[Senate Hearing 117-810]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-810

 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2023

=======================================================================

                                HEARINGS

                                BEFORE A

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

                           H.R. 8254/S. 4685

    AN ACT MAKING APPROPRIATIONS FOR FINANCIAL SERVICES AND GENERAL 
GOVERNMENT FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2023, AND FOR OTHER 
                                PURPOSES
                               __________

                       Department of the Treasury
                        Internal Revenue Service
                               __________

         Printed for the use of the Committee on Appropriations
         
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         

        Available via the World Wide Web: http://www.govinfo.gov

                               __________


                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
46-656 PDF                WASHINGTON : 2024   




                      COMMITTEE ON APPROPRIATIONS

                    PATRICK LEAHY, Vermont, Chairman

PATTY MURRAY, Washington             RICHARD C. SHELBY, Alabama, Vice 
DIANNE FEINSTEIN, California             Chairman
RICHARD J. DURBIN, Illinois          MITCH McCONNELL, Kentucky
JACK REED, Rhode Island              SUSAN M. COLLINS, Maine
JON TESTER, Montana                  LISA MURKOWSKI, Alaska
JEANNE SHAHEEN, New Hampshire        LINDSEY GRAHAM, South Carolina
JEFF MERKLEY, Oregon                 ROY BLUNT, Missouri
CHRISTOPHER A. COONS, Delaware       JERRY MORAN, Kansas
BRIAN SCHATZ, Hawaii                 JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin             JOHN BOOZMAN, Arkansas
CHRISTOPHER MURPHY, Connecticut      SHELLEY MOORE CAPITO, West 
JOE MANCHIN, III, West Virginia          Virginia
CHRIS VAN HOLLEN, Maryland           JOHN KENNEDY, Louisiana
MARTIN HEINRICH, New Mexico          CINDY HYDE-SMITH, Mississippi
                                     MIKE BRAUN, Indiana
                                     BILL HAGERTY, Tennessee
                                     MARCO RUBIO, Florida

                   Charles E. Kieffer, Staff Director
           Shannon Hutcherson Hines, Minority Staff Director

                                 ------                                

       Subcommittee on Financial Services and General Government

                  CHRIS VAN HOLLEN, Maryland, Chairman

CHRISTOPHER A. COONS, Delaware       CINDY HYDE-SMITH, Ranking Member
RICHARD J. DURBIN, Illinois          JERRY MORAN, Kansas
JOE MANCHIN, III, West Virginia      JOHN BOOZMAN, Arkansas
PATRICK LEAHY, Vermont,              JOHN KENNEDY, Louisiana
  (ex officio)                       RICHARD C. SHELBY, Alabama,
                                       (ex officio)

                           Professional Staff

                              Ellen Murray
                         Diana Gourlay Hamilton
                              Reeves Hart

                        Andrew Newton (Minority)
                        Alley Adcock (Minority)

                         Administrative Support

                              Teri Curtin
                       Sydney Crawford (Minority)

                            C O N T E N T S

                              ----------                              

                                hearings

                         Wednesday, May 3, 2022

                                                                   Page

Internal Revenue Service.........................................     1

                        Wednesday, June 14, 2022

Department of the Treasury.......................................    39

          Statements and Letters of Nondepartmental Witnesses

Nondepartmental Witnesses........................................    69

                              ----------                              

                              back matter

List of Witnesses, Communications, and Prepared Statements.......    97

Subject Index:

    Department of the Treasury...................................    99

    Internal Revenue Service.....................................    99


 
           
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2023

                              ----------                              


                          TUESDAY, MAY 3, 2022

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2:43 p.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Chris Van Hollen, (Chair) 
presiding.
    Present: Senators Van Hollen, Coons, Durbin, Manchin, Hyde-
Smith, Moran, Boozman, and Kennedy.

