[Senate Hearing 115-734]
[From the U.S. Government Publishing Office]
S. Hrg. 115-734
NOMINATION OF CHARLES P. RETTIG
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HEARING
BEFORE THE
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
ON THE
NOMINATION OF
CHARLES P. RETTIG, TO BE COMMISSIONER,
INTERNAL REVENUE SERVICE
__________
JUNE 28, 2018
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-949-PDF WASHINGTON : 2020
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COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming BILL NELSON, Florida
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia SHERROD BROWN, Ohio
ROB PORTMAN, Ohio MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana SHELDON WHITEHOUSE, Rhode Island
A. Jay Khosla, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
ADMINISTRATION NOMINEE
Rettig, Charles P., nominated to be Commissioner, Internal
Revenue Service, Washington, DC................................ 5
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Hatch, Hon. Orrin G.:
Opening statement............................................ 1
Prepared statement........................................... 35
Rettig, Charles P.:
Testimony.................................................... 5
Prepared statement........................................... 36
Biographical information..................................... 37
Responses to questions from committee members................ 56
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement........................................... 72
Communication
Blum, Jeffrey M.................................................. 75
(iii)
NOMINATION OF CHARLES P. RETTIG.
TO BE COMMISSIONER,.
INTERNAL REVENUE SERVICE
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THURSDAY, JUNE 28, 2018
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 9:30 a.m.,
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G.
Hatch (chairman of the committee) presiding.
Present: Senators Grassley, Crapo, Thune, Isakson, Portman,
Toomey, Heller, Scott, Cassidy, Wyden, Cantwell, Nelson,
Menendez, Carper, Cardin, Brown, Casey, and Whitehouse.
Also present: Republican staff: Chris Allen, Senior Advisor
for Benefits and Exempt Organizations; Chris Armstrong, Chief
Oversight Counsel; Becky Cole, Policy Director; Ryan Martin,
Senior Human Services Advisor; Nicholas Wyatt, Tax and
Nominations Professional Staff Member; and Jeffrey Wrase,
Deputy Staff Director and Chief Economist. Democratic staff:
Chris Arneson, Tax Policy Analyst; Michael Evans, General
Counsel; Ian Nicholson, Investigator; Joshua Sheinkman, Staff
Director; and Tiffany Smith, Chief Tax Counsel.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee will come to order.
I would like to welcome everyone to today's hearing on the
pending nomination of Mr. Charles Rettig, who has been
nominated to serve as IRS Commissioner, a very important
position in this country.
Right now, the IRS is at a critical juncture. The American
people are already seeing a myriad of benefits thanks to tax
reform, as unemployment continues to drop and wages rise. And
the IRS will be responsible for implementing these new policies
smoothly and efficiently so that the new law's full benefits
can be more quickly realized.
After years of turmoil and controversy, I am hopeful that
the IRS has finally started turning the corner. However, with a
large governmental organization like the IRS, there is always
room for improvement. Take for example, the problems of aging
technology services. Some of the IRS's information technology
dates back to the Kennedy administration. Unsurprisingly, that
dated technology could inhibit the IRS's ability to interact
coherently with 21st-
century technology that currently powers our country and much
of the rest of the world. If confirmed, I expect Mr. Rettig to
work with Congress to modernize the IRS's infrastructure and
technology to bring the agency into our 21st century.
Another major issue is that the IRS has an aging workforce.
Right now, the majority of the IRS's workforce is over the age
of 50 and nearing retirement. If that majority of the workforce
were to retire at or around the same time, the IRS would face a
shortage of knowledge and experience. If confirmed, I hope that
Mr. Rettig will start working with Congress immediately to plan
for the agency's future.
As the IRS continues to implement tax reform, it must work
with the Treasury Department to issue regulations and other
guidance to ensure that taxpayers have certainty and
predictability concerning this new law. It must also work with
Congress to ensure that the new law is implemented and
administrated as Congress has intended.
The challenges I have enumerated are greater than any one
Commissioner. But the Commissioner will set the tone of the
workforce and will be charged with working alongside Congress
to thoroughly and fairly implement and enforce our new tax
laws.
An effective IRS Commissioner must also remember that our
tax system relies, in great part, on voluntary compliance. And
the system works best when American taxpayers trust the agency
and are able to easily contact the IRS to receive timely and
complete answers to their questions.
In short, if confirmed, Mr. Rettig has his work cut out for
him, but I am optimistic that he is up to this job and, if
confirmed, will lead the agency with integrity. I feel quite
confident about that.
That said, should the IRS slip up, or fail to live up to
the high standards Congress has set, this committee will hold
the IRS accountable, as it always has. At the same time, when
the IRS acts properly, responds thoughtfully, and works with
us, the IRS will find no better friend than this committee,
regardless of Democrat or Republican. After all, we recognize
just how important it is that our taxes are collected fairly,
efficiently, and in compliance with what Congress intended when
we wrote our tax laws.
I want to thank Mr. Rettig for being here and for his
willingness to serve. Mr. Rettig has decades of experience
representing taxpayers before the IRS. He knows the agency
inside and out, due to his years of work on advisory councils
and stakeholder groups. And he brings the necessary passion and
dedication that this role will definitely require.
I am confident that, if confirmed, Mr. Rettig will be a
trustworthy, responsive, and earnest partner with Congress and
this committee as we pursue our shared mission to improve the
agency.
I do want to thank our Acting Commissioner Kautter, who has
done a great job at the IRS. However, that is not what we
confirmed Mr. Kautter to do. Now, more than ever, we need Mr.
Kautter back doing his full-time job at the Treasury
Department.
Before we begin today, I want to clear something up. There
have been inaccurate press reports based on leaked committee
documents that the nominee did not disclose property he owns in
a Trump International property in Hawaii. Now this is absurd
and it is false, and we should put this matter to rest right
now.
First, he disclosed these properties, which were purchased
in 2006, on the committee questionnaire. That is a fact. He has
been honest and forthright with this committee at every stage
of the vetting process. The dispute here pertains to the
additional details of noting the name on the side of the
building.
Second, any suggestion that there is a conflict of interest
here is the stuff of conspiracy theories. Maybe one wants to
argue that Mr. Rettig purchased these properties in 2006,
during Season 5 of ``The Apprentice,'' on the off chance that
Mr. Trump would become President and nominate him to be IRS
Commissioner.
I notice that you feel the same way that I do, that that is
silly, and I hope we can put that matter to rest and move on to
the substance of this morning's confirmation hearing.
And finally, I do want to note that we have noticed an
executive business meeting for this time as well. If, at any
point during the hearing, a suitable quorum is present, I
intend to pause the hearing and move immediately to votes on
the nominations of Mr. Jeffrey Kessler, Ms. Lynn Johnson, Ms.
Elizabeth Ann Copeland, and Mr. Patrick Urda. Thereafter, we
will resume our hearing.
With that, I am pleased to turn to my partner, Senator
Wyden, for his opening remarks.
[The prepared statement of Chairman Hatch appears in the
appendix.]
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman.
Mr. Chairman and colleagues, the next IRS Commissioner is
going to be in charge of administering a tax system that is
broken in two.
There is one set of rules in America for the cop on the
beat, or the worker on the factory line. Strict rules, no
special loopholes--taxes come straight out of your paycheck.
Then there is another set of rules in America for the high-
flyers. Under that system, with the right advice from costly
advisers, you can effectively pay what you want, when you want.
Mr. Rettig, nominated by the President to lead the IRS,
seems to have made a career on giving advice to a lot of those
high-flyers. And the biggest policy challenge he is going to
walk into, if confirmed as Commissioner, is implementing the
extremely complicated Trump tax law, which does a whole lot
more for the high-flyers and the well-connected than it does
for everybody else.
Given that fact, in my view, it is up to Mr. Rettig to
demonstrate that if he is confirmed, he is going to work on
behalf of all Americans, particularly hard-working, middle-
class families and the owners of the garages, the corner
stores, and the restaurants that make up our communities. ``The
guy on the street,'' as Mr. Rettig talked about in our meeting
earlier this week.
Now on another matter, if you have studied the Nixon
presidency, you know there is a dark history of the White House
abusing the IRS for political purposes. It is going to be
particularly important for Mr. Rettig to demonstrate his
independence, given that Mr. Rettig did not fully disclose to
the Finance Committee staff the condos he owns and rents out in
a Trump-branded and -managed property.
On a matter the chairman, my good friend, touched on about
leaks on this kind of discussion, I would only say that last
night there was a memo to all Finance Committee members coming
from the chairman and myself making it clear that we wanted all
members to understand what was at issue with these condos--and
they are being rented out in Trump-branded and -managed
property.
Now, having said that, disclosing that information may not
have been required by law. My view is it would have been a
smart exercise of judgment. Certainly if you want to eliminate
any questions about appearances, you can sell the properties
off.
But setting aside even that financial relationship,
committing to independence is critically important. This
administration often seems to make tax decisions for political
reasons rather than policy reasons, and that is a recipe for
the kind of swampy corruption that makes people lose faith in
institutions like the IRS.
For example, it appears a policy regarding tax-favored
``Opportunity Zones'' was changed at the behest of one well-
connected Republican donor in Nevada. It is a sign the
administration has put itself in the business of picking
economic favorites as a result of the tax law. This was a donor
who wanted an accommodation, and he got it. When the State of
Vermont sought a similar change, it was denied.
There are also reports the Trump administration is going to
introduce a new, untested tax form that will make the
experience of filing returns even more of a headache for many
Americans, particularly senior citizens.
When the debate closed and the new tax law passed, it
turned out most Americans would not be able to file on a
postcard, contrary to what Republican sponsors had promised.
The administration decided to go ahead and cram the same amount
of tax math onto a smaller form anyway. That means many
taxpayers are going to have to rifle through complicated new
sets of instructions, attach multiple schedules, and, in my
view, it certainly is likely to generate more errors. The new
forms are going to--for many taxpayers--be a set-up to failure.
One last point, Mr. Chairman. Recently, the Vice President
said that the Johnson Amendment, which bars 501(c)(3) tax-
exempt organizations from campaigning for or against political
candidates--and I am quoting the Vice President of the United
States here--``will no longer be enforced under this
administration.''
Now, I recognize this is a priority of the far right. But
people ought to understand it is a recipe for even more dark
money going into our political system.
And I feel very strongly that the next IRS Commissioner has
got to be in charge of enforcing the laws on the books despite
the Vice President's pledge which, in effect, says that will
not be the case.
So running the IRS is a difficult job that involves
managing tens of thousands of employees. Mr. Rettig has decades
of experience. It will also be a concern, as he and I talked
about, that he does not have extensive management experience.
He is going to be asked about that, as he knows, today.
I appreciate Mr. Rettig's willingness to serve. I thank him
for joining the committee.
Mr. Chairman, as always, I look forward to working with
you.
The Chairman. Well, thank you, Senator. I appreciate
working with you very much.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. I would like to extend a warm welcome to Mr.
Charles Rettig and thank him again for joining us this morning.
Soon we will hear from Mr. Rettig, who is currently working
at the firm Hochman, Salkin, Rettig, Toscher, and Perez, P.C.,
where he has represented clients before the Internal Revenue
Service, the Tax Division of the Department of Justice, and
numerous State and Federal taxing authorities.
Mr. Rettig has served on the Advisory Board of the
California Franchise Tax Board, the Advisory Council of the
California State Board of Equalization, and the Internal
Revenue Service Advisory Council. Mr. Rettig is currently the
vice chair for administration of the Section of Taxation of the
American Bar Association, and previously served as the chair
for the Section of Taxation of the California Bar.
Throughout his career, Mr. Rettig has specialized in
Federal and State civil tax and criminal tax controversy
matters, and tax litigation including tax-related examinations
and investigations for individuals, business enterprises,
partnerships, limited liability companies, and corporations.
Mr. Rettig received his bachelor's degree in economics from
the University of California at Los Angeles and his J.D. from
Pepperdine University. He then went on to earn an LL.M. in
taxation from New York University.
So I--and I am sure everybody here looks forward to hearing
from Mr. Rettig and how he plans to integrate his past
experiences with his new role at the agency, if confirmed.
Without further ado, Mr. Rettig, please begin with your
opening remarks.
STATEMENT OF CHARLES P. RETTIG, NOMINATED TO BE COMMISSIONER,
INTERNAL REVENUE SERVICE, WASHINGTON, DC
Mr. Rettig. Chairman Hatch and Ranking Member Wyden, it is
an honor to appear before the Senate Finance Committee as the
President's nominee to serve as the next Commissioner of the
Internal Revenue Service.
Before I proceed, I would like to recognize my family who
are here with me today: my wife Tam, my sister-in-law Dr. Jan,
my sister-in-law Twi with her husband Michael, my stepsons
Dayton and Trenton, my daughter Dr. Christina, and my son Dr.
Charlie. I cannot explain the degree and extent that their love
and support for me today and throughout my professional and
personal career mean to me. Personally, I would not be here--in
my mind--without the ongoing support of my family.
I need to also recognize three of my law partners who are
here today, two of whom flew out from Los Angeles last evening,
arrived this morning, and are headed back this afternoon.
Steve, Dennis, and Ed are here; my mentor in the practice of
law, Avram; a very, very close family friend Garner; and
another very, very close family friend Meko.
It is the support of my friendships that has allowed me to
be here today and to do the things that I have accomplished in
my life.
My son Charlie, who is sitting behind me, currently serves
as a Captain in the United States Army and returned Monday
evening from 12-month deployment overseas. When I was
nominated, Charlie proudly pointed out, ``Dad, I'm so proud
you'll be following me into government service.''
Nothing would make me more proud than to follow my son into
government service. I did not previously have the opportunity,
and I look forward to, if confirmed, having that opportunity
going forward.
I also learned something from my son. This tax season I was
pressing him while he was serving overseas to get the
information to the accountant in order to prepare his returns.
And the response I got was, ``Dad, I have 180 days from when I
return from the combat zone in the Sinai Peninsula to submit my
income tax returns.'' It is nice to get your tax advice from
your Army Captain son.
I would also like to acknowledge my father, who had a one-
truck air conditioning business and taught my brother and I the
value of hard work, getting up early, working late, and not
complaining.
I was the first in my family to finish college, and through
undergraduate school, law school, and graduate school my family
often joked that I would never stop studying--and they were
right.
For more than 35 years, I have worked with all levels of
the IRS to achieve resolutions on behalf of taxpayers and bring
them back into compliance with our system of voluntary self-
assessment. I have served as Chair of the IRS Advisory Council
and in a similar role in my home State of California. I am
currently vice-chair, administration for the 12,000-member
Taxation Section of the American Bar Association. I also serve
as president of the American College of Tax Counsel.
Through decades of experience working across the table from
the IRS, I have seen the difficulties faced by taxpayers of all
kinds--from large taxpayers to small businesses to low-income
taxpayers who need help.
When the IRS started ``Problem Solving Days'' years ago to
allow taxpayers to come in without an appointment, I organized
dozens of tax professionals in Los Angeles to assist
unrepresented taxpayers who appeared at the IRS seeking a
resolution of a tax issue. I have also devoted a significant
amount of time assisting taxpayers who cannot afford
professional help on a pro bono basis.
Throughout my career, I have also been privileged to work
with many professional and hardworking IRS employees and, if
confirmed, would be honored to work beside them and earn their
respect. Despite the challenges it faces, the IRS is fortunate
to have an experienced workforce committed to its mission.
In my career, I have seen the impact of those challenges
firsthand. Long waits on the phone and inadequate IT systems
are significant issues of frustration for both the Internal
Revenue Service workforce as well as taxpayers. If confirmed, I
would hope to work with this committee to take on these and
other challenges that impact on taxpayers across the board. We
cannot fall into a trap of viewing the challenges the IRS faces
as facts of life, but we must work together to solve them.
If I am privileged to serve as Commissioner, my overriding
goal will be to strengthen and rebuild the trust between the
IRS, the American people, and their representatives in
Congress. That trust is critical to all that the IRS does,
particularly as it works with the Department of Treasury to
implement once-in-a-generation tax reform legislation enacted
by Congress last year. The successful implementation of that
landmark reform bill will be among my highest priorities.
In closing, I wish to acknowledge IRS Revenue Procedure
1964-22 by Commissioner Mortimer Caplin who, at age 101,
remains a legend in our field. It is the duty of the Service to
carry out that policy by correctly applying laws enacted by
Congress to determine the reasonable meaning of various code
provisions in light of congressional purpose in enacting them,
and to perform this work in a fair and impartial manner with
neither a government nor a taxpayer point of view.
I am grateful for the opportunity to testify and look
forward to your questions.
The Chairman. Well, thank you so much. We are grateful that
you are willing to take on this assignment. It is not an easy
one, and it is one with plenty of controversy.
[The prepared statement of Mr. Rettig appears in the
appendix.]
The Chairman. I do have some obligatory questions I am
going to have to ask.
First, is there anything that you are aware of in your
background that might present a conflict of interest with the
duties of the office to which you have been nominated?
Mr. Rettig. No.
The Chairman. Do you know of any reason, personal or
otherwise, that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Rettig. No.
The Chairman. Do you agree without reservation to respond
to any reasonable summons to appear and testify before any duly
constituted committee of the Congress if you are confirmed?
Mr. Rettig. Yes.
The Chairman. Finally, do you commit to provide a prompt
response in writing to any questions addressed to you by any
Senator of this committee?
Mr. Rettig. Yes.
The Chairman. That is great.
Mr. Rettig, the IRS stands at a crossroads, both in terms
of challenges and responsibilities. In terms of challenges, if
confirmed you will run an agency that has enormous
responsibility. It touches every single American and every
business.
Nearly every function of the government depends on the
revenue the IRS collects. At the same time, it has an aging
information technology infrastructure, and an aging workforce.
Real and serious changes are needed, and this committee is
working to help with that.
Now, the IRS has a lead role in implementing and a primary
role in administering the largest tax overhaul in a generation,
which delivers tax relief and simplification for taxpayers
across the country.
Now, Mr. Rettig, this is a challenge not a lot of people
would willingly accept. So why are you dumb enough to accept
it? [Laughter.]
And why do you want this role, and are you up to this
particular challenge? And I know you are not dumb, so please
forgive me with my out-of-control sense of humor.
Mr. Rettig. Mr. Chairman, I have a deep respect for the
Internal Revenue Service, for this country, for this flag, for
the people who work for the Internal Revenue Service, and
respect the fact that the Internal Revenue Service is a
critical component of the success of this country. And I am
committed to giving my best efforts to make the Internal
Revenue Service the best agency that it can be.
The Chairman. Well, I think that is why you have been
nominated. From what I see, you are very capable of doing that.
Under President Obama, this committee led Congress's main
bipartisan investigation into the question of political bias at
the IRS and issued the only bipartisan report on the matter.
Congress has long been concerned with questions of
political bias at the IRS, which have been a serious issue
across the agency's history, most notably in the Kennedy,
Nixon, and Obama administrations.
If confirmed, do you pledge to lead the IRS without regard
to partisan political bias or inappropriate influence?
Mr. Rettig. Absolutely.
The Chairman. The Internal Revenue Service has never been a
particularly popular agency--as you know--and its reputation
has certainly been challenged in recent years. How do you
intend to restore America's faith and trust in the IRS? Do you
consider it important to build a better relationship between
the IRS and the taxpayers?
Mr. Rettig. I think that the relationship and the viewpoint
of the American taxpayers as to the Internal Revenue Service is
critical to the success not only of the Internal Revenue
Service, but also of this country. I think a large portion of
the reason that I am significantly interested in becoming
Commissioner is to rebuild the trust in that agency to confirm
to the American taxpayers that the Internal Revenue Service is
impartial, nonbiased, and color-blind for all purposes.
The Chairman. Great.
The use at the IRS of ancient computer equipment is
something that we have commonly noted. Despite everyone being
aware of the necessity of updating equipment at the IRS,
substantial progress here remains elusive. What are your plans
to update the technology needs at the IRS, and how are you
going to accomplish that?
Mr. Rettig. The modernization of the IRS IT system and
bringing the IRS IT system into the 21st century is one of my
top goals. I think that it serves two purposes. It serves not
only the protection of taxpayer data, which I believe that
universally we all agree is a principal concern, but also
modernizing the IT system serves to enhance services that the
taxpayers in this country deserve.
The Chairman. Okay.
How will you use your longtime experience as a tax
attorney, especially one who has been on the other side of the
courtroom from the IRS, to help better perform your duties as
IRS Commissioner?
Mr. Rettig. I have been on the consumer side of the IRS and
a stakeholder in working with the IRS at virtually every level,
from field level agents and revenue officers up through to the
corner offices of the Internal Revenue Service. So I think I
have a pretty good understanding of the operations of the IRS
and the various roles that different levels of the IRS play in
trying to efficiently move tax administration in this country
with an eye toward the benefits of taxpayers.
The Chairman. Okay.
I think my time is basically up. So we will turn to the
ranking member.
Senator Wyden. Thank you very much, Mr. Chairman.
Mr. Rettig, let me start with this comment made by the Vice
President. Vice President Pence said in May that the Johnson
Amendment--which prohibits the 501(c)(3) tax-exempt
organizations like churches from campaigning for or against
political candidates--will ``no longer be enforced under this
administration.''
I would like to give you the opportunity, as we begin this
hearing, to respond to the Vice President of the United States.
Who is going to be in charge--if you are confirmed as
Commissioner, who is going to be in charge of the IRS? Will it
be the Vice President of the United States, or will it be you?
Mr. Rettig. If I am confirmed, I will be in charge of the
Internal Revenue Service and will make sure that the Internal
Revenue Service moves forward and follows the law in an
impartial, nonbiased manner.
Senator Wyden. Do you find the Vice President's statement
troubling? Is that not sending a message, an inherently
political message, when what we want--whether it is Democrats
or Republicans--is the law enforced? Is that not a troubling
message?
Mr. Rettig. As a nominee, I can really only speak to my
viewpoint of what would happen if I was to operate the Internal
Revenue Service as Commissioner, if confirmed. And I confirm to
you, and I pledge to this committee, impartial, nonbiased
operation from the Internal Revenue Service from top to bottom.
Senator Wyden. I understood your answer, but I think every
American, Democrats, Republicans, whatever your political
philosophy, ought to be very troubled that the Vice President
thinks he can make a statement like that. That this
administration is, in effect, above the law; that the law is
not what matters. What matters is political muscle.
Let me move on to the question of the President's tax
returns and particularly this matter of being under audit. The
President has stated for over 10 years now that he cannot
release his individual tax returns because he has been under
these continuous audits.
In your 35 years of representing certainly many high-income
taxpayers with complicated business arrangements, have you ever
represented anybody who was under continuous audit for 10 years
or more?
Mr. Rettig. We have had taxpayers, both individuals and
entities, that have had multiple-year audits.
Senator Wyden. The question is 10 years.
Mr. Rettig. That is where I was going, Senator. I
personally cannot recall a 10-year examination. But I am not
particularly--I have no information about the audit with
respect to the President.
Senator Wyden. So how would one even get in a place of
having 10 years' worth of audits? I find it incredulous that
somebody could be under a continuous audit unless they had made
enormous mistakes on their tax returns over and over again. My
assumption is professionals in the field--like yourself--would
never let that happen.
So I find it very hard to buy the President's excuse that
he has been making all of these months for not releasing his
returns. But how would one even get in a position like this?
Mr. Rettig. From my experience, I would say that the more
complex the return, the longer it takes to get an examination
completed. But again, I have no familiarity with the
President's returns themselves.
Senator Wyden. I am going to leave the record open on that
point. I would like to have you amplify on that, because I just
find this an incredulous excuse. And you have told me
essentially that this does not happen very often. It happens
sometimes.
Mr. Rettig. In my practice.
Senator Wyden. Yes. Right. It happens sometimes. My view
is, you only get there by making enormous mistakes, and
professionals would not make that possible.
Now, I am going to read you something that goes to this
question of fairness for working-class people. Tell me if it
sounds familiar.
``Wealthy taxpayers often engage teams of sophisticated
tax, business, and estate planning lawyers, accountants, and
other professionals to oversee their business activities and to
legitimately minimize their potential tax liabilities.'' Does
that sound familiar?
Mr. Rettig. It does.
Senator Wyden. Now, you identified earlier this week the
pass-through deduction as one area where guidance is badly
needed from the IRS. And that is a provision that is so
confusing that tax consultants are already feasting on planning
opportunities for their wealthiest clients.
Given the right opportunities for tax planning and tax
evasion, frankly, created under the new Republican tax law, how
are you going to combat the kinds of aggressive tax planners
you were trying to describe your feelings about in that quote I
gave you?
Mr. Rettig. That quote relates to the fact that taxpayers
have teams, wealthy taxpayers have teams of representatives
handling their returns. Typically, a taxpayer who desires to
cheat is not going to go to a group of tax professionals to put
some structure together to do something. That is not universal,
but that is a typical----
Senator Wyden. I am over my time, so I just need you to
tell me briefly how you would combat those who are trying to
wring every possible advantage out of this, in effect, to find
holes in the law.
Mr. Rettig. For me it would be critical for the IRS to
provide clear, timely, succinct guidance as to what the
positions are, and what the intent of Congress was with respect
to each of the provisions in the tax----
Senator Wyden. On the next round, we will talk about what
that clear guidance ought to be.
Thank you, Mr. Chairman.
The Chairman. Senator Portman?
Senator Portman. Thank you, Mr. Chairman. I appreciate you
having the hearing today.
Mr. Rettig, you and I have had a chance to visit on a
number of issues including, as the chairman has indicated, our
appreciation that you are willing to step up and serve. I also
want to, if I could, mention Army Captain Charlie Rettig again,
who just came back, you said, from a 12-month deployment in a
combat zone. I am going to embarrass him and ask him to stand
up if he would, just for a second, because I would like to give
him a round of applause. [Applause.]
He is right. You are following him in service. Although it
is not combat, it is going to be a tough job.
The Chairman. I think it is combat.
Senator Portman. Yes. [Laughter.]
So you and I talked a lot about IRS reform. One reason I am
excited about having a Commissioner in place is, I think it is
an opportunity for this committee, working with you and the
Ways and Means Committee, to make some changes at the IRS
again.
We did this 20 years ago with a big restructuring and
reform act. It came after a commission was formed, actually, by
this body. I co-chaired that with Senator Bob Kerrey, as you
know.
And then along with Senator Ben Cardin, who is coming in a
moment, we introduced legislation that Senator Hatch took a
leadership role on, as did Senator Wyden in his role then on
the committee. And what we did was, we said, okay, the IRS is
not working. It is not functioning to help taxpayers.
At that time, only half of the calls were being answered
when a taxpayer would call the IRS. And they spent about $3
billion on an IT system that was not working, was not talking
to other systems. It was a big waste.
So we undertook this series of reforms. Fifty-two different
new taxpayer rights were added and so on--IRS Oversight Board.
So, half of the calls were being returned back at that period.
We passed legislation. Within 10 years, instead of half the
calls being returned, 83 percent of the calls were being
answered. So that was a big improvement.
All the ratings you looked at, you know, which agency or
department do you feel has done a good job for the taxpayer--
the IRS was at the bottom when we started the reforms. By the
time the 10 years were up and the reforms were getting in
place, it was about half way up the ladder, which is not bad
for the tax collection agency.
I will say, here we are 10 years later, and unfortunately
we are kind of back to a situation where taxpayers are not
being served. By 2015, just 3 years ago, only 37 percent of
calls were being answered. Today I understand it is back closer
to 50 percent, but still way unacceptable.
First of all, do you agree with me on that?
Mr. Rettig. I agree that America's taxpayers should have
their telephones answered if they call the Internal Revenue
Service. I think that is critical not only for whatever the
reason is they are calling, I think it is critical for them to
have the respect of the agency they are interacting with and
get efficient and timely responses.
