[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
ONGOING MANAGEMENT CHALLENGES AT IRS
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON
GOVERNMENT OPERATIONS
AND THE
SUBCOMMITTEE ON HEALTHCARE,
BENEFITS, AND ADMINISTRATIVE RULES
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 25, 2017
__________
Serial No. 115-63
__________
Printed for the use of the Committee on Oversight and Government Reform
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Committee on Oversight and Government Reform
Trey Gowdy, South Carolina, 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
Blake Farenthold, Texas Jim Cooper, Tennessee
Virginia Foxx, North Carolina Gerald E. Connolly, Virginia
Thomas Massie, Kentucky Robin L. Kelly, Illinois
Mark Meadows, North Carolina Brenda L. Lawrence, Michigan
Ron DeSantis, Florida Bonnie Watson Coleman, New Jersey
Dennis A. Ross, Florida Stacey E. Plaskett, Virgin Islands
Mark Walker, North Carolina Val Butler Demings, Florida
Rod Blum, Iowa Raja Krishnamoorthi, Illinois
Jody B. Hice, Georgia Jamie Raskin, Maryland
Steve Russell, Oklahoma Peter Welch, Vermont
Glenn Grothman, Wisconsin Matt Cartwright, Pennsylvania
Will Hurd, Texas Mark DeSaulnier, California
Gary J. Palmer, Alabama Jimmy Gomez,California
James Comer, Kentucky
Paul Mitchell, Michigan
Greg Gianforte, Montana
Sheria Clarke, Staff Director
William McKenna, General Counsel
Jack Thorlin, Government Operations Subcommittee Deputy Staff Director
Sharon Casey, Deputy Chief 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 A. Ross, Florida Wm. Lacy Clay, Missouri
Rod Blum, Iowa Brenda L. Lawrence, Michigan
Bonnie Watson Coleman, New Jersey
------
Subcommittee on HealthCare, 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
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Page
Hearing held on October 25, 2017................................. 1
WITNESSES
Mr. Jeffrey Tribiano, Deputy Commissioner for Operations Support,
Internal Revenue Service and Ms. Gina Garza, Chief Information
Officer, Internal Revenue Service
Oral Statement............................................... 4
Written Joint Statement of Mr. Tribiano and Ms. Garza........ 7
The Honorable J. Russell George, Treasury Inspector General for
Tax Administration
Oral Statement............................................... 17
Written Statement............................................ 19
Mr. Greg Kutz, Assistant Inspector General for Audit, Treasury
Inspector General for Tax Administration
Oral Statement............................................... 43
APPENDIX
Response from Mr. Tribiano, IRS, to Questions for the Record..... 66
ONGOING MANAGEMENT CHALLENGES AT IRS
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Wednesday, October 25, 2017
House of Representatives,
Subcommittee on Government Operations, Joint with
Subcommittee on Healthcare, Benefits, and
Administrative Rules
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:22 p.m., in
Room 2154, Rayburn House Office Building, Hon. Jim Jordan
[chairman of the Subcommittee on Healthcare, Benefits, and
Administrative Rules] presiding.
Present: Representatives Meadows, Jordan, Hice, Sanford,
Massie, DeSantis, Grothman, Blum, Connolly, Krishnamoorthi,
Maloney, Norton, Kelly, Watson Coleman, and Lawrence.
Mr. Jordan. The joint subcommittee hearing will come to
order. And we'll start by recognizing the chairman of the
Government Operations Subcommittee, Mr. Meadows, for his
opening statement.
Mr. Meadows. Thank you, Mr. Chairman, for continuing your
leadership on this particular issue.
As we look at that, many of you, this is not your first
rodeo. You've been here before. And, sadly, we're having to
still address some of the major concerns that have been raised
a number of times. Obviously, we will end up with a new IRS
commissioner in the coming days. And as we look at that, it is
critically important that we set the stage for making sure that
we address these issues. There are issues that TIGTA continues
to identify as problem areas.
Most of my concern, I can tell you, are the things that
continue to make headlines. You know, why do we go in and we
rehire employees when we have specifically in there, do not
rehire? You know, the IRS is held to a higher standard
primarily because you hold the American taxpayer to a higher
standard. If some of the excuses that we use as taxpayers were
tried out in an IRS audit, they wouldn't pass the smell test.
And I guess what I'm here to say is some of the things that I
am still seeing happening within the IRS does not pass the
smell test.
Now, I've been one of the few Members of Congress who have
had the opportunity to come and meet with some of the IRS
employees. And I would be remiss to not acknowledge that the
vast majority of them are excellent workers and truly are doing
a very, very good job for the American public. However, when we
start to see that we've got 213 employees who were fired--who
left the IRS while under investigation for an issue of conduct
or performance, that really was--was something that should have
been addressed. We've got four of those employees who willfully
failed to file even a tax return. Now, I think the message
needs to be clear. It's time to clean house. It's time to get
it right. We're not going to continue to have hearing after
hearing after hearing with no accountability.
Additionally, I'm very concerned with the number of IT
recommendations that continue to not be fulfilled. And so I
look forward to hearing your testimony. Because as we look at
that, IT security at the IRS should be priority number one. And
yet what we have found over and over again is, is that we've
got legacy systems, we've got out-of-date systems. And
everything wants to come running back to the financial
concerns. But I've looked at the appropriations. I've looked at
the numbers where they are. And there is not a linear
correlation between the amount of money that you get funded and
addressing those problems.
So what I want to hear today is: How are we going to
address the things that TIGTA has brought up? We continue to
see some of these mismanagement areas. And, again, if we're not
going to do it, I would rather hear under sworn testimony today
that we're just not going to do it. I'm tired of excuses. At
this point, let's get something on there.
And, again, it's very easy to become critical and have all
the IRS employees think that this is about every one of them. I
want to be clear. This is not about every one of them. This is
about management. This is about the failure to put in
safeguards to address things that are important to the American
people.
So, Mr. Chairman, I appreciate your leadership, and I yield
back.
Mr. Jordan. I thank the gentleman.
Mr. Krishnamoorthi, the ranking member, is recognized. And
we'll recognize Mr. Connolly, when he arrives, as well.
You are recognized for 5 minutes.
Mr. Krishnamoorthi. Thank you, Chairman Jordan, thank you
Chairman Meadows and Ranking Member Connolly, for convening
today's hearing. And thank you for participating in today's
hearing.
A 2013 GAO study found that there were 8,400 people with
security clearances who owed a combined total of $85 million in
unpaid Federal taxes. Only half of this group already had a
repayment plan with the IRS when their clearance was approved.
Over 4,200 of these individuals were eligible for a top secret
clearance.
Although it may not be readily apparent, the IRS plays an
important role in our national security apparatus. This is why
the GAO recommended implementing additional security checks,
including rigorous background checks, providing proof of past
tax returns, and working more closely with the Internal Revenue
Service to weed out potential security vulnerabilities in our
government.
As I'm sure everyone here is aware, financial pressure is
one of the easiest ways for adversarial intelligence agents to
recruit sources who will betray our country. Outstanding debts
are an overwhelming counterintelligence vulnerability that make
the debtor liable to pressure, seduction, blackmail, or any of
the other tools in a spy's recruitment handbook. In general,
substantial financial debts could be used against an
individual, particularly--particularly if those debts are owed
to foreign entities or individuals.
We must do everything we can to ensure that those entrusted
with access to our Nation's secrets are not vulnerable to any
sort of blackmail. And we would be abdicating this
responsibility if we did not use Congress' power of the purse
to ensure that every agency, including the IRS, support our
country's counterintelligence operations and has the means
necessary to succeed.
Given all the unknowns surrounding the President's tax
returns and the overleveraged real estate holdings of his
senior staff, we have an obligation to make sure the IRS is
able to fully cooperate with the national security and
intelligence communities to make sure they are able to assess
and respond to counterintelligence vulnerabilities within our
own government.
I look forward to further exploring this GAO report and how
the IRS works with other agencies to track these
vulnerabilities and ensure that they are properly addressed.
Thank you, Mr. Chairman.
Mr. Jordan. I thank the gentleman.
Today's hearing is entitled, ``Ongoing Management
Challenges at the Internal Revenue Service.'' That is a nice
way of saying the IRS has been a mess and remains a mess.
Rehiring employees who were under investigation, rehiring
employees who were engaged in fraud, rehiring employees who
were violating 6103, looking at confidential taxpayer
information, awarding a contract to Equifax in light of the
massive data breach, 143 million Americans' data breached
potentially.
And never forget the backdrop. Never forget the backdrop
here. Russell George became well known as the inspector of
TIGTA back in 2013 when we asked him to look into the fact that
we thought maybe the IRS was targeting conservative groups.
And, lo and behold, they were. And never forget what happened
when the IRS got caught with their hand in the cookie jar
targeting conservative groups. They first denied it. Doug
Shulman told the Ways and Means Committee way back then, no,
it's not going on. Guarantee it's not happening.
Lois Lerner sat in our office, met with oversight staff,
said, oh, not happening. Then they did what everyone else does
when they get caught doing something wrong: They tried to spin
it. Inspector General George remembers this. He was going to
release his report on Monday. On the Friday before, Lois Lerner
went to a bar association speech here in town--right, Mr.
George?
Mr. George. That's correct.
Mr. Jordan. --went to a bar association speech here in town
and had a friend ask her a question, planted question. And what
did she say? She does what everyone does when they get caught.
Said, it wasn't me. Nope, it was those folks in Cincinnati.
Remember this? Blame someone else. First you deny it. Then you
try to spin it and get in front of the story, which she did.
Then you blame someone else, say, oh, rogue agents in
Cincinnati. And then when that didn't hold up, they even
attacked Mr. George and TIGTA for doing their hard work, for
just presenting us the truth. They blamed the messenger. They
attacked the messenger.
And, finally, they resorted to the worst of it all, in my
judgment: They destroyed the evidence. The IRS 422 backup tapes
containing potentially 24,000 emails that could have answered a
lot of questions. After Lois Lerner's hard drive crashed and it
came up missing, even though it was under subpoena, even though
it was under a preservation order, they destroyed the evidence.
And now here we sit, again, the IRS continues to rehire
folks who violate 6103, look at confidential taxpayer
information, rehire folks under investigation, rehire folks
engaged in fraud, award a no-bid contract to Equifax in light
of the fact that 143 million taxpayers' information was
breached.
But here's the good news. At least there's one element of
good news. The long, sad chapter of John Koskinen as IRS
commissioner comes to an end in 2-1/2 weeks, and thank the Lord
for that.
So I look forward to our witnesses and what they have to
say, and particularly the work that Mr. George and his team
have done on a number of issues related to the targeting and
the issues that we're also going to be asking questions and
discussing today.
Mr. Jordan. And, with that, since Mr. Connolly is not here,
I think we'll swear our witnesses in and proceed with their
testimony and get right to questions.
It's my honor to welcome today Mr. Jeffrey Tribiano, deputy
commissioner for Operations Support at the IRS; Ms. Gina Garza,
the chief information officer at the Internal Revenue Service;
and, of course, the Honorable Russell George, Treasury
Inspector General for Tax Administration; and Mr. Kutz, the
assistant inspector general for Audit at the Treasury Inspector
General for Tax Administration.
Welcome to all of you. I know, Mr. George, we appreciate
you being here. You and I have talked on the phone, and we
appreciate you making the effort to be here today.
The custom of this committee is to swear people in. So if
you'll stand up, raise your right hand.
Do you solemnly swear or affirm the testimony you're about
to give is the truth, the whole truth, and nothing but the
truth, so help you God?
Let the record show each witness answered in the
affirmative.
And we will move right down the line there. So, Mr.
Tribiano, you are up first. And you know how it works. You got
5 minutes. Fire away.
WITNESS TESTIMONIES
TESTIMONY OF JEFFREY TRIBIANO
Mr. Tribiano. Yes, sir. Well, Chairman Jordan, Chairman
Meadows, Ranking Member Krishnamoorthi, and members of the
subcommittee, my name is Jeffrey Tribiano, and I'm the deputy
commissioner of Operations Support at the IRS. Joining me at
the witness table is Ms. Gina Garza, the IRS' chief information
officer. And we appreciate this opportunity to testify.
Each year, the IRS collects more than $3 trillion,
processes more than 200 million electronic tax returns, and
answers more than 60 million calls from taxpayers as part of
its mission. These and many other activities are accomplished
through detailed planning and coordination across the Service.