                        INTERNAL REVENUE SERVICE


             opening statement of senator chris van hollen


    Senator Van Hollen. Good afternoon. This hearing will come 
to order. And I want to start by welcoming our witness, IRS 
Commissioner Charles Rettig.
    Commissioner Rettig, thank you for your service. Thank you 
for being here. And I also want to take this opportunity to 
thank your staff for their professionalism and partnership, 
both preparing for the hearing, but throughout this Congress.
    The IRS has been consistently receptive to the work of our 
Committee, and my team and I are grateful to you and your team 
for your cooperation.
    At the outset I would like to highlight your diligent 
efforts over the past 2 years to implement several new COVID 
relief programs, especially those we passed under the American 
Rescue Plan. And because of the American Rescue Plan nearly 
three million Maryland families received direct relief payments 
of $1,400 a person, over one million Maryland children 
benefited from new tax cuts for families, you know, through the 
expansion of the Child Tax Credit, and over 250,000 Maryland 
workers got a tax break through the expansion of the Earned 
Income Tax Credit.
    The IRS played a key role in delivering these funds to 
Americans across the country. You did that while also working 
tirelessly to protect your own employees from COVID-19. The 
obstacles were enormous, but you and your agency delivered. And 
I want to salute you and the good men and women of the IRS who 
helped get that vital relief out the door.
    We also know that the agency, the IRS, continues to be 
underfunded and understaffed. And the massive tax return 
processing backlog at the IRS is the resultant, you know, we 
will talk some about that today.
    Many of my constituents are frustrated that they are still 
waiting for their 2021 and 2020 refunds. Just last month I 
heard from a mother of two in Maryland, who has to move homes, 
and is counting on her 2021 refund to cover the cost of a 
security deposit and the first month's rent. Her tax forms are 
stuck in the backlog, along with millions of others.
    Mr. Commissioner, I know you have made it a priority to 
address that backlog by hiring new staff at your processing 
centers, and by detailing experienced staff from other parts of 
the IRS to help with the backlog.
    I commend you for these efforts, and I want to make sure 
that this subcommittee is working with you to address this 
issue as fast as possible.
    As the Chairman of the Committee, I have made IRS funding a 
top priority, and I want to thank Ranking Member Hyde-Smith, 
for working together on these issues, so that we can help the 
IRS replace outdated technology and hire more staff.
    Less than 2 months ago, this subcommittee provided the IRS 
with its biggest funding increase in 20 years to do just that, 
to help serve our constituents, your clients.
    I look forward to seeing that investment improve service 
for working families, cut down on hold times, and reduce the 
backlog. As we work to improve customer service, we also need 
to improve IRS enforcement. Right now, as you, yourself, had 
pointed out Mr. Commissioner, there is anywhere from $500 
billion to $1 trillion in taxes, each year, that are owed but 
not paid, what is commonly referred to as the tax gap.
    These are billions of dollars that are legally due and 
owing under current tax law, while everyday Americans have 
their taxes withheld, and pay what they owe, we cannot allow 
the super-wealthy to evade the system. By enhancing the 
capacity of the IRS to track down wealthy individuals' unpaid 
taxes, and big businesses who sidestep their tax 
responsibilities, we can raise more revenue without changing 
the tax law. Those who refuse to meet their obligations, or 
avoid their obligations make everybody pay instead.
    I am proud of the work we have done to increase the IRS 
budget to meet these goals, but despite our efforts to 
prioritize IRS resources in this subcommittee, as a result of 
the overall caps, the funding we secured this year was less 
than you requested. And I believe less than you need, and we 
look forward to working with you this year so you can meet your 
mission.
    I have heard from some of my colleagues who say that the 
IRS problems we are seeing are not a budget issue at all. They 
just say that the IRS needs to hire more customer service 
agents, and upgrade their IT systems, and everything will be 
fine. Well, that would improve things, but that does cost 
money. And while money is not the only solution, it is a big 
part of the answer.
    Commissioner Rettig, I know that you understand the IRS' 
problems, and want to solve them. I will hope that this hearing 
is an opportunity for us to discuss how we can help the IRS 
access the tools it needs to delivery topnotch taxpayer 
services, and beef up enforcement of the super-wealthy who are 
not paying their fair share.
    But before we move to your testimony, I would like to 
return to Senator Hyde-Smith, and again thank her for her 
partnership on this subcommittee, and for her opening 
statement.


               opening statement of hon. cindy hyde-smith


    Senator Hyde-Smith. Thank you, Mr. Chairman, for that very 
kind welcome. And I certainly appreciate the opportunity to 
serve as the Ranking Member on this very important 
subcommittee, and I look forward to continuing to work with you 
in crafting responsible funding legislation for fiscal year 
2023.
    And I want to welcome the IRS Commissioner to our hearing 
today. And thank you for your service, and we look forward to 
your testimony this morning.
    The IRS entered this year's tax-filing season with a 
historically high backlog of unprocessed paper returns, and 
correspondence. When such issues arise, the IRS usually speaks 
about the need for more funding. However, the IRS received more 
than $3 billion in supplemental funding since 2020. Today, more 
than $1 billion of this amount remains unavailable and--I mean 
available and unobligated.
    Moreover, in this current fiscal year the IRS received 
$12.6 billion, its largest funding increase in two decades. 
Despite this robust funding, critical IT modernization projects 
lag, the tax gap remains wide, the backlogs remain high, and 
the customer service is at an all-time low.
    The IRS requests a total of $14.1 billion for the upcoming 
fiscal year. And I believe it is time for these funding 
increases to be met with fiscally responsible decisionmaking, 
decisionmaking that prioritizes that everyday taxpayer, and 
efficiency.
    I want to ensure that money appropriated to the IRS is no 
longer diverted away from measures and programs devoted to 
improving taxpayer services and enforcement. It is my hope that 
during today's hearing our priorities align to ensure utmost 
efficiency and fiscal responsibility with the IRS going 
forward.
    Mr. Commissioner, I know you have made some tough choices 
in responding to additional responsibilities placed on the 
agency. I thank you for your service. And I look forward to 
your testimony today.
    Senator Van Hollen. Thank you, Senator.
    Our first witness and only witness today is IRS 
Commissioner, Charles P. Rettig. Prior to his confirmation in 
September 2018, Commissioner Rettig worked in private practice 
for 36 years, representing thousands of individuals and 
businesses before the IRS. The Department of Justice Tax 
Division, Federal and State Courts, and State taxing 
authorities.
    He received a B.A. in Economics from the University of 
California, Los Angeles, as well as a JD from Pepperdine 
University, and an LLM in Taxation from New York University.
    Commissioner, thank you for coming back. I know that you 
have testified in front of a number of committees already this 
season, but we look forward to your testimony, and hope you can 
help us as we work with you to make sure you have the tools you 
need to do your job, and serve the American people. 
Commissioner Rettig?
STATEMENT OF HONORABLE CHARLES P. RETTIG, COMMISSIONER, 
            INTERNAL REVENUE SERVICE
    Commissioner Rettig. Yes. We have had a lot of hearings 
this year, but I should say that my wife appreciates it, 
because she likes to watch the hearings, so she knows exactly 
where I am, what I am saying, and it gives us a 3- or 4-hour 
discussion each evening as she critiques what I said, what I 
didn't say.
    It is an honor and a privilege to be in this role. It is an 
honor and a privilege to be in front of each of you. And 
Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of 
the Subcommittee, thank you for the opportunity to discuss the 
Internal Revenue Service operations, the current filing season 
and the fiscal 2023 budget.
    As you know fiscal 2021 gross receipts for the Internal 
Revenue Service were approximately $4.1 trillion which 
translates to approximately 96 percent of the gross revenue of 
the United States of America. I would like to start by 
indicating the importance of the IRS, not only to Members of 
Congress, and not only to taxpayers in this country, but really 
to the rule of law, to the country that we have, and the 
support of the country.
    We don't make decisions as to the expenditure of the funds 
collected, but the importance of the IRS in supporting this 
country, from a financial perspective, at 96 percent of the 
total gross revenue of the country simply cannot be ignored. We 
need a fully functioning, successful, Internal Revenue Service 
to have a fully functioning, successful United States of 
America.
    And you know, I am a proud American. You are all proud 
Americans. That is why we are here. We are willing to give of 
ourselves to make this country continue as the greatest country 
on the planet. I believe that, and that is why I came. And I 
believe in the people of the Internal Revenue Service.
    The people of the Internal Revenue Service have given 
extraordinary efforts during the pandemic, and we look forward 
to oversight. From my confirmation hearing through today, I 
have welcomed all types of oversight. We do have oversight in 
certain lanes. Obviously, we have a Treasury Inspector General 
for Tax Administration, we have GAO, we have media, we have 
taxpayers, we have professional associations, we have Members 
of Congress.
    Oversight should not be a concern. We welcome that; I 
welcome that; I believe every Commissioner after me should 
welcome that. My term, as you are aware, is a statutory term, 
and it concludes November 12 of this year. It has been a 
privilege to be here, a privilege to interact. I want to bring 
that in because presumably this might be my last appearance 
before you.
    The employees of the Internal Revenue Service are the 
strength of the Agency, and they will continue to be the 
strength of the Agency, and collectively, we need to support 
them in the efforts going forward.
    I believe that the President's budget proposal for fiscal 
2023, supports the employees of the Internal Revenue Service, 
supports the mission. Again, we request oversight, because I 
think that that is a privilege for the tax administration 
agency to have people understand what it is, and specifically 
what it is not, for transparency, for people to see what we do, 
and what we don't do.
    I have read a lot of articles since I have been in this 
position that I can't wait to contest once I am no longer in 
this position. We are here, collectively, and I am speaking to 
both of you, but as well as to everybody else, to get this 
right so that we can proudly walk out the door and say, we are 
here supporting the United States of America.
    And I say that as a proud member of a military family. As 
you know, my son is a Major in the United States Army. I 
couldn't be more proud of his service, of what he does, 
literally, on a daily basis. And I think that most people 
should feel like that.
    I am more than willing to have discussions with respect to 
the ARP spend plan. We provided a detailed summary of what we 
are doing with respect to the spend plan on February 12 and we 
got an Omnibus Budget on March 15, so we are adjusting our 
spend plan. We will come back to you with an adjustment to 
that, so you can see how we are spending the balance of the ARP 
funds, but we have obligated about $966 million of those funds 
to date.
    But know that we have been in more than 100 continuing 
resolutions since 2001. It is impossible to build out a robust, 
meaningful, technology infrastructure without multi-year, 
timely, consistent funding. When we get our funding halfway 
through each fiscal year, it is impossible for us to plan 
multi-year expenditures.
    So with that, and not to go further over my time, I will 
turn it back to you. I am certainly available for questions. I 
am also available for meetings individually, with Members of 
this Committee, or with staffs of this Committee, with or 
without Members of the Committee.