Senator Portman. That is not the only measurement. Another
measurement would be how many taxpayers can come in and
actually get an answer from a person, and that has also
declined.
Another issue I know that Senator Cardin and I are looking
at is the appeals process. We believe it has been more
truncated since 20 years ago with the reforms in place. We need
to get back to a system where people feel they have an absolute
right to appeal.
There are other issues as well, but one that you and I
talked a lot about in our meeting was the IRS Oversight Board.
This is something that Senator Kerrey felt very strongly about,
as did I and others.
We put in place this IRS Oversight Board that would bring
expertise, service-sector expertise, management expertise. And
frankly, I think it started off pretty well, and then, because
of lack of support by every administration, frankly, along the
way, it kind of fell to the wayside.
And the idea was not to have to have a commission every 20
years, and not to have a process that we need to undergo again.
This next couple of years, hopefully with a new Commissioner in
place, hopefully with you, we can have this commission perform
that role of oversight and ensure that we sit on track--there
are literally no members of the commission right now. Not a
single member has been appointed.
And again, this goes back administrations. The Obama
administration was no more supportive, really, than the Clinton
administration was, than the Bush administration, than the
current administration.
So what do you think about the IRS Oversight Board? Was it
a good idea or a bad idea? Do you think it should be
resurrected? And do you think it has a role to play?
Mr. Rettig. I am in favor of oversight by the IRS Oversight
Board, by this committee, by others. I think that it assists in
the transparency of the operations of the Internal Revenue
Service as well as providing assistance.
As Commissioner, I would look forward to getting ideas from
everybody. The more ideas, the better, and then we will work on
the ideas collectively.
Senator Portman. Well, I appreciate that answer. And I do
think that, if you are confirmed, that this committee is going
to be very interested in working with you on IRS reform. I hope
that will be part of the discussion.
Last question, just briefly, on the idea of having an
independent appeals process: do you support taxpayers having
access to an independent appeals process?
Mr. Rettig. Absolutely.
Senator Portman. Thank you, Mr. Chairman.
The Chairman. Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman.
Congratulations, Mr. Rettig, on your nomination.
As you know, New Jersey joined 32 other States and DC by
recently passing a law that authorizes towns and cities to
create charitable funds that will provide tax credits to
encourage donations. But in an advisory notice released in May,
it seems to me that the IRS has arbitrarily singled out new
programs like New Jersey's and warned that taxpayers could face
penalties if they write off their donations.
This fundamentally flawed advisory contradicts decades of
precedent and case law all the way up to the Supreme Court and
discriminates against States, apparently, based on political
affiliation.
So my question to you is, if you are confirmed as the IRS
Commissioner, would you adhere to the principles of federalism
and States rights and respect the authority of States to set
their own tax policy?
Mr. Rettig. If I am confirmed as Commissioner of the
Internal Revenue Service, we will follow the law impartially in
a nonbiased manner. And, as I believe I have indicated
previously, nobody should presuppose my position on any
particular issue across the board. The Internal Revenue Service
will appropriately look into the facts, look at the relevant
policies, procedures, prior guidance that has been issued, and
I believe come to the accurate conclusion in issuing whatever
guidance the Internal Revenue Service is to issue.
Senator Menendez. While I appreciate that, if 32 other
States and the District of Columbia already have the same exact
principle and it is in effect, and it has been upheld by the
IRS, would you see any reason to discriminate against another
State if in fact they are doing the very same essence of what
those 32 other States are doing?
Mr. Rettig. It is not an issue that in my practice I have
dealt with. But in the press that I have read with respect to
the issue, it is my understanding that there is a possibility
that the post-tax act situation could be not on all fours with
the earlier position taken by the Internal Revenue Service in
the 2010 Chief Counsel Notice.
Senator Menendez. Well, as you know, I raised this with you
when you came to visit me, and I do appreciate you visited me.
And you told me you did not know much then, and I said to you
that I--I gave you a very early warning that I would be asking
you these questions at this hearing.
So this is a serious issue that can raise property tax
burdens and sow confusion for hundreds of thousands of New
Jerseyans, and then they are going to deserve a clear answer.
So again, would you undermine New Jersey's law and deny
people deductions for these charitable contributions if they
are in line with 32 other States and the District of Columbia
that are doing this right now and that the IRS has upheld?
Mr. Rettig. Senator, I think as we both know, the IRS and
Treasury are both working on guidance. My incentive with regard
to the guidance would be that it be accurate, impartial,
nonbiased and clear, and issued timely.
And it should not be lost on the committee that--although
your comments relate to New Jersey, I happen to be from the
State of California, which is working on a similar situation.
And I would still look at it in a nonbiased, impartial manner.
Senator Menendez. Well, let me give you some background. In
2011, the IRS Chief Counsel released an advisory memo
clarifying that State credits do not--I repeat, do not--
prohibit taxpayers from writing off the full value of their
charitable donations. In other words, getting a tax break does
not mean you earned more money, and thus, you should not be
taxed more as a result.
The Supreme Court confirmed this interpretation, ruling
that State tax credits given for charitable donations are not
considered a thing of value and rather are ``the government
declining to impose a tax.''
I think we can all agree it is illogical, impractical, and
fundamentally backwards to tax people on the value of a tax
break they receive. In some States, tax lawyers and accountants
have bragged about how they are using their program to
circumvent the property tax cap. For example, in Alabama
financial advisors explain that so-called ``donations'' are
``treated as if you paid Alabama taxes. For Federal purposes
your donation will be reported as a charitable contribution.
Otherwise, the State tax payment would be reported as a soft
deduction subject to the $10,000 cap and provide no tax benefit
to you.''
And these efforts to maximize deductions were common even
before the Trump tax bill gutted the property tax deduction.
Indeed, high-priced tax lawyers and accountants in Georgia have
been for years urging their clients to shift their itemized
deductions from State taxes to charitable donations in order to
avoid the alternative minimum tax.
So are Alabama and Georgia's programs in compliance with
the law and IRS rules?
Mr. Rettig. I think you are aware I am not specifically
aware of the Alabama and Georgia programs themselves. And I
think that when we met you raised an issue that perhaps the
current situation, the difference between credits and
deductions--and I am not sure that that is a difference----
Senator Menendez. Mr. Chairman, you are tapping before my
time is even up.
The Chairman. Your time is up.
Senator Menendez. Well, it is up now, but not when you were
tapping. Can I hear the balance of the answer at least?
The Chairman. Well, I was trying to give you some warning.
You could have----
Senator Wyden. Mr. Chairman, I think both of us went about
a minute or so over. Could Senator Menendez just have that too?
The Chairman. Sure. I am not going to stop----
Senator Menendez. I appreciate it, Mr. Chairman.
The Chairman. Do not accuse me of interfering with your--I
tapped to let you know you are near the end so that we do not
have carryovers that prolong this committee unnecessarily.
Go ahead.
Mr. Rettig. Senator, I am aware of your concern with
respect to this issue, and the concern of others with respect
to this issue, and the concern of taxpayers across the country
with respect to these issues, and I would look forward to a
resolution that universally people could say is the right
resolution.
Senator Menendez. Well, I will just close on this. The one
thing I do not want to see is the IRS weaponized against States
like mine. It is either good for everybody, the 32 States that
have been doing it and the District of Columbia, or it is good
for nobody. So I hope that you will seriously look at this in
that manner, because otherwise we will feel that we are being
treated unjustly simply because we are the State that we are.
Thank you, Mr. Chairman.
The Chairman. Senator Carper?
Senator Carper. I think Senator Cardin was actually here
ahead of me. Let him go ahead. Senator Cardin was here before
me. Please.
Senator Cardin. You can go before me.
Senator Carper. All right. All right.
Senator Cardin. You are so courteous. Thank you.
Senator Carper. I will never make that mistake again.
[Laughter.]
I just want to say welcome today. And, Tam, to you and your
family--I am a Vietnam veteran, and it is a special pleasure to
have you here, and we welcome you to our country. I hope we
will welcome more often others from other countries to our
country. It is that spirit we could use around here these days.
Thanks for coming by yesterday. We talked a good bit about
adequate funding for the IRS.
We just passed a tax bill last year that is going to
increase the budget deficit by a couple of trillion dollars
over the next 10 years. Our deficit is already at enormous
levels, and it is going to climb higher. It is a matter of
great concern to me, and I know it is to you and my colleagues.
One of the ways we can actually reduce the deficit and
increase revenues without raising any rates at all would be to
actually fund the IRS. And what you actually see is reductions
in funding--I think over the last several years by almost 20
percent, number of employees down by double digits.
Your thoughts about this, please, and what would you do to
try to turn that around?
Mr. Rettig. Well, first I believe it is the responsibility
of the IRS to expend any funds it receives in a very
responsible, forthright, efficient manner. I think that that is
critical to obtaining the trust of the American people.
If I am confirmed and in the position as Commissioner, one
of my top priorities would be to analyze the budget of the
Internal Revenue Service, workforce-related issues, training-
related issues, all of which encompass the probability of the
need for additional resources, funding resources, the
possibility of additional workforce. I am a huge believer in
training the workforce there so that they are the best on the
planet. And I think that we need to universally get onboard
with the training of the Internal Revenue Service so they can
provide top quality service to America's taxpayers.
That is where I am coming from.
Senator Carper. Good. Thank you.
Former Commissioner John Koskinen, who I thought was a
hero--he was greatly criticized, especially by folks in the
other body. But I thought for somebody like him to come out of
retirement at the age of 70 to take on a thankless, tough job
like this, then he deserves our kudos, not our brickbats.
But he repeatedly called on Congress to reauthorize his
streamlined critical pay program, but to no avail. We talked
about this yesterday.
Can you inform the committee on your views on streamlined
critical pay authority, please? In addition, could you tell us
in the absence of this authority what your plans are for
ensuring that the IRS is able to attract top-flight tech
talent, especially given that the ongoing cybersecurity and
identity theft threats are growing ever more prevalent? Please.
Mr. Rettig. I am a proponent of critical pay authority for
the Internal Revenue Service, particularly with respect to the
IT side of the operation. I think it is publically known that
the Internal Revenue Service--the system gets attacked between
two and three million times a day.
And I think it is critical to the success of this country
and to the appearance and trust that the American taxpayers
have in the Internal Revenue Service that we have a system that
defends taxpayer data better than any other system on the
planet.
And in the absence of critical care pay scales, I think it
is a significant effort on my part and on the part of other
senior leadership members in the Internal Revenue Service to
encourage, not only the workforce that is there to remain and
want to remain there and be proud of remaining there, but to
encourage people on the outside about the benefits of
government service--which is actually what I am doing today--to
be proud to be serving.
Senator Carper. Thank you.
One of the things we talked about yesterday was minimum
standards for paid preparers. John Koskinen said we have a huge
problem here. Gene Dodaro, Comptroller General for the GAO, has
said we have a huge problem here. Senator Wyden has introduced
legislation, with my support and others on the committee, to
better ensure that people who are actually preparing tax
returns know what they are doing and can reduce the number of
errors that flow from that.
I would like to ask, if I could, your views on this,
please.
Mr. Rettig. I believe that people who prepare tax returns
on behalf of others should be capable, competent, and
understand the tax laws for the returns that they are
preparing. And I think that the training that accompanies a
typical regulation, or involvement, licensing, or whatnot of
most preparers, is critical.
Senator Carper. Good.
One of the things we talked about yesterday was the IT
programs for the IRS which are--as we have heard earlier here--
just old, tired. We talked about it yesterday as being as much
as a $400-million upgrade. Is that something that you would be
inclined to support?
Mr. Rettig. From the press--I am not on the inside, so I do
not know the particulars of it. But from the press on the
outside and from what we see on the outside, I think that the
American taxpayers deserve the most up-to-date IT system on the
planet.
Senator Carper. Thank you.
Lastly, a question on your management experience. Some
people are going to say, he looks pretty good on paper. Maybe
he is a decent guy, wonderful family. I salute your son, Navy
salutes--is your son a marine?
Mr. Rettig. Army.
Senator Carper. Navy salutes Army.
I just have a quick word on your management experience.
Could you speak to the question of your management experience?
It is a big job, a lot of people to manage.
Mr. Rettig. Yes. Management experience to me is based on
leadership and the skills of leadership and creating teams. And
the leader facilitates the ability of the teams to perform to
their top capabilities and open communication from top to
bottom.
I perceive myself as a pretty good people person,
interaction with others. I am open. I am open to criticism, and
I am open to providing criticism as well.
Senator Carper. All right. Thanks so much.
Senator Isakson [presiding]. Senator Cardin?
Senator Cardin. Mr. Rettig, first of all, thank you very
much for your willingness to serve. You have a very
distinguished career in understanding the tax laws and
advocating on behalf of others. So I thank you for your
willingness to get involved in this area, which is not without
controversy. And I thank your family.
I want to follow up on some of the comments that were made
by Senator Portman and Senator Carper on tax administration.
But I want to start with the budget that Senator Carper asked
you about.
We have gone through a series of budget years where the IRS
has really taken a hit on its budget. The only reason there was
an increase in this year's budget was to implement a new tax
law. It did not deal with the underlying capacity within the
IRS itself.
And I appreciate the fact that you recognize that you have
to live within the funds that are appropriated and you want to
make sure that every dollar is properly expended--and I want
you to do that. But I also want to know whether you will be an
advocate on behalf of the men and women--the professional
people--who are there serving their country and trying to make
sure our tax laws are administered fairly, that they would have
the resources they need and the support they need in order to
be able to carry out their mission.
Are you going to be that type of an advocate within the
Trump administration to make sure that you have adequate
resources to carry out this mission?
Mr. Rettig. Senator, people who have known me for the past
50 years, the last thing they would characterize me as is shy.
The committee, the American taxpayers, should anticipate that I
will be knocking on every door possible if I make the
determination that I think we need something to accomplish the
goals that we have set out.
Senator Cardin. And you will be prepared to tell us
directly those needs so that we as an independent branch of
government can get that information?
Mr. Rettig. Yes. This committee will hear from me directly.
Senator Cardin. I want to underscore some of the points on
legislation that is moving through here. You mentioned several
times that you want to make sure that the personnel are
adequately trained to deal with the complexities of our tax
code, the needs of the taxpayer.
There is legislation that would establish a division for
training within the IRS to protect those funds because, as you
probably are aware, when there are tight budgets, those funds
are some of the first to be cut.
Will you work with us so that we can protect the resources
that go into training to make sure your people are adequately
trained?
Mr. Rettig. Absolutely.
Senator Cardin. Thank you.
There is also a program, as you know, the VITA program, to
deal with low-income taxpayers, for assistance in the IRS. Are
you prepared to work with us in order to strengthen that
program?
Mr. Rettig. Absolutely.
Senator Cardin. Thank you.
You already answered questions on tax preparers. I think we
really need to make sure that consumers are protected when it
comes to those who are out there using consumers as a part of
business.
I appreciate that answer on private debt collection. We
have been debating that for a long time. Every study has shown
that private debt collection usually ends up costing us more
money than we raise.
I think the House has come up with an effort to try to deal
with the size of the taxpayer as one of the methods. Will you
work with us so that we can try to resolve this issue as to
private debt collection?
Mr. Rettig. I will.
Senator Cardin. Thank you.
The last issue I want to talk about--it is a different hat
I wear. I am the ranking member on the Small Business and
Entrepreneurship Committee. Senator Risch is the chairman of
that committee.
We have received a great deal of interest from the small
business community as to the administration of the tax laws
before the change in the tax code. Now since the change, we
have heard a lot more as to how small businesses will be able
to deal with the changes that have been made. We have heard a
lot of concern about the tax preference of business income for
small businesses.
Would you, if confirmed, be prepared to come before the
Small Business Committee at Senator Risch's and my request in
order to work on ways that we can help small businesses deal
with the complexities of our tax code that were there before
the tax reform, but are now made more complicated by the
passage of this law?
Mr. Rettig. Absolutely.
I grew up in a small business. I believe small businesses
are the backbone of this country.
Senator Cardin. Thank you.
Mr. Chairman, I yield back the balance of my time.
Senator Isakson. Thank you, Senator Cardin. I will call on
Senator Cassidy and Senator Whitehouse, in that order. Then I
will end this first round, for those listening in who may be
coming, and we will have a second round after I ask my
questions.
Senator Cassidy?
Senator Cassidy. Hi; thanks for coming in. I enjoyed our
meeting in my office.
In February, I had an exchange with the Acting Commissioner
on identity theft and protection of taxpayer data. My identity
was stolen once, and it still has implications in terms of how
we file and when we receive our dollars back.
So the trends look good--significant reductions in ID theft
since 2015. There were 1.4 million fraudulent returns in 2015,
about 600,000 this year. What thoughts do you have as to how we
can move that 600,000--which cost us billions of dollars in
fraudulent returns--down towards zero?
Mr. Rettig. I am proud of the fact that the Internal
Revenue Service has made a dent in identity theft, and I share
your concern that 600,000 would still be too much, that any
identity theft is still too much.
There are issues with respect to the timing of certain
functions in the Internal Revenue Service that, if the IRS was
allowed more time, they could prevent more ID theft in
situations like that. So if confirmed, I would look forward to
working with you in that regard.
Senator Cassidy. I would point out that I am told that my
stolen return did not note that I had three children, and
formerly I had had three. And so you could have checked the
obits to see if something had happened.
But it does seem as if integration with the Social Security
fund or something could have revealed that sort of simple
thing.
Mr. Rettig. There is tremendous pressure on the Internal
Revenue Service to issue refunds, and I believe that that is
part of the issue to be dealt with. And I share the concern
that any identity theft related to the Internal Revenue Service
is----
Senator Cassidy. Congress is considering some IRS
administrative reforms that would improve this. Let me give you
some ideas and see what you think of them.
Designating a single point of contact at the IRS where an
ID theft victim could call, notifying taxpayers when ID theft
is suspected, and updates on criminal prosecution. I would like
to know that this is not just, oh my gosh, it is just
happening, and we do not care. And then expansion of the ID
Protection PIN program.
Any thoughts on those?
Mr. Rettig. The single point of contact, I think, is
critical, because it is confusing for people who have suffered
ID theft. There are multiple gates, multiple doors to get into.
So I think a single point of contact would be significant.
The criminal investigation issues, I think that it is a
significant part of the criminal investigation function within
the Internal Revenue Service as deterrents. So making people
who might consider going down that road in terms of ID theft,
making them aware of the fact that they could be looking at a
significant prison sentence, I think is critical.
Senator Cassidy. But it is also because of, somebody I know
stole my ID, then frankly, that is going to get out in my
community.
Mr. Rettig. Correct.
Senator Cassidy. And so the kind of--and presumably,
somebody I know stole my ID. It could have been somebody who
logged on and got my info, but to the degree that--but anyway,
just to kind of reverberate, what about the ID Protection PIN
program?
Mr. Rettig. The PIN program, I think, is critical, and
there is even contemplation of maybe an issuance of different
Social Security numbers and other things associated with that
even beyond the PIN. Most of us do not want to have--we can
remember a Social Security number. We may not remember a PIN
code as we go into the future.
And even getting into government buildings, when you are
asked for the last four of your social, sometimes most of us
have to start at the beginning to get to the last four. So I
think the possibility of issuing new Social Security numbers to
people who have incurred that might also generate some respect
by the victim for the fact that the government stands with
them.
Senator Cassidy. The Treasury--let me talk about the return
review program. Again, to improve fraud detection, it has been
implemented in recent years. It appears to be a significant
improvement over the old system.
The Treasury IG for Tax Administration report from
September 2017 noted the IRS may not meet its December 2018
target for retiring the legacy system. Again, I have had an
unflagged fraudulent return. How could you prioritize full
implementation of the new system?
Mr. Rettig. Being on the outside, I am not personally
familiar with the system. But it would be a high priority for
me, if confirmed, to look into it and to work with you and the
rest of the committee.
Senator Cassidy. Okay.
The IRS has undertaken an information sharing pilot program
to reduce fraud and ID theft. I understand 24 States
participated in 2017. It seems reasonable to expand that.
Again, your views on that? You probably are familiar with
this.
Mr. Rettig. I am an advocate of information sharing with
other similar State agencies. I think that that is critical to
moving forward.
Senator Cassidy. No parochialism there, if you will.
Lastly, I will say that I am pleased to see the IRS has
improved customer service, but still I think one in five people
calling never gets their phone call answered. What can we do to
improve that?
Mr. Rettig. I believe it is critical for the respect of the
agency and to earn the trust of the American taxpayer that,
when they call the IRS, somebody answers the phone.
Senator Cassidy. It seems pretty basic, huh?
Any ideas on how to improve, or more manpower, woman power,
or----
Mr. Rettig. I am aware of other States that have the
ability to--when you call in, you actually get a recording, and
it says the hold time is 17 minutes, if you would leave your
number, we will call you back in 3 minutes. Private industry as
well tends to do that routinely.
If that is possible on the scale of the Internal Revenue
Service, that type of a system would be significant--not only
in terms of getting the person off the phone so they are not on
hold, but the respect for the agency to make them the 21st-
century agency that operates the same as the private sector.
That is what the taxpayers are used to. They are used to
calling a private-sector entity and getting a 3-minute hold,
leave your number, and they will call you back. And I would
like to see the IRS--working with the committee, I would like
to see the IRS get to that level.
Senator Cassidy. That would be great. Thank you very much.
Senator Isakson. Thank you, Senator Cassidy.
Senator Whitehouse?
Senator Whitehouse. Thank you, Mr. Chairman.
Mr. Rettig, thank you. Good to see you. Thank you for the
visit to my office.
The IRS has a history from bygone days of having been used
as a political weapon. We have a President who apparently is
regularly demanding loyalty of folks who are appointed.
We witnessed the administration leaning on both independent
regulators and on agencies of government like DOJ that are
supposed to be independent to try to impose their will. That
combination of factors raises the questions, (a) have you made
any loyalty pledge, or (b) been asked to make any loyalty
pledge?
Mr. Rettig. No, I have not.
Senator Whitehouse. No, you have not?
Mr. Rettig. Excuse me. No on both counts.
Senator Whitehouse. No on both counts.
And along the spectrum of yielding to political pressure
when it is brought to bear on you, versus being staunchly
independent as Commissioner, where do you expect you would fall
along that spectrum?
Mr. Rettig. I would hope that the members of this committee
and the American taxpayers see me as staunchly independent or
more so.
Senator Whitehouse. One of the problems we talked about in
my office is the problem of shell corporations. They are used
for tax avoidance and evasion. They are also used for a
considerable degree of criminal activity.
Much of that is a matter of State law, but there are
signals that the IRS Commissioner could send, for instance,
telling investigators looking into tax fraud that when they
bump up against a shell corporation, they ought to really
redouble their efforts and not just walk away because they
cannot figure that out. And also to be a voice with respect to
the shell corporation problem as Congress deliberates that
problem.
Let me know what your thoughts are on dealing with shell
corporations in those two ways.
Mr. Rettig. If confirmed, I will be a vocal advocate for
the strength of the enforcement mechanisms in the Internal
Revenue Service, including the Criminal Investigation Division
of the Internal Revenue Service. In my background, criminal
investigation does not back down from a challenge; they
appreciate the challenge, and they move forward.
Senator Whitehouse. And would you be willing to make a
report to us once you have been in for a while and gotten a
look at this as to how bad the shell corporations problem is
from your perspective in terms of law enforcement?
Mr. Rettig. Absolutely.
Senator Whitehouse. Okay. Great. Thank you.
There is a collections gap between what taxpayers owe and
what the IRS collects. It is estimated to be about $400
billion.
Would it be fair for us to evaluate your tenure as IRS
Commissioner based on what you can do to reduce that number?
Mr. Rettig. Senator, what I can tell you is, I am very
familiar with the tax gap. I am aware the majority of the tax
gap comes from the individual side: under reporting, non-
filing, and underpayment.
I actually look at the tax gap as somewhat of a roadmap to
tax avoidance, tax evasion in this country. It has been
identified going back to 2001. I believe it was the first tax
gap map that was created, dealing with tax year 2001.
I am very sensitive to that issue. And I am sensitive to
the need to reduce that issue for a variety of reasons,
including a little bit more respect. If we got 1 more percent
of voluntarily compliance, we would move it from say 83 percent
to 84 percent. That is another $30 billion a year.
On the other side, if the Internal Revenue Service loses
respect of the taxpayer and it reduces 1 percent, that is a $30
billion a year loss.
I am extremely hopeful to put a significant dent in the tax
gap.
Senator Whitehouse. And my last question is that a lot of
the work that the IRS does is based on truthful reporting by
taxpayers. If it should come to your attention that a taxpayer
is claiming one thing under oath in a filing to the IRS, and is
claiming something that on its face appears very different to
other regulators or in other reporting environments, what do
you think should be done about that? Is that worth at least a
preliminary look to see why the taxpayer is reporting something
very different to the IRS than they are elsewhere?
Mr. Rettig. The Commissioner is not responsible for audit
selection of taxpayers or issues. That is really more the
workforce.
But I think that the IRS itself has those mechanisms in
place. And they do read the newspapers. They do pay attention
to what is going on outside of the service.
Senator Whitehouse. Should it be something the IRS looks
into if there appears to be inconsistent reporting to determine
whether the reporting to the IRS is truthful or not?
Mr. Rettig. In my experience, the IRS has looked into that.
Senator Whitehouse. And should it continue to do so?
Mr. Rettig. I believe that it should.
Senator Whitehouse. Okay.
Mr. Rettig. It has been my experience that they do.
Senator Whitehouse. My time is up.
I thank the chairman.
Senator Isakson. Thank you, Senator Whitehouse.
Mr. Rettig, would you tell me about the UCLA Extension Vets
Count Scholarship Fund? Do you know anything about that?
Mr. Rettig. I would proudly tell you about the Vets Count.
Senator Isakson. We will all proudly listen. Tell us about
it.
Mr. Rettig. I created the Vets Count Scholarship Fund
through UCLA for the purpose of--UCLA Extension is the number
two extension program in the world in terms of actual
registrations.
Vets Count Scholarship Fund is intended to provide
scholarships to active duty and veterans. It came from the
situation of--you see reality TV, where you see soldiers in a
sandbagged installation in Iraq or wherever they happen to be,
and maybe playing video games or whatnot, and the intent of
Vets Count is to remotely, through webcasts or otherwise, allow
soldiers serving overseas in something like a sand bunker to
actually earn extension credits in areas of finance,
accounting, and such so that when they leave--if you have been
a machine gunner on a Humvee for 3 years, and you have a GI
bill, the ability to go to a college or a university in this
country and sit in a geography class might be a challenge
coming out of the environment that you have been in.
The idea of Vets Count is to provide active duty soldiers
and veterans with the ability to assimilate into society with
some financial literacy, some accounting--and maybe in time
they would go to college--but immediately, to give them some
respect when they come back into the job market.
Senator Isakson. As I understand, you are the cofounder of
that program. Is that correct?
Mr. Rettig. I am the founder of the program.
Senator Isakson. The reason I bring it up is, I am the
chairman of the Veterans' Committee in the United States
Senate. And it is always great for me to point out a United
States citizen who is lending their expertise and their career
to help support in some way veterans' employment, veterans'
education.
And having co-written the eArmyU Act a few years ago when
Senator Kerry and I started distance learning in the United
States military for earning college credit, I understand how
valuable what you are doing there is. And you are taking video
games out of a soldier's hands in many cases and putting a
calculus book in their hands, which is great for all of us.
I wanted to commend you publicly on your commitment to our
military. And your son behind you, he will be a good student
following your leadership, sir.
Mr. Rettig. Thank you.
Senator Isakson. Second, are you familiar with Free File?
Mr. Rettig. I am.