This includes critical support provided by the IRS' Information
Technology organization. In allocating resources for these
efforts, our highest priorities are the delivery of filing
season, implementing congressional mandates, and protecting
taxpayer data. At the same time, to the extent resources are
available, we continue to invest in modernization of our tax
administration systems and applications.
To continue delivering on our priorities and modernization
efforts, it is critical that the agency's IT infrastructure
components be up to date. We continue to make investments in
modernization of critical infrastructure, using managed
services and cloud technology to the extent possible. While we
have seen some progress over the last year, additional
investments are needed. We are concerned that the risk of a
catastrophic system failure is increasing as our infrastructure
continues to age. Replacing the aging IT infrastructure is a
high priority for the IRS, but we are challenged by our budget
situation. Our budget is now $900 million below what it was in
2010, and modernization at a faster pace requires significant
additional resources for IT.
We were also asked today to address the sole-source
contract award to Equifax in late September after the company
announced a major data breach. At the beginning of this year,
we recognized the risk of using only one vendor, Equifax, to
provide the IRS critical identity verification and validation
services. In February 2017, we publicly announced our strategy
to issue two competitive solicitations, one for a short-term
12-month single-award vehicle, under GSA schedule, followed by
a long-term 5-year, multiple-award vehicle. In July, we awarded
a 12-month contract to Experian to provide these services.
Equifax then filed a protest to the Government Accountability
Office, which had up to a hundred days to render a decision.
The protest triggered an automatic stay of contract
performance on the awardee to preserve the status quo until GAO
issued its ruling. At this point, overriding the statutory stay
was not warranted under the circumstances. Equifax was
satisfactorily providing services on the contract. There is no
suggestion or evidence of any issues that would have caused the
IRS to question Equifax's performance or whether Equifax's
continued performance on the contract represented a risk to the
government. We filed a motion at that time to dismiss the
protest, but GAO denied our motion on August 2nd.
Since the GAO decision was not expected until October 16th,
and the contract with Equifax was ending on September 30th, we
were facing a lapse in identity verification services. This had
the potential to negatively impact up to a million taxpayers.
We believed it was critically important to maintain the ability
for taxpayers to authenticate their identity to receive certain
online services, particularly electronic requests for prior
year's tax returns. This was specifically significant for
taxpayers preparing to file returns before their extensions ran
out on October 16th, and for the taxpayers in the federally
declared disaster areas.
Several factors were considered prior to awarding the
short-term bridge contract to Equifax on September 29, to
include the GAO protest period, the time needed to transition
to Experian, and the impact on taxpayers, and the results of
our initial onsite security assessment conducted by the IRS
team and the TIGTA special agents. However, on October 12,
after reviewing new information on Equifax's situation, we took
the precautionary step of temporary suspending the short-term
bridge contract with Equifax. Now that GAO has denied the
protest, we are moving forward with Experian.
Lastly, we have also been asked to address the procedures
for rehiring former employees. The IRS is committed to properly
evaluating prior performance and conduct issues. We have in
place procedures, which we continue to refine, to consider
prior performance and conduct in the hiring process to the
extent permissible by law, and this includes implementing all
of TIGTA's recommendations by October 31st of 2017.
This concludes mine and Ms. Garza's opening statement, and
we are happy to take your questions.
[Prepared joint statement of Mr. Tribiano and Ms. Garza
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Jordan. Thank you, Mr. Tribiano.
Ms. Garza, is that accurate? You're good?
Ms. Garza. [Nonverbal response.]
Mr. Jordan. Okay. Mr. George, you're up. Thank you.
TESTIMONY OF J. RUSSELL GEORGE
Mr. George. Thank you, Chairman Jordan, Chairman Meadows,
Ranking Member Krishnamoorthi, and members of the subcommittee.
I thank you for the opportunity to discuss IRS hiring practices
and information technology challenges. As noted earlier,
joining me is Greg Kutz, assistant inspector general for Audit.
TIGTA first reported in December of 2014 that the IRS had
rehired 824 former employees with substantiated conduct and
performance issues. For example, the IRS hired 141 former
employees with substantiated tax issues, including five that
willfully failed to file their Federal tax returns. Other prior
issues for rehired employees included unauthorized access to
taxpayer information, leave abuse, falsification of official
forms, and misuse of government property.
In response to our 2014 report, the IRS said its current
process was more than adequate to mitigate risks to the
American taxpayer. In our followup July 2017 report, we found
that the IRS continued to rehire former employees with conduct
and performance issues. IRS rehired more than 200 former
employees who were previously terminated from the IRS who had
separated while under investigation for conduct or performance
issues. In response to our report, IRS management agreed with
the intent of our recommendations and cited plans to update
current practices. Bringing in employees with a history of
problems increases the internal threat to taxpayer data.
This leads to my second point: Information technology
challenges facing the IRS. Recent cyber events show that bad
actors are continually seeking ways to exploit IRS systems and
access taxpayer information. The recent breach at Equifax could
further increase the risk of identity theft. IRS continues to
take steps in response to our recommendations, including
implementation of two-factor authentication.
The IRS has also faced significant challenges in
modernizing its legacy systems and hardware infrastructure. For
example, CADE 2, which is the planned replacement of the
Individual Master File, has been under development since 2009.
The previous CADE initiative dates back to the late 1990s.
Currently, there is no planned completion date for CADE 2. The
IRS has a large and increasing amount of aged hardware
infrastructure, some of which is three to four times older than
industry standards. The percentage of aged hardware has
steadily increased from 40 percent at the beginning of fiscal
year 2013 to 64 percent at the beginning of fiscal year 2017.
This increases the security risks to critical taxpayer data the
IRS must protect.
The IRS has also been challenged in responding to some high
profile requests from Congress, the public, and the courts. The
loss or destruction of information resulted from a combination
of inadequate systems and policies, along with human error. For
example, systems and record retention policies have not ensured
that email records are automatically archived and could be
retrieved for as long as needed.
We reported last year that the IRS' previous attempt to
implement a new email system was unsuccessful at a cost of at
least $12 million. According to the IRS, its future-state email
system was to be implemented by September 30, 2017. Until a
solution is effectively implemented, IRS emails will remain
difficult to retain or search.
In conclusion, providing increased online access to
taxpayers, while protecting their identity and their
information from internal and external threats, is a
substantial challenge for the IRS. In addition, modernizing
systems would result in lower operating costs, increased
security of taxpayer data, and improved customer service for
taxpayers. TIGTA will continue to prioritize overseeing IRS
hiring practices and efforts to address its information
technology challenges.
Thank you for the opportunity to share my views.
[Prepared statement of Mr. George follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Jordan. Thank you, Mr. George.
Mr. Kutz?
Mr. Kutz. [Nonverbal response.]
Mr. Jordan. You're good? That's what I thought.
The gentleman from Georgia is recognized for 5 minutes.
Mr. Hice. Thank you, very much, Mr. Chairman.
It seems like dealing with the numerous challenges and
crises at the IRS is a pretty regular thing around here. We've
been through hearing after hearing in this committee. And some
issues, such as the technology, rehiring of the employees,
these things are ongoing. We talk about them often and rightly
so. But sometimes there are new issues, even to the IRS, such
as this recent debacle with Equifax, that has a lot of us
crawling in our skin.
The common thread in all of these issues, regardless of
what they may be, is mismanagement. And it's not a management
problem. It is a mismanagement problem that has been taking
place for years. And, you know, it filters down from the top to
the bottom and infects everywhere it goes. And as the chairman
stated a while ago, I join in celebrating the fact that finally
Commissioner Koskinen is leaving in a few days, and it is my
hope that the tarnished agency that he leaves behind will
finally get leadership that can correct the problems of
mismanagement that are so abundant. I know there are good
people, dedicated people, at the IRS. And I don't intend or
mean to throw all of them under the bus, or any of those who
are dedicated. But the mismanagement has got to come to a stop.
Now, I mention Equifax. This is certainly a word that, at
least now, probably everyone in America is aware of, and with
good reason. 143 to 145 million individuals who have had their
personal information compromised, where it walked right out the
front door of Equifax. And the report was widely reported, as
we all know, of what happened.
So, Mr. Tribiano, Ms. Garza, let me just begin with you.
The end of September, September 29th, the IRS awarded a bridge
contract to Equifax after the data breach occurred. I'm trying
to wrap my mind around that. Did the IRS know about the data
breach when they made this bridge contract?
Mr. Tribiano. Yes, sir.
Mr. Hice. Then why in the world did you make another
contract?
Mr. Tribiano. We heard about the data breach the same as
everybody else, when Equifax announced it. I believe it was on
September 7th, in the evening. On September 8th, our chief
privacy officer convened our incident response team, which is
made up of some of our senior leaderships, which is our CIO,
our head of cybersecurity, the head of our business units, our
chief contracting officer, and then we asked our TIGTA criminal
investigators to join us on that day. And we made a call to
Equifax to try to determine what exactly was going on down with
Equifax.
Later on in the month of September, we sent that same team,
IRS cybersecurity, IRS criminal investigators, and TIGTA
criminal investigators, down to Equifax for a 1-day visit to
determine what happened, what was breached, how that activity
happened, and what the impact was where the IRS did business.
Mr. Hice. Are you getting to my question?
Mr. Tribiano. I am, sir. I'm explaining the decisions that
were made up to the point where we issued----
Mr. Hice. My question: With 145 million whose personal data
was breached, why in the world would you go back and have
another contract with them?
Mr. Tribiano. Well, because they--at that point in time,
the systems that housed where we did business was separate from
the systems that were breached. And there was no indication and
no security risk for where we did and exchanged information
with Equifax.
Mr. Hice. So you're saying that there's no fear for the
IRS, with 145 million people whose personal information has
been breached, you have no concern whatsoever that that may
impact the security of the IRS-type information----
Mr. Tribiano. No, sir.
Mr. Hice. --of those individuals?
Mr. Tribiano. No, sir, I'm not--I didn't say that. What I
was referring to was the information exchange where we exchange
information with Equifax for our eAuthentication verification.
Part of the process that was--we had gone through also at that
point in time was to look at the impact of the breach, of the
143 million, the information----
Mr. Hice. Well, Commissioner Koskinen made it--paraphrasing
him, he said: It's no big deal for us to have another contract
with Equifax because all these people's IDs have been breached
already. So if they come to us, they're still breached.
Mr. Tribiano. Sir, I can't answer for Mr. Koskinen. What I
can----
Mr. Hice. Well, you can answer for the IRS. This is another
example of the mismanagement that is poisoning the entire
agency, let alone the citizens of this country.
And, Mr. Chairman, my time is running out. But this is
inexcusable. And I yield back.
Mr. Jordan. I thank the gentleman. And it is inexcusable.
Does the gentleman from Virginia wish to be recognized now?
Because we can go down----
Mr. Connolly. I thank the chair. And I note that he noted
my absence. But----
Mr. Jordan. I knew you'd be here, brother.
Mr. Connolly. Struggling a little bit to get here, but
happy to be here. And I thank the chair.
Mr. Jordan. The gentleman is recognized.
Mr. Connolly. And I'm sorry I'm out of turn.
The IRS has suffered severe and repeated budget cuts since
2010. My colleague just talked about dysfunctionality at the
IRS as if Congress had nothing to do with it. The current IRS
budget is 20 percent less than the fiscal year 2010 funding
level when adjusted for inflation. The IRS continues to face
additional proposed cuts amid heightened demand for services
and additional unfunded mandates. These drastic budget cuts
have severely weakened the ability of the IRS to fulfill its
mission, to enforce our Nation's tax laws, and have not sparred
any corner of the agency.
Most significantly, between 2010 and 2016, the IRS lost
13,000 employees. The agency's fiscal 2017 budget noted that
every additional dollar invested in enforcement can produce $6
in revenue. That's not a bad return on investment, if you had
bothered to make it. But, of course, Congress has thought
otherwise. And the additional and direct savings from deterring
tax evasion can be three times that amount, an 18-to-1 return
on investment.
However, between 2010 and 2016, the IRS was forced to
reduce its enforcement staff by 11,600 full-time employees.
That's a reduction of 23 percent. Even Secretary Mnuchin, at
his confirmation hearing, expressed his concern about those
staffing levels, saying, and I quote: I am concerned about the
staffing at the IRS. That's an important part of fixing the tax
gap. And also noting: If we add people, we make money. That's
not Obama's Secretary of Treasury. That's Trump's.