    [The statement follows:]
          Prepared Statement of Charles P. Rettig Commissioner
                              introduction
    Chairman Van Hollen, Ranking Member Hyde-Smith and Members of the 
Subcommittee, thank you for the opportunity to discuss the filing 
season and the IRS budget.
    Taxpayer service remains the most significant IRS priority, and we 
have implemented many new, innovative strategies in an effort to 
improve our overall level of service and processing of our 
unprecedented current and projected inventories. The pandemic presented 
the IRS with a confluence of novel and critical demands at a time when 
we lacked the stable, long-term funding needed to appropriately serve 
the American people. Given these significant challenges, although we 
may not have always gotten it right or supported the important 
priorities of some, our employees have worked extremely hard to respond 
as best we could to a never-ending string of compounding challenges.
    I am pleased to report the 2022 filing season has gone well in 
terms of tax return processing and the operation of our information 
technology (IT) systems. Through April 15, the IRS processed more than 
118 million individual Federal tax returns and issued more than 78 
million refunds totaling more than $242,000,000,000. We worked 
diligently to open the filing season earlier this year than last, on 
January 24, 2022, compared to February 12, 2021. A detailed discussion 
of the filing season is provided later in this testimony.
    While the filing season has presented no major disruptions or 
surprises, we know we have a great deal of work to do in many other 
areas of the IRS. The IRS continues to focus on working to reduce paper 
correspondence inventory and process paper tax returns from 2021 as 
well as improve our response to an unprecedented level of phone 
demand--situations that have been compounded by the pandemic and 
related issues. For example, in fiscal year 2021, we received more than 
15 million individual paper returns. We also had a significantly higher 
error rate on individual returns due in large part to challenges 
associated with reconciling funds received through important stimulus 
programs like Economic Impact Payments (EIPs). We received far more 
than 10 million returns where the taxpayer did not properly reconcile 
the two EIPs received in 2020 to the amount of the Recovery Rebate 
Credit (RRC) stated on their return filed in 2021. Similarly, more than 
10 million individuals reported unemployment compensation on their 
return that was subject to the exclusion enacted during the 2021 filing 
season. In addition, millions of taxpayers elected to use 2019 rather 
than 2020 as the base year for determining their EITC (and the 
legislative change for that was enacted after our IT development for 
the 2021 filing season had been completed). Each of these returns 
required a manual review and resolution by an IRS employee.
    We will continue to do our best as we face new challenges. Our 
workforce is strong and remains our most important resource, with 
substantially all of our employees engaged on a full-time basis. We 
have taken numerous steps to address these challenges, and we continue 
to look for other ways so that we can improve these operations and get 
healthy by the end of the year.
    The IRS is serving more people and entities in a global environment 
than ever before, while handling new and bigger responsibilities. This 
was the case before the pandemic and has only increased since then. At 
the same time, we have experienced delays in updating our IT systems, 
which means the IRS and taxpayers must continue to use certain paper-
based processes. This use of paper processes can result in significant 
delays, contributing to IRS inventories and limiting taxpayers' ability 
to know the status of their cases.
    We are in this position because we have not had the sustained 
sufficient multi-year investment for IT modernization necessary to 
improve our technology and operating systems. I am here to tell you 
today that nothing is more important than having those resources in 
place to make it possible for us to appropriately serve the American 
people. Absent consistent, timely, multi-year funding we have largely 
been a paper-based organization operating in a digital world 
environment. In 2022, IRS employees should not be transcribing paper 
returns by hand. Taxpayers should not have to wait and wait on the 
phone--often to no avail. I want to better serve the American people--
and so do the dedicated employees at the IRS. They will finally be able 
to do so if you, and your colleagues, provide us the stable, multi-year 
funding we need.
    Like all Federal agencies, the IRS is best able to accomplish our 
mission when we receive the resources necessary to do so. And that 
mission is vital to the functioning of our government: The fact that 
the IRS collects approximately $4.1 trillion in gross revenue per year, 
representing about 96 percent of the gross revenue of the U.S., clearly 
shows that the success of our Nation is closely tied to the success of 
the IRS. The President's fiscal year 2023 budget proposal, which 
provides $14.1 billion for the IRS, will allow the agency to take 
important steps forward in improving taxpayer service, modernizing our 
systems and ensuring fairness in the tax system. But for the IRS to 
truly be able to deliver for the American people, it needs stable, 
multi-year funding to be in place to allow the agency to rebuild.
    Over the course of the last decade, the IRS's budget has decreased 
by more than 15 percent in real terms. Because of this decrease, in 
fiscal year 2021 we realized less than 79,000 full-time equivalents 
(FTEs), which is close to 1974 levels. Since 2010, IRS Enforcement FTEs 
have decreased by 30 percent, while the Nation's real Gross Domestic 
Product has increased by 29 percent, and the filing population has 
increased by 14 percent. Over the next 6 years, we estimate we will 
need to hire 52,000 employees just to maintain our current levels. 
Every measure that is important to effective tax administration has 
suffered tremendously in recent years, with profound deficiencies 
resulting from underinvestment in human capital and information 
technology.
    Although the IRS appreciates the $675,000,000 increase to our 
budget in the fiscal year 2022 Omnibus, sufficient funding remains a 
constraint to addressing the current paper inventory and supporting our 
IT operations adequately. For example, this year's funding left our 
Operations Support account, the account that funds all of the hiring, 
rent, laptops, and telecom for taxpayer services and enforcement 
employees, $100,000,000 short of our inflationary cost increases. 
Without shifting the funds to the appropriate accounts, we are left 
depleting resources from one less-visible program to pay for another 
essential program, which causes us to slow or stop work on updates to 
our systems that must be modernized to provide digital services that 
citizens expect from us. Mandatory multi-year, consistent funding would 
help us deliver meaningful services to taxpayers, conduct critical 
enforcement initiatives and support long-term modernization efforts to 
improve both service and compliance for the Nation.
    When we are confronted with long-term Continuing Resolutions (CRs), 