Senator Isakson. I have in the last 7 years had a Free File
event every April in Atlanta at an underemployment and
unemployment center promoting the available software that is
made available by American software developers to file and pay
and get your income taxes or get your EITC, one way or another.
I have tried to pursue making that permanent. It has only
been authorized every 2 years for a couple of years.
Would you give me some idea if you would support permanency
of the Free File program?
Mr. Rettig. If confirmed, I would look into it in more
detail. But I am a huge supporter of whatever makes it more
easy for U.S. taxpayers to get into compliance.
Senator Isakson. Thank you for that answer.
And lastly for my questions, before I turn back to the
ranking member for his second questions, my personal feeling--
and this is me personally as a taxpayer--I have paid taxes
since April 15, 1959, when I made $40 a week as a surveyor's
assistant and had $8.90 withheld from my $40 weekly check,
which is my first experience paying taxes.
Some say that is when they became a Republican. I did not
become a Republican then. I became one later. But nonetheless,
that is not relevant one way or another.
What is relevant about it is, I have paid them for a long
time, and I have had professional help to pay them a lot of
that time, because I personally--it went beyond my ability to
do it and feel like I was doing it right or accurately.
But I believe the most recent tax change, along with some
that took place earlier in tax law, have actually simplified
the process of filing and paying income taxes. Am I wrong or
right on that?
Mr. Rettig. Senator, I know from the outside and from the
press reports that I believe we are on that course. I believe
in terms of being able to come up with a calculus as to an
actual right or wrong, we need to see how this filing season
goes with the 6868.
Senator Isakson. I agree with that. And I am talking to you
as a taxpayer here, not really as a Senator, because it just
seems like, with the enhanced individual deduction, the
doubling of the deduction, with some of the reductions in
itemization that took place and some of the new laws we have
done over the last couple of years, it has made the dream one
day of having the one-page 1040 where you sign and send it in
maybe within reach of us.
I hope as Commissioner of the IRS you will work towards
completing that task to moving towards simplification of the
system, because you just said in answering Senator Whitehouse's
question with regard to the amount of income we have lost by
people not paying, that most of the income we are not getting
is due to the tax gap, people who are not filing and are not
paying.
Mr. Rettig. Right.
Senator Isakson. So it is an overt act on their part that
we are not getting the money, not a mistake. And I would think
simplicity would help us to reduce that amount of people who
are not paying and increase the amount of people who are
filing.
If you would help us do that, I think it would help you a
lot in raising that percentage of collection from 83 to 84.
Mr. Rettig. I agree.
Senator Isakson. Okay. Thank you.
Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman.
My friend, Senator Isakson, makes the commendable point
about simplicity. And I hope you will take it seriously. I will
just tell you, if confirmed, you have some heavy lifting to do
because, after all the ballyhoo about how the administration
was going to get taxes on a postcard, apparently for a lot of
people you would have to complete six schedules in order to be
part of such a drill. So you are going to have some heavy
lifting to do.
I will just tell you point-blank, I hope what you will do
is focus on the small business guidance, on the pass-through
provision which looks like it is literally from fantasy land in
terms of trying to figure out what is expected of these small
businesses in April. A lot of them told me they could not even
begin to make an estimate of their taxes.
I hope you will do that first, rather than continue on
other matters that might make for good publicity but do not
really deal with the guts of what our economy needs. And
particularly in my State and much of the country, most
businesses are pass-throughs, and they are literally crying out
for some clarity on what is going to be done.
Now for my next question, I would like to turn to the
charity area, because we have had strong bipartisan support in
this committee for charity. Senator Thune and I have prosecuted
that case for a long time.
Secretary Mnuchin said that the bill is going to encourage
more charitable donations. The nonpartisan experts at the Tax
Policy Center say, in their view, that the number of taxpayers
claiming the charitable deduction will be cut by more than a
half, and overall charitable giving will decline by as much as
$20 billion annually. You have probably seen in the press that
a lot of the charities are already speaking out publically
about their concerns, their concerns about the vagueness of the
provisions, drafting errors. They do not even in many instances
know how to comply with the new rules.
Do you have any reason to doubt the findings of these
nonpartisan experts who talk about the decline of charitable
giving as I have described?
Mr. Rettig. I have not reviewed those reports personally.
So it would really be unfair of me to comment on what they are
saying. But I believe in the concept of charitable giving and
would support that.
Senator Wyden. On the management front, what is the largest
number of employees that you have managed?
Mr. Rettig. Actual employees in our office, 35.
Senator Wyden. Thirty-five. Okay.
So there are 70,000 people who are going to be working at
the IRS. I thought your point with respect to Senator Carper
that you have shown leadership and you have served on all of
these boards--I would like you to furnish for the record,
because time is short and my colleague and I, we have some
business to do. I would like to hear more specifics about what
kind of management approach you would actually take, because
there is a big difference between managing 35 and managing
70,000. I would just like to have that for the record.
One last question with respect to these charitable groups
and political activity. I thought your answer to my question
about the Vice President was a good one, because I thought that
statement he made was way over the line. I mean, not even
close, because that is really trying to interfere with the
impartial administration of tax law.
But I continue to be concerned about these issues, given
the allegations that the Trump campaign operation coordinated
or even diverted how Trump Foundation grants were distributed
to provide maximum benefit to the Trump campaign.
In the meeting that you and I had, you emphasized the
importance of the IRS using its resources to send a message to
the public. You talked about some examples of that. What kind
of a message would it send for the IRS not to pursue evidence
of the law being violated by a high government official?
Now I am not talking to you about a specific case, but I
would just like to hear your thoughts about the kind of message
it would send for the IRS not to pursue evidence of a law
violation by a high official.
Mr. Rettig. In my experience, the IRS looks into a lot of
matters, develops the facts of those matters, and sometimes we
hear about them publically and sometimes we do not. So the
public acknowledgement of what the IRS might be doing does not
really surface until something gets through the system. But
also in my experience, the IRS does read the newspapers, and
they do create cases out of what they read in the newspapers.
Senator Wyden. The IRS certainly will get a newspaper. But
given what has happened recently, literally a month ago, with
the Vice President of the United States basically saying that
his views were more important than the Johnson Amendment, which
prohibits politics from the pulpit, I think we ought to
understand we are in a different kind of time.
So I look forward to continuing these discussions. I have
asked for a number of matters for the record.
Chairman Hatch and Senator Isakson have agreed we have some
other business to do after Senator Brown has a chance to ask
questions.
I appreciate the second round, Mr. Chairman.
Senator Isakson. Yes, sir.
Senator Brown?
Senator Brown. Thank you, Senator Isakson.
Senator Wyden, I appreciate that.
Welcome, Mr. Rettig. It was good talking with you. Thank
you for joining us.
I would like to start with the issue of private debt
collection. I echo the comments of Senator Cardin that it costs
more than it raises, and there is obviously evidence for that.
I fought against this program at every turn. It is unfair. It
is too often confusing for taxpayers, as I know you are aware.
The Taxpayer Advocate has said that it is unfairly
targeting low-income individuals. That too, I think all of us
agree, is unacceptable.
If confirmed, would you commit to a full review of the
private debt collector program, including a review of its
collection methods?
Mr. Rettig. I would. The Internal Revenue Service's
responsibility is to follow the law. And as we all know,
private debt collectors are part of the law.
The issue I think that surfaced is implementation of the
private debt collector law and is it being implemented in an
impartial manner. And I would absolutely look into that.
Senator Brown. And that means you are suggesting you would
work to ensure that extremely vulnerable taxpayers are not
being targeted?
Mr. Rettig. Agreed.
Senator Brown. Okay.
The IRS is planning, as we have talked about, to shut down
a branch in Covington, KY, just on the other side of the Ohio
River from Cincinnati, affecting 800 of my constituents. Would
you commit to finding similar employment for workers at a
nearby IRS office?
Mr. Rettig. I do not believe it is fair for me to commit,
not having been in the Internal Revenue Service, with respect
to that and the reasoning behind terminating employees. But I
share your concern with 800 individuals not being employed if
they shut down the office, and I commit to you I would look
into that and work with your office.
Senator Brown. Considering the amount of talk about the
agency's need for resources and staff--which I certainly
support, and I hope my colleagues on the other side of the
aisle will too--I think it is unreasonable to eliminate these
positions rather than work to reassign those workers. So I will
work with you on that, and I appreciate that.
Lastly, I know you have discussed your experience with the
VITA program with me and my staff. My understanding is you have
done that from the time you were in school and since.
For tax compliance, especially with respect to the Earned
Income Tax Credit, which is one of the most important parts of
our tax law--it rewards work for moderate- and low-income
workers. And every March or April, literally hundreds of
thousands of Ohioans who make $20,000 or $30,000 or $40,000 a
year, because of this refundable tax credit, all things you
know, will get a check of $2,000 or $3,000, and that income is
very, very significant, obviously.
VITA sites have a 93-percent accuracy rate. They are really
the gold standard.
Describe for us, because I think it is so important to have
an IRS Commissioner who has actually practiced this, who cares
about VITA--tell us about your experience working with VITA.
And reassure all of us on this committee that you will work to
make sure that VITA sites have the resources they need to meet
demand for their services.
Mr. Rettig. I am a huge proponent of VITA. It serves two
purposes. It is obviously--on the taxpayer service side, it is
providing essentially free services to the taxpayer.
The other side of that is, a significant number of tax
professionals in this country started out understanding what
tax administration was about in a VITA program--you know,
preparing returns and interacting on behalf of taxpayers in
that context, rather than taking tax or accounting courses in a
college-type environment.
So for many professionals whom I know, their spark on the
interest of being involved in tax administration began in a
VITA program. And as you indicated, Senator, the accuracy
relayed from VITA programs, the training of the people involved
in the programs, is significant and point-on for the purpose of
preparing accurate returns, and it is critical to the success,
if you will, of the tax administration in this country that
returns get prepared as accurately as possible.
Senator Brown. Thank you.
I so appreciate the work you have done with VITA, and so
appreciate your comments. I hope we can count on you when there
are members of this committee and there are politicians in this
town who love to talk in a deceitful way, frankly, by playing
with numbers, about fraud and the Earned Income Tax Credit,
always exaggerated frauds. That is echoed sometimes by
newspapers like The Wall Street Journal so often, because what
they call fraud is really either underpayment or overpayment
that the taxpayer had nothing to do with. They were simple
mistakes.
Again, often it is underpayment of funds, not overpayment.
So it is far from fraud, but I am hoping we can count on you as
the IRS Commissioner to defend that and speak out and set the
record straight when those accusations are made.
Mr. Rettig. Absolutely.
Senator Brown. Thank you.
Senator Isakson. Senator Toomey?
Senator Toomey. Thank you, Mr. Chairman.
Mr. Rettig, thank you very much for being here, for your
willingness to serve in what is sometimes a thankless position.
I enjoyed our chat some weeks ago.
A couple of points here: one, the tax reform measure that
we passed almost exactly 6 months ago is contributing, I think,
enormously to a very, very good economic environment. We are
seeing some very encouraging data, record low unemployment, the
unprecedented fact that there are more job openings than there
are people looking for jobs in America today.
The CBO revised its GDP growth for the year. Their estimate
changed from 2 percent before the tax reform to now where they
are expecting 3.3 percent. Our goal to eliminate the lock-out
effect on foreign earnings by changing to a more territorial
basis--that is clearly working, as dividends from abroad are
coming home on a scale of hundreds of billions of dollars.
So this is proving to be extremely beneficial. But as you
know, there are still provisions that need rules for
implementation. And I simply would want to ask that you would
commit to working with this committee and members of Congress
to ensure that as any ambiguities are addressed and rules are
developed that you are taking into account the intent of those
of us who wrote this legislation so that we get it right for
our constituents.
Mr. Rettig. Absolutely.
If confirmed, the Internal Revenue Service will follow the
law and what Congress intended in putting it into law. And I
look forward to the opportunity to assist the Internal Revenue
Service in providing clear, concise, timely guidance so the
taxpayers of this country can get it right the first time.
Senator Toomey. Great. Great. Thank you.
We also spoke briefly about the Foreign Account Tax
Compliance Act, often known by the acronym FATCA. And this is
the requirement that foreign financial institutions that hold
assets for American citizens have to report about these
accounts to the U.S. Government or withhold 30 percent as a tax
on these.
The fact is, many foreign financial institutions find this
so cumbersome they simply refuse to provide banking systems to
American citizens abroad. This is a huge problem for Americans
abroad. A record number of Americans have renounced their U.S.
citizenship because they just cannot manage their finances if
they choose to live abroad for some time.
It also makes it a huge competitive disadvantage for
Americans who are seeking to work--and sometimes a stint
overseas can be a very valuable experience for one's career. I
do not think we should be putting Americans, and for that
matter American multi-nationals, at a competitive disadvantage
this way.
So can I get a commitment from you that you will work with
us here in Congress to find ways to lessen this burden that
FATCA is imposing on Americans?
Mr. Rettig. If confirmed, I would commit not only with
respect to FATCA, but with respect to every issue that we can
come up with to lessen the burden on American taxpayers going
forward.
Senator Toomey. And then finally, it struck me as
surprising when I learned that the IRS has so few appointed
positions and so many career positions. There are lots of
terrific career staff. There is no question about that.
But my understanding is there is a Commissioner, a Chief
Counsel, and a Chief of Staff who are the Commissioner's direct
discretionary hires, but other than that--well, the
Commissioner gets appointed, of course. But otherwise,
everybody is career staff.
And I just wonder if it would not be better for the
Commissioner to be able to assemble his or her own management
team to a greater extent. Do you have an opinion on that?
Mr. Rettig. I believe that the workforce and leadership
currently in place--career IRS workers are absolutely world-
class. But I also believe that having a private-sector
experience and bringing that inside is critical so that there
is a deep understanding of the impact of each step that the
Internal Revenue Service takes on American taxpayers and
interactions with this committee and others.
Senator Toomey. Great. Thank you very much.
Thanks, Mr. Chairman.
Senator Isakson. Thank you, Senator Toomey.
It was the committee's intention to report four nominees
during today's hearing. But as we have yet to get a quorum, we
will have to move the consideration of these four to the floor
later today.
I understand the ranking member would like to make a brief
statement about the four nominees. And I recognize Senator
Wyden.
Senator Wyden. Thank you very much, Mr. Chairman. I agree
with the decision to vote on these nominees off the floor
later.
We are going to be voting on four nominations, as Chairman
Isakson has noted. Ms. Elizabeth Copeland, and Mr. Patrick Urda
are up for positions on the Tax Court, obviously key positions
with respect to fairness for taxpayers.
Mr. Chairman, I note that our friend Senator Scott has
come. I believe he probably wants to ask questions of Mr.
Rettig.
Why don't I hold off making my comments about the nominees?
Then we could let Senator Scott go before we go to another
matter.
Senator Isakson. Senator Scott, you are recognized.
Senator Scott. Well, thank you both very much.
Mr. Rettig, the Department of Treasury and the IRS formally
certified nominations from the States, the District of
Columbia, and all possessions of the United States to designate
opportunity zones in their areas of jurisdiction. This is
really good news.
Securing this provision in the tax bill was a huge
legislative win for millions of Americans living and struggling
in communities in need of a renaissance. Please thank Acting
Commissioner Kautter and his team for their hard work in
pushing out the guidance that helped local leaders select their
opportunity zones.
This provision will help to create permanent and positive
change that will benefit generations to come. I look forward to
further guidance for the investors and entrepreneurs on
establishing the investment vehicles and identifying qualified
investments most likely to drive jobs and economic activities
back into those areas.
Innovative tax incentive programs, such as my opportunity
zones provision, have been created by Congress to achieve
important public policy goals that risk being severely
underutilized because of taxpayer fear of IRS retribution.
If confirmed, what will you do going forward to more
closely align IRS guidance and enforcement with congressional
intent?
Mr. Rettig. Senator, if confirmed, I look forward to
working with you and other members of the committee in making
sure that guidance issued by the Internal Revenue Service is
clear, concise, and timely.
And I would hope that we could get to a situation where
American taxpayers do not fear retribution from the Internal
Revenue Service but respect the Internal Revenue Service, and
that it is clear that they know that the Internal Revenue
Service respects the American taxpayer.
Senator Scott. Thank you very much. That is really good to
hear, because I will tell you that, as you think about the
opportunity zones legislation, we are talking about legislation
that could provide private-sector capital to more than 52
million Americans living throughout this Nation still in
distressed communities. So the positive impact of attracting
maybe $2 trillion of capital gains back into some of the most
distressed communities in the country would be just impressive
and necessary.
Having grown up in one of those distressed communities
myself, I understand and appreciate the potential that is
locked, trapped in the soil in those communities. And we have a
way of excavating that human potential. I think it is
incredibly important. Thank you very much for that.
One final question, Mr. Chairman.
The IRS currently wields a tremendous amount of power over
the folks in South Carolina and across the country, far more
than the founders intended. One example is found in civil asset
forfeiture. This practice allows the IRS to confiscate a
citizen's wealth upon the mere suspicion of wrongdoing.
During a 2-year investigation, the Ways and Means Oversight
Subcommittee discovered the IRS had seized civil assets from
small business owners without providing substantial evidence to
support their claim. That is why I introduced the RESPECT Act,
which would require the IRS to show probable cause before
seizing assets and facilitate taxpayer presentation of proof
that would clear them of wrongdoing.
Will you commit to working with me to protect taxpayers and
small businesses?
Mr. Rettig. Absolutely.
Senator Scott. Thank you very much, sir.
This is basically an issue of liberty, and there is a
bipartisan consensus that civil asset forfeiture is an abuse
that needs to be stopped.
Thank you for your response. Thank you for your indulgence.
I yield the rest of my time.
Senator Isakson. Thank you, Senator Scott.
And I might add, since I am only acting chairman, I am
going to abuse that privilege, if I can for one second, to
commend Senator Scott on the asset forfeiture issue being
brought forth. I am a cosponsor of that legislation.
There is a Georgia taxpayer who I think is the face of that
movement around the country to end the abuse of the civil asset
forfeiture treatment. And I hope the IRS will do everything
they can to cooperate with us and get into a positive
resolution of that.
Thank you for bringing that up.
Senator Scott. Thank you, Mr. Chairman.
Senator Isakson. Senator Wyden, you are recognized for the
remainder of your statement.
Senator Wyden. Thank you, Mr. Chairman.
I am sure it is hard for folks to assess where we are.
Unless any other members come in, Mr. Rettig, we will look
forward to getting your written responses and continuing our
discussions.
Chairman Isakson and Chairman Hatch and I have all agreed
we will vote on the nominations that are before us off the
floor of the Senate when we have a vote. So there are several
nominees. Ms. Elizabeth Copeland and Mr. Patrick Urda are up
for positions on the U.S. Tax Court. Obviously those positions
deal with fairness for taxpayers that we have been talking
about today.
Jeffrey Kessler is nominated to be an Assistant Secretary
at the Commerce Department, and, if confirmed, he would play a
key role in another area of bipartisan concern: tougher
enforcement of trade laws. I plan on supporting each of those
three nominees.
The fourth who is up for consideration is Ms. Lynn Johnson,
nominated to serve as Assistant Secretary for Family Support at
HHS. In that position, Ms. Johnson would be the head of the
Administration for Children and Families.
There are several specific issues regarding that nomination
that I will just touch on briefly. The first deals with the
child welfare system.
Our committee has passed a number of landmark bipartisan
child welfare laws. It is our job to perform vigorous oversight
of those laws, and the Congress needs access to the information
that shows how child welfare programs around the country
actually work on the front lines.
Unfortunately, last year the Trump administration announced
a plan that would make it significantly harder to get the
information this committee and the public needs to conduct
oversight of these programs effectively. So, this is not a
criticism of that particular nominee, Ms. Johnson, but it
certainly was a mistake by the Trump administration, a big
mistake--in my view, a mistake in the wrong direction for kids
in foster care.
I have been working with the Department on the issue for
several months. We have had communication, but I still do not
think there has been enough actual progress on that front.
That, then, brings me to the second issue with respect to
Ms. Johnson. If she is confirmed, she would oversee the Office
of Refugee Resettlement. This is the agency that has custody
over the thousands of refugee children the Trump administration
separated from their mothers and fathers.
Americans have rightfully been horrified by the stories of
weeping mothers unsure of where their daughters and sons have
been taken. And some of the audio tapes--gut-wrenching audio
tapes--have been heard, with young children crying out in fear
inside a detention facility. And Americans want answers as to
how this is going to be fixed.
Now, Ms. Johnson, when she ran the Jefferson County child
welfare program in Colorado, the State Senate greenlighted a
law allowing foster kids to be placed in juvenile detention
facilities. When the committee met several weeks ago for a
hearing on her nomination, that was one issue among several
that committee members had to consider.
Now, because of the new firestorm that the Trump
administration has created, the issue of putting children in
detention facilities is obviously very much on the minds of the
American people. In my view, the committee has not had an
opportunity to learn nearly enough about how Ms. Johnson would
handle this part of her job, if she is confirmed.
And the fact is, we have been in the dark to a great extent
on this matter for several weeks now. We had Secretary Azar,
with respect to the children under his custody, not able to
give us straight answers even with respect to how many of the
parents have been told where their children actually are.
So Ms. Johnson certainly, if confirmed, is going to have a
key role in addressing this issue of protecting these kids,
making sure these children are safe, when we have seen
significant evidence that they really are at considerable risk.
So she has a big job ahead of her.
We will have the vote off the floor of the Senate.
Certainly a number of my colleagues on both sides of the aisle
are going to support her, but in view of the two issues that I
have mentioned, I am not able to support her nomination today.
Thank you, Chairman Isakson. It looks to me like we are
done.
Senator Isakson. We are almost done. I have a statement to
read for the chairman.
Thank you all for attending today. And in particular, Mr.
Rettig, thank you for your attendance and your commitment to
public service. We commend you on your work in the past, in
particular on veterans' affairs. We appreciate that very much.
We appreciate all of the good questions that were provided
today by the members. Any other questions can be submitted for
the record.
Please know that should you serve the agency and the
American people well, Mr. Rettig, you will have no greater
friend than this committee. However, we also have a
responsibility to the American people, and the Finance
Committee will continue to be the place where your actions will
be overseen and reviewed. We hope you will count on us for
help. We will be the greatest watchdog you and the agency have.
I ask that any member who wishes to submit questions for
the record do so by the close of business on Tuesday, July 3rd.
With that said, this hearing is adjourned.
Thank you, Mr. Rettig, for your attendance.
[Whereupon, at 12:19 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a hearing to
consider the nomination of Charles Rettig to be the Internal Revenue
Service (IRS) Commissioner.
Right now, the IRS is at a critical juncture. The American people
are already seeing a myriad of benefits thanks to tax reform, as
unemployment continues to drop and wages rise.
And the IRS will be responsible for implementing these new policies
smoothly and efficiently so that the new law's full benefits can be
more quickly realized.
After years of turmoil and controversy, I am hopeful that the IRS
has finally started turning the corner. However, with a large
governmental organization like the IRS, there is always room for
improvement.
Take for example, the problems of aging technology services. Some
of the IRS's information technology dates back to the Kennedy
administration. Unsurprisingly, that dated technology could inhibit the
IRS's ability to interact coherently with 21st-century technology that
currently powers our country and much of the rest of the world.
If confirmed, I expect Mr. Rettig to work with Congress to
modernize the IRS's infrastructure and technology to bring the agency
into the 21st century.
Another major issue is that the IRS has an aging workforce. Right
now, the majority of the IRS's workforce is over the age of fifty and
nearing retirement. If that majority of the workforce were to retire at
or around the same time, the IRS will face a shortage of knowledge and
experience.
If confirmed, I hope that Mr. Rettig will start working with
Congress immediately to plan for the agency's future. As the IRS
continues to implement tax reform, it must work with the Treasury
Department to issue regulations and other guidance to ensure that
taxpayers have certainty and predictability concerning this new law.
It must also work with Congress to ensure that the new law is
implemented and administrated as Congress intended.
The challenges I have enumerated are greater than any one
Commissioner. But the Commissioner will set the tone of the workforce
and will be charged with working alongside Congress to thoroughly and
fairly implement and enforce our new tax laws.
An effective IRS Commissioner must also remember that our tax
system relies, in great part, on voluntary compliance. And the system
works best when American taxpayers trust the agency and are able to
easily contact the IRS to receive timely and complete answers to their
questions.
In short, if confirmed, Mr. Rettig has his work cut out for him,
but I'm optimistic that he is up to the job and, if confirmed, will
lead the agency with integrity.
That said, should the IRS slip up, or fail to live up to the high
standards Congress has set, this committee will hold the IRS
accountable, as it always has.
At the same time, when the IRS acts properly, responds
thoughtfully, and works with us, the IRS will find no better friend
than this committee. After all, we recognize just how important it is
that our taxes are collected fairly, efficiently, and in compliance
with what Congress intended when we wrote the tax laws.
I thank Mr. Rettig for being here and his willingness to serve. Mr.
Rettig has decades of experience representing taxpayers before the IRS.
He knows the agency inside and out, due to his years of work on
advisory councils and stakeholder groups. And he brings the necessary
passion and dedication that this role will require.
I am confident that, if confirmed, Mr. Rettig will be a
trustworthy, responsive, and earnest partner with Congress and this
committee as we pursue our shared mission to improve the agency.
I do want to thank Acting Commissioner Kautter, who has done a
great job at the IRS. However, that's not what we confirmed Mr. Kautter
to do. And now, more than ever, we need Mr. Kautter back doing his
full-time job at the Treasury Department.
Before we begin today, I want to clear something up. There have
been inaccurate press reports based on leaked committee documents that
the nominee didn't disclose property he owns in a Trump International
property in Hawaii.
This is absurd and false, and we should put this matter to rest
right now.
First, he disclosed these properties, which were purchased in 2006,
on the committee questionnaire. That is a fact. He has been honest and
forthright with this committee at every stage of the vetting process.
The dispute here pertains to the additional details of noting the name
on the side of the building.
Second, any suggestion that there is a conflict of interest here is
the stuff of conspiracy theories. Maybe one wants to argue that Mr.
Rettig purchased these properties in 2006, during Season 5 of ``The
Apprentice,'' on the off chance that Mr. Trump would become President
and nominate him to be IRS Commissioner.
But this is silly, and I hope we can put that matter to rest and
move on to the substance of this morning's confirmation hearing.
And finally, I do want to note that we've noticed an executive
business meeting for this time as well.
If, at any point during the hearing, a suitable quorum is present,
I intend to pause the hearing and move immediately to votes on the
nominations of Mr. Jeffrey Kessler, Ms. Lynn Johnson, Ms. Elizabeth Ann
Copeland, and Mr. Patrick Urda.
______
Prepared Statement of Charles P. Rettig, Nominated to be Commissioner,
Internal Revenue Service
Chairman Hatch and Ranking Member Wyden, it is an honor to appear
before the Senate Finance Committee as the President's nominee to serve
as Commissioner of the Internal Revenue Service.
Before I go any further I would like to recognize my family who are
with me today: my wife Tam, my sister-in-law Jan, my stepsons Dayton
and Trenton, my daughter Christina, and my son Charlie. I cannot
explain what their love and support mean to me.
Charlie serves as a Captain in the U.S. Army and returned just days
ago from a 12-month deployment overseas. When I was nominated he
proudly pointed out, ``Dad, you'll be following me into public
service.'' Nothing would make me prouder. He also taught me something
about the tax code--that he has 180 days from when he left the Sinai
Peninsula to file his tax return.
I would also like to acknowledge my father, who built an air-
conditioning business that taught my brother and me the value of hard
work. I was the first in my family to finish college, and through
undergrad, law school, and graduate school they often joked that I
would never stop studying--and they were right.