IRS employees are not the only ones affected by those
budget cuts. The American people have felt it as well through
diminished customer service, quality, reliability, and,
including, of course, longer call waiting times and delayed tax
refunds.
I'm most alarmed with the IRS budget constraints impeding
the ability of the agency to update its outdated IT systems,
delaying more than $200 million in investments. IRS has legacy
IT systems that date back to the Johnson administration. And a
September 2017 report by the Treasury Inspector General for Tax
Administration notes that 64 percent of the agency's IT
hardware infrastructure is beyond its useful life. I will say,
parenthetically, I am informed that the good news might be that
the Chinese don't know how to hack into COBOL. It's too old.
So IRS software is also shockingly out of date. Thirty-two
percent of supporting software are two or more releases behind
the industry standard, and 15 percent more than four releases
behind. The legacy systems are a catastrophe waiting to happen,
and it's critical they be upgraded in order to adequately
protect taxpayer data and provide the modern services that
taxpayers deserve.
I understand we're not going to have political agreement in
this committee about the role of the IRS and its importance,
centrality to a functioning government. But, surely, it seems
to me we could agree that modernizing IRS' IT infrastructure is
necessary to prevent cyber hacks and will improve customer
service, customers who are our constituents.
I know our committee, Mr. Chairman, has led the way on IT
modernization throughout the Federal Government. It's time we
did the same for the IRS.
I yield back.
Mr. Jordan. I thank the gentleman.
The gentleman from Illinois is recognized for his 5 minutes
of questioning. Then we'll go to the gentleman from South
Carolina.
Mr. Sanford. I thank the gentleman. I guess I'd go to you,
Mr. George.
Mr. Jordan. That's all right.
Mr. Sanford. I'm sorry?
Mr. Jordan. That's fine. We'll go that way.
Mr. Sanford. No, no. Which way?
Mr. Jordan. I think we should probably go--because Mr.
Connolly was doing his opening statement.
Mr. Sanford. Oh, please.
Mr. Jordan. So next in line is the ranking member. He's
yielding. You can't both yield. He's yielding to you first, so
you got to take it, man.
Mr. Krishnamoorthi. Okay.
Mr. Jordan. Then we'll come to Mr. Sanford.
Mr. Krishnamoorthi. Thank you, Mr. Chairman.
I wanted to focus a little bit more on this security
clearance tax issue. And, you know, since 2010, as Ranking
Member Connolly indicated, IRS funding has been cut. And, in
fact, it's seen its funding cut by 17 percent. And it is
performing the lowest levels of individual and business audits
in a decade. This is at the same time that the GAO has
recommended increased coordination between the IRS and the
Director of National Intelligence.
Mr. Tribiano, how have these cuts impacted the IRS' ability
to effectively work on security issues and coordinate with
other agencies? In its 2013 report, the GAO urged the Director
of National Intelligence, the Office of Personnel Management,
and the Department of Treasury, to evaluate the feasibility of
Federal agencies obtaining data on Federal tax debt when
evaluating security clearance applicants and monitoring current
security clearance recipients. Could you illuminate this a
little bit?
Mr. Tribiano. Yes, sir. Yes, sir, I can. Any time there's
reduced resources within the IRS, our prioritization is
always--is making sure that we can deliver a safe and
successful filing season. It's important to us to make sure
that we can process the returns, get the refunds out the door,
and complete that work. The second prioritization is always
whatever legislative mandates that are out there that we have
to implement. And third is obviously overriding cybersecurity
and protecting the data that we have.
Whatever resources we have after that then go into a
prioritization for whatever projects we have to work on. The
project that you're referring to, being able to provide data,
at least the status, as security agencies are doing suitability
assessments on possible government employees, took us awhile to
work the funds available to start that process.
Now, I can tell you this. We are ready to provide that
service. The--what we do is--we don't provide taxpayer data.
What we do is we get the name and the information from the
projected candidate, and we tell the suitability agency whether
or not there's a outstanding liability, not a liability, or
there's an issue that you need to contact us about. But we
can't release taxpayer data to them. Because a lot of these
agencies don't have the built-in ability to protect taxpayer
data. So we----
Mr. Krishnamoorthi. Let me interrupt for a second. I'm
going to lose all my time. One quick question, which is, you're
also--on those tax returns, you would know whether there's
income from foreign sources, right?
Mr. Tribiano. Um----
Mr. Krishnamoorthi. If they were disclosed to the IRS?
Mr. Tribiano. If it's disclosed to the IRS, we would know
that. But that's not part of the suitability--my understanding
it's not part of the suitability. Suitability is whether
somebody has an outstanding liability to the government that
the IRS has on record.
Mr. Krishnamoorthi. And if they asked you to provide
information about income owed, or debts owed, to foreign
actors, or income received from foreign actors, you'd be able
to provide that, right?
Mr. Tribiano. We are not ready to provide that. And it's a
privacy issue, in a sense, that if we release data like that,
there has to be protections in place on where it's going and
what's being done with it. We just can't release taxpayer data
without having the proper authority to do so. So that's why in
our suitability we provide whether or not there's an
outstanding liability to the Federal Government that the IRS
has on record, and that the suitability professional that's
working on security clearances takes that into account on
whether or not that person would--you know, the information we
provide would create an additional risk in their assessment of
that individual's background.
Mr. Krishnamoorthi. Okay. You know, make no mistake, in
these situations, the IRS is as valuable an intelligence
collecting agency as the FBI, in my opinion. I'm from Chicago,
and it wasn't the violence or the speakeasies that brought down
Al Capone. It was the IRS that nailed him on tax fraud. I'm
very concerned that we're now impeding the ability of the IRS
to protect us from threats much greater than bootleggers or
gangsters.
You know, Mr. Tribiano, has the IRS been cooperating with
Special Prosecutor Mueller's team as he seeks to unwind the
extent to which Russia has been interfering in our elections?
Mr. Tribiano. Sir, I would have no idea. That's outside of
my purview. And even if it was in my purview, I wouldn't be
allowed to discuss any ongoing investigations.
Mr. Krishnamoorthi. Are you aware of any political
appointee, from any agency, seeking to exert pressure on the
IRS to not cooperate with Mueller?
Mr. Tribiano. Sir, again, I'm not subject to any of those
activities within the IRS. You know, I can tell you the IRS has
only two political appointees in our entire 80,000 structure.
That's the Commissioner of Internal Revenue and the Chief
Counsel. That's it. All other employees within the IRS are
Federal employees.
Mr. Krishnamoorthi. I'm just really troubled by some of
these answers. I just don't think the IRS is doing enough to
assess the financial liabilities of those who, you know, seek
security clearances. We've heard repeatedly, repeatedly, about
people on SF-86 forms with all kinds of entanglements,
financial entanglements, of which the IRS should be aware, if
it's not already, and I'm just troubled that this information
is not being shared across the government.
Thank you, Mr. Chairman.
Mr. Jordan. I thank the gentleman.
The gentleman from South Carolina is recognized.
Mr. Sanford. I thank the gentleman.
It seems to me in the back and forth that the--a fairly
central question that's emerged has been: Has the cut in
funding in IRS resulted in its inability to do things? And so I
guess my question to you, Mr. George, would be this: One could
argue, I think fairly reasonable, that, you know, the number of
agents would impact audit capacity. I don't know that one could
argue as reasonably that some of the cuts in funding with IRS
would affect essential management decisions.
And, fundamentally, when you look at this notion of
rehiring folks that have been dismissed for a variety of
different reasons, fundamentally, you're looking at a
management decision rather than a capacity decision. I think
that the cross-tabs are here especially interesting. Because
you look, and you all had studied this issue back in 2014, and,
at that point, roughly 11 percent of the employees that had
been dismissed had been rehired. You studied it again in 2017,
and 10 percent of the folks that had been dismissed had been
rehired. In fact, with the cut in funding, actually, there had
been a 1 percent, or almost a 2 percent, increase in lessening
the impact of rehires of mismanaged folks.
So it doesn't seem to me that there's any correlation
between amount of money, and, again, one's propensity to go out
and rehire somebody that was dismissed. Could you give me a
little bit further thinking on that?
Mr. George. I agree with everything that you stated,
Congressman. I guess the only thing that could be said in
defense of the IRS' actions is that a lot of the rehires are
temporary IRS employees. During the filing season, in order to
process the millions of tax returns that come in, they bring in
people who have had experience doing that in the past.
Mr. Sanford. But they've had fundamentally bad experience.
They have either done wrong, committed malfeasance, not filled
out their own tax returns, a variety of different--or they've
been dismissive to a superior, they've been insubordinate. Go
down the litany of different possibilities. You fundamentally
go back and hire somebody like that to increase, quote,
capacity? It seems to me you would diminish capacity.
Mr. George. And it is bad decision-making on their part.
Whether it's 400 or whether it's 1, that rehire should not have
occurred. We agree completely. We hope the new commissioner
will be more proactive in avoiding this in the future. But we
will, I can assure you, sir, be on top of this issue from day
one.
Mr. Sanford. Again, Mr. Tribiano, again, you look again at
the cross-tabs and the numbers, you got less money, but
actually had fewer faulty management decisions by about 1.7
percent in, again, the difference between 2014 and 2017. Your
thoughts on that? I mean, fundamentally, again, it speaks on
not to money being the issue, but management being the issue.
Mr. Tribiano. Yes, sir. So let me first start by making
sure I make it clear. We have an incredibly dedicated and
talented workforce. And I want to echo what Mr. Chairman was
saying----
Mr. Sanford. Again, that's just saying what I think has
been laid out by a variety of different members. I don't think
we're questing the whole of many people who work there. We're
questioning the management process that goes out and rehires
folks that have been found not worthy to be in the agency that
does have capable people in it.
Mr. Tribiano. So let me answer your question.
Mr. Sanford. Yeah.
Mr. Tribiano. Because you're associating that with funding.
And there is a funding issue. You know, when----
Mr. Sanford. Wait, wait, wait. Again, the numbers speak for
themselves. You had 1.7 percent less in the way of rehiring
folks that had been dismissed after you had less money.
Mr. Tribiano. Yes, sir. And I'm trying to get to your
answer. There's a lot of factors that go into that. When in
2014 TIGTA laid out the recommendations that they wanted the
IRS to follow, they implemented those recommendations. It
probably caused some of those numbers to drop down. But some of
the issues are related to funding, and I don't want to discount
that. And I can get to that in a minute. But I can tell you the
fundamental difference now between what TIGTA recommended this
go-around and what we are going to do to stop this process from
happening and what TIGTA called to light for us, is we do a
suitability check. Right? So we go by OPM standards that states
clearly if somebody had this disciplinary issue, concern,
problem, after X number of years, OPM tells you whether or not
they're suitable or not suitable, whether you can take that
into consideration or can't take that into consideration.
Mr. Sanford. Wait. If, based on your own filings, you have
the words do not rehire on there, and you still go out and
rehire, that doesn't seem to me to fit with anybody's standard
of common sense.
Mr. Tribiano. If it fits within OPM's guidelines about
what's suitable----
Mr. Sanford. Would you define that as common sense?
Mr. Tribiano. No, sir. So let me just--if I can just finish
this statement so we're all on the same page.
Mr. Chair, can I have a few minutes or a few extra seconds,
please, sir?
Mr. Jordan. Sure. Sure.
Mr. Tribiano. Thank you.
So, Mr. Sanford, so what we're changing in that process is
twofold. One is, we do the suitability check and we find that
there's an issue or concern or some type of problem with the
employee. We now tag that when we send that to the hiring
manager so the hiring manager knows there's a suitability issue
with that individual. That's what TIGTA's recommendation was.
Because that allows us to still meet the requirements within
OPM, but notify the hiring manager that there's an issue.
That's number one. Number two----
Mr. Sanford. Let me just let you finish the thought. But
since we've already gone over, this is what makes people crazy.
In other words, you have just defined this process as being
outside the bounds of common sense, and yet you describe a
circuitous process by which, supposedly, it checks somebody's
box as being okay. But it doesn't pass the common sense test,
which I think is the ultimate test.
