[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

                              ----------                              
                                                                   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

                              ----------                              


                      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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