For more than 35 years, I have worked with all levels of the IRS to
achieve resolutions on behalf of taxpayers and bring them back into
compliance with our system of voluntary self-assessment. I have served
as Chair of the IRS Advisory Council and in a similar role in my home
State of California. I am currently vice-chair, administration for the
12,000 member Taxation Section of the American Bar Association. I also
serve as president of the American College of Tax Counsel.
Through decades of experience working across the table from the
IRS, I have seen the difficulties faced by taxpayers of all kinds--from
large employers, to small businesses, to low-income taxpayers who need
help. When the IRS started ``Problem Solving Days'' to allow taxpayers
to come in without an appointment, I organized dozens of tax
professionals in my area to assist unrepresented taxpayers who appeared
at the IRS seeking a resolution of a tax issue. I've also devoted a
significant amount of time assisting taxpayers who can't afford
professional help on a pro bono basis.
Throughout my career, I have also been privileged to work with many
professional and hard-working IRS employees and, if confirmed, would be
honored to work alongside them and earn their respect. Despite the
challenges it faces, the IRS is fortunate to have an experienced
workforce committed to its mission.
In my career, I have seen the impact of those challenges firsthand.
Long waits on the phone and inadequate IT systems are significant
sources of frustration. If confirmed, I will work with this committee
to take on these and other challenges with the impact on taxpayers in
mind. We cannot fall into the trap of viewing the challenges the IRS
faces as facts of life but must work together to solve them.
If I am privileged to serve as Commissioner, my overriding goal
will be to strengthen and rebuild trust between the IRS, the American
people, and their representatives in Congress. That trust is critical
to all that the IRS does--particularly as it works with the Department
of the Treasury to implement once-in-a-generation tax reform
legislation enacted by Congress last year. The successful
implementation of that landmark reform law will be among my highest
priorities as Commissioner.
In closing, I wish to acknowledge IRS Revenue Procedure 1964-22
issued by Commissioner Mortimer Caplin--a veteran of D-Day, who, at age
101, remains a legend at the IRS and throughout the tax practitioner
community:
. . . it is the duty of the Service to carry out that policy by
correctly applying the laws enacted by Congress; to determine
the reasonable meaning of various code provisions in light of
the Congressional purpose in enacting them; and to perform this
work in a fair and impartial manner, with neither a government
nor a taxpayer point of view. . . .
I am grateful for the opportunity to testify and look forward to
your questions.
______
SENATE FINANCE COMMITTEE
STATEMENT OF INFORMATION REQUESTED
OF NOMINEE
A. BIOGRAPHICAL INFORMATION
1. Name (include any former names used): Charles Paul Rettig, also
known as Chuck Rettig.
2. Position to which nominated: Commissioner of the Internal Revenue
Service.
3. Date of nomination: February 13, 2018.
4. Address (list current residence, office, and mailing addresses):
5. Date and place of birth: November 18, 1956; Burbank, California.
6. Marital status (include maiden name of wife or husband's name):
7. Names and ages of children:
8. Education (list secondary and higher education institutions, dates
attended, degree received, and date degree granted):
Graduate Law School: New York University, School of Law, 09/
1981 to 05/1982 (LL.M. in Taxation, 1982).
Law School: Pepperdine University, School of Law, 09/1978 to
12/1980 (JD, 1980).
Undergraduate College: University of California, Los Angeles
(UCLA), 09/1974 to 03/1978 (BA, Economics, 1978).
High School: El Camino Real High School, LAUSD, Woodland Hills,
California (1972 to 1974).
9. Employment record (list all jobs held since college, including the
title or description of job, name of employer, location of work, and
dates of employment):
Hochman, Salkin, Rettig, Toscher, and Perez, P.C. (and
predecessor firm Hochman, Salkin, and DeRoy, P.C.), tax
attorney; 9150 Wilshire Boulevard, #300, Beverly Hills,
California 90212; July 6, 1982 to present.
10. Government experience (list any advisory, consultative, honorary,
or other part-time service or positions with Federal, State, or local
governments, other than those listed above):
Internal Revenue Service Advisory Council (IRSAC) Chair; 2010-
2011; Vice-Chair, 2009-2010; Member (Small Business/Self-
Employed Division Subgroup), 2008-2010; an unpaid voluntary
position.
California Franchise Tax Board, Advisory Board, 1998-present;
an unpaid voluntary position.
California State Board of Equalization, Advisory Council, 2011-
2014; an unpaid voluntary position.
11. Business relationships (list all positions held as an officer,
director, trustee, partner, proprietor, agent, representative, or
consultant of any corporation, company, firm, partnership, other
business enterprise, or educational or other institution):
President, Hochman, Salkin, Rettig, Toscher, and Perez, PC.
President/Director, PADI Foundation, a non-profit, public
benefit corporation.
Trustee (unpaid) of several irrevocable trusts for a few
private individual clients of our law firm--each such trust is
solely for the benefit of family members of such client--I do
not have nor have I ever had any beneficial or economic
interest in any of such trusts. I have/will resign as Trustee
of such trust if privileged to be confirmed for the position
for which I am being nominated, and prior to serving in such
position.
Co-Trustee (unpaid) of the Hochman, Salkin, Rettig, Toscher,
and Perez, PC retirement plans. I have/will resign as Trustee
of such trust if privileged to be confirmed for the position
for which I am being nominated, and prior to serving in such
position.
Trustee (unpaid) of 9150 Trust, created for the benefit of
Hochman, Salkin, Rettig, Toscher, and Perez, PC. I have/will
resign as Trustee of such trust if privileged to be confirmed
for the position for which I am being nominated, and prior to
serving in such position.
12. Memberships (list all memberships and offices held in
professional, fraternal, scholarly, civic, business, charitable, and
other organizations):
Internal Revenue Service Advisory Council (IRSAC), Chair (2010-
2011).
Vice-Chair (2009-2010); Member--Small Business/Self-Employed
Division Subgroup (2008-2010).
California Franchise Tax Board, Advisory Board, Member, 1998-
present.
California State Board of Equalization, Advisory Council,
Member, 2011-2014.
American Bar Association, Taxation Section.
Vice Chair, Administration, 2014-present.
Council Director, 2012-2014.
Civil and Criminal Tax Penalties Committee.
Chair, 2009-2011.
Vice-Chair, 2007-2009.
Chair, Subcommittee on Civil Penalties, 2002-2008.
Member, Standards of Tax Practice Committee.
Liaison, IRS National Taxpayer Advocate, 2003-2007
(est.).
Member, Court Procedure and Practice Committee, Member.
Member, Committee on Appointments to the U.S. Tax Court,
2006, 2008, 2011-2013.
State Bar of California.
Chair, Taxation Section, 1999-2000.
Chair-Elect, Taxation Section, 1998-1999.
Vice-Chair and Member, Taxation Section Executive
Committee, 1995-1997.
Advisor, Taxation Section Executive Committee, 2004-2014.
Immediate Past-Chair, Taxation Section Executive
Committee, 2000-2001.
Chair, Committee of Past-Chairs, 2001-2002.
Chair, State and Local Tax Committee, 1998.
Member, Tax Procedure and Litigation Committee
American College of Tax Counsel (ACTC), President (2018); Vice-
President (2016-2018); Treasurer, (2015-2016); Member and
Chair, Nominating Committee (2012-2015); Elected Regent (2009-
present); Elected Fellow (2000-present).
New York University School of Law, Graduate Tax Program,
National Board of Advisors, 1999-2010 (est.).
New York University School of Law, Weinfeld Associate.
New York University School of Law, Wallace-Lyon-Eustice
Associate.
New York University Institute on Federal Taxation.
Institute Co-Chair, 2009 and 2017.
Chair, Tax Controversies Sessions, 2007-present.
Member, Advisory Board, 2007-present.
UCLA Extension Annual Tax Controversy Institute.
Institute Chair and Planning Committee Member, 1998-
present.
USC Institute on Federal Taxation,
Member, Executive Committee, 2003-present.
Subcommittee Chair--Ethics, Compliance, and Enforcement,
2004--present.
ABA National Institute on Criminal Tax Fraud and Civil Tax
Controversy, Institute Chair, 2011-2013; Institute Co-Chair
2014-present; ABA National Institute on Criminal Tax Fraud,
Institute Co-Chair, 2010.
California CPA Education Foundation, Board of Trustees, Member,
2007-2011.
Beverly Hills Bar Association.
Chair, Taxation Section, 2001-2003.
Vice-Chair, Taxation Section, 2000-2001.
Executive Committee Member, Taxation Section, 2003-2014.
Chair, Tax Procedure Committee, 2000-2001.
Chair, State and Local Tax Committee, 1997-1999.
Los Angeles County Bar Association
Chair, Tax Procedure and Litigation Committee-1997.
Wolters Kluwer Law and Business (CCH) Legal Tax Advisory Board,
Founder and Chair, 2012-2014.
Society of Trust and Estate Practitioners (STEP), 2009-present.
California Society of CPAs (CSCPA), Committee on Taxation, Los
Angeles Chapter, 1998-present; CSCPA, Associate Member, 1998-
present.
Hawaii Society of Certified Public Accountants (HSCPA)--
Taxation Committee, Member.
California Society of Enrolled Agents, Professional Affiliate,
2006-2010 (est.).
American Tax Policy Institute, Life Member.
Co-Founder, UCLA Extension VETS COUNT Scholarship Fund--Vets
Count provides scholarships for active and retired military
personnel who are working to realize their career goals in tax,
accounting, wealth management, and other areas of the financial
services industry, https://giving.ucla.edu/vetscount.
United States Tax Court Judicial Conference, Invited
Participant, 1999, 2005, 2007, 2009, 2015, 2018.
Golden Gate University, Graduate School of Taxation, Advisory
Board, Member, 2006-2015 (est.).
Chapman University School of Law, Graduate Tax Program,
Advisory Board, Member, 2004-2008 (est.).
Association of Tax Counsel, Los Angeles, CA 1997-present.
U.S. Court of Federal Claims Bar Association.
Federal Bar Association (Taxation Section).
State Bar of California (Taxation Section).
State Bar of Arizona (Taxation Section).
State Bar of Hawaii (Taxation Committee).
Los Angeles County Bar Association (Taxation Section).
Beverly Hills Bar Association (Taxation Section).
San Fernando Valley Bar (Taxation Section).
California CPA Education Foundation, Faculty of Lecturers,
1997-2009.
Wounded Warrior Project, Advance Guard, 2011-present.
UDT-SEAL Association, Associate Member, 2010-2016.
National Rifle Association (Father's Day gift subscription from
active duty military family member).
PADI Foundation, a California Non-Profit Public Benefit
Corporation, Co-Founder, President/Chair, 1991-present.
Crespi Carmelita High School, Board of Directors, 2006-2010.
Natural History Museum, Past-Member, Los Angeles, CA.
Greater Los Angeles Zoo Association, Member, Los Angeles, CA.
Honolulu Zoo Association, Member, Honolulu, HI.
Santa Barbara Zoo Association, Past-Member, Santa Barbara, CA.
The Academy of Magical Arts, Past-Associate Member, Los
Angeles, CA.
Porsche Club of America, Los Angeles Chapter, CA.
Petersen Automotive Museum, Los Angeles, CA.
13. Political affiliations and activities:
a. List all public offices for which you have been a
candidate.
N/A.
b. List all memberships and offices held in and services
rendered to all political parties or election committees during
the last 10 years.
N/A.
c. Itemize all political contributions to any individual,
campaign organization, political party, political action
committee, or similar entity of $50 or more for the past 10
years.
I have exercised my best efforts to identify all such political
contributions including a review of my personal files and searches of
publicly available electronic data bases. Despite my searches, there
may be other contributions I have been unable to identify, find, or
recall. In this regard, to the best of my present knowledge:
Muliufi (``Mufi'') Hannemann for Congress--2012 ($1,500).
Brad Sherman for Congress--2012 ($500).
Mary Mack Bono Committee--2012 ($500).
Romney for President, Inc.--2012 ($500).
Obama Victory Fund--2012 ($500).
Obama for America--2012 ($500).
Friends of Max Baucus--2013 ($2,600).
Robert E. Andrews for Congress--2013 ($250).
Friends of Alan Arakawa--2013 ($1,000 est.).
Brian Schatz for Senate--2013 ($5,200).
Brian Schatz for Senate--2014 ($5,200).
Brian Schatz for Senate--2016 ($200).
Democratic Party of Hawaii--2014 ($2,100).
Kamala D. Harris for Senate--2016 ($500).
National Republican Congressional Committee--2017 ($500).
Trump Make America Great Again Committee--2017 ($500).
Donald J. Trump for President, Inc.--2017 ($375).
14. Honors and awards (list all scholarships, fellowships, honorary
degrees, honorary society memberships, military medals, and any other
special recognition for outstanding service or achievement):
Certified Specialist, Taxation Law, the State Bar of
California, Board of Legal Specialization.
Certified Specialist, Estate Planning, Trust and Probate Law,
the State Bar of California, Board of Legal Specialization.
``Tax Lawyer of the Year'' (Litigation and Controversy, Los
Angeles), Best Lawyers--2016, 2017, and 2018.
IRS District Director's Award, Los Angeles District, 1998.
V. Judson Klein Award for Outstanding Achievement in Taxation,
Taxation Section; State Bar of California, 2003.
Award for Extraordinary Efforts Enhancing Government and
Private Tax Practitioner Partnerships in the Tax Community for
Continuing Education and Professional Development, UCLA
Extension, 2005.
2009 Tax Person of the Year (Top 10), Tax Notes/Tax Analysts.
Top 50 IRS Representation Practitioners for 2008, CPA Magazine,
2008.
Chambers USA, Eminent Practitioner, ``Tax Fraud--Nationwide.''
President's Award for Outstanding Contributions to GPA's in
Hawaii, Hawaii Society of CPAs, 2003-2004.
2015 Partner Appreciation Award, Steller Member, ABA Center for
Professional Development.
Conference Speaker of the Year Award, California CPA Education
Foundation, 2000.
Instructor of the Year Award, Graduate Tax Program, Golden Gate
University, 2002.
Commencement Speaker, Graduate Tax Program, Golden Gate
University, 2003.
Keynote Conference Speaker, Hawaii Society of CPAs 42nd Annual
Conference, 2002.
Top 100 Super Lawyers (Los Angeles County), Los Angeles
Magazine/Southern California Super Lawyers Magazine, 2005.
Top Tax Super Lawyers (Los Angeles County), Los Angeles
Magazine/Southern California Super Lawyers Magazine, 2004-
present.
The Best Lawyers in America, 2004-present.
Strathmore's Who's Who, Lifetime Member.
Martindale-Hubbell AV Preeminent Rating (highest possible
rating).
Awarded keys to the cities of Elkhart, Nappanee, and Goshen,
Indiana in recognition of facilitation of significant financial
gift to the Elkhart County Community Foundation, July 2014.
15. Published writings (list the titles, publishers, and dates of all
books, articles, reports, or other published materials you have
written):
I have exercised my best efforts to identify all published
writings, including a review of my personal files and searches
of publicly available electronic data bases. Despite my
searches, there may be other materials I have been unable to
identify, find, or recall. However, I can represent that I have
not published materials that would be embarrassing to me or to
the government if they were to be later disclosed publicly. In
this regard, please see the attached list 1-163.
Articles
------------------------------------------------------------------------
Title Publication Date
------------------------------------------------------------------------
Message From the Institute Journal of Tax Practice Dec.-Jan. 2018
Chair, Charles P. Rettig and Procedure
and Steven Tascher
------------------------------------------------------------------------
Practice--A Lesson in Journal of Tax Practice Oct.-Nov. 2017
Accountability and IRS and Procedure
Enforcement
------------------------------------------------------------------------
Striking Hard: Overview of Journal of Tax Practice June-July 2017
the Revised California and Procedure
Administrative Income Tax
Procedure
------------------------------------------------------------------------
What to Expect From Newly Journal of Tax Practice Feb.-Mar. 2017
Announced LB&I Compliance and Procedure
Campaigns
------------------------------------------------------------------------
Message From the Institute Journal of Tax Practice Dec. 2016-Jan.
Chair, Charles P. Rettig and Procedure 2017
------------------------------------------------------------------------
TIGTA Evaluation of the IRS Journal of Tax Practice Oct.-Nov. 2016
Whistleblower Program and Procedure
------------------------------------------------------------------------
Why the Ongoing Problem With Journal of Tax Practice Aug.-Sept. 2016
FBAR Compliance? and Procedure
------------------------------------------------------------------------
In a Tax Practice, Journal of Tax Practice Jun.-July. 2016
Everything Is Fine, Until and Procedure
It's Not!
------------------------------------------------------------------------
The Panama Papers and Journal of Tax Practice Apr.-May 2016
Lessons Learned From Years and Procedure
of Offshore Leaks
------------------------------------------------------------------------
IRS Audit Selection and Journal of Tax Practice Feb.-Mar. 2016
Classiffcation Processes and Procedure
------------------------------------------------------------------------
Evaluating the IRS Wealth Journal of Tax Practice Dec. 2015-Jan.
Squad and Procedure 2016
------------------------------------------------------------------------
Basic Overview: The Kovel Journal of Tax Practice Oct.-Nov. 2015
Accountant and Privileged and Procedure
Communications
------------------------------------------------------------------------
Handling the Sensitive Issue Journal of Tax Practice Aug.-Sept. 2015
IRS Audit and Procedure
------------------------------------------------------------------------
NEW IRS Guidance Limits FBAR Journal of Tax Practice June-July 2015
Penalties! and Procedure
------------------------------------------------------------------------
Determining ``Reasonable Journal of Tax Practice Apr.-May 2015
Cause'' for Nonwillful FBAR and Procedure
Violations
------------------------------------------------------------------------
Overview: Trust Fund Journal of Tax Practice Feb.-Mar. 2015
Recovery Penalty and Procedure
------------------------------------------------------------------------
Overview: IRS Examination Journal of Tax Practice Dec. 2014-Jan.
Process and Procedure 2015
------------------------------------------------------------------------
IRS Administrative Appeals The Practical Tax Winter, 2014
Process Procedures Lawyer
------------------------------------------------------------------------
Common Badges of Tax Fraud Journal of Tax Practice Oct. 2014
Uncovered and Procedure
------------------------------------------------------------------------
OVDP and Streamlined Journal of Tax Practice Aug.-Sept. 2014
Procedures: Am I Non- and Procedure
Willful?
------------------------------------------------------------------------
Jury Determines 150-Percent Journal of Tax Practice June-July 2014
FBAR Penalty and U.S. Seeks and Procedure
FBAR Related Forfeiture of
$12 Million!
------------------------------------------------------------------------
IRS Changes Streamlined OVDP Journal of Tax Practice June-July 2014
Reducing FBAR Penalty and Procedure
Exposure!
------------------------------------------------------------------------
IRS LB&I Revised IDR Journal of Tax Practice Apr.-May 2014
Enforcement Process and Procedure
------------------------------------------------------------------------
2014 Tax Enforcement Valley Lawyer April 2014
Priorities and Practice
Tips From the Tax Trenches
------------------------------------------------------------------------
Overview: Indirect Methods Journal of Tax Practice Feb.-Mar. 2014
of Determining Taxable and Procedure
Income
------------------------------------------------------------------------
Revised IRS Appeals Journal of Tax Practice Dec. 2013-Jan.
Procedures re: FBAR and Procedure 2014
Penalties
------------------------------------------------------------------------
Criminal Tax Restitution Journal of Tax Practice Oct.-Nov. 2013
Orders and the Civil and Procedure
Liability
------------------------------------------------------------------------
A Temporary and Transitory Journal of Tax Practice Aug.-Sept. 2013
Visit With California and Procedure
Residency
------------------------------------------------------------------------
GAO to IRS: Pursue Quiet Journal of Tax Practice June-July 2013
Disclosures and First Time and Procedure
FBAR Filers
------------------------------------------------------------------------
IRS Offshore Voluntary Journal of Tax Practice Apr.-May 2013
Disclosure Progam: Opt- and Procedure
Outs, a Revised FBAR and
Rescissions of Pre-
Clearance Letters by
Criminal Investigations
------------------------------------------------------------------------
Whistleblower Awards and the Journal of Tax Practice Feb.-Mar. 2013
Bank Secrecy Act: Mutually and Procedure
Exclusive?
------------------------------------------------------------------------
Message From the Institute Journal of Tax Practice Dec. 2012-Jan.
Chair, Charles P. Rettig and Procedure 2013
------------------------------------------------------------------------
Form 8300: Reporting Journal of Tax Practice Dec. 2012-Jan.
Domestic Currency and Procedure 2013
Transactions
------------------------------------------------------------------------
Webinar Featuring Steve HSRTP Jan. 11, 2018
Tascher--The Perils of
Cival and Criminal Tax
Penalties: What You Need to
Know
------------------------------------------------------------------------
Steve Tascher Receives HSRTP Nov. 3, 2017
Lifetime Achievement Award
for Outstanding
Contributions in the Field
of Tax Law
------------------------------------------------------------------------
Judge L. Paige Marvel Has United States Tax Court Feb. 29, 2016
Been Elected as Chief Judge Press Release
of the United States Tax
Court
------------------------------------------------------------------------
IRS Streamlined FBAR HSRTP Feb. 4, 2016
Reporting Procedures Non-
Resident Certification Form
14653
------------------------------------------------------------------------
Agostino and Associates Agostino and Associates Jan. 21, 2016
Newsletter--Evaluating
Collection Alternatives
------------------------------------------------------------------------
National Institutes on ABA Dec. 1, 2015
Criminal Tax Fraud and Tax
Controversy, Dec. 9-11
------------------------------------------------------------------------
Withheld Taxes and the Trust HSRTP Nov. 18, 2015
Fund Recovery Penalty
------------------------------------------------------------------------
Civil Tax Penalty Defenses: HSRTP Oct. 12, 2015
Reasonable Cause and
Reliance
------------------------------------------------------------------------
First Time Abatement of HSRTP Sept. 29, 2015
Civil Tax Penalties
------------------------------------------------------------------------
Sensitive Issue Tax HSRTP Sept. 5, 2015
Examinations--the
``Eggshell Audit''
------------------------------------------------------------------------
New FBAR Reference Guide HSRTP Aug. 7, 2015
------------------------------------------------------------------------
New Filing Due Dates for HSRTP Aug. 1, 2015
FBARs, Partnership and C
Corporation Returns!
------------------------------------------------------------------------
Determining ``Reasonable HSRTP July 29, 2015
Cause'' for Nonwillful FBAR
Violations
------------------------------------------------------------------------
IRS Advises re Delinquent HSRTP July 18-27, 2015
International Information
Return Submission
Procedures
------------------------------------------------------------------------
Practical Advice for an IRS HSRTP July 15, 2015
Examination
------------------------------------------------------------------------
NEW IRS Guidance Limits FBAR HSRTP June 12, 2015
Penalties!
------------------------------------------------------------------------
Reminder FBAR Electronic HSRTP June 30, 2015
Filing Due by June 30, 2015
------------------------------------------------------------------------
IRS Audit Techniques Guides HSRTP May 15, 2015
------------------------------------------------------------------------
Clinton Foundation to File HSRTP May 1, 2015
Amended Returns, Should
You?
------------------------------------------------------------------------
Tax Return Should Not HSRTP Feb. 27, 2015
Represent an Offer to
Negotiate Deductions With
the Government
------------------------------------------------------------------------
President Obama Announces HSRTP from the White Feb. 25, 2015
Intent to Nominate Cono R. House--Press Release
Namorato, for Assistant
Attorney General for the
Tax Division, Department of
Justice
------------------------------------------------------------------------
Answering Your Civil and ABAWebinar Feb. 20. 2015
Criminal Offshore
Disclosure Question
------------------------------------------------------------------------
ICU Reveals Swiss HSBC Data HSRTP Feb. 9, 2015
------------------------------------------------------------------------
Fraudulent Failure to File HSRTP Jan. 23, 2015
Tax Returns--75% of the Tax
Due!
------------------------------------------------------------------------
How Long Should I Keep Tax HSRTP Dec. 7, 2014
Records?
------------------------------------------------------------------------
Random Thoughts re IRS HSRTP Nov. 24, 2014
Examination Representation
------------------------------------------------------------------------
Voluntary Disclosures by Non- HSRTP Nov. 18, 2014
Filers
------------------------------------------------------------------------
Warning Signs of an IRS HSRTP Nov. 3, 2014
Criminal Tax Prosecution
Referral
------------------------------------------------------------------------
IRS: Common Badges of Tax HSRTP Oct. 2, 2014
Fraud
------------------------------------------------------------------------
IRS Interview of Taxpayers HSRTP Sept. 22, 2014
and Return Preparers
------------------------------------------------------------------------
Bankruptcy (Tax) Law Must HSRTP Sept 15, 2014
Apply Equally to the Rich
and Poor Alike
------------------------------------------------------------------------
Voluntary Disclosure-- HSRTP Sept 12, 2014
Benefits of Timely Filing
Amended and Delinquent Tax
Returns
------------------------------------------------------------------------
IRS Non-Filers Beware: Who's HSRTP Sept. 8, 2014
That Knocking at Your Door?
------------------------------------------------------------------------
Agostino and Associates Agostino and Associates Sept. 2, 2014
Newsletter--De Novo Review
of Assessable International
Penalties
------------------------------------------------------------------------
Recommendations for IRS Tax HSRTP Aug. 26, 2014
Return Preparers
------------------------------------------------------------------------
Hidden Resources--IRS Audit HSRTP Aug. 12, 2014
Techniques Guides
------------------------------------------------------------------------
Am I ``Non-Willful'' Under HSRTP Aug. 8, 2014
the IRS OVDP Streamlined
Procedures?
------------------------------------------------------------------------
IRS Methods of Indirectly HSRTP Aug. 5, 2014
Determining Taxable Income
------------------------------------------------------------------------
FIRST TIME ABATE of IRS HSRTP July 31, 2014
Penalties
------------------------------------------------------------------------
OVDP and Streamlined HSRTP July 2, 2014
Procedures: Expect the
Unexpected!
------------------------------------------------------------------------
Critical Links--2014 OVDP HSRTP June 26, 2014
and Streamlined Filing
Compliance Procedures
------------------------------------------------------------------------
IRS OVDP Opt Out Vs. HSRTP June 24, 2014
Transition to the New
Streamlined Procedures?
------------------------------------------------------------------------
IRS Changes Streamlined OVDP HSRTP June 22, 2014
Reducing FBAR Penalty
Exposure!
------------------------------------------------------------------------
IRS Makes Major Changes to HSRTP June 19, 2014
Offshore Voluntary
Disclosure Program!
------------------------------------------------------------------------
Reminder: 2013 FBAR Filing HSRTP June 16, 2014
Due by June 30, 2014
------------------------------------------------------------------------
Zwerner: Jury Determines HSRTP May 29, 2014
150% FBAR Penalty Applies--
Excessive Fines Clause to
the Rescue?
------------------------------------------------------------------------
Protecting Privileges During HSRTP May 17, 2014
an IRS Examination
------------------------------------------------------------------------
U.S. Seeks FBAR Related HSRTP Apr. 15, 2014
Forfeiture of $12 Million
------------------------------------------------------------------------
Just Released: Hot Audit HSRTP Apr. 12, 2014
Issues for the California
FTB!
------------------------------------------------------------------------
Virtual Currency Constitutes HSRTP Apr. 4, 2014
Taxeable Property for U.S.
Federal Tax Purposes
------------------------------------------------------------------------
IRS FBAR OVDP Opt-Out HSRTP Mar. 25. 2014
Intetview Questions
Revealed!
------------------------------------------------------------------------
IRS Internal IDR Training HSRTP Mar. 21, 2014
Materials Revealed!