Mr. Tribiano. What I described is the rules that I have to
follow in order to meet OPM's requirements, all right, that I
cannot operate or expect my people to operate outside of. But
if I could just----
Mr. Jordan. Mr. Tribiano, the point is, was it reduced
resources that caused you to rehire someone you had said don't
rehire? Was it reduced resources that led to a decision to give
Equifax a no-bid contract 30 days after they said 143 million
Americans had their data compromised? That's Mr. Sanford's
point. And, frankly, any American who looks at that says
there's no way reduced resources caused the IRS to make those
decisions. They just made those decisions.
Mr. Tribiano. The reduced resources, it affects every part
of the IRS. It's not just our revenue agents or revenue
officers. It affects our contracting folks. It affects our HR
folks. So the last thing I would just like to say, we are
seeking----
Mr. Jordan. And it affects your ability to read. Do not
rehire, and yet you rehired them.
Mr. Tribiano. Sir, according to----
Mr. Jordan. I've got to get to the other side here. Finish
your thing, then we will get to----
Mr. Tribiano. Thank you. I appreciate some leeway there,
Mr. Chair.
The one thing that we are requesting to try to get to your
common sense approach is we're working with OPM on getting
debarring authority to where if we can--for those items that
reach that level that OPM will approve it, that we can debar
those type of fractions from being part of the suitability and
remove them from that. But that's the context of what we have
to work in on some of those rules that are out there. So that
debarring authority can help prevent some of these activities.
And, again, I'm sorry that I ran over.
Mr. Jordan. Gentleman from Virginia.
Mr. Connolly. Thank you, Mr. Chairman.
I guess I'm not surprised Mr. George would say something
like I agree with everything you said, when listening to my
friend from South Carolina. My friend from South Carolina has
executive experience. So do I. I helped run one of the largest
counties in the United States. And I can tell you this. At some
point, you do less with less.
The idea that there's no relationship--which I think I
heard my colleague say--no relationship between resources and
functionality, capacity, whatever, is an absurd proposition,
and I don't think any sensible American will buy into it. And
so we have a smokescreen going on in terms of the
dysfunctionality of IRS and decisions made or not made. But
where Americans really care is where they intersect with the
IRS.
So, Mr. Tribiano, have the cuts that have ensued since
Republicans took over the Congress, coincidentally, in the 2010
elections, have the cuts had a material effect on the quality
of services by the IRS?
Mr. Tribiano. Yes, sir. I would say any reduction in
resources----
Mr. Connolly. No, no, no. I'm asking specifically. I don't
want to hear general. That's what Mr. Sanford was talking
about. I want to hear specifically. Let's test his theory. Has
there been a deterioration in customer service at the IRS in
the last 7 years?
Mr. Tribiano. Yes, sir.
Mr. Connolly. Why?
Mr. Tribiano. Because we don't have the resources to
perform all the compliance reviews that we need to have. We're
down revenue agents and revenue officers, which means we're
doing less compliance across the board in all areas.
Mr. Connolly. So, for example, are there fewer audits of
tax returns?
Mr. Tribiano. Yes, sir.
Mr. Connolly. Why is that a bad thing? I mean, a lot of
Americans might welcome the fact that you can't audit me as
easily as you once could.
Mr. Tribiano. Well, our tax system is built on voluntary
compliance. If people don't feel that there's any repercussions
from compliance purposes, then there's a tendency to move to--
--
Mr. Connolly. Isn't there also an equity issue? So people
who are cheating don't get caught because you don't have the
resources to do the audit to catch them, while law-abiding
citizens are paying their fair share of taxes while someone
else is getting away with not doing it.
Mr. Tribiano. Yes, sir. We've had few criminal convictions
from our criminal investigators. And it's not because there's
less criminals out there; it's because we have less resources.
Mr. Connolly. Do you remember what the estimate is every
year of taxes owed but not collected? Because this committee's
had hearings on that subject.
Mr. Tribiano. I don't recall it right now, sir.
Mr. Connolly. Does the figure $350 billion ring a bill?
Mr. Tribiano. That sounds----
Mr. Connolly. Isn't that amazing?
Mr. Kutz. It's $450, actually.
Mr. Connolly. I'm sorry. Thank you. 450. So we're testing
Mr. Sanford's theory here that resources have no relationship
to capacity or functionality. $450 billion of taxes owed, left
on the table every year. Now, I don't know, I'm not that good
at math, but times 10, that's $4.5 trillion. You want a down
payment on the debt? There's a good way to start without
raising anyone's taxes or without cutting vital investments for
the United States.
So what about, Mr. Tribiano, has it had a material effect
on customer service? Have waiting times gone up when I call the
IRS or do people pick up that phone right away on the first
ring and whistle while they work?
Mr. Tribiano. Waiting times have gone up. This last filing
season, though, we allocated more resources that we had to
that. So we did a better job in it. But if you talk to anybody
that waits for any amount of time on the phone, it's not good
enough.
Mr. Connolly. Now, I talked about legacy systems and the
lack of an investment. And, Ms. Garza, certainly pipe in if
you'd like. What can go wrong with having legacy systems that
are 50 years old and hardware and software that's way beyond
the industry average in terms of life span in an agency that
keeps data on every American in terms of financial data, paying
their taxes?
Ms. Garza. So the aged infrastructure, the risk, which is
one of our biggest risks at the IRS, it creates instability in
the systems. So you end up having----
Mr. Connolly. But specifically, Ms. Garza--my time is
running out--what's the risk we worry about here? If I got--are
these systems capable, all of them, uniformly, of being
encrypted? Isn't there a privacy concern for Americans that
when you're dealing with aging hardware and software, they're
more vulnerable?
Ms. Garza. It depends on where you're talking. We have a
perimeter, a secure boundary around our systems, that is very--
what we call a very hard shell that protects the systems that
are inside.
Mr. Connolly. Yes. I think OPM thought it had one of those
too.
Mr. Tribiano, did you want to comment on that before my
time ends?
Mr. Tribiano. I agree with Ms. Garza. I can just tell you
that I worry about system failure during filing season. That's
my number one concern, because if we can't process returns,
refunds aren't going out the door. And that could have a large
effect on this economy and taxpayers. So I worry about that,
and I also worry about cyber. And everybody in government
should be worrying about cyber. But those are my two biggest.
Mr. Connolly. Thank you. Thank you, Mr. Chairman. And I
thank my colleague from South Carolina for being willing to
test his theory.
Mr. Jordan. I thank the gentleman from Virginia. With the
committee's indulgence, I'm going to let Mr. Sanford respond
just for a few minutes. And if the gentleman needs a few more
minutes, I'll do the same, and then we'll get to our other
questions.
Mr. Sanford. I appreciate so much my colleague's lightning
fast mind. Certain parts of his body may be not moving as fast
as they have in the past, but his mind does certainly not fit
into that description. I appreciate his intellect.
And I'd just say two things. One is that hyperbole is often
the way of politics. And there's a little bit of hyperbole in
what my dear colleague is suggesting. And I even seeded the
point, which is to his point, I think that if you look at call
times, wait times, audits, there are a number of things that
could be legitimately impacted by cuts within the IRS. My point
in the rehire question--and that's why I differentiated--was to
say that doesn't seem to be the case on the rehire question,
given the fact that if you look at the numbers in 2014--or
rather--yeah, 2014, you had 11.7 percent, in essence, misfire
there, and by 2017, it had gone down to 10.65 percent, a drop
of a little over a point, even though there was less money. And
there seemed to be reverse correlation there. There could be a
variety of different factors that play there. But there seemed
to be a difference in the cross-tab.
So I'd say that the money begs otherwise. And I would
certainly cede the larger point to my colleague with regard to
audit and other.
I would also make this point. This isn't a South Carolina
perspective. This is a perspective, and, therefore, I would ask
you to take it up with Mr. George, that is held by the
inspector general. My numbers are simply coming from them. I'm
reading off the numbers that I see from the inspector general,
and that's why I think it was so instructive. When I walked
through my numbers, he said, I could not agree more.
With that, I'd yield back.
Mr. Connolly. Thank you, Mr. Chairman. And I thank my
colleague for his clarification. And I didn't have time to go
into the rehire issue, and I take his point. I thought Mr.
Tribiano was trying to tell us that there are OPM rules about
rehiring that they have to go to first. I don't know that Mr.
Tribiano adequately addressed the chairman's point, and your
point, Mr. Sanford, but if there was a note saying don't
rehire, does OPM still require you to do that? Because that
doesn't make sense to any of us.
Mr. Tribiano. What OPM requires, sir, is a suitability.
There's lengths of time that, after you exceed that length of
time, that violation, issue, whatever you want to call it, is
no longer part of the suitability check, even though you have a
record that says an individual was AWOL from work--or absent
without leave, I'm sorry--from work. After a certain number of
years, that is not part of the suitability----
Mr. Connolly. My time is going to run out, but let me ask
this. So do we need to change the OPM regs? Because it sounds
like they are making you do something you would prefer not to
do.
Mr. Tribiano. I would leave that up to Congress. I would
say it would allow me more flexibility to be able to manage the
agency differently. And that is why we are seeking that
debarment authority, because that would allow us, then, to
block out major infractions and say, look, we can use this
debarment authority and meet those commonsense standards that
Mr. Sanford was referring to.
Mr. Connolly. I thank the Chair for his consideration.
Mr. Jordan. The gentlelady from the District is recognized.
Ms. Norton. Thank you, Mr. Chairman. I think it only fair
to Mr. George to lay to rest notions that ran throughout this
committee for a long time, the false narrative that the Obama
White House had directed the IRS to target conservative groups
for political reasons. One of my friends on the other side said
it was, quote, basically an attempt to muscle anyone who is
their political opponent and to use whatever power they have at
their disposal to intimidate people they don't agree with. So
there was an accusation that's from the top of the government,
from the White House, that there was an attempt to,
essentially, commit fraud, frankly, with the IRS.
Now, in 2013, TIGTA--and you know that, of course, is the
Treasury Inspector General--conducted an audit of the screening
procedures used to process applications for tax exempt status,
which is what this was all about. Is that not correct, Mr.
George?
Mr. George. That's correct.
Ms. Norton. In that audit, that audit--and here I'm quoting
from it directly--found ineffective management, allowed
inappropriate criteria to be developed, resulted in substantial
delays, and allowed unnecessary information requests to be
issued.''
As a result of that audit, therefore, Mr. George, there is
no evidence of political motivation, is there?
Mr. George. That is correct. And I've stated that from the
outset.
Ms. Norton. Yes, you did. I just want to lay this on this
record, given the hullabaloo that went on for at least 2 years
on this question.
And, Mr. George, you found absolutely zero evidence of
White House direction. Is that not correct?
Mr. George. That is correct.
Ms. Norton. On September 27, 2017, TIGTA released a
followup report looking at additional material not included in
the 2013 audit. Is that not true, Mr. George?
Mr. George. We did.
Ms. Norton. This new report confirms that it was both
progressive and conservative groups that received extra
scrutiny in the application process and that there was no
political targeting, that groups with progressive, with occupy,
with green energy in their names were pulled for additional
scrutiny. They too were subject to extended delays in the
processing of their applications, and they too received
unnecessary questions.
Is that not true? That whatever was this faulty management
sense applied to groups that consider themselves liberal or
conservative and groups that consider themselves the opposite,
and that both were victims of this management failure at the
IRS. Is that not true?
Mr. George. Yes. But I need to qualify something. As it
relates to progressives, I will agree that what you stated was
accurate. As it relates to the other groups, especially the
ones that you deemed conservative, we, neither in 2013, nor in
2017, made that decision to determine the political leaning of
any group.
Ms. Norton. I don't understand what you're saying. You
understood the political leaning of the left-wing groups but
not the right-wing groups?
Mr. George. Well, only because progressive, and through the
work of my chief auditor on that matter, who happens to be Mr.
Kutz, who, with your permission, I'd like to defer to----
Ms. Norton. I'd be pleased to hear from Mr. Kutz.
Mr. George. --elaborate on that.
Mr. Kutz. Yeah. Congresswoman, we didn't label anyone
anything in either report. But the criteria----
Ms. Norton. Well, you know, I'm using quotation marks here.
I'm not labeling them. I'm using quotation marks on the report:
progressive, occupy, green energy.
Mr. Kutz. Organizations with those terms in them did
receive delays similar to the first report and did receive
unnecessary questions. It wasn't the same magnitude. But there
was some that did. That is a fair statement.
Ms. Norton. In fact, none of the procedures in place at the
time of the inappropriate criteria are still in place at the
IRS today. Is that not correct?