we typically freeze nearly all external hiring. We take this action to 
ensure we have funds to pay all employees, including any applicable pay 
raises. Last fall, we increased staffing despite the CR, hiring at risk 
without the funding in place to support these positions, but assuming 
future resources would be provided by the eventual enactment of the 
fiscal year 2022 appropriation, to help address our inventory. The full 
fiscal year 2022 President's budget request would have allowed us to 
maintain current staffing levels and fund 4,200 additional full-time 
equivalent employees. The Omnibus increased our Taxpayer Services 
account by $193,000,000 from fiscal year 2021, which covered the 
inflationary increases in Taxpayer Services (what we refer to as 
``maintaining current levels"), and about 42 percent of our requested 
program increases. We will now be required to use other funding sources 
to cover our remaining needs, including requesting an inter-
appropriation transfer, redirecting user fees, and realigning American 
Rescue Plan (ARP) funds. Although the Omnibus reflects an important 
down payment on the necessary investments in the IRS, it is far, far 
from what the dedicated IRS employees need to serve the American people 
they way they deserve.
    Even with appropriate funding, the IRS continues to experience 
significant challenges recruiting talent to support the critical work 
the agency does for taxpayers and our Nation, particularly in the 
current labor market. With our limited funding, we have been hard at 
work to do all we can to bring talent on board. For example, we have 
major processing center operations in Austin, TX, Kansas City, MO, and 
Ogden, UT, where we are working to attract eligible applicants for more 
than 5,000 vacant positions. We have been holding both in-person and 
virtual job fairs in Austin, TX, Kansas City, MO, and Ogden, UT where, 
using recently received Direct Hiring Authority (DHA), we have been 
able to make more than 2,500 conditional offers at the conclusion of 
the interviews.
    IRS employees want to do more to help taxpayers. We want to be able 
to answer the phones and respond to questions. We want to be ready, 
whenever crisis hits, to deliver economic relief quickly--as our 
employees demonstrated repeatedly during the current pandemic, working 
long hours to deliver crucial programs. During this challenging period, 
the IRS has been operating in an ``all-hands-on deck'' approach, 
leaving nothing off the table for consideration to improve overall 
service.
    Our employees continue to expend every effort to balance the 
confluence of multiple, unprecedented demands--including successfully 
starting the current filing season and working our inventory of 
unprocessed tax returns, as well as looking for additional ways to 
minimize burden for taxpayers, tax professionals and businesses. We 
will continue to rapidly adapt to changing circumstances when 
appropriate to do so. We remain committed to ensuring the tax system is 
administered fairly and impartially and that every American receives 
the nature and quality of services they deserve.
         effects of the covid-19 pandemic and the irs response
    This unprecedented pandemic illustrates the significant role that 
the IRS plays in the overall health of our country. We have been called 
to provide economic relief during this national crisis while also 
fulfilling our routine responsibilities of tax administration. The 
IRS's response to COVID-19 includes issuing more than $1.5 trillion in 
combined historic economic relief and individual refunds over the past 
2 years. This effort shows the level of dedication of our workforce and 
illustrates how important the IRS is to the functioning of our 
government and the success of the Nation.
    IRS employees have worked hard since March 2020 to implement major 
provisions of the Coronavirus Aid, Relief and Economic Security (CARES) 
Act, ARP and other COVID-related relief legislation. This work included 
delivering more than $800,000,000,000 in EIPs to help Americans cope 
with the financial effects of COVID-19--which involved creating the 
internal processes to accomplish this effort. The Treasury Inspector 
General for Tax Administration (TIGTA) noted in a report released March 
21, 2022, that the IRS computed the correct payment amount for more 
than 99 percent of the 175 million payments issued for the third round 
of EIPs. Our work also included delivering (and creating the internal 
processes for) more than 200 million advance payments of the Child Tax 
Credit totaling $93,000,000,000 that were made to eligible families 
between July and December of last year.
    Congress provided critical help to support our ability to implement 
the third round of EIPs and the advance CTC payments by appropriating 
$1.86 billion in supplemental funding for the agency under the ARP. 
These funds represent important 3-year funding (expiring fiscal year 
2023) and have provided, and will continue to provide, critical 
assistance in our effort to better serve taxpayers. As of April 12, 
2022, the IRS has obligated $928,000,000 of the total; we are 
continuing to use the funds over the remaining 2 years of the 
expenditure window provided by Congress in ways that are intended to 
maximize taxpayer service, including responding to taxpayer questions 
about EIPs and advance CTC payments. As identified in our ARP Spending 
Projections provided to Congress in February 2022, these funds are 
allowing us to help taxpayers efficiently obtain the payments they are 
rightfully due, with additional frontline staffing, systems and 
technology improvements to create safe and secure platforms, and with 
investments in long-term modernization enhancements that will pave the 
way for long-needed system improvements going forward.
    For both the third round of EIPs and the advance CTC payments, the 
IRS made an extensive effort to ensure we reached as many people as 
possible who might be eligible for these benefits. We worked with 
thousands of community groups, non-profits, associations, education 
groups and anyone else with connections to people with children to 
share critical information about EIPs, the CTC and other important 
benefits. As noted above, we are continuing to work this filing season 
to ensure that anyone eligible who did not receive an EIP understands 
they can claim the RRC on their return, and we continue reminding 
recipients of the advance CTC of the need to reconcile those amounts on 
their returns.
Reducing Inventory of Paper Returns and Correspondence
    The combination of the pandemic, new tax laws and numerous other 
factors led to an unprecedented amount of unprocessed tax returns and 
correspondence remaining in the IRS inventory during 2021.
    The IRS pursued significant actions during the 2021 filing season 
to address the return and correspondence inventory. But due to resource 
issues and numerous unique factors tied to new legislation and the 
pandemic, we have entered the 2022 filing season with a significant 
inventory of unprocessed returns and correspondence and, to date, the 
inability to meet our hiring goals. We must continue pursuing 
innovative strategies to fulfill our commitment to return inventories 
to a healthy level before entering the 2023 filing season.
    To reduce the current and projected inventory, we are taking 
aggressive actions that include:

  --Surge Teams. We presently have more Customer Service 
        Representatives (CSRs) onboard than ever before. We have 
        retained temporary CSRs on a permanent basis to concentrate on 
        the inventories. We took this risk in the context of an 
        uncertain funding environment, hoping the annual appropriation 
        process would deliver funding; however, this effort has not 
        been sufficient to reduce the current and projected inventories 
        The IRS is deploying surge teams, which are groups of employees 
        across the agency organized to temporarily assist with urgent 
        issues. For example, we temporarily moved approximately 900 
        employees with previous relevant experience back into key areas 
        from other organizations. In addition to this accounts 
        management surge team, which is now in place, we have assembled 
        a similar surge team for our submission processing area with 
        700 employees who started on this critical work in April.
  --Direct Hire Authority (DHA). Working with Treasury, the Office of 
        Personnel Management, and the National Treasury Employees 
        Union, the IRS recently secured direct hiring authority for a 
        total of 10,000 positions--5,000 employees with the goal of 
        onboarding them in the next several months, as well as an 
        additional 5,000 new hires to be made over the course of the 
        next year. Congress also helpfully provided hiring 
        flexibilities in the Omnibus to further expedite hiring in 
        critical positions. Due to the challenges of hiring during the 
        pandemic and competition from other employers for the same 
        talent, this environment is an exceptionally difficult one for 
        hiring. DHA may improve our ability to be competitive in cities 
        where these employees are most needed. We are extremely hopeful 
        to satisfy our hiring goal over the coming months. Also, for 
        the first time, we have partnered with the Military Spouse 
        Employment Program and are engaging contractors while 
        aggressively pursuing our hiring goals. We are grateful for the 
        specific direct hiring authority language included in the 
        recent Omnibus (Consolidated Appropriations Act, fiscal year 
        2022) that will enable us to bring talent on-board more swiftly 
        in needed locations.
  --Mandatory Overtime. We have implemented mandatory overtime and are 
        offering authorized overtime to certain employees to help with 
        the reduction in inventory, and we are doing so for the first 
        time in certain functions.
  --Increased access to online self-service tools. Over the last 
        several months, more than 10 million individuals have created 
        their individual online account through IRS.gov. Reducing call 
        volumes through increased online service allows us to devote 
        more resources to the inventories.
  --EIP/CTC letters. We sent more than 250 million letters to help 
        taxpayers match IRS records to prevent delays in processing. 
        IRS Letter 6475, Your Third Economic Impact Payment, and IRS 
        Letter 6419, 2021 Advance Child Tax Credit, set forth the 
        amounts that individuals received in 2021. Individuals can also 
        verify these amounts by accessing their individual online 
        account through IRS.gov. Given that more than 10 million 
        returns failed to properly reconcile two EIP payments received 
        in 2020 on their returns filed during the 2021 filing season, 
        it is critical that individuals (and their preparers) verify 
        the possibly six to eight payments received in 2021 before 
        submission of a 2021 return this year.
  --Innovating to expedite case closures. We are employing new tools to 
        help IRS employees review and process tax returns that include 
        errors and manual reviews, a piece that is already helping 
        taxpayers receive refunds quicker in 2022. These efforts have 
        already demonstrated positive results.
  --Expanded Saturday openings of certain Taxpayer Assistance Centers 
        (TACs) to assist taxpayers this filing season in more than 90 
        cities around the country. TACs provide important front line, 
        in-person taxpayer assistance. We maintain 358 TACs but, due to 
        attrition and resource limitations, 39 are presently not 
        staffed on a full-time basis (24 TACs presently provide a 
        virtual service delivery alternative to an in-person visit). 
        All staffed TACs offer appointments as well as the ability to 
        walk in.
  --Enhanced the EITC Assistant tool on IRS.gov to make it more user 
        friendly for individuals to determine their potential 
        eligibility (intended to reduce resources being dedicated to 
        erroneous EITC claims). This important tool serves taxpayers 
        and reduces erroneous claims, freeing up resources to help 
        process our inventories.
  --VITA/TCE. We are also continuing to notify taxpayers about ``Free 
        Tax Return Preparation for Qualifying Taxpayers'' by 
        encouraging use of the IRS's Volunteer Income Tax Assistance 
        (VITA) and Tax Counseling for the Elderly (TCE) programs, which 
        offer free basic tax return preparation to qualified 
        individuals.
  --Created and expanded self-service portals for taxpayers to 
        implement an Online Payment Agreement, request payment 
        transcripts, request an Identity Protection Personal 
        Identification Number (IP PIN), update their personal 
        information, etc. These efforts reduce call volume, which 
        releases resources to help process our inventories.
  --Expanded ``Customer Callback'' to approximately 70 percent of our 
        toll-free telephone demand. During fiscal year 2022, we have 
        offered this option to more than 5.3 million taxpayers with an 
        acceptance rate exceeding 57 percent. We estimate this feature 
        has saved taxpayers more than 1.7 million hours.
  --Implemented Online Live Assistance, Voice Bots and Chat Bots (in 
        English and Spanish) to better enable taxpayers to interact 
        with IRS. Online Live Assistance leverages limited employee 
        resources allowing a single employee to respond to multiple 
        taxpayers at a time. Our Advance CTC Voice Bot launched 
        February 18, 2022 (delivered 6-8 weeks ahead of schedule) and 
        handles the top 27 Advance CTC topics (English only at present, 
        but the Spanish version is coming soon) to assist callers who 
        need help reconciling the credits on their 2021 tax return. The 
        IRS, in recent weeks, has deployed Voice and Chat Bots in 
        English and Spanish for phone lines that assist taxpayers with 
        tax payment issues or understanding an IRS notice they may have 
        received. In addition to the payment lines, Voice Bots help 
        people calling the EIP toll-free line, providing general 
        procedural responses to the most frequently asked questions. 
        Voice Bots are software powered by artificial intelligence (AI) 
        that allow a caller to navigate an interactive voice response 
        (IVR) system with their voice, generally using natural 
        language. Chat Bots simulate human conversation through web-
        based text interaction, also using AI-powered software to 
        respond to natural language prompts. Taxpayers who request to 
        speak with a CSR are placed in queue for English or Spanish 
        telephone assistance. These efforts reduce call volume, 
        releasing resources to help process our inventories.
  --Reduced the percentage of our outdated hardware from more than 60 
        percent a few years ago to approximately 10 percent at present. 
        Funding provided by Congress has allowed us to pursue these 
        efforts, reducing the risk associated with an interruption to 
        our delivery of meaningful services.