------------------------------------------------------------------------
New IRS LB&I Revised IDR HSRTP Mar. 17, 2014
Enforcement Process
------------------------------------------------------------------------
``Ballpark Guesstimate'' HSRTP Mar. 12, 1014
Insufficient to Support
``Real Estate
Professional'' Status--
Accuracy-Related Penalty
Applied
------------------------------------------------------------------------
Simplified Option for Home HSRTP Mar. 10, 2014
Office Deduction Now
Available!
------------------------------------------------------------------------
IRS-Criminal Investigation HSRTP Mar. 6, 2014
2014 Investigative
Priorities
------------------------------------------------------------------------
IRS Identifies the ``Dirty HSRTP Mar. 5, 2014
Dozen'' Tax Scams for 2014
------------------------------------------------------------------------
Offshore Tax Evasion: The HSRTP Feb. 25, 2014
Effort to Collect Unpaid
Taxes on Billions in Hidden
Offshore Accounts
------------------------------------------------------------------------
Criminal Tax Prosecutions HSRTP Feb. 5, 2014
Surge Under President Obama
------------------------------------------------------------------------
Civil Detention for Failure HSRTP Feb. 4, 2014
to Pay Taxes
------------------------------------------------------------------------
Badges of Fraud--IRS Goes HSRTP Feb. 3, 2014
Undercover in a
``Gentleman's Club''
------------------------------------------------------------------------
Tax Enforcement Priorities HSRTP Jan. 17, 2014
for 2014 and Beyond!
------------------------------------------------------------------------
``Fedex Express Saver'' is HSRTP Nov. 26, 2013
NOT Valid for Filing of a
Timely Tax Court Petition
(or Tax Returns)
------------------------------------------------------------------------
New FBAR Form 114 and HSRTP Nov. 10, 2013
Revised IRS Appeals
Procedures re FBAR
Penalties
------------------------------------------------------------------------
IRS Warns of Telephone Scam HSRTP Nov. 1, 2014
Targeting Taxpayers,
Including Recent Immigrants
------------------------------------------------------------------------
Tax Practice Tool: IRS Audit HSRTP Oct. 12, 2013
Techniques Guides
------------------------------------------------------------------------
October 15th Deadline HSRTP Oct. 8, 2013
Remains in Effect for
Taxpayers Who Requested a
Six-Month Extension to File
Tax Return
------------------------------------------------------------------------
A Temporary and Transitory HSRTP Oct. 6, 2013
Visit With California
Residency
------------------------------------------------------------------------
Zwerner Answers DoJ Efforts HSRTP Sept. 26, 2013
to Collect Multiple 50
Percent Civil FBAR
Penalties
------------------------------------------------------------------------
New IRS Commissioner HSRTP Aug. 3, 2013
Nominated by President
Obama
------------------------------------------------------------------------
Reminder: 2012 FBAR Filing HSRTP Jun. 20, 2013
Due by June 30th
------------------------------------------------------------------------
DoJ Files Action to Collect HSRTP Jun. 15, 2013
Multiple 50% Civil FBAR
Penalties in U.S.A. vs.
Zwerner
------------------------------------------------------------------------
Rescissions of IRS OVDP Pre- HSRTP Jun. 12, 2013
Clearance Letters
------------------------------------------------------------------------
IRS FBAR Voluntary HSRTP Jun. 12, 2013
Disclosure Program, Opt-Out
Considerations and
Taxpayers Interviews
------------------------------------------------------------------------
Form 8300: Reporting HSRTP Jun. 12, 2013
Domestic Currency
Transactions
------------------------------------------------------------------------
New Filing Compliance HSRTP Sept. 18, 2012
Procedures for Non-
Residence U.S. Taxpayers
------------------------------------------------------------------------
IRS Provides Updated HSRTP Jun. 27, 2012
Guidance re FBAR Voluntary
Disclosure Program
------------------------------------------------------------------------
The IRS Whistleblower HSRTP May 23, 2012
Program: Making Money the
Old Fashioned Way!
------------------------------------------------------------------------
Practice Tips From the Tax HSRTP Mar. 10, 2012
Trenches
------------------------------------------------------------------------
FBAR Offshore Voluntary HSRTP Jan. 11, 2012
Disclosure Initiative
(OVDI)
------------------------------------------------------------------------
Non-Filers Beware: Who's HSRTP Jan. 11, 2012
That Knocking on Your Door?
------------------------------------------------------------------------
Examining the FBAR/Offshore HSRTP Jan. 11, 2012
Account Information
Document Request (IDR)
------------------------------------------------------------------------
IRS Voluntary Disclosure HSRTP Jan. 11, 2012
Practice
------------------------------------------------------------------------
Overview of FBAR Reporting HSRTP Jan. 11, 2012
Requirements
------------------------------------------------------------------------
Qualified Amended Returns HSRTP Jan. 11, 2012
Can Eliminate Accuracy
Related Tax Penalty
------------------------------------------------------------------------
FOIA Request: A Look Into HSRTP Jan. 11, 2012
the IRS Examination File
------------------------------------------------------------------------
IRS Global High-Wealth HSRTP Jan. 11, 2012
Industry Group: Evaluation
of an IRS Wealth Squad IDR
------------------------------------------------------------------------
Basic Audit Techniques: HSRTP Jan. 11, 2012
Taxpayer Interviews
------------------------------------------------------------------------
IRS Audit Techniques Guides HSRTP Jan. 11, 2012
------------------------------------------------------------------------
IRS Voluntary Worker HSRTP Jan. 11, 2012
Classification Settlement
Program
------------------------------------------------------------------------
New 2012 IRS FBAR Voluntary HSRTP Jan. 11, 2012
Disclosure Initiative
------------------------------------------------------------------------
Making a Voluntary HSRTP Jun. 18, 2011
Disclosure Under the 2011
OVDI
------------------------------------------------------------------------
Tax Penalty Relief--Reliance HSRTP Jun. 18, 2011
on Tax Adviser
------------------------------------------------------------------------
Current IRS Enforcement HSRTP Sept. 10, 2010
Priorities
------------------------------------------------------------------------
Introduction/Legal HSRTP Sept. 9, 2010
Disclaimer
------------------------------------------------------------------------
U.S. Launches Criminal Forbes Apr. 23, 2016
Inquiry Into 200 U.S.
Citizens Named in the
Panama Papers
------------------------------------------------------------------------
The Panama Papers and Forbes Apr. 6, 2016
Lessons Learned From Years
of Offshore Leaks
------------------------------------------------------------------------
Where's My Tax Refund? Forbes Apr. 3, 2016
------------------------------------------------------------------------
No Ordinary Audit: Donald Forbes Feb. 28, 2016
Trump Is Facing the IRS
``Wealth Squad''
------------------------------------------------------------------------
IRS FBAR Streamlined Forbes Aug. 2, 2015
Procedures Revisited: Am I
Non-Willful?
------------------------------------------------------------------------
Reminder: FBAR Electronic Forbes Jun. 23, 2015
Filing Due By June 30, 2015
------------------------------------------------------------------------
New IRS Guidance Limits FBAR Forbes Jun. 9, 2015
Penalties
------------------------------------------------------------------------
Clinton Foundation to File Forbes Apr. 25, 2015
Amended Returns; Should
You?
------------------------------------------------------------------------
Am I Non-Willful Under the Forbes Aug. 8, 2014
OVDP Streamlined
Procedures?
------------------------------------------------------------------------
IRS OVDP vs. Streamlined: Forbes Jul 7, 2014
What to Do
------------------------------------------------------------------------
Important Links to Latest Forbes Jun. 23, 2014
IRS OVDP Procdures
------------------------------------------------------------------------
FBAR Penalty Applies to Forbes Jun. 19, 2014
Offshore Poker Accounts
------------------------------------------------------------------------
Zwerner: Jury Determines Forbes May 19, 2014
150% FSAR Penalty Applies--
What Next?
------------------------------------------------------------------------
U.S. Seeks FBAR Related Forbes Apr. 16, 2014
Forfeiture of $12 Million
------------------------------------------------------------------------
``FedEx Express Saver'' is Forbes Apr. 11, 2014
NOT Valid for Filing of a
Timely Tax Court Petition
(or Tax Return)
------------------------------------------------------------------------
``Ballpark Guesstimate'' Forbes Mar. 12, 2014
Insufficient to Support
``Real Estate Pro'' Status--
Penalties Applied
------------------------------------------------------------------------
Offshore Tax Evasion: The Forbes Feb, 25, 2014
Effort to Collect Unpaid
Taxes on Billions in Hidden
Offshore Accounts
------------------------------------------------------------------------
FBAR: Revised IRS Penalty Forbes Nov. 25, 2013
Appeals Procedures
------------------------------------------------------------------------
Temporary and Transitory Forbes Nov. 4, 2013
Visit With (California)
Residents
------------------------------------------------------------------------
IRS Shutdown? October 15th Forbes Oct. 8, 2013
Deadline Remains in Effect
------------------------------------------------------------------------
Zwerner Answers DoJ Efforts Forbes Sept. 26, 2013
to Collect Multiple 50
Percent Civil FBAR
Penalties
------------------------------------------------------------------------
President Obama Nominates Forbes Aug. 7, 2013
John Koskinen as Next IRS
Commissioner
------------------------------------------------------------------------
Do You Outsource Payroll? Forbes Jul. 17, 2013
Pay Attention to These IRS
Tips
------------------------------------------------------------------------
IRS FBAR Voluntary Forbes Jul. 4, 2013
Disclosure Program and Opt
Out Considerations
------------------------------------------------------------------------
Reminder: FBAR Filing Due by Forbes Jun. 25, 2013
June 30th
------------------------------------------------------------------------
DoJ Files Action to Collect Forbes Jun. 17 2013
Multiple 50 Percent Civil
FBAR Penalties in U.S.A.
vs. Zwerner
------------------------------------------------------------------------
IRS FBAR Voluntary Forbes Jun. 12, 2013
Disclosure Program:
Taxpayer Interview
------------------------------------------------------------------------
Non Filers Beware: Who's Forbes Nov. 15, 2012
That Knocking at Your Door?
------------------------------------------------------------------------
New Streamlined Filing Forbes Sept. 18, 2012
Compliance Procedures for
Non-Resident U.S. Taxpayers
------------------------------------------------------------------------
IRS Provides Updated Forbes Jun. 27, 2012
Guidance re FBAR Voluntary
Disclosure Program
------------------------------------------------------------------------
Six-Year Statute of Forbes Apr. 27, 2012
Limitations Does Not Apply
to Deficiency From
Overstated Basis
------------------------------------------------------------------------
Get an Extension of Time to Forbes Apr. 14, 2012
File 2011 Returns Beyond
the April 17th Deadine
------------------------------------------------------------------------
Deja Vu--Yet Another IRS Forbes Jan. 10, 2012 and
FBAR Voluntary Dislosure Feb. 9, 2012
Initiative
------------------------------------------------------------------------
16. Speeches (list all formal speeches you have delivered during the
past 5 years which are on topics relevant to the position for which you
have been nominated):
I have exercised my best efforts to identify all speeches I
have delivered within the past 5 years on topics relevant to
the position for which I have been nominated. Despite my
searches, there may be other speeches I have been unable to
identify, find, or presently recall. However, I can represent
that I have not published materials that would be embarrassing
to me or to the government if they were to be later disclosed
publicly. In this regard, please see the attached list 1-66 of
presentation outlines (presentations were not scripted but the
attached written materials were generally provided in
association with the presentation).
PowerPoint Presentations
------------------------------------------------------------------------
Title Venue Date
------------------------------------------------------------------------
Hot Topics in IRS Cal-CPA--Fed., State, Nov. 16, 2017
Enforcement--35+ Years in Local, and Int'l Tax--
the Tax Trenches Universal City, CA
------------------------------------------------------------------------
IRS Audit Issues and Hot CP America Int'l, Nov. 14, 2017
Topics--35+ Years in the Inc.--Tucson, AZ
Tax Trenches
------------------------------------------------------------------------
Tax Controversies--Tips 76th NYU Institute on Nov. 12, 2017
From the Tax Trenches-- Federal Taxation--San
Everything Is Fine . . . Francisco, CA
Until it Isn't
------------------------------------------------------------------------
Hot Topics in IRS Pacific Tax Institute-- Nov. 1, 2017
Enforcement--35+ Years in Seattle, WA
the Tax Trenches
------------------------------------------------------------------------
Tax Controversies--Tips 76th NYU Institute on Oct. 22, 2017
From the Tax Trenches-- Federal Taxation--New
Everthing Is Fine . . . York, NY
Until it Isn't
------------------------------------------------------------------------
From the Trenches--150+ Calif. Society of Aug. 25, 2017
Years of Tax Disputes CPAs--Hollywood/
Beverly Hills
Discussion Group--Los
Angeles, CA
------------------------------------------------------------------------
Hot Topics in IRS 17th Annual Oregon Tax Jun. 1, 2017
Enforcement--Tips From the Institute--Portland,
Tax Trenches OR
------------------------------------------------------------------------
Hot Topics in IRS Calif. Society of May 5, 2017
Enforcement--Tips From the CPAs--Hollywood/
Tax Trenches Beverly Hills
Discussion Group--
Los Angeles, CA
------------------------------------------------------------------------
Offshore Tax Enforcement: AICPA--2016 National Nov. 14, 2016
Today's Smaller, More Tax Conference
Transparent World--
Government and Taxpayer
Perspectives--Session #7
------------------------------------------------------------------------
Insight and Warnings on AICPA 2016 National Nov. 14, 2016
Today's Tax Enforcement Tax Conference
Priorities--Session #11
------------------------------------------------------------------------
Tax Controversies--Tips 75th NYU Institute on Nov. 13, 2016
From the Tax Trenches Federal Taxation--San
Diego, CA
------------------------------------------------------------------------
Conflicts of Interest and Pacific Tax Institute-- Nov. 3, 2016
Disclosures in the Seattle, WA
Performance of Tax
Services
------------------------------------------------------------------------
California Non-Residency Pacific Tax Institute-- Nov. 3, 2016
Determiniations--A Seattle, WA
Temporary and Transitory
Visit With California
Residency
------------------------------------------------------------------------
Tax Controversies--Tips 75th NYU Institute on Oct. 23, 2016
From the Tax Trenches Federal Taxation--New
York, NY
------------------------------------------------------------------------
Offshore Tax Enforcement Sept. 1, 2016
Update--Tips From the Tax
Trenches
------------------------------------------------------------------------
Current Developments in IRS Calif. Society of Jun. 12, 2016
Enforcement--Tips From the CPAs--Hollywood/
Tax Trenches Beverly Hills
Discussion Group
------------------------------------------------------------------------
Economic Substance, Practising Law Jun. 9, 2016
Judicial Doctrines, and Institute--San
Ethics Francisco, CA
------------------------------------------------------------------------
IRS Audit Issues and Hot 7th Annual Southwest Dec. 3. 2015
Topics--Tips From the Tax Tax Conference--The
Trenches All Around Tax
Conference: Not Just
a Tax Update--Las
Vegas, NV
------------------------------------------------------------------------
Tax Controversies--Tips 74th NYU Institute on Nov. 15, 2015
From the Tax Trenches-- Federal Taxation--San
Everthing Is Fine . . . Francisco, CA
Until it Isn't
------------------------------------------------------------------------
A Temporary and Transitory Pacific Tax Institute-- Nov. 5, 2015
Visit With California Seattle, WA
Residency
------------------------------------------------------------------------
Hot Topics in IRS Pacific Tax Institute-- Nov. 5, 2015
Enforcement--Tips From the Seattle, WA
Tax Trenches
------------------------------------------------------------------------
Tax Preparer Obligations Clark Nuber--Seattle, Nov. 4, 2015
and Penalties--IRS Audit WA
Issues and Hot Topics--
Tips From the Tax Trenches
------------------------------------------------------------------------
Ethics and OPR--Conflicts, 2015 AICPA National Nov. 3, 2015
Omissions, and Ethics-- Tax Conference
Session #20
------------------------------------------------------------------------
Tax Controversies--Tips 74th NYU Institute on Oct. 23, 2015
From the Tax Trenches-- Federal Taxation--New
Everthing Is Fine . . . York, NY
Until it Isn't
------------------------------------------------------------------------
Practitioners Standards, 2015 AICPA Oct. 2015
Penalties, and IRS
Enforcement Initiatives--
When Problems Are Likely
to Occur in a Tax or
Estate Planning Practice--
Session #22
------------------------------------------------------------------------
FBAR Overview--Sanctions-- Aug. 30, 2015
Criminal Penalties
------------------------------------------------------------------------
Tax Post-Filing AICPA Aug. 12, 2015
Representation 101--IRS
Audits, Administrative
Appeals, and Settlements--
Everything Is Fine . . .
Until it Isn't
------------------------------------------------------------------------
FBAR Overview--Sanctions-- Jun. 30, 2015
Criminal Penalties
------------------------------------------------------------------------
What's Next in 7th Annual NYU Tax Jun. 5, 2015
International Tax Controversy Forum--
Enforcement--Tips From the New York, NY
Trenches
------------------------------------------------------------------------
Tax Preparer Obligations 2015 AICPA Tax May 19, 2015
and Penalties--Conflicts, Strategies for the
Omissions, Controversy, High- Income
and Ethics--Session #25 Individual
------------------------------------------------------------------------
``M''--Marital 47th Annual Family Law May 2, 2015
Dissolutions--Is the IRS Symposium--Universal
Watching Your Clients?-- City, CA
Tips From the Tax Trenches
------------------------------------------------------------------------
Enforcement and Criminal 39th FBA Annual Tax Mar. 6, 2015
Tax Symposium Law Conference
------------------------------------------------------------------------
Enforcement Update From the Feb. 8, 2015
Trenches
------------------------------------------------------------------------
Offshore Tax Enforcement 62nd Annual Taxation Dec. 4, 2014
and Compliance--Tips From Conference--UT School
the Tax Trenches! of Law--Austin, TX
------------------------------------------------------------------------
IRS Audit Issues and Hot 6th Annual Southwest Dec. 2, 2014
Topics--Tips From the Tax Tax Conference--Las
Trenches! Vegas, NV
------------------------------------------------------------------------
Tax Controversies--Tips 73rd NYU Institute on Nov. 16, 2014
From the Tax Trenches Federal Taxation--San
Diego, CA
------------------------------------------------------------------------
When Problems Are Likely to 2014 AICPA--Tax Nov. 14, 2014
Occur in a Tax or Estate Strategies for the
Planning Practice--Tips High- Income
From the Tax Trenches-- Individual Conference
Session #32
------------------------------------------------------------------------
IRS Audit Issues and Hot 2014 Tax Conference-- Nov. 10, 2014
Topics--Tips From the Tax CPAmerica
Trenches! International--San
Juan, Puerto Rico
------------------------------------------------------------------------
Hot Topics in IRS Tax 25th Annual Nov, 6, 2014
Enforcement Philadelphia Tax
Institute--Philadelph
ia, PA
------------------------------------------------------------------------
Tax Post-Filing 2014 AICPA National Nov. 5, 2014
Representation 101--IRS Tax Conference
Audits, Administrative
Appeals, and Settlements--
Session #303
------------------------------------------------------------------------
Practical Tax Advice-- 2014 AICPA National Nov. 4, 2014
Protecting Your Clients Tax Conference
and Yourself--Tips From
the Tax Trenches--Session
#31
------------------------------------------------------------------------
Ethics and OPR: Covering 2014 AICPA National Nov. 4, 2014
Conflicts, Omissions, Tax Conference
Controversy, and Ethics--
Session #20
------------------------------------------------------------------------
Strategic Options for Pacific Tax Institute-- Oct. 30, 2014
Taxpayers re International Seattle, WA
Tax Enforcement--Session
B1
------------------------------------------------------------------------
Current Developments in IRS Pacific Tax Institute-- Oct. 30, 2014
Enforcement--Tips From the Seattle, WA
Tax Trenches!
------------------------------------------------------------------------
Tax Controversies--Tips 73rd NYU Institute on Oct. 19, 2014
From the Tax Trenches Federal Taxation--New
York, NY
------------------------------------------------------------------------
Current Developments at the 11th Annual Nonprofit Sept. 19, 2014
IRS Affecting Nonprofits Organizations
Seminar--Chaminade
Univ. of Honolulu, HI
------------------------------------------------------------------------
Audits: Types of Audit, ALI-CLE--Handling a Aug. 30, 2014
Audit Techniques and Tax Controversy:
Procedures, and Audits, Appeals,
Limitations Litigation, and
Collections
------------------------------------------------------------------------
Taxpayer Representation 2014 NYU/SCPS 6th Jun. 19, 2014
Tips From the Tax Trenches Annual Tax
Controversy Forum--
New York, NY
------------------------------------------------------------------------
Information Sharing and Federal Bar Feb. 28, 2014
Enforcement Association--Washingt
on, DC
------------------------------------------------------------------------
Representing Clients in IRS ALI CLE--Hot Topics Dec. 16, 2014
Examinations for Accountants and
Tax Lawyers
------------------------------------------------------------------------
IRS Audit Issues and Hot Estate Planning Dec. 4, 2013
Topics of Interest to Council of Seattle
Estate Planners--Current
Enforcement IRS Priorities
and Strategies
------------------------------------------------------------------------
Hot Topics in IRS Tax 5th Annual Southwest Dec. 2, 2013
Enforcement--Current Tax Conference--
Developoments in the Tax Nevada Society of
Trenches CPAs--Las Vegas, NV
------------------------------------------------------------------------
Tax Controversies--Tips 72nd NYU Institute on Nov. 17, 2013
From the Tax Trenches Federal Taxation--San
Francisco, CA
------------------------------------------------------------------------
Hot Topics in IRS Tax Pacific Tax Institute-- Nov. 15, 2013
Enforcement: Tips From the Seattle, WA
Tax Trenches!
------------------------------------------------------------------------
Hot Topics in IRS Tax 24th Annual Nov. 7, 2013
Enforcement Philadelphia Tax
Institute--Philadelph
ia, PA
------------------------------------------------------------------------
Current IRS Enforcement 2013 AICPA National Nov. 6, 2013
Priorities--Workshop Tax Conference--Tax
Session #2 Controversy Worksop--
Washington, DC
------------------------------------------------------------------------
Coming Out of the Cold: 2013 AICPA National Nov. 4, 2013
Voluntary Disclosures-- Tax Conference
Tips From the Tax
Trenches--Session #14
------------------------------------------------------------------------
Broad Issues Raised by High 48th Annual Southern Oct. 23, 2013
Net Worth IRS Audits-- Federal Tax Institute
Everything Is Fine . . .
Until it Isn't
------------------------------------------------------------------------
Tax Controversies--Tips 72nd NYU Institute on Oct. 20, 2013
From the Tax Trenches Federal Taxation--New
York, NY
------------------------------------------------------------------------
IRS Enforcement Update and Tulane Tax Institute-- Oct. 16, 2013
Wealth Squad Examinations New Orleans, LA
------------------------------------------------------------------------
Nuts and Bolts of IRS 2013 AICPA National Oct. 13, 2013
Audits--Tips From the Tax Tax conference
Trenches--Session #10
------------------------------------------------------------------------
IRS Audit Issues and Hot Woodland Hills Tax and Sept. 11, 2013
Topics of Interest to Estate Planning
Estate Planners Council--Woodland
Hills, CA
------------------------------------------------------------------------
Preparing and Arguing Your AICPA--Tax Planning, May 17, 2013
Case in IRS Appeals Compliance, and
Controversy--Conferen
ce for Businesses and
Individuals
------------------------------------------------------------------------
Roundtable Discussion-- 2013 Tax Institute-- Jan. 2013
Kathryn Keneally, Asst. USC Gould School of
Atty. Gen. of the Tax Law
Div., USDOJ
------------------------------------------------------------------------
FBAR Penalty Update and ??? ???, 2017
Streamlined Offshore
Disclosures: To File or
Not to File?--Offshore Tax
Enforcement Update
------------------------------------------------------------------------
17. Qualifications (state what, in your opinion, qualifies you to
serve in the position to which you have been nominated):
The activities of the IRS touch virtually every American, and
it is an honor to have been nominated to be the next
Commissioner of the IRS. I have more than 35 years of
experience as a tax lawyer representing taxpayers before all
administrative levels of the IRS (examinations, appeals,
litigation, collection, etc.) as well as in tax matters before
the Tax Division of the U.S. Department of Justice, various
State taxing authorities, the United States Tax Court, and the
United States District Court. As a strong supporter for the
integrity our system of tax administration, I have been
appointed by various Federal and State taxing authorities to
their advisory boards and have been invited to lecture to IRS
and other governmental tax authorities on issues including the
accountability of both government and private tax practitioners
to the public as well as to our system of taxation.
I began serving on the IRS Advisory Council (IRSAC) in 2008 and
ultimately became Chair of IRSAC in 2011. The IRSAC serves as
an advisory body to the IRS Commissioner providing an organized
public forum bringing IRS executives and officials together
with representatives of the public to discuss relevant tax
administration issues. In this regard, IRSAC suggests best
practices and operational improvements for taxpayer services at
the IRS as well as current or proposed IRS policies, programs,
and procedures.
For almost 20 years, I have served in an advisory capacity as a
member of the Advisory Board for the California Franchise Tax
Board and, for approximately 4 years, I also served as a member
of the Advisory Council of the California State. Board of
Equalization. I am currently Vice-Chair, Administration for the
12,000+ member Taxation Section of the American Bar
Association, and I am currently President of the American
College of Tax Counsel. I previously chaired the 4,000+ member
Taxation Section of the California Bar. Additionally, I have
served as chair of numerous national, State, and local
professional tax-related conferences and am also a frequent
lecturer at such conferences before enrolled agents, certified
public accountants, accountants, tax lawyers, tax practitioners
from industry, and others.
If confirmed, I will do my utmost to successfully carry out the
responsibilities entrusted to me as Commissioner of Internal
Revenue and help IRS become more efficient, more responsive,
and more respected in meeting and hopefully surpassing the
expectations of America's taxpayers.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections with your present employers,
business firms, associations, or organizations if you are confirmed by
the Senate? If not, provide details.
Yes, but I will continue to participate in the Cash Balance
Plan and in the Profit Sharing Plan (a defined contribution
plan) of Hochman, Salkin, Rettig, Toscher, and Perez, P.C. The
plan sponsor will not make further contributions, after my
separation from Hochman, Salkin, Rettig, Toscher, and Perez,
P.C.
2. Do you have any plans, commitments, or agreements to pursue
outside employment, with or without compensation, during your service
with the government? If so, provide details.
No.
3. Has any person or entity made a commitment or agreement to employ
your services in any capacity after you leave government service? If
so, provide details.
No.
4. If you are confirmed by the Senate, do you expect to serve out
your full term or until the next presidential election, whichever is
applicable? If not, explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated.
N/A.
2. Describe any business relationship, dealing, or financial
transaction which you have had during the last 10 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated.
During the last 10 years, I have been a tax lawyer with
Hochman, Salkin, Rettig, Toscher, and Perez, P.C. and have
served as tax counsel for numerous individuals and entities
involved in various tax-related disputes with the Internal
Revenue Service. In connection with the nomination process, I
have consulted with the Office of Government Ethics and the
Department of Treasury's designated ethics official to identify
potential conflicts of interest. Any potential conflicts of
interest will be resolved in accordance with the terms of an
ethics agreement that I have entered into with the Treasury's
designated ethics official and that has been provided to this
committee. I am not aware of any other potential conflicts of
interest.
4. Describe any activity during the past 10 years in which you have
engaged for the purpose of directly or indirectly influencing the
passage, defeat, or modification of any legislation or affecting the
administration and execution of law or public policy. Activities
performed as an employee of the Federal government need not be listed.
N/A.
5. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Department of
Treasury's designated ethics official to identify potential
conflicts of interest. Any potential conflicts of interest will
be resolved in accordance with the terms of an ethics agreement
that I have entered into with the Treasury's designated ethics
official and that has been provided to this committee. I am not
aware of any other potential conflicts of interest.
5. Two copies of written opinions should be provided directly to the
committee by the designated agency ethics officer of the agency to
which you have been nominated and by the Office of Government Ethics
concerning potential conflicts of interest or any legal impediments to
your serving in this position.
Provided to committee.
D. LEGAL AND OTHER MATTERS
1. Have you ever been the subject of a complaint or been
investigated, disciplined, or otherwise cited for a breach of ethics
for unprofessional conduct before any court, administrative agency,
professional association, disciplinary committee, or other professional
group? If so, provide details.
No.
2. Have you ever been investigated, arrested, charged, or held by any
Federal, State, or other law enforcement authority for a violation of
any Federal, State, county, or municipal law, regulation, or ordinance,
other than a minor traffic offense? If so, provide details.
No.
3. Have you ever been involved as a party in interest in any
administrative agency proceeding or civil litigation? If so, provide
details.
No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense.? If so, provide details.
No.
5. Please advise the committee of any additional information,
favorable or unfavorable, which you feel should be considered in
connection with your nomination.
N/A.
E. TESTIFYING BEFORE CONGRESS
1. If you are confirmed by the Senate, are you willing to appear and
testify before any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If you are confirmed by the Senate, are you willing to provide
such information as is requested by such committees?
Yes, if such information is not otherwise legally precluded
from disclosure.
______
Questions Submitted for the Record to Charles P. Rettig
Questions Submitted by Hon. Orrin G. Hatch
Question. One of the key accomplishments of the IRS, State revenue
departments and private industry of the past few years is the creation
of the Identity Theft Tax Refund Fraud Information Sharing and Analysis
Center (IDTTRF-ISAC). This ISAC allows the participants in the tax
preparation and banking areas to collect and analyze information
regarding identity theft fraud schemes and patterns. The results today
have been impressive. Do you intend to support this initiative and its
funding?
Answer. I agree the Information Sharing and Analysis Center (ISAC),
along with the overall Security Summit initiative, has been a success
in combating tax-related identity theft and helping taxpayers. If
confirmed, I will continue to support the ISAC efforts and the
continued partnership of the Security Summit initiative among the IRS,
the States and the Nation's private-sector tax community.
Question. In 2014, under the prior administration, the IRS provided
guidance determining that convertible virtual currency should be
treated as property for U.S. income tax purposes. The IRS received a
number of comments from industry and even its own Inspector General
criticizing the fact that many questions remained, making it difficult
for taxpayers to appropriately comply with the guidance. The Inspector
General noted in its report that, ``Although the IRS requested comments
to Notice 2014-21 from the public, no actions were taken to address the
comments received'' despite ``TIGTA [having] reviewed all the comments
and [finding] several examples of information requested by the public
that would be helpful in understanding how to comply with the tax
reporting requirements when using or receiving virtual currencies.'' It
seems to be widely recognized that various aspects of the taxation of
virtual currencies do not fit neatly into existing taxation principles.
Will you work with Congress and industry to help develop more
appropriate guidelines for industry in this area?
Answer. Virtual currency presents challenges not only for the U.S.
tax administration but for tax administration globally. I will work
with the Chief Counsel and other divisions of the IRS to respond to
this challenge. I think it's also important to work closely with
Congress and the private sector on this issue.
Question. Mr. Rettig, do you believe the IRS should take additional
steps to ensure the confidentiality of taxpayer information? What do
you think might be cyber-security steps the IRS could take to protect
taxpayer information--both from external hackers, as well as from
employees inside the IRS who might inappropriately access certain
taxpayer information?
Answer. I believe that a critical component of providing
outstanding taxpayer service involves ensuring that the information
taxpayers provide to the IRS will be kept secure. If confirmed, I will
assess what additional steps may be needed to advance cybersecurity. I
look forward to working with the committee to protect taxpayers.
______
Questions Submitted by Hon. Chuck Grassley
Question. Mr. Rettig, as you are aware, I have been a staunch
proponent of the IRS whistleblower program, and I am pleased to see you
have written favorably about the program on several occasions. For
instance, in 2013 you wrote that the IRS whistleblower rules should
require payment of awards from all proceeds collected by the
government, regardless of the particular title or underlying law
violation. I have long agreed and just this year was successful in
passing a clarification to the definition of collected proceeds under
the program. My amendment will help ensure whistleblowers are not
shortchanged and are incentivized to bring valuable information to the
IRS that results in criminal fines and other non-title 26 penalties.
However, I have some concerns that the IRS is dragging its feet in
implementing this policy. What would you do as IRS Commissioner to make
sure that the implementation of the collected proceeds rule is not
delayed and is consistently applied to whistleblowers?
Answer. I agree that the whistleblower program is a valuable tool
in supporting IRS tax administration efforts. If confirmed, I will work
with you and the members of this committee to identify ways to make the
whistleblower program more efficient and effective.
Question. As you may be aware, I have been a strong proponent of
the IRS private debt collection program. In 2015, Congress updated and
made mandatory the IRS private debt collection program. This program is
designed to chip away at the tax gap by requiring the IRS to contract
with private debt collectors to collect inactive tax debts owed to the
government. These are tax debts not being worked by the IRS and absent
the program would likely never be collected. According to the non-
partisan Joint Committee on Taxation, the program could collect $2.4
billion over 10 years. However, I have had concerns with the slow low
rollout of the program and am concerned some within the IRS and
Treasury may be working to undermine the program. Can you assure me
that as Commissioner you will implement and administer the private debt
collection program in accordance with, and to the full extent of, the
law?
Answer. As you note, this program is law. If confirmed, I will
ensure that the IRS fully implements the law.
Question. The IRS has long struggled to address the high improper
payment rates of refundable credits, such as the Earned Income Tax
Credit (EITC). According to the Treasury Inspector General of Tax
Administration (TIGTA), more than $16 billion in improper EITC payments
were made in fiscal year 2017. One of the requirements of the EITC is
that a taxpayer must have a work authorized Social Security number to
be eligible for the EITC. Yet, according to TIGTA the IRS has yet to
develop a process to prevent individuals with ``non-work'' Social
Security numbers from receiving the EITC. As a result, more than $100
million in erroneous EITC payments may be made annually to those
ineligible to work in the United States. As IRS Commissioner, what
steps would you take to address these types of improper payments?
Answer. If confirmed, I will review the procedures that the IRS has
in place to prevent improper payments--including those related to the
Earned Income Tax Credit--and will work to strengthen those procedures
where necessary. I look forward to working with the committee on this
issue.
Question. In February, the Treasury Inspector General for Tax
Administration (TIGTA) reported that nearly 2,000 IRS employees with
disciplinary actions received employee awards or bonuses. As part of
their review, TIGTA noted that IRS screening was insufficient in
identifying employees with tax compliance issues that were not
otherwise disciplined. This included employees who had tax liens or
were in failure to pay status. Given the IRS's role in ensuring the
integrity of our tax system this is particularly troubling. As
Commissioner what actions would you take to ensure employees with
conduct issues, particularly those not in compliance with our tax laws,
are not rewarded with bonuses?
Answer. If confirmed, I will work to ensure that bonuses only go to
employees that deserve them.
Question. I have long been concerned about IRS employees spending
more time on union activities than employees in other government
agencies. Time spent on union activities takes away from education and
enforcement activities. As an example, a 2013 Freedom of Information
request revealed that about 200 IRS employees were working full-time on
labor union activities. This past May, President Trump issued an
executive order that seeks to limit the amount of time Federal
employees spend on union activities. However, it is ultimately up to
agencies as part of contract negotiations with employee unions to
implement the order. Are you aware of any efforts by the IRS to update
its contract with the Treasury Employees Union in light of this
executive order? If not, would you expect to do so should you be
confirmed as Commissioner?
Answer. I am not familiar with the current status of contract
negotiations between the IRS and the National Treasury Employees Union.
If I am confirmed, I will review these negotiations. I believe IRS
employees' first priority should be assisting taxpayers with their
filing and compliance obligations or working to support those taxpayer-
focused efforts.
______
Questions Submitted by Hon. Michael B. Enzi
Question. In 2009, the IRS began developing the Customer Account
Data Engine (CADE 2) to replace the Individual Master File for managing
taxpayer accounts. Since then, the agency has spent more than $1
billion on the project, but has only completed one phase, has
significantly scaled back other phases, and has delayed CADE 2's
estimated completion date. In light of the challenges posed by this
project, please describe what steps the IRS will take to ensure the
CADE 2 project is managed effectively so it is completed on time and on
budget.
Answer. During my confirmation hearing, I stated that modernizing
the IRS information technology will be one of my priorities. If
confirmed, I will examine existing IT modernization efforts to ensure
that they are both efficient and effective.
Question. On April 17, 2018, the IRS's information technology (IT)
system crashed and halted the processing of millions of returns,
causing significant problems for taxpayers filing their returns. The
IRS faces significant IT challenges. The Government Accountability
Office (GAO) identified the Individual Master File, the data source for
managing individual taxpayer accounts, as one of the oldest IT systems
used by the Federal Government and noted that it is written in assembly
language code--a low-level computer code that was initially used in the
1950s. Assembly language code is difficult to write and maintain, and
many of the programmers trained in using this language are retiring.
There are concerns of increased risks of a catastrophic IT systems
failure as the system continues to age and as programmers with the
required skills are no longer available. Given these challenges, what
steps would the IRS take to manage and mitigate these risks?
Answer. If confirmed, I will work to ensure that risk management--
including having appropriately trained personnel--is a central part of
the IRS effort to modernize its IT system.
Question. Tax-exempt organizations are attempting to comply with
two new provisions enacted as part of the Tax Cuts and Jobs Act. Both
of these deal with unrelated business income tax (UBIT).
IRC section 512(a)(6)--Directs nonprofits ``with more than
one unrelated trade or business'' to compute their unrelated
business income (and related losses) earned ``separately with
respect to each such trade or business.'' However, there isn't
any definition about what constitutes a ``separate'' trade or
business, creating uncertainty about how to document, compute,
report and pay the tax.
IRC section 512(a)(7)--Imposes a new tax on expenses
nonprofits incur for their employees' transportation and
parking.
Does Treasury and the IRS plan to issue guidance about applying
these two subsections, so that tax-exempt filers will have clarity how
to comply with these changes?
Answer. It is important that all taxpayers and nonprofits have the
information and guidance they need to file their returns in the coming
filing season. If confirmed, I will work to ensure that clear guidance
is issued in a timely manner.
______
Questions Submitted by Hon. John Thune
Question. The IRS has been pursuing an initiative to improve
taxpayer service with a particular emphasis on electronic services. I
believe the expansion of e-services can lead to better taxpayer service
if it is implemented strategically and with a careful focus on
protecting taxpayer data. One concern I have in this area, however, is
how it will affect taxpayers in rural parts of the country, like much
of my State of South Dakota. In these areas where Internet access often
is more limited, taxpayers are less likely to have access and the
experience with online accounts and other electronic tools to make the
IRS e-services successful. If you are confirmed, may I have your
assurance that you will keep these rural taxpayers in mind as the IRS
builds its e-services and ensure that they still have easy access to
IRS services through more traditional means like telephone and walk-in
assistance options?
Answer. The IRS needs to provide various service options, including
electronic services, which meet taxpayer needs while protecting
taxpayer data. I also recognize that there will always be taxpayers who
do not have access to digital services, or simply prefer not to conduct
their transactions with the IRS online. If confirmed, I work to ensure
that taxpayers continue to have access to the IRS through traditional
means. I can assure you that I will keep the needs of rural taxpayers
in mind.
Question. The IRS has gone through a number of controversies in
recent years, in particular the controversy in the last administration
surrounding approval of section 501(c)(4) organizations. Do you see
your nomination as an opportunity to put that part of the agency's past
behind us and refocus the agency on its mission of collecting the
Nation's revenues and providing taxpayers with top-quality service? If
so, how would you go about making that happen, if you are confirmed?
Answer. As I have discussed with the committee, if I am privileged
to serve as Commissioner, my overriding goal will be to strengthen and
rebuild trust between the IRS, the American people, and their
representatives in Congress. Demonstrating that the IRS will treat all
taxpayers and organizations fairly and equally is central to achieving
this goal.
Question. We had an unfortunate systems failure on tax day this
year that prevented many individuals from completing their tax-return
filings and required the Acting Commissioner to extend the due date by
a day. We understand that a key part of the IRS's recent 5-year plan is
to modernize its information-technology systems, some parts of which
date back to the Kennedy administration. May I have your commitment
that you will make the comprehensive overhaul of the IRS return-
processing and other IT systems a priority for your tenure as
Commissioner, if you are confirmed?
Answer. As I have discussed with the committee, if I am confirmed,
modernizing the IRS's IT systems will be a priority, and I look forward
to thoroughly reviewing the 5-year plan. I look forward to working with
Congress on this effort
Question. It has now been almost 20 years since the IRS
restructured its operations into organizational units based on
particular groups of taxpayers with similar needs, as directed in the
Internal Revenue Service Restructuring and Reform Act of 1998. A lot
has happened in those 20 years for individual taxpayers, small
businesses and the self-employed, as well as large domestic and
international businesses in this country. From your perspective as a
tax practitioner, is it still optimal to have the IRS's structure
focused around taxpayers with similar needs, rather than geographic
areas, which was the case prior to the 1998 Act? Are there changes--big
or small--that we should consider to improve taxpayer service and
support the IRS ability to collect Federal revenues?
Answer. I have seen firsthand the impact that changes in the
structure of the IRS has on taxpayers. If confirmed, I will examine
whether changes in the structure of the IRS would help improve taxpayer
service and increase compliance. I look forward to working with the
committee on this issue.
______
Questions Submitted by Hon. Rob Portman
improving retirement plan compliance
Question. During my time in Congress, I've been supportive of
expanding the ability to save for retirement by encouraging small
businesses to adopt employer-
sponsored retirement plans for their employees. In many circumstances,
compliance with tax laws serves as a barrier to entry or an opportunity
for clerical errors, especially for small businesses sponsoring plans.
These small businesses should feel confident in their ability to
correct these mistakes in a timely way at a reasonable cost, through
simple and clear procedures.
The IRS can greatly improve these procedures by expanding the self-
correction program within the Employee Plan Compliance Resolution
System (EPCRS), which will enable businesses with retirement plans to
more easily correct common mistakes. Congress directed the IRS to do
this 12 years ago but much more needs to be done to fully implement our
directive.
Please describe the ways in which an expansion of the IRS's
retirement plan self-correction program could help ease the burden on
small business sponsoring retirement plans due to increased fees. Do
you think that an expansion of this program could improve retirement
plan compliance? What policy concerns would you have with a potential
expansion of the retirement plan self-correction program, if any?
Answer. I agree with you that this is an important issue. We need
to do everything we can help to help businesses that want to provide
retirement plans for their employees. If confirmed as Commissioner, I
will examine the steps that the IRS has taken to implement retirement
plan self-correction program to date as well as potential additional
steps that could help the program operate more effectively. I look
forward to working with the committee on this issue.
The IRS could streamline the Voluntary Compliance Program (VCP)
within EPCRS to improve these procedures. Streamlining VCP processing
is beneficial for small businesses that are waiting on an answer from
the IRS that their retirement plan is in full compliance. Streamlined
processing should also lead to decreased costs for the IRS to operate
the program.
Question. Please provide an update if and when the Voluntary
Compliance Program will be streamlined. If as a result of the
streamlining the time to process submissions is decreased, will the IRS
commit to immediately revising the user fees to reflect the lower costs
rather than over charging plan sponsors until the next biennial review?
Answer. If I am confirmed, I will examine the possibility of
streamlining the Voluntary Compliance Program (VCP) within EPCRS and
review the user fees. I look forward to working with the committee on
this issue.
notice 2017-10 and effect on historic preservation easements
Question. Congress has traditionally supported the conservation of
open space and preservation of historic structures, dating back to the
Tax Reform Act of 1976. Since then, these programs have evolved as
taxpayers, the IRS, and Congress have identified issues and implemented
solutions to more effectively achieve their intended policy goals as
well as curtail real and perceived abuses. Most recently, the IRS
published IRS Notice 2017-10, which identifies certain syndicated
conservation easements transactions as listed transactions. To my
knowledge, this guidance was published without the opportunity for
public comment or congressional input.
I understand that the potential for abuse within the conservation
easement program is a serious and constant concern for the IRS. I share
this concern with the IRS, but I am also troubled as to why the public
was not given an opportunity to comment on this process.
I understand this took place before your time, but would you be
willing to share the rationale as to why IRS did not allow for a public
comment period before issuing Notice 2017-10?
Given that syndication is a common part of financing commercial
real estate projects and, moreover, that most historic preservation
easements concerning commercial real estate must comply with more
stringent regulations, restrictions, and reporting requirements through
the historic tax credit program, would you be supportive of reexamining
the impact of IRS Notice 2017-10 on historic preservation easement
transactions?
Furthermore, if it can be determined that the guard rails imposed
on historic preservation easement transactions are sufficient to
prevent abuse on their own, would you be open to removing historic
preservation easement transactions from IRS Notice 2017-10?
Answer. If confirmed, I will discuss with IRS Chief Counsel and the
Treasury Department the rationale and basis for the transactions
described in Notice 2017-10. I look forward to working with the
committee on this issue.
______
Questions Submitted by Hon. Tim Scott
notice 2017-10 and effect on historic preservation easements
Question. Both parties within Congress have consistently supported
the preservation of open space and historic structures since the 1970s.
The programs have evolved and changed as taxpayers, the IRS and other
government departments identified shortcomings in the regulatory scheme
and worked together to respond to perceived abuses. In 2016, the IRS
acted unilaterally and published IRS Notice 2017-10. Notice 2017-10
makes certain preservation easements listed transactions when they are
part of a syndication. I understand that there are abuses within the
preservation easement program and something should be done. However,
how is it possible that Notice 2017-10, guidance that significantly
undermines congressional intent, be issued without any public comment?
Would you be willing to allow modification of Notice 2017-10 based on
public comments?
Answer. If confirmed, I will discuss with IRS Chief Counsel and the
Treasury Department the rationale and basis for the transactions
described in Notice 2017-10. I look forward to working with the
committee on this issue.
Question. Real estate projects have traditionally raised capital
through syndications. Given that syndication is a common part of
financing commercial real estate and most historic preservation
easements concern commercial real estate coupled with the fact that
historic preservation easements have greater regulations, restrictions
and reporting requirements imposed on them through the Internal Revenue
Code, Treasury, and the National Park Service, would you be supportive
of removing historic preservation easement transactions from IRS Notice
2017-10?
Answer. As noted above, if confirmed, I will examine the rationale
and basis for the transactions described in Notice 2017-10. I look
forward to working with the committee on this issue.
taxpayers and the irs
Question. Currently, there is an active bill in the House to
modernize and improve the IRS. Do you support the concepts of an
Independent Appeals Process and Sensible Enforcement? If so, should
this bill become law, would you support the application of this law to
all audits and IRS appeals currently in process?
Answer. As I stated during my confirmation hearing, I support an
independent appeals process. If confirmed, I look forward to ensuring
that the IRS works with the committee to provide technical feedback on
pending legislation.
Question. Dealing with the IRS can be very expensive and
frustrating. Many taxpayers, both large and small, feel they have
little choice but to pay the tax, interest, and penalties because of
the cost to challenge the findings of an audit. These taxpayers also
believe that some IRS professionals use this as leverage as there is no
cost or consequence to the IRS professionals who do so. What process
exists, currently, for a taxpayer who believes it is being treated
unfairly by an IRS professional or professionals?
Answer. The IRS has an independent appeals process for taxpayers to
settle tax disagreements without having to go to court. Taxpayers also
can seek the services of the Office of the National Taxpayer Advocate,
whose job is to ensure that every taxpayer is treated fairly and has a
process for taxpayers to report those issues. In addition, the Treasury
Inspector General for Tax Administration reviews and intervenes in
cases of taxpayer mistreatment. If confirmed, I will work to ensure the
IRS treats all taxpayers impartially and informs taxpayers of the
options available to them if they believe that they have been
mistreated.
Question. In some cases, tax incentive programs created by Congress
to achieve important public policy goals are severely underutilized
because of taxpayer fear of IRS retribution. What will you do to more
closely align IRS guidance and enforcement with congressional intent?
Answer. It is the job of the IRS to efficiently implement that laws
passed by Congress in an impartial and nonbiased manner. If confirmed,
I look forward to working with the committee to ensure IRS guidance and
enforcement are aligned with congressional intent.
Question. What are your thoughts on the mission of the IRS? Is it
to effectively act as a department of revenue and collect as much tax
as possible? Or is it to enforce the laws Congress has passed so that
each taxpayer pays their fair share without any personal or
institutional IRS bias?
Answer. It is the responsibility of the IRS to efficiently
implement laws passed by Congress in an impartial manner.
irs guidance
Question. Congress enacted section 179D(d)(4) to encourage the
private sector to design more energy-efficient government buildings.
The statute is very clear. However, some government entities are
abusing their role in administering the incentive by inappropriately
seeking payment in exchange for the allocation of the deduction. It is
important that the IRS issue strong guidance that confirms the intent
of Congress and directs government entities they cannot seek or accept
payment in exchange for providing a designer an allocation under
section 179D(d)(4). I ask for your views on this matter now, and your
willingness to have the IRS provide guidance promptly upon your
confirmation.''
Answer. If confirmed, I examine this issue and will work to ensure
the IRS provides clear, concise, and timely guidance, as appropriate.
______
Questions Submitted by Hon. Ron Wyden
preventing tax avoidance
Question. Mr. Rettig, during your 35-year career as a tax
controversy lawyer, you have defended many wealthy individuals. Your
firm even describes specific services for ``high net worth individuals
and their closely held entities,'' noting that ``if you may be
subjected to a Wealth Squad examination, we can help.'' The ``Wealth
Squad'' refers to the global High Wealth Industry group of the IRS
Large Business and International division. In a 2007 article in the
Journal of Tax Practice and Procedure, you expressed concern over IRS
procedures related to listed transactions--transactions the IRS has
highlighted as potentially abusive and specifically designed for tax
avoidance.\1\
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\1\ Kathryn Keneally, Charles P. Rettig, ``IRS Enforcement: The
Pendulum Has Swung Too Far,'' Journal of Tax Practice and Procedure at
19-22, April-May 2007.
During meetings with members of the Finance Committee, and during
your nomination hearing, you noted a desire to rebuild trust and faith
---------------------------------------------------------------------------
in the IRS for the ``everyday guy'' and ``the guy on the street.''
The new Republican law did little to simplify existing law and
added new opportunities for tax planning and tax avoidance. The new
passthrough deduction is just one example of new areas of complexity
created by the new tax law. Without guidance from the IRS, small
business owners will struggle to accurately determine what they owe,
and bad actors will be able to abuse the system and avoid paying their
fair share.
Given your professional history, how can regular taxpayers--those
without high-priced accountants and tax attorneys--have faith that you
are acting in their interests, and not in the interests of your former,
wealthy clients?
Answer. Through decades of experience working with the IRS, I have
seen the difficulties faced by taxpayers of all kinds-- from large
taxpayers, to small businesses, to low income taxpayers. I've also
devoted a significant amount of time to assisting taxpayers who can't
afford professional help on a pro bono basis.
Question. In your meetings with members and staff prior to your
nomination hearing, you noted that high-profile tax enforcement actions
can raise awareness and potentially increase tax compliance. However,
in your 2007 article, you bemoan IRS officials who have ``trumpeted the
success of collecting tax liabilities and penalties in connection with
so-called abusive tax shelters.'' How are members of the committee
supposed to reconcile your more recent statements, made in connection
with your nomination, with your past professional writings and actions?
Answer. I believe that every taxpayer, high-profile or not, has the
right to be treated impartially by the IRS. If confirmed, I will work
to ensure that this is the case.
Question. Given the ripe opportunities for tax planning created
under the new Republican tax law, as Commissioner, how would you combat
aggressive tax planners? How would you continue to monitor tax-
avoidance strategies over the next few years as the law is implemented?
Answer. The IRS has a responsibility to enforce all tax laws in an
impartial and unbiased manner. If confirmed, I will review the IRS's
approach to enforcement to ensure it reflects this responsibility.
Question. What kind of message would it send if the IRS failed to
go after a high-level government official if there were credible
allegations that the official had failed to comply with the tax laws?
Wouldn't that do serious damage to our voluntary tax compliance system,
especially if there were evidence the violations were knowing or
willful?
Answer. The IRS has a responsibility to enforce all tax laws in a
fair and unbiased manner. If confirmed, I will work to ensure that the
IRS treats all taxpayers equally under the law.
Question. If career IRS officials come to you recommending
enforcement action against an administration official, how would you
handle the situation?
Answer. It is my understanding that the Commissioner does not get
involved in individual taxpayer matters--including enforcement actions,
If confirmed, I will work to ensure that the IRS treats all taxpayers
equally under the law.
Question. What would you do if administration officials at the
Treasury Department or elsewhere in the administration urged you not to
pursue an enforcement case?
Answer. It is unlawful for the President, Vice President, or any
employee of the Executive Office of the President or Vice President to
request directly or indirectly any officer or employee to conduct or
terminate an audit or other investigation of any particular taxpayer.
If confirmed, I will work to ensure that the law is upheld and
appropriate steps are taken if it is violated.
taxpayer assistance
Question. Many provisions of the new tax law are complicated and
confusing, especially for small business owners. I have been pressing
Acting Commissioner David Kautter to provide guidance for these
taxpayers, but, to date, little guidance has been issued.
In the hearing, you mentioned the need for clear, timely guidance.
How will you make sure taxpayers, in particular those who cannot afford
to hire the top tax consultants, receive clear guidance in a timely
manner?
Answer. If confirmed, I will work to ensure guidance is clear and
consistent, and available to all taxpayers in a timely manner.
Question. Do you think it is important for IRS to conduct greater
outreach to traditionally underserved groups like low-income families
and immigrant communities? If so, can you tell us how you would improve
IRS outreach efforts?
Answer. If confirmed, I look forward to reviewing the IRS's current
outreach channels and exploring new ways to deliver information and
strengthen outreach, including in underserved communities.
conservation easement syndication
Question. Mr. Rettig, on March 29, 2017, I wrote to IRS
Commissioner John Koskinen about the growth in abusive tax shelters
involving the syndication of conservation easements. I asked the IRS to
provide a report on the nature and scope of this problem. On July 13,
2017, the IRS provided a partial response that revealed participants in
these syndication deals claimed deductions that were nine times the
amount of their original investment. Subsequent preliminary responses
indicate IRS may have lost billions of dollars to this tax shelter in
hundreds of tax shelter transactions.
The Treasury Department issued Notice 2017-10, identifying these
syndication transactions as abusive tax shelters and requiring
participants to disclose their involvement to the IRS. The notice was
also intended to deter future deals; however, media reports suggest
these deals are still taking place.\2\
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\2\ Peter Elkind, ``The Billion-Dollar Loophole,'' ProPublica,
December 20, 2017.
Historically, when the Treasury Department and IRS issue a Notice
``listing'' a certain transaction as an abusive tax shelter, the
promotion and use of such schemes stops. Are you concerned by the
apparent continued use of these tax avoidance techniques? Please
describe what actions you would take as Commissioner, if confirmed,
against the promoters of these abusive shelters identified in Notice
---------------------------------------------------------------------------
2017-10.
Answer. If confirmed, I will work with IRS officials to ensure an
appropriate enforcement strategy is in place to uphold the law as
Congress intended.