Mr. Kutz. They stopped using the be-on-the-lookout listings
in June of 2013.
Ms. Norton. My only reason for going over this again--and I
thank you both for this audit--is that it did not seem
conceivable to some of my friends on the other side that there
was management disarray, that it had to be political. And I
will say when you go so far as to say that the White House
itself is directing civil servants to look into groups based on
their political background, that is so serious that it needs to
be laid to rest right here. And I very much appreciate your
coming forward. I very much appreciate the second audit. I very
much appreciate that. I believe the work you have done, which
is objective, and always has been, as Mr. George has said--and
he's been before us at length on this matter, now with you, Mr.
Kutz, also involved--I believe we can put this matter to rest,
this shameful period in the history of this committee.
And I yield back.
Mr. Jordan. Mr. Kutz, the 2013 audit that reflected what
was going with Tea Party groups had a BOLO list, right?
Mr. Kutz. That's correct.
Mr. Jordan. And the BOLO list said this: 912 Tea Party
conservatives. Those were the targeted terms. Is that correct?
Mr. Kutz. Only Tea Party was on a BOLO list, but the other
ones, IRS confirmed, were being used to pull cases for that
bucket.
Mr. Jordan. Those groups received extensive scrutiny. They
were asked about what they were praying, what kind of prayers
were given at those meetings. Isn't that correct?
Mr. Kutz. There were seven unnecessary questions that we
looked at.
Mr. Jordan. Very, very unnecessary privacy invading kind of
questions.
Mr. Kutz. Right. Ninety-eight organizations in the first
report received these unnecessary questions.
Mr. Jordan. And almost all of those were conservative
groups, correct?
Mr. Kutz. We did not assess that.
Mr. Jordan. No, they were. I saw the list. They were almost
all conservative groups. We've all seen the list. Everyone
knows it was conservatives.
The audit that the gentlelady's referring to went clear
back to 2004, and some of those groups that received extra
scrutiny deserved it. ACORN-leaning groups deserved it, right?
Wasn't that audit from 2004 to 2013?
Mr. Kutz. The second audit covered the period 2004 to 2006.
Mr. Jordan. Yeah. A completely different context.
Mr. Kutz. Correct.
Mr. Jordan. Some of those groups probably deserved
scrutiny. And just the argument itself, oh, because liberal
groups were also targeted, somehow it's okay? Nobody should
have been targeted by the IRS. But we know in 2010, 2011, and
2012, the inspector general, the investigation we asked Russell
George and you guys to do in 2013 about that, that was totally
focused on conservative groups. And now to say, oh, a second
audit that went clear back to 2004 somehow justifies that, oh,
no, everyone got caught up in this is just complete baloney,
and everyone understands that.
Now, to the issue at hand today, four people at the IRS
were rehired who had been terminated or resigned. Is that--four
people who had had some kind of violation with 6103. Is that
right?
Mr. Kutz. They willfully failed to file their Federal tax
returns. That's correct.
Mr. Jordan. Was there anything relative to looking at
information regarding 6103--violating 6103, examining stuff
that they shouldn't have been able to look at?
Mr. Kutz. Yes.
Mr. Jordan. Wasn't there four employees who had been
involved in that?
Mr. Kutz. Those were additional employees that had
unauthorized access to taxpayer records, yes.
Mr. Jordan. And were those four people who had unauthorized
access to taxpayer records, were they terminated or did they
resign, or how were they let go from the IRS?
Mr. Kutz. One of the two, and then they were hired back.
They either would have been terminated or they left before they
got--you know, in the Federal Government----
Mr. Jordan. So they were in the process of getting fired--
--
Mr. Kutz. Right. That's correct.
Mr. Jordan. --for fraud for looking at taxpayer information
they weren't supposed to look at, right?
Mr. Kutz. For substantiated unauthorized access to taxpayer
records, yes, sir.
Mr. Jordan. So they were terminated and resigned, and they
got rehired?
Mr. Kutz. Yes.
Mr. Jordan. Okay. Now, do we know anything about these
people, these four people?
Ms. Norton. Mr. Chairman----
Mr. Jordan. What division did they work in?
Ms. Norton. Mr. Chairman, are you using an additional 5
minutes? Because you used it both to try to refute what I said
without giving me any ability to respond, and now you've gone
on to the second issue. I mean, how is this subcommittee being
run, sir?
Mr. Jordan. No. I have not taken my 5 minutes. I have not--
I did my opening statement. I have not taken any 5 minutes of
questions.
Ms. Norton. So you believe you're within 5 minutes in
what's happening here now?
Mr. Jordan. This is my 5 minutes.
Ms. Norman. Go ahead, Mr. Chairman.
Mr. Jordan. The last time I checked, every member was
entitled to 5 minutes. I've not had 5 minutes.
Ms. Norton. Well, then be our guest, sir.
Mr. Jordan. Well, it's not about being your guest. I happen
to get the privilege----
Ms. Norton. I made an inquiry. You say you're taking 5
minutes you did not have. I was not aware of that. I was not
aware of that, that you did not have----
Mr. Jordan. Well, if we could stop this time now. The way
it normally works is I gave Mr. Connolly an opening statement--
--
Ms. Norton. I know how it works, sir.
Mr. Jordan. --Mr. Krishnamoorthi an opening statement, Mr.
Meadows an opening statement, I took an opening statement. So
we had four opening statements, ranking member and chairman. I
have not taken 5 minutes of questioning. And now I'm taking my
5 minutes of questioning, and somehow you say that's wrong?
That's how it always works.
Ms. Norton. Go ahead.
Mr. Jordan. If you want the chairman of the committee not
to have 5 minutes of questioning, then----
Ms. Norton. I didn't say that, Mr. Chairman, so don't put
that in my mouth.
Mr. Jordan. Well, then why the interruption?
Ms. Norton. Because I didn't--it seemed to me that you were
over your 5 minutes. I did not realize you had not had 5.
Mr. Jordan. Well, before you talk----
Ms. Norton. You have spoken often this afternoon, therefore
I did not realize you had not had your 5 minutes.
Mr. Jordan. I've spoken to recognize the gentlelady for
D.C.
Ms. Norton. Well, obviously, I'm not talking about that.
Mr. Jordan. Okay.
So tell me about these four people. They were terminated
and resigned. Do we know what area they worked in?
Mr. Kutz. Actually, all 213 that were rehired in the second
report were in the Wage and Investment Division. And they were
positions like data transcribers, contract representatives, tax
exam technicians. So even though some were temps, they had
access to taxpayer records and sometimes were dealing with
taxpayers.
Mr. Jordan. And what was the timeframe when they were
working and got terminated? What timeframe?
Mr. Kutz. They were rehired between January 2015 and March
2016. They had been terminated before that period.
Mr. Jordan. And had they worked--the four that I'm
concerned about who had access to unauthorized information, who
accessed unauthorized information, were they here during the
targeting time, during 2010, 2011, 2012, 2013?
Mr. Kutz. I'd have to get back to you for the record on
that.
Mr. Jordan. Do we know if any of them had contact with Lois
Lerner or anything like that?
Mr. Kutz. We don't know that, no.
Mr. Jordan. You didn't look at that?
Mr. Kutz. We did not look at that, no.
Mr. Jordan. It seems to me that's something we should look
at.
Unfortunately, my time is out, even though I lost a minute
in a debate about something that shouldn't--we shouldn't have
debated, so I'll come back and take a second round.
But we will now go with the gentlelady from Illinois I
think is recognized next.
Ms. Kelly. Thank you, Mr. Chair.
Under the IRS Restructuring and Reform Act of 1998,
Congress granted IRS the authority to hire a limited number of
individuals to staff critical, technical, and professional
positions in the agency at salary levels greater than general
schedule rates. Congress intended this critical pay authority
to help the agency attract highly qualified individuals with
advanced technical expertise who might otherwise be unavailable
for government service at normal Federal salary levels. The IRS
used its authority from Congress to fill a total of 168
positions from 1998 to 2013, many of which were positions in
critically important areas such as information technology and
cybersecurity.
Mr. Tribiano and Ms. Garza, does critical pay play a role
in making Federal Government jobs more appealing to highly
qualified technical individuals who might be interested in
public service but could be earning a much higher salary in the
private sector?
Mr. Tribiano. Yes, ma'am, it does. And to emphasize, it's
streamline critical pay. And the streamline portion of that is
really important, because what that allows us to do is to go
out into the private industry, find somebody that's on the
cutting edge of technology, let's just say in cybersecurity,
and have them sitting in the chair working for the IRS in a
matter of weeks than the months, 4 to 6 months that it could
take going through the normal Federal hiring process, and then
be able to offer them a salary that maybe it doesn't meet
industry standards, but offers them something that makes it
worthwhile for them coming onboard.
And that's a key aspect--and I'll let Ms. Garza get into
this--it's a key aspect to getting, again, individuals that
have a cyber background, architectural background, engineering
background, those technical skills. And I can tell you a lot of
these private sector individuals would love to come into
government if it was easy, right, in that streamline process,
add value for the amount of years that that authority was in
place for and then go back to the private sector.
Ms. Kelly. Can you tell me how big the gap is between
Federal pay and a private sector, just a guesstimate?
Mr. Tribiano. Well, I'm a little outdated. I've been in
Federal service for a few years now, but when I was in the
private sector, it was a--it's a substantial pay reduction to
enter Federal service. You--when I came in, I came in for the
factor to serve, and that was worth taking less money and less
benefits in order--in order to serve.
Ms. Kelly. Oh, I didn't know if you were going to say
something.
Mr. Tribiano. I was going to yield it to Ms. Garza for any
input on the technicality.
Ms. Garza. So on the tech--on the streamline critical pay,
some of the areas that were of great benefit was cybersecurity.
We had critical pay, streamline critical pay that we got off
the street that was extremely very technical, very good, ran
our CSIRC operations, and he's since left the IRS. Also, in our
engineering and architecture, we had a very good group of
streamline critical pay that really helped shape the direction
that we were going from a technical perspective. They've all
left the IRS at this point.
Ms. Kelly. In testimony before this committee last year,
IRS chief information officer Terence Milholland stated, and I
quote: ``Making progress at a faster pace on transitioning our
legacy systems will require significant sustained additional
resources in the IT area.''
Would those resources include human resources, such as
individuals qualifying for critical pay?
Ms. Garza. Yes. I think that's probably our biggest risk is
the human resources that we have lost over the last several
years.
Ms. Kelly. I'm the ranking member on the IT Subcommittee,
and my chair, Congressman Will Hurd, has often talked about
what can we do to work out something public-private or some
kind of system where maybe someone from the private sector is
on loan to us, you know, for a little while. What do you guys
think should happen or any ideas, besides pay?
Mr. Tribiano. The streamline critical pay authority that we
had in place that expired that we placed back in our 2018
budget allowed us that capability, allowed us to bring in
private sector individuals for shorter periods of time, and
then they can go back out into the private sector. Or in some
cases, some of them love Federal service and compete openly for
Federal positions.
I think if we continue down that path and concentrate on
the streamline portion along with the critical pay, but to me
it's both pieces of that, because there is an authority--
there's an authority that OPM has out there, and I think TIGTA
cited in their report, it's not streamlined, but it does allow
critical pay. The issue is, and TIGTA recognizes in their
report, although I think there's a few more, out of the 800
positions, at the time TIGTA did their analysis, there was only
four of them that were able to get through the process. I think
it's a little bit greater than that now. And we initiated that
process to try to see what it takes to offer that. But
streamline critical pay, again, allows us that authority to get
them in the chair quickly and then to be somewhat competitive
with salary, but not matching the private sector comparison.
Mr. Kutz. Yeah. The OPM program is not as attractive
either. It only offers $207,000 of pay versus the streamline
critical pay was $240,000. So there's two ways to deal with
this, either give IRS streamline critical pay or strengthen
this OPM program that has 800 positions available that only
four are being used governmentwide.
Ms. Kelly. I'm out of time, so thank you.
Mr. Jordan. I thank the gentlelady.
The gentleman from Wisconsin is recognized.
Mr. Grothman. I'll pass for now.
Mr. Jordan. The gentleman from Iowa is recognized.
Mr. Blum. Thank you, Mr. Chairman. Thank you to our panel
for being here today. I appreciate it very much.
Mr., is it Tribiano?
Mr. Tribiano. Yes.