    These steps are making a difference. Refunds for tax returns and 
amended tax returns in the inventory continue to flow out to taxpayers. 
We continue to consider and pursue additional relief measures while 
balancing the many other demands for our time and limited resources.
    We also instituted additional relief measures for taxpayers, such 
as:

  --On January 27, we announced the suspension of notices in situations 
        where we have credited taxpayers for payments but have no 
        record of the tax return being filed. Given that in some 
        situations the return is still waiting to be processed, 
        suspending this notice will help avoid confusion.
  --On February 9, we announced the suspension of more than a dozen 
        additional notices, including automated collection notices 
        normally issued when a taxpayer owes additional tax or has no 
        record of filing a tax return. As a result, we have now 
        suspended all known notices that are associated with 
        unprocessed original return inventory. Specifically, any 
        notices that are still being sent to taxpayers are associated 
        with ongoing programs and services that are not associated with 
        the unprocessed returns. Note that many other IRS notices are 
        statutorily required to be issued within a certain timeframe to 
        be legally valid.

    We are evaluating penalty relief options; however, we must also 
determine if systemic programming changes or manual intervention are 
required for the considered relief. Manual intervention would require 
re-direction of resources from processing original returns and amended 
tax returns, which complicates this area.
Other Taxpayer Assistance Offerings
    Important Update Information Available at IRS.gov. The IRS 
workforce is working hard to reduce current and projected inventories, 
meet taxpayers' continuing needs and provide relief or assistance 
whenever possible. We have issued various announcements available on 
IRS.gov outlining important steps we've taken this filing season to 
assist taxpayers with the aim of reducing current and projected future 
inventories. On February 14, we issued a news release titled, ``IRS 
launches resource page on IRS.gov with latest details and information 
for taxpayers during filing season,'' (IR-2022-32, February 14, 2022) 
with a link to this important resource page ( ``Help for taxpayers and 
tax professionals: Special filing season alerts'' ).
    The IRS is continuing to assess other changes and system 
modifications to assist taxpayers on an array of issues. We have 
redeployed and reallocated resources throughout the IRS and have 
implemented innovative strategies in an ongoing effort to provide a 
meaningful reduction in our inventories. As we make additional 
adjustments, we will continue to make information available to 
taxpayers throughout the filing season and beyond.
    Important Steps for Current Filers to Get Their Refund as Quickly 
as Possible. To prevent future inventory problems, the IRS has also 
worked diligently to encourage people to take extra precautions this 
year so they can get their refund quickly and avoid processing delays. 
For this filing season, refunds on error-free electronically filed 
returns continue to be processed within approximately 21 days. 
Requesting direct deposit accelerates receipt of the refund by the 
taxpayer. There are three important steps people can take to get their 
refund as quickly as possible:

  --File electronically;
  --File an accurate return (verify amounts reflected as received for 
        the EIP and advance CTC payments), and;
  --Request a direct deposit of their refund.