Question. Enforcement actions against illegal syndicated
conservation easement tax shelter transactions have proven challenging
and time-consuming for the IRS. For example, earlier this year the Tax
Court issued a ruling disallowing tax write-offs from a sham
conservation easement transaction that occurred more than a decade
ago.\3\ While Notice 2017-10 may have extended the statute of
limitations period for certain transitions, the time in which IRS can
take enforcement actions on those tax shelter transactions grows
shorter by the day. If confirmed, will you commit to developing and
carrying out a strategy to ensure that promoters of syndicated
conservation easement tax shelter transactions are held accountable
before the close of the statute of limitations?
---------------------------------------------------------------------------
\3\ T.C. Memo. 2018-45.
Answer. As noted above, if confirmed, I will work with IRS
officials to ensure an appropriate enforcement strategy is in place to
---------------------------------------------------------------------------
uphold the law as Congress intended.
Question. Do you believe the IRS currently has the tools needed to
put an end to this abuse? If confirmed, will you recommend regulatory
or statutory changes to address these abuses if Notice 2017-10 and
other tools are shown to be insufficient to curb the use of these tax
shelters?
Answer. If confirmed, I will assess the situation and work with
Congress to ensure the IRS has adequate tools to complete its mission
and uphold the law.
Question. If confirmed as Commissioner, how high of a priority will
you place on stemming this abuse?
Answer. If confirmed, I will discuss with IRS Chief Counsel and the
Treasury Department the rationale and basis for the transactions
described in Notice 2017-10. I look forward to working with the
committee on this issue.
Question. Do you believe the transactions described in Notice 2017-
10 are abusive on their face?
Answer. I do not currently have access to the information that
served as the basis for the decision by the Treasury Department and IRS
to list these transactions.
Question. If confirmed, what actions will you take to ensure IRS
challenges the tax benefits of each and every transaction covered by
Notice 2017-10?
Answer. If confirmed, I will work to ensure an appropriate
enforcement strategy is in place.
Question. If confirmed, will you support Notice 2017-10?
Answer. As I have noted, if confirmed, I will discuss with IRS
Chief Counsel and the Treasury Department the rationale and basis for
the transactions described in Notice 2017-10. I look forward to working
with the committee on this issue.
______
Questions Submitted by Hon. Maria Cantwell
irs administration
Question. Mr. Rettig, in contrast to the small law firm where you
have worked for over 35 years, the Internal Revenue Service is a multi-
billion-dollar agency with a workforce of nearly 77,000. You have built
your practice on representing taxpayers and companies who have disputes
with the IRS and have served on many boards and advisory committees
advising the IRS and the California Franchise Board. Yet, you do not
have the managerial background and expertise running a large
organization like the IRS. Mark Mazur, former Assistant Secretary of
Tax Policy, has noted that the IRS is more like a large company that
processes information, collects bills, and maintains accounts.\4\
---------------------------------------------------------------------------
\4\ James Rufus Koren, ``The Beverly Hills attorney set to lead the
IRS likes magic tricks--he'll need a few to run the agency.'' The Los
Angeles Times, February 13, 2018, http://www.la
times.com/business/la-fi-charles-rettig-irs-20180213-story.html.
The IRS is about to undertake the largest regulatory project in a
generation to put in place the regulations for the recently passed
---------------------------------------------------------------------------
$1.5-trillion tax bill.
What assurances can you give this committee that you will be able
to handle this enormous management task?
Answer. In my career, I have worked with IRS employees at every
level of the Service. If confirmed, I will work to earn their respect
and lead the IRS in taking on the range of challenges it faces,
including implementing the tax reform law.
timeliness
Question. I am concerned about the ability of the IRS to provide
taxpayers with timely guidance. For example, the solar industry had to
wait 2\1/2\ years for guidance from the 2015 tax bill.
What assurances can you give to individuals and small businesses
that they will have the guidance needed to file their taxes?
Answer. If confirmed, I will ensure that the IRS works with
Treasury and others involved--including Congress--to issue guidance in
a timely manner.
Question. What backup plan do you have if the IRS is not able to
meet its goal?
Answer. If confirmed, I will assess progress made in issuing
guidance to date and work to ensure taxpayers have the clarity they
need to file.
offshore tax shelters
Question. Much has been written about your private-sector
experience with the work you have done on behalf of your clients
related to offshore bank accounts.
How can you put your past experience to work for the American tax
payers to crack down on hidden offshore bank accounts and tax
avoidance?
Answer. In my professional career, I have not been involved in
creating tax avoidance schemes. If confirmed, I would familiarize
myself with the ongoing work the IRS is undertaking in this area and
ensure the IRS implements the law in an impartial manner.
______
Questions Submitted by Hon. Bill Nelson
Question. I understand that the number of tax-related identity
theft cases has declined in recent years, but criminals now have more
information on us than ever before--with all the data breaches and
privacy lapses that's occurred in recent years. What do you plan to do
to stay on top of this crime and protect Americans from identity theft
abuse or other scams, as criminals become increasingly sophisticated?
Answer. If I am confirmed, the IRS will remain vigilant in this
area and work to expand its efforts. The IRS has made great progress in
the battle against identity theft. If confirmed as Commissioner, I will
work to ensure that the IRS remains a leader in this fight.
Question. Last year, I introduced the Identity Theft and Tax Fraud
Prevention Act (S. 606), which grants the Treasury Department authority
to oversee paid tax preparers, among other reforms to protect taxpayers
from tax-related identity theft. Unfortunately, the paid tax preparer
provision is considered controversial by some Members of Congress. The
provision, Section 115 of the bill, provides the following:
SEC. 115. MINIMUM STANDARDS FOR PROFESSIONAL TAX PREPARERS.
(a) In General.--Subsection (a) of section 330 of title 31,
United States Code, is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) establish minimum standards regulating--
``(A) the practice of representatives of persons before the
Department of the Treasury; and
``(B) the practice of tax return preparers; and'', and
(2) in paragraph (2)--
(A) by inserting ``or tax return preparer'' after
``representative'' each place it appears, and
(B) by inserting ``or in preparing their tax returns, claims
for refund, or documents in connection with tax returns or
claims for refund'' after ``cases'' in subparagraph (D).
(b) Authority To Sanction Regulated Tax Return Preparers.--
Subsection (b) of section 330 of title 31, United States Code,
is amended--
(1) by striking ``before the Department'',
(2) by inserting ``or tax return preparer'' after
``representative'' each place it appears, and
(3) in paragraph (4), by striking ``misleads or threatens'' and
all that follows and inserting ``misleads or threatens--
``(A) any person being represented or any prospective person
being represented; or
``(B) any person or prospective person whose tax return, claim
for refund, or document in connection with a tax return or
claim for refund, is being or may be prepared.''.
(c) Tax Return Preparer Defined.--Section 330 of title 31, United
States Code, is amended by adding at the end the following new
subsection:
``(e) Tax Return Preparer.--For purposes of this section--
``(1) In general.--The term `tax return preparer' has the meaning
given such term under section 7701(a)(36) of the Internal
Revenue Code of 1986.
``(2) Tax return.--The term `tax return' has the meaning given to
the term `return' under section 6696(e)(1) of the Internal
Revenue Code of 1986.
``(3) Claim for refund.--The term `claim for refund' has the
meaning given such term under section 6696(e)(2) of such
Code.''.
Do you believe this provision is a reasonable solution to the
problem of fraudulent or incompetent paid tax preparers? If not, please
explain why not and suggest changes to the text to address any concerns
you may have about the provision.
Answer. People who prepare tax returns on behalf of others should
be capable, competent, and knowledgeable of the tax laws covering the
tax returns they are completing. I understand the administration has
included a legislative proposal with the FY 2019 Budget Request to give
the IRS the statutory authority to require minimum standards for paid
tax return preparers. If I am confirmed, I will ensure the IRS provides
appropriate technical feedback on such legislative proposals.
Question. How will you work to ensure Public Law 115-97 will not be
used by corporations to deceptively shift profits abroad?
Answer. If confirmed as Commissioner, I will ensure the IRS works
to implement clear guidance and will work to ensure that the IRS has an
effective enforcement strategy.
Question. How do you plan to combat tax avoidance schemes,
particularly estate planning techniques that abuse ambiguous parts of
the tax code?
Answer. If confirmed as Commissioner, my job will be to uphold the
law. Through the years, there have been many maneuvers and schemes to
improperly evade taxes. An important job of the IRS is to watch for
these schemes and take appropriate action to protect our Nation's tax
system.
Question. Do you hold any sympathies with individuals who hide
income in offshore bank accounts to avoid taxes? If so, please explain.
Answer. If I am confirmed, my role will be to ensure that IRS
upholds the law. Taxpayers have an obligation to follow the law,
regardless of whether they have income onshore or offshore.
Question. Do you believe your ownership of two rental units in the
Waikiki Trump International Hotel and Tower could compromise your
ability to fairly administer the tax laws free of any influence from
the President? If not, do you pledge to notify both the chair and
ranking member of the Senate Finance Committee if the President asks
you to do anything that would undermine the integrity or functioning of
the IRS?
Answer. No. As I said during the hearing, if confirmed, I pledge
ensure that the IRS operates in an impartial, unbiased manner from top
to bottom.
______
Questions Submitted by Hon. Robert Menendez
free file
Question. Mr. Rettig, the IRS since 2002 has been in a public-
private partnership with the tax industry which provides free tax
returns and electronic filing for the lowest 70 percent of the U.S.
taxpayer population. Do you support continuing this program?
Answer. I support the Free File program, which has helped millions
of taxpayers file their tax returns for free since the program's
creation. I support continuing the program.
identity theft refund fraud information sharing and analysis center
Question. Mr. Rettig, one of the key accomplishments of the past
few years is the creation of the Identity Theft Refund Fraud
Information Sharing and Analysis Center (IDTTRF-ISAC). This allows IRS,
State Departments of Revenue and companies in the tax and banking area
to collect and analyze information under MITRE regarding identity theft
fraud. Do you intend to support this initiative and its funding?
Answer. The IRS has made great progress in the battle against tax-
related identity theft during the last several years following the work
of the Security Summit and the subsequent creation of the Information
Sharing and Analysis Center (ISAC). This collaborative effort among the
IRS, States, and the Nation's private-sector tax community is working.
If confirmed as Commissioner, I will work to ensure the continued
success of the Summit partnership and the ISAC and provide appropriate
resources.
______
Question Submitted by Hon. Benjamin L. Cardin
Question. As we discussed during your hearing, I am very interested
in pursuing tax administration improvements across various issues. One
of the most important is retirement.
Compliance with the tax laws when businesses sponsor a retirement
plan can be challenging due to the complex rules that govern the
operation of these plans. Especially for small businesses, this can
lead to many opportunities for foot faults. Businesses need to have the
ability to correct these mistakes in a timely way at a reasonable cost,
through simple and clear procedures.
The IRS can help with this issue by expanding the self-correction
program within the Employee Plan Compliance Resolution System (EPCRS),
which will enable businesses with retirement plans to more easily
correct common mistakes. Congress directed the IRS to do this 12 years
ago in the Pension Protection Act of 2006, which directed Treasury to
update and improve EPCRS, giving special attention to, among other
things, the concerns of small employers. Much more needs to be done to
fully implement that directive.
Will you commit to promptly expand IRS's retirement plan self-
correction program in order to improve retirement plan compliance and
protect participating employees?
Answer. I agree that this is an important issue. We need to do
everything we can to enable businesses that want to provide retirement
plans for their employees. If confirmed as Commissioner, I will examine
the steps that the IRS has taken to implement retirement plan self-
correction program to date as well as additional steps that could help
the program operate more effectively. I look forward to working with
the committee on this issue.
______
Questions Submitted by Hon. Sherrod Brown
Question. Regarding conservation easements, given your extensive
background with the tax code, can you describe how you see conservation
easements and historic tax credits intersecting? In 2016, the IRS
published Notice 2017-10, which attempted to curtail certain practices
regarding conservation easements. Do you have any thoughts on the
review process already required of historic tax credits, and do you
think that is a sufficient process for reviewing projects that also
utilize credits like conservation easements?
Answer. If confirmed, I will discuss with IRS Chief Counsel and the
Treasury Department the rationale and basis for the transactions
described in Notice 2017-10. I look forward to working with the
committee on this issue.
Question. In recent years, we've seen trend of for-profit colleges
converting to non-profits that still lead to financial gain by their
former owners. How would the IRS enhance scrutiny of these tax
structures under your leadership? How would you suggest the IRS improve
upon coordination with the Department of Education when evaluating
these conversions?
Answer. If confirmed, I will review and assess this situation and
ensure appropriate coordination takes place.
______
Questions Submitted by Hon. Michael F. Bennet
Question. By keeping the IRS free from political influence, we can
strengthen its stability and credibility.
Do you agree that the IRS's work to administer and enforce the tax
code should be free from political interference (even if a company or
individual affiliated with President Trump, his close associates, or
family members is involved)?
Would you commit to notifying me and the bipartisan membership of
the Finance Committee in writing if inappropriate political
interference occurs, from the White House, Main Treasury, or otherwise?
Answer. As I have discussed with the committee, if I am privileged
to serve as Commissioner, my overriding goal will be to strengthen and
rebuild trust between the IRS, the American people, and their
representatives in Congress. Treating all taxpayers and organizations
fairly and equally is central to achieving this goal. In addition, it
is unlawful for the President, Vice President, or any employee of the
Executive Office of the President or Vice President to take certain
actions with respect to the operation of the IRS. If confirmed, I will
work to ensure that the law is upheld and appropriate steps are taken
if it is violated.
Question. The administration requested $11.1 billion in
discretionary appropriations for the IRS for 2019, down from the 2018
budget and down even further from its funding level in FY2010. In
December 2017, the President signed into law tax legislation that
contains substantial revisions to the Internal Revenue Code that the
IRS is responsible for administering.
Do you believe the current funding levels are adequate to meet the
implementation challenges of the tax law and to appropriately address
taxpayer needs?
Answer. If confirmed, one of my top priorities would be to ensure
the IRS has the resources it needs and uses those resources as
effectively as possible.
Question. A September 2017 Inspector General audit noted that 64
percent of the IRS's IT hardware infrastructure is beyond its useful
life. The IRS estimates that the current replacement cost for this IT
equipment is approximately $430 million. However, the administration
only requested $110 million for IT modernization efforts in its budget,
about one-fourth of that estimate.
From your perspective as a practitioner who deals with the IRS, how
does this IT underfunding affect efforts to increase efficiency and
security of the agency?
Will improving IT infrastructure be a priority for you?
Answer. Modernizing the IRS's IT systems and bringing the IRS's IT
systems into the 21st century is one of my top goals. Modernization
serves three purposes: it protects taxpayer data, it enhances services
provided to taxpayers, and it preserves the IRS's ability to collect
the taxes that fund the government.
Question. Do you have a sense of how you will fill your role as IRS
Commissioner and what your priorities are for the agency?
Answer. As I have discussed with the committee, if I am privileged
to serve as Commissioner, my overriding goal will be to strengthen and
rebuild trust between the IRS, the American people, and their
representatives in Congress.
Question. Setting aside current politics, what would an ideal
system of tax administration and tax enforcement in the United States
look like to you and do you have a sense of how much you think it would
cost?
Answer. Our system of tax administration and enforcement is based
on voluntary self-assessment. Such a system will work most effectively
if taxpayers have the information they need to file accurate returns
and believe the IRS will enforce the tax code effectively and without
bias. Implementing such a system will require more than resources, it
will mean building trust in the IRS.
Question. IRS estimates that individuals attempted at least $14.5
billion in identity theft tax refund fraud in tax year 2015. Starting
with its March 2015 Security Summit, IRS has partnered with State tax
administrators and tax preparation companies, among others, on
initiatives aimed at better preventing and detecting identity theft
(IDT) refund fraud.
How do you plan to continue preventing identity theft and tax
refund fraud?
Answer. The IRS has made some incredible progress in the battle
against tax-
related identity theft through the Security Summit effort. This
unprecedented partnership among the IRS, the States and the Nation's
tax community is working. I understand the number of tax-related
identity theft victims has fallen dramatically. I plan to continue this
important work of the Security Summit. To complement this, I will
continue to strengthen IRS's efforts in order to make it harder for
identity thieves to successfully masquerade as taxpayers and file
fraudulent refund claims on behalf of taxpayers.
How do you think about the balance of responsibilities between
taxpayer services and enforcement, and how does the role of the
criminal investigations division play into this?
Answer. To be effective the IRS needs to balance between taxpayer
services and tax enforcement. The IRS must do everything it can to help
people meet their tax responsibilities. At the same time, some people
will not comply. That is why the IRS needs an effective tax enforcement
program that respects taxpayer rights.
Question. In 2015, we worked to change the previous ``placed-in-
service'' standard for qualification for section 48 investment tax
credits to a ``beginning of construction'' standard for projects
completed by the end of 2023. Application of the beginning of
construction standard is new to solar investment and requires Treasury
to issue guidance to clarify the rules. Yet, nearly 3 years later, no
guidance has been issued.
The failure to release the pending guidance is causing considerable
uncertainty for new solar projects--particularly utility-scale solar
projects, which must navigate significant and time-consuming financing,
and permitting issues and take three to 5 years to complete.
If you're confirmed, I'd like to strongly urge you to immediately
prioritize the issuance of this guidance for solar energy projects.
Can you please commit, if confirmed, to getting this done as soon
as possible, so businesses and investors have the certainty they need
to take advantage of this important incentive?
Answer. It is my understanding the guidance you mentioned involving
solar energy projects and the beginning of construction date issue is
reflected in IRS Notice 2018-59, which the IRS issued on June 19, 2018.
______
Questions Submitted by Hon. Mark R. Warner
Question. Mr. Rettig, should you be confirmed as IRS Commissioner,
you will have about 70,000 Federal employees working for you. Given the
complexity of the tax code and the importance of helping taxpayers,
recruiting and retaining skilled employees is of utmost importance.
Yet, this administration is going to great lengths to worsen the
quality of Federal jobs, including at the IRS.
The administration's proposals include cuts in retirement benefits
and across-the-board pay freezes. In addition, a recent set of
executive orders issued by the President attempts to dramatically
undermine the rights and protections of Federal workers.
How do you see cutting benefits and worsening bargaining rights
affecting recruitment and retention of talented workers at the IRS?
Answer. Throughout my career, I've seen first-hand the work of IRS
employees in many different roles. The majority are committed to
serving taxpayers. If confirmed, I will work with Congress and the
Service's existing workforce to help build the best possible workplace
so we can attract and retain the best people to serve the Nation's
taxpayers.
Question. Mr. Rettig, We know from tax data that Americans are
consistently reporting more self-employed or independent income than
they did 20 years ago. And whether they rely on this work for all or
just some of their income, one of the biggest complaints I hear from
independent and contract workers is that tracking expenses and filing
their taxes is just too complicated. But we do not know how many people
are using that work as extra income, how many are actually relying on
this work as their primary source of income, and whether their tax
challenges are the same. There are still big questions we do not have
the answers to, and better information is going to be key to bringing
our workforce policies in line with the employment realities of the
21st century.
I recently introduced legislation, S. 3097, which would direct the
Department of Treasury to study how income has shifted between wages
and non-employer business income over the past few years. This research
will also look at the withholding, reporting, and filing system related
to workers earning non-employer business income.
It is clear we need to know more about how workers are earning non-
business income and what their income profile looks like. What do you
believe that we could do to make their tax compliance easier and
better?
Answer. As you note, this issue is very important, given the
continuing changes in the workforce. The IRS needs to focus on
improving taxpayer service, including providing self-employed
individuals with the information and assistance they need to accurately
file their taxes. If confirmed, I look forward to working with the
committee on this issue.
Questions Submitted by Hon. Sheldon Whitehouse
Question. The IRS plays a critical role in policing the political
activities of nonprofit organizations organized under 501(c)(4) of the
tax code. This role was made increasingly complex by the Citizens
United decision, which weaponized tax-exempt 501(c)(4) organizations
into the preferred vehicle to funnel secret dark money into our
elections. These social welfare groups are under IRS's jurisdiction.
The IRS should never be used as a political tool, but it also does have
an obligation to see that groups are not abusing the tax code and
engaging in improper political activity.
What assurances can you give us that you will stand up to political
pressure from Republicans and enforce the IRS's rules fairly,
consistently, and vigorously?
Answer. If confirmed, I will work to ensure that the IRS operates
in an impartial, nonbiased manner from top to bottom.
Question. At the hearing, you said that it was ``your experience''
that the IRS looks into inconsistent filings by taxpayers. The Pulitzer
Prize winning organization ProPublica investigated the tax and election
filings of 104 501(c)(4) organizations to see whether they were
reporting consistent amounts of political spending. It found that 32
groups reported political spending to the Federal Election Commission
or State election commissions, but told the IRS they spent no money to
influence elections. Both statements cannot be true. Yet, to my
knowledge, neither the IRS nor the FEC have investigated.
As Commissioner, do you think it is worthy of investigation if
organizations are openly and notoriously reporting inconsistent
information to the IRS and other regulators?
Answer. If confirmed, I will work to ensure that the IRS implements
the law in an impartial, nonbiased manner. In my experience, the IRS
does take into account publicly available evidence of potential
wrongdoing and takes action where appropriate. If confirmed, I will
work to ensure that it continues to do so.
Question. Should the IRS review other filings and statements a
person has made to the IRS or other agencies to verify that the
information regarding material matters is consistent?
Answer. I understand the IRS has a variety of tools available to
look into issues and determine the accuracy of information. I'm also
aware that the IRS works with other law-enforcement agencies when
appropriate. If confirmed, I will be a vocal advocate for the
enforcement mechanisms of the IRS.
Question. Section 125 of division E of the Consolidated
Appropriations Act, 2018 prevents the IRS from issuing new guidance on
the types of political activities 501(c)(4) organizations can and
cannot engage in.
Do you support think the IRS should be able to issue new
regulations to provider greater certainty and clarity to 501(c)(4)
organizations?
Answer. If confirmed, I will examine relevant regulations to ensure
they provide as much certainty and clarity as possible under the law.
Question. Does this rider make the IRS's job more difficult?
Answer. As I am not currently at the IRS, I do not have all the
information needed to assess the impact of this provision.
Question. In 2016, Congress amended the Internal Revenue Code to
require self-declared 501(c)(4) organizations to notify the IRS of
their existence. However, the IRS does not make these notifications
public. As a result, there is a disparity between registered
501(c)(4)s, which have filed publicly available Form 1024s that provide
information on their existence and activities, and ``declared''
501(c)(4)s, for which there may be no public information about their
activities or even their existence.
Is there a public interest in making sure that all 501(c)(4)
organizations provide public information about their existence and
activities?
Answer. If I am confirmed, I will work to ensure that the IRS
implements the law as Congress intended.
Question. Will you commit to working with Congress to address this
disparity?
Answer. If I am confirmed, I will work to ensure that the IRS
provides appropriate technical feedback on potential legislation.
Question. 26 U.S.C. Sec. 7206(1) makes it a felony punishable by up
to 3 years of imprisonment and $100,000 in fines for a person who:
``[w]illfully makes and subscribes any return, statement, or other
document, which contains or is verified by a written declaration that
it is made under the penalties of perjury, and which he does not
believe to be true and correct as to every material matter.''
Why is it important to ensure that taxpayers are providing accurate
information?
Answer. It is important that taxpayers providing accurate
information because our tax system is based on the principle of
voluntary self-assessment. However, the IRS has many tools available--
both civil and criminal--to take action against people who knowingly
provide inaccurate information or otherwise abuse the system.
My Republican colleagues have promised that Americans will be able
to file their taxes on a postcard. Last week a draft of the postcard
was reported in the press. The new postcard still requires taxpayers to
fill out up to six separate schedules.
In light of this, what does the postcard accomplish?
Answer. I have not been involved in this effort as I am not
currently at the IRS. If confirmed as Commissioner, I will work to
ensure that all methods of filing minimize the burden on taxpayers.
Question. More than 90 percent of taxpayers file their taxes
electronically, which also makes it easier for the IRS to process. Is
it a good idea to encourage taxpayers to go back to filing paper
returns?
Answer. It is important that the IRS provide taxpayers with both
electronic and traditional means of filing.
Question. Given that the IRS already has payroll information from
employers, wouldn't it be easier for taxpayers if the agency sent them
a completed tax form for their review and signature?
Answer. The IRS does not have all the information needed to prepare
an accurate and complete tax return; only the taxpayer does. If
confirmed, I look forward to working with the committee to reduce the
burden that filing puts on taxpayers as much as possible.
Question. According to the IRS, the net tax gap, the difference
between what people and companies owe in taxes and what the IRS
ultimately collects exceeds $400 billion per year. This should be the
low-hanging fruit of deficit reduction; this is money owed under the
law. The budget request notes that an additional $15 billion for
enforcement over 10 years will generate $44 billion in collections,
``yielding a net savings of $29 billion.'' In other words, every dollar
spent on enforcement brings in three.
Do you agree that additional enforcement dollars would produce a
positive return and help reduce the deficit?
Answer. If confirmed, I will work to ensure the IRS maintains
effective enforcement that respects taxpayer rights. However,
enforcement alone will not close the ``tax gap.'' In our system of
voluntary self-assessment, taxpayer must trust that the IRS will
effectively enforce the tax code without bias.
Question. Are you aware that the President's FY19 request for the
IRS enforcement budget was nearly $1 billion lower than Congress
appropriated for it in 2011?
Answer. Yes.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
The next IRS commissioner will be in charge of administering a tax
system that's broken in two.
There's one set of rules for the cop on the beat or the worker on
the factory line. Strict rules, no special loopholes, taxes come
straight out of your paycheck.
Then there's another set of rules for the high-flyers. Under that
system, with the right advice from costly advisers, you can effectively
pay what you want, when you want.
Mr. Chuck Rettig, nominated by the President to lead the IRS, made
a career on dispensing that advice. And the biggest policy challenge
he'd walk into as Commissioner is implementing the extremely
complicated Trump tax law, which did a whole lot more for the high-
flyers and well-connected than everybody else.
Given that fact, it's up to Mr. Rettig to demonstrate that if he's
confirmed, he'd work on behalf of all Americans, particularly hard-
working, middle-class families and the owners of the garages, corner
stores and restaurants that make up our communities. ``The guy on the
street,'' as he said in our meeting earlier this week.
One of the most immediate challenges he'll inherit if he's
confirmed is sorting out a big headache the Trump tax law has caused
for small businesses. Months after it was enacted, small businesses
nationwide are still struggling to figure out how the new pass-through
deduction will affect their tax bills. This law was hyped as a way to
simplify the code and make life easier for millions of Americans. The
pass-through deduction is an example of where the exact opposite has
happened.
Mr. Rettig also needs to demonstrate that he will maintain
independence from the Trump White House. That's important with any
nominee, but it's especially relevant in Mr. Rettig's case, since he
owns and rents out condos in a Trump-branded and -managed property.
I'll have questions about that today.
But even setting aside that financial relationship, committing to
independence matters. This administration often seems to be making tax
decisions for political reasons rather than policy reasons, and that's
a recipe for the kind of swampy corruption that makes people lose faith
in institutions like the IRS.
For example, it appears a policy regarding tax-favored
``Opportunity Zones'' was changed at the behest of one well-connected
Republican donor in Nevada. It's a sign the administration has put
itself in the business of picking economic favorites as a result of the
tax law. This donor wanted a special accommodation, and he got it. When
the State of Vermont sought a similar change, it was denied.
There are also reports the Trump administration is going to
introduce a new, untested tax form that will make the experience of
filing returns even more of a headache for lots of Americans,
particularly seniors. When the debate closed and the new tax law
passed, it turned out that most Americans would not be able to file on
a postcard, contrary to what Republicans had promised. But the
administration decided to go ahead and cram the same amount of tax math
onto a smaller form anyway. That means many taxpayers are going to have
to rifle through complicated new stacks of instructions, attach
multiple schedules and it will lead to more errors. The new forms are
setting up taxpayers to fail.