Mr. Blum. Are you responsible for the hiring and firing
decisions in the IRS?
Mr. Tribiano. I oversee the human capital function within
the IRS.
Mr. Blum. You oversee.
Mr. Tribiano. Yes, sir.
Mr. Blum. I've learned all kind--I'm from the private--I'm
from the private sector. I've learned all kinds of new terms
here. You oversee it.
Mr. Tribiano. Yes, sir.
Mr. Blum. So are you responsible for it or not?
Mr. Tribiano. I am responsible for the human capital
aspect, yes, sir.
Mr. Blum. The human capital aspect. I was reading your bio
here. It said, before joining the USDA, you worked in the
private sector----
Mr. Tribiano. Yes, sir.
Mr. Blum. --with multiple high-growth organizations.
Mr. Tribiano. Yes, sir.
Mr. Blum. The question I have for you, one of the many is,
in the private sector, would they rehire people the way the IRS
does? People that may have been under investigation, people
that may have been under investigation for tax fraud, people
whose personnel file said, do not hire? How would the private
sector--your experience been, how would they handle that?
Mr. Tribiano. They go through a----
Mr. Blum. Any difference?
Mr. Tribiano. Yes, sir, there's a difference. They go
through a process. I don't think--in my experience, and again,
this is my experience, there's less rules and boundaries that
you have to operate in within that. So----
Mr. Blum. In the private sector?
Mr. Tribiano. Yes, sir. In the private sector, there's less
boundaries that box you into certain scenarios. So it's a
streamline process.
Mr. Blum. So we have more boundaries, more rules, more
regulations than the public sector, safe to say, in hiring and
firing, and we get worse results.
Mr. Tribiano. I would say----
Mr. Blum. Not saying the employees are bad, but we're
rehiring up to 10 percent of people that have been terminated
from the agency prior? Is that true? Is that true?
Mr. Kutz, is that true?
Mr. Kutz. It's 10 percent of the former IRS employees that
were brought back. That's correct.
Mr. Blum. That--and were they terminated with cause or
did--that 10 percent, did they leave on their own accord?
Mr. Kutz. Well, they either were terminated or they were
going to be terminated and left before.
Mr. Blum. And we--I literally, I'm from the private sector,
can't believe this. We're going to hire back 10 percent of
people we were going to terminate. Does that strike you an as
incredible? Mr. Kutz.
Mr. Kutz. Yeah. They didn't have to do it. Okay. And our
issue was the selecting officials, the person we think should
get the information to make the decision. I don't think it
prevents that from happening. There are suitability issues at
the end, but I don't think that's our big issue. Our issue is
early in the process, we believe a selecting official should
have the information to make a decision. That's where the bad
decisions are being made. In fact, there's not a decision.
You're sitting there with candidates as a selecting official
and you don't know the derogatory information that you just
described in making your choice.
Mr. Blum. Does that make sense to you that they don't know
that?
Mr. Kutz. That's why we made the recommendation that they
change the process.
Mr. Blum. Mr. George, TIGTA issued a report this past July,
correct, on the problem of IRS rehiring employees previously
fired by the agency? This isn't the first time a report like
that's been issued. Is that correct?
Mr. George. That is correct.
Mr. Blum. That report documented, that you issued, an
instance when the IRS rehired somebody who literally on their
personal file it said, do not hire this person. Can that
possibly be correct?
Mr. George. That is correct.
Mr. Blum. I mean, it sounds like not a good situation to
me. It doesn't sound like something--private sector is not
perfect. It doesn't sound like something that would happen in
the private sector.
Did the IRS adopt your recommendations, Mr. George, on this
topic?
Mr. George. They have in the--in principle in the most
recent report. Again, we issued a previous report in 2014 on
the very same issue. They said they were going to adopt----
Mr. Blum. They did--I'm sorry, they did in principle, is
that what you said?
Mr. George. In the current one, they're in process of----
Mr. Blum. They're in the process of adopting them.
Mr. George. Correct.
Mr. Blum. And how is that process going? Is there a sense
of urgency there?
Mr. Tribiano. Yes, sir. We will have that----
Mr. Blum. As evidenced by what?
Mr. Tribiano. As evidence as we are going to have it
implemented and running in October when we start our filing
season hiring to bring back the part time, as you called them,
but we call them seasonal employees. So we took all the TIGTA
recommendations that came through and we are implementing them
right now and will have them done. We are on target to have
them done in October.
Mr. Blum. You know, I represent the eastern part of Iowa.
It's kind of a blue collar district. And I go up there and talk
to the factory workers. And I tell them, you know, if you were
terminated by this company or going to be terminated, do you
think you'd ever get rehired again at the same company? I mean,
that would be a laugh line.
Can you see why people out in the real part of this country
think what's going on here is nonsensical, why there needs to
be change, why we need to drain the swamp? These are the things
that I don't even want to repeat, because it's embarrassing. Do
you understand that? I mean, do you hear that?
Mr. Tribiano. Yes, I--I understand. I understand what this
looks like. And we are doing everything possible right now to
put those things--to put the recommendations from TIGTA, plus
some additional things, like I said, about seeking debarment
authority from the OPM to be able to put more controls in place
to stop this from happening.
Mr. Blum. But you said previously more controls and more
regulations, I think you said, penned you in. And now you want
to put more regulations----
Mr. Tribiano. No, sir. These are not controls that come
from OPM. I'm referring to internal controls, management
controls that we administer at the IRS to be able to stop this
type of activity, based on the recommendations from TIGTA, from
happening. These are recommendations that TIGTA came forward
with that we are adopting and implementing. And I'm stating
that we will have that in place in October to be able to
monitor, to provide the--what Mr. Kutz talked about, which is
giving the hiring manager the suitability and the issues with
prior----
Mr. Blum. This will be in place next month?
Mr. Tribiano. This will be in place at the end of October,
yes, sir.
Mr. Blum. Mr. Chairman, can we follow up to make sure this
is in place by the end of October? Because these are the very
reasons why there's so little confidence in the Federal
Government out there in the real world.
So I would say time is of the essence, and I took forward
to you doing that.
Mr. Tribiano. Yes, sir.
Mr. Blum. I yield back, Mr. Chairman, the time I do not
have.
Mr. Jordan. I thank the gentleman for his good questions.
The gentlelady from New Jersey is recognized.
Mrs. Watson Coleman. Thank you, Mr. Chairman.
A quick yes or no from you, Mr. George and Mr. Kutz, the
IRS has a lot of improvements to do. Is it moving in a right
direction?
Mr. George. I would say that, especially in the wake of the
2013 issues and a few of the other ones that occurred after
that, that they are taking quite seriously the issues that we
have uncovered.
Mrs. Watson Coleman. And would it be very helpful if they
had the resources they needed to get to modernize their
equipment, their IC equipment, et cetera, would that certainly
be of help?
Mr. George. The IRS, if it had additional resources, could
do more.
Mrs. Watson Coleman. Thank you, sir. I am going to take us
off into an entirely different, but I think vitally important
area here. As the House prepares to vote on a budget resolution
this week to begin the process for enacting massive tax cuts, I
want to take this opportunity to question the witnesses here
today about the proposed drastic changes to our Tax Code.
Since unveiling their tax reform plan last month,
Republicans have tried to claim that their proposals to cut
taxes for the wealthiest Americans will somehow benefit the
hardworking middle class families. But even the Treasury
Secretary himself called his party's bluff, stating that it is,
quote, ``very hard,'' unquote, not to cut taxes for the rich,
and that repealing the estate tax, quote, ``disproportionately
helps rich people,'' close quote. In fact, many of the people
who stand to gain the most from the Republican tax plan are
President Trump and the Cabinet.
Would any one of the witnesses here disagree that repealing
the estate tax, which limits the tax breaks granted to the
wealthiest .2 percent of Americans, disproportionately helps
rich people as the Secretary conceded? That's a yes or no.
Mr. Tribiano. No, ma'am. Tax policy is the purview of
Treasury and Congress and the administration.
Mrs. Watson Coleman. You don't know the answer to the
question?
Mr. Tribiano. Ma'am, we are tax administration. Laws get
passed and we administer them.
Mrs. Watson Coleman. Thank you. In fact, 11 members of the
Trump administration are included in the .2 percent. According
to the Center for American Progress, repeal of the estate tax
will position heirs to those 11 Cabinet members and the
President's family to gain almost $3.5 billion. Just to put
that number into context, that $3.5 billion is about one-third
of IRS's fiscal 2018 budget. Is that correct? Yes or no.
Mr. Tribiano. Yes, ma'am.
Mrs. Watson Coleman. Thank you. That doesn't sound like
helping middle class working families and hardworking men and
women.
The Republican plan also proposes changes to the tax on the
income of passthrough businesses like LLCs, which are not
subject to the standard corporate income tax. The Republican
plan would cut the top rate on this income from 39.6 percent to
25 percent. This is 10 percentage points lower than the top
rate imposed on individuals, and would not benefit the 86
percent of passthrough businesses that already pay a tax rate
of 25 percent or lower.
Again, this would profit only millionaires who the Center
on Budget and Policy Priorities finds, quote,receive about 80
percent of the tax cuts in 2018. Again, this doesn't sound like
helping the middle class or the working class families that
make up this middle class, but it does indeed directly help
individuals in the Trump administration. The President stands
to receive a tax cut of almost $23 million from this proposal,
while senior advisor Jared Kushner, his son-in-law, could
receive a cut of $6 to $17 million, and Secretary of Education
Betsy DeVos, a cut of $3 to $5 million. Does that sound like
benefiting the middle class or working families to anyone here?
I don't think so.
But that isn't all. Republicans want to eliminate the
alternative minimum tax under which President Trump was forced
to pay $31 million in taxes he could have otherwise avoided in
2005. Of course, that was well over a decade ago, and we don't
know how much this tax has cost the President since giving his
refusal to release his tax forms.
Mr. Tribiano, this is something that you can answer, I
think, is President Trump under audit by the IRS?
Mr. Tribiano. Ma'am, I cannot discuss any audits or
anything of that nature. And I actually wouldn't know who's
under audit. It's not part of my responsibilities.
Mrs. Watson Coleman. Would you know if he actually paid any
taxes?
Mr. Tribiano. Ma'am, I would have no idea.
Mrs. Watson Coleman. Is there anything that stops an
individual under audit from releasing his tax returns or her
tax returns? Would you know the answer to that question?
Mr. Tribiano. No, ma'am, I do not know.
Mrs. Watson Coleman. Would anyone know the answer to that
question? Is there anything that stops an individual who is
being audited from releasing his or her tax returns? Does
anyone know the answer to that question?
Mr. George. My understanding is there is no restriction
on----
Mrs. Watson Coleman. I didn't think so.
We already know that the Republican plan will benefit the
Cabinet members, but if the President wants anyone to take
seriously his claim that their tax plan won't benefit them at
the expense of working men and women and their families, then
he can prove it just once and for all by showing America the
money he has and releasing his own tax forms.
And with that, I yield back. Thank you, Mr. Chairman.
Mr. Jordan. I thank the lady.
The gentleman from Wisconsin is recognized.
Mr. Grothman. Sure. A couple of questions.
Mr. Tribiano, how many employees in the IRS?
Mr. Tribiano. Give or take pending on filing season, close
to 80,000 employees.
Mr. Grothman. Eighty thousand, wow. And in every year, in
an average year, how many are terminated?
Mr. Tribiano. I don't have that number. Sir, I can get that
for you, though.
Mr. Grothman. Any of you inspector general guys have a stab
at that one?
Mr. George. Actually no, we don't have that information,
sir.
Mr. Tribiano. I can get that for you and get back to you.
Mr. Grothman. Why don't you tell me how many were maybe
terminated right in between. Is there a probationary period?
Mr. Tribiano. Yes, sir. All Federal employees have a
probationary period when they enter Federal service of 1 year.
Mr. Grothman. Well, give me two statistics. Give me the
number who made it to their probationary period and the number,
once you get by the probationary period, who are let go every
year. Can you do that?
Mr. Tribiano. Yes, sir, I can.
Mr. Grothman. Now we're going to--we got a little
explanation for our listeners back home. Could somebody
describe the Taxpayer Protection Program? It's supposed to be
something designed to strengthen catching suspicious tax return
filers. Are you familiar with that program?
