone to be given erroneously, what would it be, if
something comes to mind? You mentioned it is not just earned
income tax credit; there are business credits, too.
Mr. Dalrymple. I can't think of one off the top of my head,
but I'd be happy to come back to you with ----
Mr. Grothman. Yes, think of some so we can--yes. And how
many of the EITCs percentagewise did you guys review do you
think are fraudulent or erroneous? I should put it that way.
Mr. Dalrymple. Yes. Because--the point that my colleague
from the GAO made is this is an incredibly complex law for a
very unsophisticated group of taxpayers. And so a lot of the
mistakes made are not necessarily fraudulent. They are honest
mistakes. And then the other thing that you've got here are not
normal nuclear families, so determining who has the ability to
claim the dependent, et cetera, all those things are incredibly
difficult in this environment.
Mr. Grothman. You are a nice man, Mr. Dalrymple, but I
think you are naive. I think they do it on purpose. But ----
Mr. Dalrymple. Yes, I don't know that many people would
call me that, but I appreciate that actually.
Mr. Grothman. You are a nice guy, as we say. Okay. Thank
you much.
Mr. Jordan. Let the record show the gentleman kept us
waiting and still got eight minutes of questioning.
[Laughter.]
Mr. Jordan. Let me thank our witnesses. And, Mr. Dalrymple,
we want to wish you the best in your retirement.
Mr. Dalrymple. Thank you.
Mr. Jordan. Thank you for being here on this important
subject and for the important work that you do in uncovering
what has been happening at the IRS.
I would ask unanimous consent that members have five
legislative days to submit questions for the record. Without
objection, so ordered.
The subcommittees stand adjourned.
Mr. Dalrymple. Thank you.
[Whereupon, at 4:33 p.m., the subcommittees were
adjourned.]
APPENDIX
----------
Material Submitted for the Hearing Record
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]