And finally, the Vice President said in May that the Johnson
amendment, which bars 501(c)(3) tax-exempt organizations from
campaigning for or against political candidates, quote, ``will no
longer be enforced under this administration.''
That's a longstanding right-wing priority and a recipe for even
more dark money to infect our political system. The next IRS
Commissioner will be in charge of enforcing that law on the books
despite the Vice President's pledge to look the other way.
I'll close on this. Running the IRS is a difficult job that
involves managing tens of thousands of employees. Mr. Rettig has
decades of experience in tax matters, but his lack of management
experience is a concern. I'm sure he will be asked that today as well.
I appreciate Mr. Rettig's willingness to serve, and I thank him for
joining the committee here today. I look forward to Q&A.
______
Communication
----------
Statement of Jeffrey M. Blum
7106 Meadow Ridge Drive
Louisville, Kentucky 40218
Telephone (502) 494-2889
fax (502) 749-2949
blum.jm@gmail.com
Introduction
I have been representing the owners of Country Folk Art Shows, Inc.
(``CFAS''), a fully lawful family business, since the summer of 1994.
CFAS has been victimized by one of the first and largest improper civil
asset forfeitures conducted by IRS agents. Approximately four million
dollars has been unlawfully taken and despite repeated court rulings
and a review conducted by the Deputy Attorney General (initiated by
Attorney General Ashcroft, and conducted by Deputy Attorney General
Corney and Associate Deputy Attorney General Catherine O'Neil), all
directing the IRS to return the money as tax refunds, the IRS has done
nothing but stonewall since first being directed to address refund
claims in 2002. The extensive, well-
documented tax refund claims have repeatedly been ``lost,'' and
inaction has been justified by saying that mere theft of assets by
agents does not justify a tax refund until the Commissioner writes a
letter crediting the money as tax payments. For more than a decade the
Commissioner has been strategically unreachable; every written
communication to him has been rerouted to IRS Criminal Investigations,
which has responded, if at all, by saying, in the words of former Chief
Nancy Jardini, that it has no jurisdiction over refund claims.
Our clients' lawfully derived income, which consists of five years
of gate receipts from Country Folk Art Shows, was initially tendered
voluntarily to the IRS to pay off about 80% of a bona fide tax
liability in what was termed a ``consent judgment'' of civil
forfeiture. The IRS had a written policy at the time directing that any
lawfully derived assets forfeited based on ``structuring'' allegations
could only be used to pay off tax liability, or forfeiture would not be
authorized.Because the U.S. Attorney and everyone else acknowledged the
legality of exhibiting country folk art, the owners received oral
assurances from the IRS that this policy would apply. Three months
after voluntarily tendering the assets the CFAS owners were subjected
to a bait and switch. The assets were distributed as grants to various
government agencies and the same taxes, interest and penalties were
assessed a second time. The Sixth Circuit Court of Appeals denied other
avenues of redress, but held that the owners should be entitled to
refunds once they filed properly amended refund claims. Since that time
multiple lawsuits have been filed and the IRS has engaged in a variety
of machinations to hide the missing assets while refusing to provide
any lawful response to the refund claims.
Most recently counsel for the House Government Oversight
Subcommittee of the Ways and Means Committee has helped to enlist the
Taxpayer Advocate Service to get the refund claims addressed in a
lawful manner. The Taxpayer Advocate for the District of Columbia
worked diligently to understand the refund claims and document how they
had repeatedly gone missing. However, he was then suddenly overruled by
National Taxpayer Advocate, Nina Olsen, who announced her personal
ruling that any use of the word ``forfeiture'' in connection with money
acquired by the IRS, makes the money a gift or off-the-books payment to
the IRS regardless of the circumstances by which it was obtained. If
Ms. Olsen's dictum is a correct statement of IRS policy, then this is
an agency that has engaged in criminal fraud and required several of
its employees, including ones at high levels, to act as accessories
after the fact in furtherance of the fraud. Point I, infra, explains
how a central part of the fraud has involved creating an imaginary law
against ``structuring generally,'' that has been misrepresented to be
the actual law against structuring a single transaction over $10,000 in
currency. 31 U.S.C. Sec. 5324(a)(3). The actual and imaginary laws bear
superficial similarity, but the imaginary one is much broader in
ostensibly authorizing forfeiture of all cash income of lawful
businesses lawfully put in domestic banks as separate deposits under
$10,000. In the case of Country Folk Art Shows and many other
legitimate businesses, bank officials have advised how deposits could
lawfully be made, depositors have attempted to follow the law, and IRS
agents have confiscated the money for their own use because of what
former Attorney General Eric Holder has approvingly called
``structuring generally.'' The expansion of this practice has occurred
after the Deputy Attorney General of a prior Republican Administration
conducted a detailed review with my assistance and warned against the
illegality of what was occurring.
Having recently watched the video recording of the Committee's June
28 hearing, I am heartened by several things. American taxpayers should
be grateful for the work of Senators Scott and Isakson in sponsoring
the Respect Act and to Senator Scott for eliciting a promise of
compliance from Commissioner-designate Rettig. Specifically, Senator
Scott stated:
The IRS currently wields a tremendous amount of power over the
folks in South Carolina and across the country, far more than
the founders intended. One example is found in civil asset
forfeiture. This practice allows the IRS to confiscate a
citizen's wealth upon the mere suspicion of wrongdoing. During
a two-year investigation the Ways and Means Oversight
Subcommittee discovered the IRS had seized civil assets from
small business owners without providing substantial evidence to
support their claim. That is why I introduced the RESPECT Act
to require the IRS to show probable cause before seizing assets
and facilitate taxpayer presentation of proof that would clear
them of wrongdoing. Will you commit to working with me to
protect taxpayers and small businesses?
Mr. Rettig replied, ``Absolutely.'' (V. R. 2:01:30 to 2:02:20). I was
also given hope by Mr. Rettig's recognition that the public's trust in
the IRS to act lawfully ``is critical to the success not only of the
IRS but of this country,'' and his professed commitment ``to rebuild
the trust in that agency [and] to confirm to the American taxpayers
that the Internal Revenue Service is impartial, nonbiased and color
blind for all purposes.'' (V. R. 53:40 to 54:10). Also heartening was
Chairman Batch's warning that ``if the IRS shall slip up or fail to
live up to the high standards that Congress has set, this Committee
will hold the IRS accountable.'' (V. R. 33:10). Such oversight may be
essential because Mr. Rettig's seemingly heartfelt promise to adhere to
the law closely resembled words previously spoken by former
Commissioner Koskinen before the House Oversight Subcommittee. However,
Mr. Koskinen's lavish promises were quickly followed by an admission
that others in the IRS prevented him from knowing or considering the
details of any specific case. This resulted in a lengthy period where
the Commissioner acted as a kind of shill offering the utmost devotion
to lawfulness in the abstract where running interference for a plethora
of unlawful practices.
I. Abuses of Civil Forfeiture Stemming From the Imaginary Law against
``Structuring Generally''
The pseudo-law against ``structuring'' was conjured to mimic but
have much broader application than the actual law against structuring a
single transaction in currency, 31 U.S.C. Sec. 5324(a)(3). Congress
enacted the real law in the 1980s to aid in the enforcement of laws
against money laundering by closing off a familiar loophole. Money
launderers had been known to hire bank runners known as ``smurfs'' to
help them evade the CTR filing requirement for cash transactions that
exceeded ten thousand dollars at a single financial institution in a
single day. The paradigm case was of a launderer who would hire two or
more smurfs to bring cash amounts between five and ten thousand dollars
to different tellers and thereby get more than $10,000 into the
destination bank without having a CTR filed.
The Secretary of the Treasury, who created the rules that defined
the law (Part 103 of the Code of Federal Regulations), understood there
were many legitimate cash businesses which regularly deposited cash
receipts of more than a couple thousand dollars. To distinguish money
launderers and smurfs, who typically worked with a single corrupt
institution, from these other legitimate businesses, the Secretary
imposed an important limitation on Sec. 5324(a)(3). In order for the
law to be violated there had to be a single transaction of more than
$10,000 cash that was being broken up--or structured--into smaller
transactions to evade the requirement. This structured single
transaction was clearly distinguished in the law from a series of
separate cash transactions under $10,000 that could have been
aggregated by making fewer cash deposits. For the last thirty years the
CFR has clearly defined a single transaction as the sum total of all
cash transactions with a single banking institution (including all its
branches) made within a 24-hour period. While the regulations were
clear from the outset, any possible doubt about their meaning was
erased in 1994 when the United States Supreme Court further clarified
that the currency structuring law only prohibits ``break[ing] up a
single [currency] transaction above the [$10,000] reporting threshold
into two or more separate transactions for the purpose of evading a
financial institution's [CTR] reporting requirement.'' Ratzlaf v.
United States, 535 U.S. 135, 136 (1994) (emphasis supplied).
With the actual law defined in this way, smaller banks and branches
that found the CTR filing requirement onerous were left free to advise
owners of cash businesses simply to keep their daily deposits under
$10,000 and use other banks in addition to theirs if necessary. As a
result, the CFAS owners, who typically received thousands of gate
receipts in small denominations, made numerous cash deposits in a
number of banks in amounts under $10,000. The IRS waited five years and
then forfeited all the cash deposits, totaling about four million
dollars, which were distributed internally by AFMLS and IRS Criminal
Investigations. The Service and a cooperating U.S. Attorney first
obtained consent to the forfeiture by promising to follow IRS written
policy directing that the money could only be used as tax payments,
then three months later decided to defy the directive of the Assistant
Commissioner for Criminal Investigations and assess the same tax
liability a second time. The clients paid under protest and retained me
in 1994 to get the money back. After the Sixth Circuit Court of Appeals
determined in 2001that tax refunds were the appropriate vehicle and the
Deputy Attorney General requested in 2005 that the IRS act on long
pending refund claims, the IRS, visibly acting under the leadership of
Division Counsel Edward G. (``Ted'') Cronin, not only defied the
request, but proceeded to launch numerous shakedown operations--all
fraudulent and unlawful, based on the same imaginary law against
``structuring generally.'' According to a New York Times investigation,
more than $242 million was seized by the IRS for ``suspected
structuring violations'' between 2005 and 2012 in more than 2,500
cases. The Country Folk Art Shows forfeiture was one of the first and
largest of these unlawful seizures; it was also the one that led to a
warning from the top of the Justice Department, the disregard of which
now leaves the IRS with the headache of an additional 2,500 cases.
Since the Times's full front page article came out on October 25,
2014 the House Ways and Means Government Oversight Subcommittee has
implemented what I am told is extensive oversight. Surprisingly, there
continues to be defiance from IRS leadership, most recently from the
National Taxpayer Advocate, Nina Olsen. With all plausible legal
arguments for keeping the money having been either defeated or
abandoned in court, it is puzzling why this continues. In 2015 I
explained to TIGTA agents why I thought the practice was criminal,
saying that to
understand how the sudden switch from the actual law against
structuring a single transaction in currency to the imaginary
law against ``structuring generally'' can convert IRS Criminal
Investigations officers into perpetrators of crime it helps to
consider an on-point analogy to the actual offenses of bank
robbery, attempted bank robbery and conspiracy to commit bank
robbery. Once such an offense occurs persons who drive the
getaway car will also be guilty of the offense. So it would
make sense to clarify that driving a vehicle away from a bank
with cash taken from the bank inside it can indeed make one
liable for bank robbery or conspiracy to commit bank robbery.
But if one focuses simply on the act of driving a vehicle with
cash removed from a bank and begins to conjure an imaginary law
against using a motor vehicle to assist in removing cash from a
bank while ignoring the other essential elements of the crime
of bank robbery, then one is likely to instigate the following
rash of criminal acts by law enforcement agents:
The agents lie in wait outside banks. When they observe
customers leaving ATM machines the agents follow their cars,
stop them after a few blocks and then forfeit to AFMLS and
themselves all cash in the driver's or passenger's possession
along with the vehicle, while threatening to prosecute everyone
in the car for using a motor vehicle to assist in removing cash
from a bank. Given the essentially fraudulent nature of such
prosecutions it makes sense to threaten drivers and passengers
with lengthy prison sentences but allow them to avoid the time
in prison if they surrender to AFMLS and the agents all the
cash taken as well as their vehicles.
Report on the IRS Unlawful Asset Conversion Program Based on an
Imaginary Law Against ``Structuring'' Generally and IRS Counsel's
Continuing Attempts to Mask Fraud by Seeking to Impose Double Taxation
on the Owners of Country Folk Art Shows (``TIGTA Report'') at 6.
Businesses making frequent four-figure cash deposits are like most
people getting cash from an ATM machine and driving away in a car.
Under certain narrow, legally defined circumstances that have been
shaped to combat genuine wrongdoing the actions can be part of a crime,
but when AFMLS and IRS Criminal Investigations agents start seizing
money for themselves by pretending that any transporting of money from
a bank by car is a crime, innocent people are victimized and the
government agencies become the criminal.
II. Reasons for Extending Committee Oversight to the Particular Tax
Refund Claims of Country Folk Arts Shows Owners
Because there have been so many court proceedings, agency reviews
and evasive maneuvers conducted over a nearly twenty-year time span,
the history of the Country Folk Art Shows refund claims provides a
useful diagnostic tool for identifying sections of the IRS where the
agency's commitment to upholding the law has been weak or nonexistent.
Although a full exposition of wrongdoing by every involved part of the
agency is beyond the purview of this statement (even though complete
documentation has been retained), we should note that some offices in
need of further scrutiny include not only IRS Criminal Investigations,
but also the Office of the Commissioner, Office of Chief Counsel and
the National Taxpayer Advocate personally. Once conflict of interest
issues have been resolved, I look forward to providing my services on a
volunteer basis to anyone, hopefully including Mr. Rettig as
Commissioner, who takes seriously the job of cleaning up this agency.
For now a brief summary of the circumstances giving rise to the refund
claims will have to suffice.
CFAS, like most successful cash businesses, had to deal with
receiving a large volume of small bills. These were regularly deposited
in several physically adjacent banks in Grand Blanc, Michigan, pursuant
to legally correct advice provided by bank personnel. Most, but not
all, of the deposits were under $10,000. Initially the IRS and Justice
Department believed--or pretended to believe--that all four million
dollars worth of bank deposits were ``involved in structuring'' and
could be forfeited. However, because no illegal contraband was
involved, IRS written policy required that the assets be credited as
tax payments. The government's subsequent attempt to retain the
taxpayers' assets over and above collecting full payment of their tax
liability was contrary to IRS written policy at the time, as well as,
obviously, the Internal Revenue Code's prohibition on collecting two
times for the same tax liability. See the IRS Litigation Guideline
Memorandum dated September 3, 1991 which incorporated a Policy
Memorandum of the Assistant Commissioner (Criminal Investigations)
dated October 26, 1988 that specifically addressed forfeitures under 31
U.S.C. Sec. 5324 and stated that ``forfeiture is appropriate only where
there is a reasonable belief that the property is derived from criminal
activity unrelated to tax violations,'' and ``if the property is not
criminally derived, and tax has been paid on it, forfeiture is not
authorized and the property should be returned.'' Tax Notes Today,
January 12, 1996 at 10. Because the owners acknowledged and wanted to
pay off their tax liability with the greatest degree of cooperation,
they consented to the forfeiture on September 25, 1992.
The effect of the IRS bait and switch three months after the
consent judgment was to say that domestic banks operate as a kind of
hidden trap door where depositors think they are depositing the money
for safekeeping, but they are actually making unwitting donations to
IRS agents and the Department of Justice Assets Forfeiture and Money
Laundering Section (``AFMLS''). It took nearly ten years of litigation
to get the owners fully exonerated of all currency structuring charges
and for the government to concede that the owners' deposits had not
violated the actual currency structuring law. This happened in stages,
an important one being the Deputy Attorney General's review that
concluded with a July 25, 2005 letter of Associate Deputy Attorney
General Catherine O'Neil to IRS Criminal Investigations (``CI'') Chief
Nancy Jardini implicitly acknowledging that there had been no basis for
the forfeiture other than tax liability. O'Neil's letter to Jardini
concluded, ``this office has been mindful of the fact that the factual
basis for the forfeiture appears to be closely linked with the facts
underlying the $5.3 million tax liability of the taxpayers. Counsel for
the taxpayers has advised us that he filed a refund claim with the
Internal Revenue Service pertaining to that tax assessment on or about
April 2, 2002. As you and I have discussed, I am writing to suggest
that your office undertake its own review of the facts of the pending
refund claim and render a decision.''
Pursuant to this request Division Counsel for CI completed its own
review by the end of 2005 and apparently reached similar conclusions.
However, the IRS then commenced what appear in retrospect to have been
evasive maneuvers. Division Counsel Edward F. Cronin moved to suppress
the Criminal Investigations review by claiming attorney-client
privilege and Jardini wrote, ``we have concluded that the Internal
Revenue Service-Criminal Investigations (CI) does not have jurisdiction
with regard these [tax refund] claims.'' Although technically correct
in this, Jardini did not take the next step and pass the refund claims
along to the Small Business and Self-Employed Division, which did have
jurisdiction over them. Instead the tax refund claims kept being lost
and all correspondence was routed by Cronin.
After Ashcroft, Corney and O'Neil had all left office in 2005, the
task of following up on the Justice Department's review was entrusted
to the chief counsel for AFMLS, Lester Joseph. No longer able to
ballyhoo the imaginary law, he shifted to claiming that DOJ had no
capacity to dissuade the IRS from pursuing its unlawful course of
action. This necessitated further litigation which clarified the one
essential legal point for the requested refunds to be granted: Were
there four million dollars worth of violations of the actual currency
structuring law? On August 6, 2008 in response to a motion to
supplement the record on appeal a panel of three Sixth Circuit judges
ruled that Plaintiffs
now move to supplement the record on appeal by requiring the
government to file with the court a list of structured
transactions. No such list was filed in the district court, and
that court did not consider a list of structured transactions
in ruling on the appellants' motion to vacate. The government
opposes the motion to supplement the record. . . . As noted by
the court in denying appellants' motion for a limited remand, a
list of structured transactions will not assist the court in
its consideration of the issue on appeal.
(Emphasis supplied). If the factual basis of the forfeiture had been
structured transactions rather than payment of tax liability, then a
list of structured transactions would have been absolutely essential
for ``consideration of the issue on appeal'' due to an absolute rule
that consent judgments of forfeiture having no factual basis are void
and must be set aside. See Libretti v. United States, 516 U.S. 29, 42-
44, 55-56 (1995) (unanimously affirming absolute need for factual basis
set forth by statute and declaring judgments of forfeiture without
statutory basis to be void).
In other words, the illegality of using ``structuring'' generally,
as opposed to actual violations of 31 U.S.C. Sec. 5324(a)(3) which
require structuring a single transaction in currency, was now finally
acknowledged. In 2008 the Sixth Circuit continued to let the consent
judgment of forfeiture stand because it had a factual basis rooted in
the IRS's authority to collect taxes owed at the time. But because the
factual basis was now acknowledged to be collection of taxes owed,
there was no longer any conceivable justification for allowing the
double-taxation to stand. Hence the Commissioner's mandatory duty to
recognize the forfeited assets as tax payments.
The issue of whether tax refunds were the appropriate vehicle for
granting the CFAS owners redress had been resolved by the Sixth Circuit
Court of Appeals in an earlier lawsuit. In Blakely v. United States,
276 F.3d 853 (2002) the Sixth Circuit decided that since any money owed
to the taxpayers could come back to them as tax refunds, other avenues
of redress were not necessary. It declined to set aside the Consent
Judgment of Forfeiture, noting a general reluctance to set aside
consent judgments that were not blatantly illegal. It held that the
Department of Justice procedures for refunding money through petitions
for remission were voluntary with the Assets Forfeiture and Money
Laundering Section (``AFMLS''), and it considered the Federal Tort
Claims Act inapplicable to the taking of assets by means of a consent
judgment. The Sixth Circuit panel also ruled that taxpayers could not
yet sue for tax refunds because they had not yet exhausted their
administrative remedies with the IRS. The taxpayers' 54-page refund
demand letter, which I drafted and filed with the IRS on August 17,
1994, was deemed insufficient to constitute an exhaustion of remedies
because it failed to meet certain technical requirements of a refund
claim.
However, the panel noted that the letter, which had been filed
within two years of the forfeiture, would likely toll any statute of
limitations under United States v. Kales, 314 U.S. 186, 194 (1941)
because it satisfied the requirements of an informal claim. Even though
the taxpayers had not yet satisfied the requirements for filing a tax
refund suit as of 1999 when they first attempted to sue for a refund,
the fact that the August 17, 1994 letter had satisfied the requirements
of an informal claim under United States v. Kales (informal claim must
have ``a written component,'' communicate that a refund is being sought
and ``furnish sufficient information to `allow the IRS to make a
reasonable and intelligent investigation and evaluation of the
taxpayer's claim' '') meant that the Amended Refund Claims necessitated
by the court's decision, would relate back to the filing date of August
17, 1994. The Amended Refund Claims were filed within three months of
the Sixth Circuit's decision.
The Blakely Court's lengthy footnote 9, 276 F.3d at 874, correctly
summarized the main issue regarding timeliness of the taxpayers' refund
claims brought under 26 U.S.C. Sec. 7422:
Plaintiffs' brief makes clear that the issues raised in this
case involve their challenge to the consent decree, which
perfected the forfeiture of their property. Plaintiffs argue
that misrepresentations on the part of the government induced
them to enter into the consent judgment by promising Plaintiffs
that their forfeited assets would be used to pay off their tax
liability. See Plaintiffs' Br. at 12. Thus, Plaintiffs admit
that their suit revolves around their challenge to the consent
judgment. Moreover, Plaintiffs admit that in order to file a
tax refund suit, they must first have exhausted their
administrative remedies by filing an administrative claim with
the Secretary of the Treasury. See McDonnell v. United States,
180 F.3d 721, 722 (6th Cir. 1999) (explaining that 26 U.S.C.
Sec. 7422(a) requires taxpayer to first file an administrative
claim before filing judicial action). . . .
Plaintiffs claim they did so by hand delivering the [54-page]
August 17, 1994 letter to IRS agents. However, that argument
was not made before the district court when it ruled on
Plaintiffs' motion, thus, they are barred from raising the
argument here. Anchor Motor Freight, 899 F.2d at 559. Moreover,
the 1994 letter fails to meet the requirements of an informal
claim. See Hale v. United States, 876 F.2d 1258, 1262 (6th Cir.
1989) (noting that informal request for tax refund must apprize
IRS that a refund is sought and for certain years). The 1994
letter fails to meet this standard.
276 F.3d at 874, n.9.
But the court went on to add:
Plaintiffs correctly contend that deficiencies in timely filed
informal claims have been overlooked when an amendment, even if
untimely, remedies such deficiencies. United States v. Kales,
314 U.S. 186, 194 (1941). However, Plaintiffs have yet to point
to an amendment that remedies any deficiencies in the 1994
letter.
Thus the Sixth Circuit's Blakely opinion effectively directed the
filing of the amended refund claims three months later. It also made
clear that the timeliness of that filing in April 2002 would need to be
determined by applying the standards of United States v. Kales to the
54-page refund demand letter that taxpayers filed with IRS on August
17, 1994. Those standards required ``a written component,'' which
communicated that a refund was being sought and ``furnish[ed]
sufficient information to `allow the IRS to make a reasonable and
intelligent investigation and evaluation of the taxpayer's claim'.''
United States v. Kales is unequivocal in maintaining that a letter
satisfying the requirements of an informal claim will preserve the
timeliness of a refund claim that is properly formalized after the
lapsing of the statutory period. In it the Supreme Court states:
This Court, applying the statute and regulations, has often
held that a notice fairly advising the Commissioner of the
nature of the taxpayer's claim, which the Commissioner could
reject because too general or because it does not comply with
formal requirements of the statute and regulations, will
nevertheless be treated as a claim, where formal defects and
lack of specificity have been remedied by amendment filed after
the lapse of the statutory period. United States v. Memphis
Cotton Oil Co., 288 U.S. 62; United States v. Factors and
Finance Co., 288 U.S. 89; Bemis Bro. Bag Co. v. United States,
289 U.S. 28; Moore Ice Cream Co. v. Rose, 289 U.S. 373, 384.
This is especially the case where such a claim has not misled
the Commissioner and he has accepted and treated it as such.
Bonwit Teller and Co. v. United States, 283 U.S. 258; United
States v. Memphis Cotton Oil Co., supra, 70.
314 U.S. at 194. The Supreme Court proceeded in Kales to deem a letter
filed 16 years before its decision sufficient to preserve the
taxpayer's refund claim. In the federal court system the Supreme
Court's Kales decision has been cited or followed 378 times. It has
never been disapproved and only once has its validity been questioned.
That question related to an entirely different aspect of Kales. See
Farnsworth v. Phinney, 297 F.2d 681,684 (51 Cir. 1962) (discussing
whether a suit against a tax collector was res judicata against a
taxpayer suing the United States). So once the IRS decides to follow
the law as set forth in Kales and its many progeny the conclusion that
the Longs' and Blakelys' amended refund claims were timely when filed
will follow automatically because a 54-page refund demand letter easily
qualifies as having ``a written component'' communicating that a refund
is being sought, and ``furnish[es] sufficient information to `allow the
IRS to make a reasonable and intelligent investigation and evaluation
of the taxpayer's claim'.''
After the Blakely decision came down the government made no effort
to argue that refund claims would be untimely or to argue that the
Kales standard had not been met. Its efforts centered on trying to
defend the idea of taxpayers' ``structuring'' being a ``civil'' offense
that provided an independent factual basis for civil forfeiture. This
strategy was pursued from the trial court's August 21, 1997 vacatur of
currency structuring convictions and ensuing dismissal of all currency
structuring charges until the Deputy Attorney General's 2005 review
acknowledged that there had been no basis for the forfeiture other than
tax liability.
After 2008 the government ceased making any attempt to set forth a
substantive defense of the double taxation, but simply set about
repeatedly losing the refund claims and their eighty pages of attached
documentation. Over the years I have probably filed and refiled these
claims about eight times. In 2013, after Gregg Hoffmaster in the Office
of Chief Counsel advised that I should file yet another lawsuit, I
filed a mandamus action against the IRS Commissioner and Secretary of
the Treasury seeking a court order that they cease diverting tax
payments into grants to IRS Criminal Investigations and grant refunds
for money so diverted. The government's response was to refuse to take
any position on the merits or address them in any way, but simply to
contest the venue of the court where the lawsuit was filed,
notwithstanding the law's liberal handling of venue requirements for
mandamus lawsuits.
Conclusion
Examining IRS mishandling of the Country Folk Art Shows refund
claims provides insight into abuses relating not only to civil asset
forfeiture, but into the agency's handling of any refund claim. Even if
a revenue agent could conjure a legally plausible ground for denying or
greatly reducing the claims, the claims would still merit a good-faith
response from the IRS. Seeing how the agency evaded its duty to provide
such a response will show oversight agencies problematic tendencies
that need to be controlled going forward. In addition, we appear to
have witnessed continued stonewalling of the Oversight Subcommittee's
efforts to elicit agency cooperation in remedying past abuses. If the
new leadership is confirmed and allowed to lapse into the Koskinen
tradition of being strongly committed to upholding the law in the
abstract but very permissive in allowing abuses to continue
unredressed, then this entire saga beginning with the imaginary law
against ``structuring generally,'' will mark a serious defeat for
legislative oversight and efforts to sustain lawfulness in government.
[all]