Are you guys doing anything--you must be doing--right now
we're looking at tax reform, and there are feelings that,
particularly on some large refund returns, particularly earned
income tax credit returns, that people are lying and getting
big refunds. Are you familiar with that problem?
Mr. Tribiano. Mr. George?
Mr. George. We are familiar with that problem and are quite
concerned, sir. The instructions for the Earned Income Tax
Credit are more than 30 pages, single-spaced, double-sided.
It's an extraordinarily difficult credit to implement, both
from the perspective of the taxpayer and then from the
perspective of the IRS to ensure that the information they're
receiving is accurate.
What we're especially concerned about, sir, is many of the
instances in which we find that people are inappropriately
receiving that credit are as a result of returns that have been
prepared by professional tax preparers. So people who are
supposedly trained and have the expertise to do this are doing
so in a way that gives people credit or credits that they're
not entitled to.
Mr. Grothman. Is that the fault of the preparer or is that
the fault of garbage in, garbage out?
Mr. George. We have concerns that it's both, sir.
Mr. Grothman. Okay. You said it's an overly complicated
credit. And I can't imagine why anybody would pass a law
requiring 30 pages of instruction, but apparently people around
here did, and that's one of the problems the IRS has. It is not
bad IRS employees, it's bad professional employees. Go ahead.
Mr. Tribiano. I'm sorry, sir, but in that arena as well,
and I would like to echo what Mr. George said, we can't do the
verification upfront. We don't have the authority to do that,
so the return gets processed through the system and we have to
pick it up under compliance to see if there's an issue. We've
been asking for and seeking correctable error authority that
would allow us to match up when those returns come in during
the processing cycle, match up the data that's on there with
some of the Federal Government records and make those
corrections while we're processing the return. Because if it
goes in, it has to be picked up under compliance in order for
us to----
Mr. Grothman. And compliance means--what is that, another
word for audit?
Mr. Tribiano. I mean, an audit or review. Now, the PATH Act
helped a portion of that, and it allows us that capability to
try to match stuff up before we release refunds, but
correctable error authority will help us go further in that
arena.
Mr. Grothman. If you had to guess percentage wise how many
of those returns--say not ones where you get a little credit of
$45 bucks or something, but say credit's in excess of $2,000--
what percent do you think are fraudulent or they have errors in
them?
Mr. Kutz. Well, the overall improper payment rate for
Earned Income Tax Credit is about 25 percent, but they don't
all meet the criteria you just described. There could be some
small ones and other types in there. But the overall has been
steadily in the mid-20s for over a decade.
Mr. Grothman. If you had any other Federal program and 20
percent of the credits going out the door were wrong, would you
continue that program?
Mr. Kutz. It's not the only one. There's other credits that
IRS have very high improper payment rates also.
Mr. Grothman. Which other ones are those?
Mr. Kutz. The child credit and the education credit both
have very high im----
Mr. Grothman. Well, we've got a Ways and Means Committee
looking at that. Maybe those are three things we ought take out
of there, because we're looking for ways to simplify these
returns and get some cuts on the middle class.
So could you give me a little or could you guys forward to
me for me to forward to the Ways and Means Committee a little
more information on the education credit and how you think
people are cheating on that one, the child care credit--child
credit or child care credit?
Mr. Kutz. Yes. The child credit. I don't know the full name
of it, but it's a child credit, yes.
Mr. Grothman. Okay, the child credit. And particularly the
Earned Income Tax Credit, because there's some people who want
to, you know, do a tax reform around here, we might as well
make sure we get it done right. We might as well make sure, by
the time we're done with this, we don't operate any slipshod
program. Thank you very much.
Mr. Jordan. The gentlelady from Illinois is recognized. I'm
sorry. Oh, I'm sorry.
Representative Lawrence, the gentlelady from Michigan is
recognized.
Mrs. Lawrence. Thank you. I'll charge that to your head,
not your heart.
Mr. Jordan. I apologize.
Mrs. Lawrence. Since 2010, the actions of the congressional
Republicans have drastically reduced both the IRS budget and
your workforce. The IRS has lost over $1 billion in annual
funding and 18,000 employees since 2010. During that the same
time, the IRS workforce has steadily increased. Over 10 million
more tax returns are filed annually.
This year, IRS is cutting its seasonal workforce during tax
filing season by 2,000 people. Is that correct, Mr. Tribiano?
Mr. Tribiano. Yes, ma'am. That sounds close to being
accurate.
Mrs. Lawrence. How does cutting 2,000 workers during your
tax season affect the quality of customer service that
taxpayers expect when they call the IRS?
Mr. Tribiano. Well, it would definitely impact our ability
to provide, you know, taxpayer service. This area is a little
bit outside of my purview. It really falls in our service and
enforcement side, the deputy commissioner that oversees that
activity.
Mrs. Lawrence. And who on this panel that can tell me how
this is going to impact what the taxpayers will receive from
the IRS? And then you talk about quality in the error rate and
fraud rate. If you're having an increasing number of tax
returns with significant budget reductions, who in here is
going to tell me that the IRS has any chance of being
effective?
Mr. George. Congressman, they are directing people to their
online irs.gov website to assist in areas, where in the past
people could go to taxpayer assistance centers and/or other
IRS-funded entities. In addition, they also refer people to
volunteers to help complete their tax filing obligation.
Mrs. Lawrence. And that system is fully up and running?
Mr. George. It has been. Sitting out the volunteer aspect
of it and, of course, the website is. But not everyone has
access to computers and the internet, and not everyone can get
to one of the centers or to one of the locations where the
volunteers are. So there's no question a cut in resources, in
the terms of human relations and employees, will affect the
length of time and the ability of taxpayers to receive
assistance.
Mrs. Lawrence. How does--does the IRS have anymore plans
for staff reduction?
Mr. George. I'm sorry, I----
Mrs. Lawrence. Does the IRS have any further plans to
reduce your workforce, pursuant to the President's executive
order that directs all agencies to create a workforce reduction
plan?
Mr. Tribiano. Ma'am, we've been under a workforce reduction
plan for the last 5 years, and each year, we steadily lose our
total head count. Our--our--we are a people-driven agency. And
our funding, the majority of our funding goes to the workers
within the IRS. So when we have reduced funds, we hire less in
certain areas. And we try to focus the hiring to the greatest
need, but we also have some constraints on our appropriation
language. I know that's not this committee, but there's
constraints on that that state what type of appropriations
could be used for what type of work. And that also causes some
imbalances in our workforce, but we've been slowly reducing our
size.
Now, I can tell you, ma'am, you mentioned about 18,000
employees, and I think that's right. It's between 16,000 and
18,000, when you count fluctuations and seasonal. I don't think
we're ever going to get back to that and I don't know if
there's a need to, but there is a need for more work. And we
don't have enough staff to be able to adequately service the
taxpayers, to have the right compliance levels out there, to
generate revenue, and then to support that with our management
and administrative interior support that helps support that
activity. So I don't think there's anybody within the IRS that
says we should go back up to the levels we had. I don't think
that's reasonable.
Mrs. Lawrence. I have a quick question. So if this knew Tax
Code is passed, has any of you been at the agency long enough
to go through tax change or Tax Code process? Doesn't that
include the need for additional staff to implement, train, and
to enforce new Tax Codes?
Mr. George. At the sides, ma'am, not something as
comprehensive as being discussed. But to their credit, the IRS
has demonstrated an uncanny ability to implement tax law
changes, even at the very final portion of the tax----
Mrs. Lawrence. So, sir, if I can quote you, you're saying
that if the proposed tax change program passed, at your
reduction workforce plan, at your reduced--at your reduced
level that you are at now, without the manpower to ask
individual questions, sending them to a website, you are
confident that the IRS will just absorb this and the world will
continue, and you will provide the quality expectation that our
taxpayers expect?
Mr. Jordan. The gentleman can respond. Mr. Tribiano.
Mr. Tribiano. No, ma'am. I am not--no, I'm not confident.
It depends--we haven't seen the language at the IRS, because,
again, policy is not what we're about. We're about
administration of that policy.
Mr. Jordan. In----
Mr. Tribiano. But if it's complicated, it will definitely
have an impact, right, because we have to be able--if we're
changing the actual structure of a tax return, that has a big
impact on our IT systems. And I can let Ms. Garza talk about
that. But there are implications of that. And anything that's
retroactive has a big impact on our ability to administer or
try to get the systems.
Mr. Jordan. The gentlelady from New York is recognized.
Mrs. Lawrence. I just want to thank the chair. He didn't
remember my name, he gave me an extra minute. Thank you.
Mr. Jordan. Anyone from the great State of Michigan, even
though I'm from Ohio, will do that.
The gentlelady from New York is recognized.
Mrs. Maloney. Thank you so much, Mr. Chairman.
And I'd like to ask Mr. Tribiano, last month, Equifax
announced it had suffered one of the largest data breaches in
history, compromising the personally identifiable information
of more than 145 million Americans. That's almost half the
country now has their Social Security number and their date of
birth compromised. And while that in itself is troubling, what
is perhaps even more troubling is the fact that hackers roamed
the Equifax network for more than 2 months without detection.
And the company waited weeks, absolutely weeks to alert the FBI
after learning about the breach. This is simply unacceptable. I
will hope that the chairman of this committee would commit to
holding a hearing on this matter.
But today, I want to delve deeper into another fact of the
issue: The IRS's contract extension with Equifax while waiting
for a ruling on a bid protest. And I'd like to ask you, Mr.
Tribiano, is it correct that the IRS extended a current
contract with Equifax after the breach was revealed? How much
was the bridge contract worth? What was the length of the
bridge contract? What services were covered by IRS's contract
with Equifax?
Mr. Tribiano. Yes, ma'am. Let me start with the bridge
contract itself was for three 3-month increments. When the
reports came out that it was $7.3 million, that was for the
whole 9 months. The intent of the bridge contract was to be
able to cover the time period from the first 3 months, which
was worth about $1.3 million. And the intent of that was to
cover the time period between GAO either upholding the protest
or not upholding the protest and our ability to get the new
vendor online and up and running. So we had to have a bridge
between those two contracts.
Mrs. Maloney. And what services were covered by this
contract?
Mr. Tribiano. EAuthentication services. This is where a
taxpayer would provide certain data that we would verify with
Equifax to be able to verify the identify of the taxpayer. I
mean, I'm simplifying----
Mrs. Maloney. Okay. And it's my understanding that after
the breach was announced, IRS personnel were sent to Equifax to
assess whether IRS data was compromised. And, Ms. Garza, can
you describe that assessment and its findings?
Ms. Garza. Yes. So we reached agreement with Equifax to do
a 1-day visit, followed by a 3-day visit, which we did conduct
last week. On that first-day visit, the primary objective was
to look to see if any IRS data had been compromised and also,
working partnering with TIGTA investigations, look at what data
had been----
Mrs. Maloney. Was it compromised?
Ms. Garza. No. No IRS data had been compromised.
Mrs. Maloney. Well, that's good to hear. But I'm concerned
that, shortly after the breach, IRS entered into a short-term
bridge contract with Equifax. Shortly after reports of this
sole-source bridge contract, I sent a letter to Chairman Gowdy
and Ranking Member Cummings requesting a hearing on this $7
million no-bid contract.
Ms. Garza, can you elaborate on that contract? And why did
IRS enter into it? Despite the rising concerns with the laxity
of Equifax and their identity and theft protection to be hired
to then verify protection further at the IRS is deeply
concerning to me.
Mr. Tribiano. Yes. I'll start, if I can.
Mrs. Maloney. Okay.
Mr. Tribiano. And then I'll turn it over to Ms. Garza for
some of the technical aspects of that.
So when I originally was discussing this earlier, and I
forgot who asked me the question, I was trying to lay out the
pattern that happened. So right now, we had a sole-source
contract with Equifax as our sole vendor in this arena for a
long time. We recompeted that contract, and that's the one that
they protested, to bring other--other companies into the fold
and have them all for their service as well. Experian met the
qualifications from a technical perspective and put in a lower
bid than Equifax and they won the contract. So now we have
competitiveness. When GAO put the stay out there, and knowing
that GAO has up to 100 days to decide on whether or not the
protest----
Mrs. Maloney. Well, my time is almost up, and I sort of
know the whole line of circumstances. Can I ask, given the
circumstances of the bid protest and the data breach, were
there any other options the IRS had, besides extending the
contract with Equifax and temporarily discontinuing the
services that were being provided to consumers?
Mr. Tribiano. Well, ma'am, we could have discontinued the
service or we could have provided the bridge contract. What you
heard from GAO when they talk about the authority to be able
to--a higher authority level that you could override a protest
or start the process of implementing something in the middle of
a protest, we didn't reach that level to be able to exercise
that option.
Mrs. Maloney. My time has expired. I have further questions
and will submit them to the record.
Mr. Jordan. Or if you want, we can do a few more----
Mr. Kutz, the 200--was it 213 who were fired and then
rehired, 213?
Mr. Kutz. Correct. Fired or left in lieu of termination.
Mr. Jordan. Okay. Yeah. When they were rehired, there has
to be some kind of interview process, something that goes on.
In that interview process, does the IRS say like, oh, I see you
were employed at the IRS before and you were let go, do they
get into that questioning?
Mr. Kutz. They may get to it in suitability, but they don't
get to it when the selecting official is making the decision to
make the offer. That person does not have the derogatory
information in front of them, which is our primary concern
here.
Mr. Jordan. But someone at some time knew this person was
fired and now they're back in front of me seeking employment at
the very agency that fired him?
Mr. Kutz. Yes. It's in IRS's database called ALERTS. It's
right in there.
Mr. Jordan. Okay. So four people were fired for looking at
information, private taxpayer information that they were not
entitled to look at, right?
Mr. Kutz. Correct.
Mr. Jordan. They were fired for that. They are now back in
front of the IRS wanting a job, and someone says--has that
information in front of them and says, you were fired for
looking at confidential taxpayer information and now you want
to come back and work for the Internal Revenue Service. And
somehow that gets moved along to the next level, where
supposedly they don't have this information. Is that accurate?
Mr. Kutz. No. I think the bigger issue is they don't have
that information. And it's the selecting official who has
people who are best qualified, they get into their desk, and
that person does not have the information you just described. I
think that's what we want to happen here. We want the person
making the hiring decision to know the derogatory information.
Mr. Jordan. But someone in some point in the process did
have that information?
Mr. Kutz. They may have it after the offer's been made. But
if it's a suitability issue, as Mr. Tribiano's described, they
can forget about it if it's more than 5 years old or 6 years
old or there's other circumstances where it doesn't matter. And
that's what he's talking about----
Mr. Jordan. How can it not matter that people were
accessing confidential taxpayer information, were fired for it,
are now back in front of the IRS asking for a job, and are
going to have access to that same kind of confidential taxpayer
information?
Mr. Kutz. Because the OPM process for the suitability
forgives certain things after a certain period of time. It's
mitigated by time.
Mr. Jordan. And there's no obligation on the part of the
person seeking employment to give that information?
Mr. Kutz. Well, when it gets to that point, you can't say--
you can't reverse it. You could have reversed it earlier in the
process, that's why we want it earlier in the process. When the
official is making the selection, you can do it then. So they
need to do it earlier in the process.
Mr. Jordan. Absolutely, absolutely crazy.
Ms. Garza, let's go back to the previous questions. The 145
million, 143 million, that number that Equifax announced, what
relationship does that 143 million have to people who file with
the IRS, if any? What's the overlap? How does that relate to
the Internal Revenue Service?
Ms. Garza. We don't know what that overlap is. We went in
and just looked at what data elements had been compromised.
Mr. Jordan. I mean, it would have to be substantial,
because there are 330 million people in the country. There's
probably 150-, 160 million taxpayers, right?
Mr. Kutz. Of course. There's an assumption that, you know--
--
Mr. Jordan. Eventually, every single taxpayer.
Ms. Garza. A good portion of those are, you know, directly
related to taxpayers.
Mr. Jordan. Yeah. Maybe all of them. It would have to be
so.
This is announced, that there's this major breach, 143
million Americans, and 1 month after it's announced, you do
this no-bid contract to Equifax. Is that right?
Mr. Tribiano. Yes, sir.
Mr. Jordan. Okay. And, Ms. Garza, you testified before the
Ways and Means Oversight Subcommittee that you had no knowledge
of the short-term contract prior to it being made public.
Ms. Garza. What I testified was that I did not know it was
signed on the 27th.
Mr. Jordan. Why would you not know that?
Ms. Garza. It was not an IT contract. It was actually
administered from the IA, identity assurance office.
Mr. Jordan. Yeah. But you're the chief information officer,
right? You're in charge of all this stuff.
Ms. Garza. The contract was for professional services for
credit bureau, and so the folks that were involved in
establishing that contract deemed that it did not have to come
to my organization for review.
Mr. Jordan. Any services or equipment that are used in the
automatic acquisition, storage, analysis, evaluation,
manipulation, management, movement, control, display,
switching, interchange, transmission, reception, information
again. That's the definition of information officer. I just
find that hard to believe you had no idea that this was
happening.
Ms. Garza. It was--I knew that there was a problem with
original Equifax and there had been a protest. But I was not
involved in any discussions about what was to occur, how we
were going to mitigate the situation.
Mr. Jordan. But you obviously knew there was a contract
with Equifax at the time that they announced the breach, that
the IRS had a contract with Equifax?
Ms. Garza. Yes.
Mr. Jordan. Yeah. And you knew it was up for renewal?
Ms. Garza. Yes.
Mr. Jordan. And it gets renewed without your knowledge?
Ms. Garza. I did not know the specifics. And I was not
involved in the conversations that went to making that
decision.
Mr. Jordan. So this is--again, this is what drives Mr.
Hice--the first member to question today, this is what drives
Americans crazy, we didn't know that we were rehiring people
who committed fraud. We didn't know that we had 213 folks who
have been terminated who are now back in front of us and we're
going to rehire them, and they looked at confidential tax payer
information in a way that they weren't supposed to. And we
didn't know, even though we had a contract with Equifax, even
though we knew it was up for renewal, even though they
announced 143 million Americans had their data compromised, we
didn't know and I had no part--it's like this pass--this is
what drives them crazy.
So again, let's hope it all clears up when Mr. Koskinen is
stepping down and we get someone new to run the place.
The gentlelady from D.C. is recognized, if she'd like an
additional few minutes.
Ms. Norton. Thank you.
I wanted to stay to ask a question. And by the way, I'm not
sure how the IRS is going to know anything if we keep cutting
their budget. But I'm concerned for Federal employees that work
at the IRS, because there have been reports of really vitriol
well beyond--I think this question is for you, Mr. George,
because I think that this was reported to the IG.
It's clear that IRS employees have had increase, in fact, a
marked increase in the number of threats. Apparently, there
have been 1,556 investigations into possible threats since the
beginning of the year. And there have been prosecutions,
apparently. I was very concerned that commercial trucks--and I
must indicate that these reports say that the Trump Hotel is
very close to the IRS, so some of this may be people from God
knows where protesting that or they are protesting the IRS. So
it makes this a volatile shop--spot.
The report, and these are news reports, said that
commercial trucks, Ubers, and taxis are not being checked by
canine and magnetic wands, and that they are parked, allowed to
park and idle between the hotel and the IRS building. Employees
say that they were particularly concerned, because all of us
may have read about this as well, about the arrest in May of a
man from Pennsylvania who brought a whole cache of weapons and
90 rounds of ammunition into the Trump Hotel parking lot. So he
was somehow caught, I'm gratified to say. He pleaded not
guilty, but then he--and, of course, after arrest, pleaded not
guilty, but while he was out after that awaiting trial,
prosecutors said he posted dangerous antigovernment messages on
social media. Now, look, I'm a First Amendment absolutist, but
when prosecutors say that there may be a crime here, I do pay
attention.
I wonder, before something really serious happens, Mr.
George, whether or not there ought not be an investigation of
what is a very unusual number of threats against Federal
employees who they say make it difficult to do their work. I'm
looking to you for advice. Sometimes they don't even know who
to complain to, the police or the IG or the FBI. Would an
investigation help to put to rest where the problem is and what
should be done about it?
Mr. George. Congresswoman, that's a very important and
timely question. And, in fact, we are currently working with
the Internal Revenue Service's security division on that very
issue. And so I don't know whether we will be able to report
publicly, because we don't want to endanger--again, further
endanger lives of IRS employees or other Federal workers or
private citizens who are there, but we would be happy to brief
you and the chairman and the committee on what we find in a
nonpublic setting.
Ms. Norton. That's very engaging--very encouraging, Mr.
George. I would take it, though, that after a report--I mean,
after an investigation, some kind of report that the public
could see would be appropriate. We're not asking for reports of
who struck John or what should be done about it, but it would
be reassuring, just as I am reassured by knowing you are indeed
involved in an investigation, at the end of that investigation,
surely there is something that the IG's office could say so
that, for example, people would know that various, various
steps have been taken, et cetera. Is that not possible?
Mr. George. I will certainly take that under advisement.
And I'm certain there would be a possibility for us to issue a
somewhat redacted version that wouldn't endanger security and
methods and sources, but nonetheless, inform the public and the
IRS employees about what actions have been taken.
Ms. Norton. Thank you very much, Mr. George. I appreciate
that kind of initiative.
Mr. George. Certainly.
Mr. Grothman. [Presiding.] Thank you very much.
I'll give just one question, maybe you guys aren't
qualified to answer, because it's really not along the same
vein as the other questions today. But I'll try to ask you, Mr.
Tribiano. As you know, we're working on a major tax law change,
which may or may not come to fruition, it probably will, but
there are people here who want to make sure it's done by the
end of the year and make it retroactive on the 2017 returns.
Are you familiar with how the IRS handles tax changes passed in
November or December, retroactively?
Mr. Tribiano. Sir, I haven't been with the IRS for a major
tax change like this. I can tell you, though, talking to my
colleagues--and I know Ms. Garza can add some additional
comments on this--talking to my colleagues about this, it
depends on the complexity of what's in this law or what gets
passed. And if it's retroactive, it does cause us concerns
because we don't have enough time internally to make the
changes to the systems, to educate our phone assisters and the
people that would--the influx of people asking the tax
questions. Plus, our partners out there, the software companies
that produce the software that a lot of Americans use, need
time also to be able to build into their software whenever
these changes----
Mr. Grothman. Maybe I should ask Ms. Garza. What happens if
there's even a minor change in December, because we've done
that before, retroactive changes?
Ms. Garza. So it really depends on the change and what
exactly is being changed. One of the things that is probably
the most difficult to implement is, if you change what we call
the record, core record layout, which is kind of how the return
is structured, it has all of the business rules associated, and
those are all programmed. So if you're going, you know, from a
2-page 1040 return to a 1-page or a postcard type, that's
significant work.
On the other--on going back in time making it retroactive,
that is very difficult because we have to go back to our
systems. Depending on how the language is, you know, how far
back do we have to go and how do we apply that to things that
have already occurred?
One of the things that I would suggest is, and I'm sure
it's probably already happening, is that we engage with your
staffs to figure out what's the best approach that we can use
to still get you to where you want to get, but make it in the
simplest way.
Mr. Grothman. You're going to have to come up with new
instructions for the returns, right?
Ms. Garza. Yes.
Mr. Grothman. New instructions presumably for the Schedule
C, presumably for the Schedule E, and many other schedules,
right? How quickly in days do you think you can turn that
around? I mean, these are not obscure schedules.
Ms. Garza. So the development of the schedules actually
comes out of our W&I organization, so I don't know how long
that would take for them to do. I do think it's an extended
period of time.
Mr. Grothman. Why don't you--I'm a little bit afraid
they're not doing it. I just hope that you're coordinating with
the Ways and Means Committee. Because I used to do taxes and we
used to make fun of Congress when they changed things for the
prior year. But that's even on minor things where you, you
know, can contact the licensed tax preparers. I would--I'll
talk to the Ways and Means folks, but they should be, you know,
dealing with you guys on a routine basis.
But while we hope--I asked some questions, I hope we get
answers in the future. You can tell we're very disappointed
with, you know, some of the ways some of your people are
hired.I mean, it's to the point of bizarre that you'd rehire
somebody who was fired before, particularly--it's obvious it
causes just tremendous amount of public lack of confidence in
the IRS.
But I would like to thank you all for appearing before us
today. The hearing record will remain open for two more weeks
for any member to submit a written opening statement or
questions for the record.
If there is no further business, I see I'm all alone here,
without objection, the subcommittee will stand adjourned.
[Whereupon, at 4:20 p.m., the subcommittee was adjourned.]
APPENDIX
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