    These steps are critical to accelerating delivery of the refunds 
people deserve and the IRS employees want to get out as quickly as 
possible. We have engaged in extensive outreach with community-based 
and professional organizations to reduce the otherwise manual review of 
returns that fail to reconcile these amounts. We're also encouraging 
taxpayers with questions to turn first to online resources, since we 
anticipate a continued high call volume again this year.
Responding to Unprecedented Demand for Phone Assistance
    The IRS provides phone service to individuals, businesses, tax 
professionals and tax-exempt entities. We have specialty lines for the 
hearing impaired, identity theft victims, the taxpayer protection 
program, and for making appointments at our TACs. We also offer over-
the-phone translation services in 350 languages.
    Taxpayer Service Remains Our Top Priority. The long-term erosion of 
our budget has depleted every function of the IRS. Even though our Wage 
& Investment division--which is where the current and projected 
inventories exist--remains the most well-staffed function of the entire 
IRS, it is well below the levels necessary to deliver the service we 
aspire to achieve. We have implemented several approaches to reducing 
current and projected inventories and reducing call volumes which 
allows us to devote more resources to the inventories.
    Our customer service representatives (CSRs) operate from 10 main 
campus sites and 14 smaller satellite locations across all mainland 
United States time zones, plus Puerto Rico. The CSRs work 7 a.m. to 7 
p.m. shifts staggered nationally according to time zones. When we 
temporarily closed most of our facilities in March 2020 to protect 
employees from COVID-19, our IT operation worked rapidly--within 
weeks--to provide our CSRs with laptops, related equipment and training 
so they could work remotely in a virtual environment.
    Against that backdrop, IRS phone operations have faced an unusually 
challenging environment over the past year, with an unprecedented level 
of phone assistance demand. In 2021, we answered four million more 
taxpayer calls than the year before but had a lower level of service 
than prior years because demand was so high. In the first half of 2021 
alone, we received more than 199 million calls--about 400 percent more 
calls than we get in an average year. For comparison, we received a 
total of 42 million calls in all of 2018, 40 million calls in 2019, and 
55 million calls in 2020. On March 15, 2021, we received 8.6 million 
calls on just that one day, which is an average of about 1,500 calls 
per second. The high call volume has significantly hampered our ability 
to manage telephone demand.
    At the same time, the average duration of each call has also 
increased due to the complexity of COVID-related tax law changes and 
because taxpayers have personally endured a great deal throughout the 
pandemic. Our average time per call was 12 minutes for calendar year 
2019. Thus far in 2022 (through April 16) the average time per call is 
16 minutes. Spending more time on each call to provide the needed 
customer service limits the CSRs' ability to handle more calls during a 
shift.
    We attempted to ease these challenges by starting the CSR hiring 
process for the 2021 filing season months earlier than normal. We 
repeated this approach for the 2022 filing season. During the pandemic, 
we transitioned into an entirely virtual recruiting and onboarding 
process for new employees to speed up the process. While we were able 
to hire an additional 3,800 CSRs, clerks and other support staff for 
the 2021 filing season, it was short of our goal of 5,000. While we did 
slightly better thus far in the 2022 filing season, we still have been 
able to hire just 4,131 of our overall goal of 5,000. The pandemic 
caused significant hiring challenges, including low applicant pools in 
some locations, delays in fingerprinting due to closed facilities, and 
delays in processing applicants virtually. And we routinely find 
ourselves being able to offer candidates significantly less than what 
the private sector can. We are trying innovative training approaches to 
get new CSRs ready to work the phones in less than the usual 14-week 
timeframe. Working with NTEU, OPM and Congressional Appropriators, we 
are also thrilled to have secured direct hire authority, discussed 
previously, which will allow us to be more successful in recruiting top 
talent by increasing the speed with which new employees can be 
onboarded.
                    update on the 2022 filing season
    The IRS successfully opened the 2022 tax season on January 24--two 
weeks earlier than the year before--giving taxpayers more time to file 
returns and delivering more than 1 million refunds in the first days of 
processing. Getting underway in January has given taxpayers as much 
time as possible to meet the Federal tax filing deadline, which this 
year was April 18 for most taxpayers.
    Due to many factors, the 2022 tax filing season has been a complex 
and challenging one for taxpayers, tax professionals and for the IRS as 
well. During this tax season, taxpayers faced a number of issues 
resulting from critical tax law changes that took place in 2021, as 
well as ongoing challenges related to the pandemic. Our dedicated 
workforce has done everything it can to prepare for the April 18 
deadline, and our focus has been on simplifying the taxpayer filing 
experience by streamlining the process, answering as many questions as 
possible and reducing the inventories mentioned earlier in this 
testimony.
    Our system that allows electronic filing of returns, Modernized 
eFile (MeF), took a major step forward this filing season. We made the 
latest in a series of changes that over time have made MeF more 
efficient, standardized and robust. This latest change expanded the 
availability of MeF so that our external partners who transmit returns 
electronically can access the system 24 hours a day, seven days a week. 
This upgrade is a win not only for the transmitters and ultimately 
taxpayers, but also for the IRS, because it allows us to perform MeF 
maintenance during the week, enabling more rapid deployment of critical 
updates.
Providing Help to Navigate a Challenging Filing Season
    We believe the filing season has gone the smoothest for taxpayers 
who file electronically, file accurate tax returns and request direct 
deposit of their refund.
    In fact, filing electronically with direct deposit has been more 
important than ever this year, given the additional complexities on 
many returns, such as those who were eligible for an EIP but did not 
receive it and are now claiming the RRC, as well as those who need to 
reconcile advance CTC payments on their return.
    During the filing season we have worked to ensure families who 
added a dependent--such as a child, a parent, a nephew or niece, or a 
grandchild--on their 2021 income tax return who was not listed as a 
dependent on their 2020 income tax return to know they may be eligible 
to receive a 2021 RRC of up to $1,400 for this dependent. Additionally, 
all eligible taxpayers with qualifying children born or welcomed 
through adoption or foster care in 2021 have been encouraged to claim 
the CTC--worth up to $3,600 per child- on their 2021 tax return.
    Another important credit we've been highlighting is the Child and 
Dependent Care Credit, which was expanded for 2021. This means that 
more taxpayers will qualify this year than ever before, and the credit 
will be worth more. We've been working to remind people who pay 
expenses for the care of a qualifying person while working or looking 
for work that they may qualify for this important tax credit. Depending 
on their income, taxpayers can get a credit worth 50 percent of their 
qualifying child care expenses. For tax year 2021, the maximum eligible 
expense for this credit is $8,000 for one qualifying person and $16,000 
for two or more.
    We realize that taxpayers who are still waiting for their 2020 
return to be processed may be wondering whether they should wait to 
file their 2021 return. Our message to these individuals has been to 
file their 2021 return when they are ready. If a taxpayer is 
electronically filing their 2021 tax return and we have not yet 
processed their 2020 tax return, they should validate their 2021 
electronic tax return by entering $0 (zero dollars) as their prior year 
adjusted gross income (AGI). If a taxpayer used the Non-filer Sign Up 
tool in 2021 to register for advance CTC payments or an EIP, they will 
instead enter $1 as their prior year AGI.
    Given that incredibly high call volume has continued again this tax 
season, we understand the filing experience has been more difficult for 
taxpayers who need to interact with us. But we continue to make 
improvements and are confident this work will have us trending in the 
right direction. We are also encouraging taxpayers with questions to 
turn first to online resources. This area has been a huge focus for the 
IRS, and critical tools are available that people may overlook. These 
options range from the Where's My Refund online tool to several other 
automated tools now available through the Online Account on IRS.gov. 
For many, there are ways to get help without calling.
Improving Service to Diverse Communities
    Amid the challenges posed for the agency by the pandemic and new 
tax law changes, the IRS has continued to focus on improving service to 
diverse communities. An important way we serve these taxpayers is by 
communicating with them in their most comfortable language. We are 
committed to enhancing the experience of all taxpayers, including those 
who have limited English proficiency. We know that these taxpayers 
respond to our efforts--as just one example, there were nearly 90 
million visits to non-English pages on IRS.gov last year. Already this 
year, through April 10, there have been about 17.7 million visits to 
non-English pages.
    Since 2021, the IRS has taken important steps to further improve 
the amount of service we offer in multiple languages:

  --Provided the Form 1040 in Spanish during the 2021 filing season for 
        the first time.
  --Gave taxpayers the opportunity to indicate on new Schedule LEP 
        (Limited English Proficiency) whether they want to be contacted 
        by us in a language other than English. This schedule, filed 
        with the 1040, allows taxpayers to select one of 20 languages 
        in which to receive communications from the IRS. During 
        calendar year 2021, the IRS received approximately 326,000 
        Schedule LEPs.
  --Made Publication 1, Your Rights as a Taxpayer, available in 20 
        languages.
  --Issued a new, streamlined version of Publication 17, Your Federal 
        Income Tax, that is available in seven languages.

    These efforts continue this year. We've completed conversion of 34 
Spanish notice inserts to Braille, text, audio and large print as of 
January. We also recently converted Form 1040 and its main schedules, 
as well as Form 1040 NR, Form 1040 SR, Form W-4 and six publications, 
into Spanish Braille, text, and large print. We continue working to 
increase our communications and outreach materials--including 
information shared on social media channels--into additional languages. 
To ensure that taxpayers can easily provide their preferences in this 
area, we also released new Form 9000, Alternative Media Preference, 
this filing season. This form allows taxpayers to tell us they want to 
receive notices in Braille, large print, audio, or text, and can be 
filed alone or with the 1040.
    While those steps are all important, the IRS is continuing to do 
more to enhance the taxpayer experience for those who are more 
comfortable using a language other than English. We are, for example:

  --Pursuing efforts to translate website applications for these 
        taxpayers. We have already identified 17 of the most frequently 
        used applications for translation into additional languages.
  --Exploring opportunities to employ machine translation to help us 
        add more multilingual content. This is a significant challenge, 
        given how complex many tax terms are. We will need to carefully 
        evaluate automated translation tools, so we anticipate this 
        effort will be ongoing for several years.
                    update on modernization efforts
    One of my highest priorities as Commissioner is ensuring the 
agency's IT infrastructure remains on a path toward modernization. 
Modernization is vital to all our core functions: successfully 
delivering the annual tax filing season, ensuring the health of the 
Nation's tax system and supporting the Federal Government's financial 
strength. Today, we do not have the steady, consistent multiyear 
funding to support these efforts the way we need to in order to deliver 
appropriately for the American people.
    We have long sought levels of funding that would enable necessary 
IT investments. As noted above, absent consistent, timely, multi-year 
funding we have largely been a paper-based organization operating in a 
digital environment. It is difficult to modernize a significant IT 
portfolio to improve processing and delivery of important taxpayer 
services when constantly funded through a CR.
    Until recently, we were operating under a CR for fiscal year 2022. 
This year's Omnibus (Public Law 117-103) represents the largest funding 
increase for the agency in two decades. But the agency's needs are much 
deeper. Unfortunately, because our budget has fallen so significantly 
in real terms over the course of the last decade, we have lost 
foundational staff at the agency and need to rebuild. From a 
modernization perspective, many of our priorities, including upgrading 
the Individual Master File, one of the oldest IT systems in the Federal 
Government, are multi-year efforts. This situation means we have not 
been able to invest in modernizing and integrating our technological 
infrastructure, which processes the more than 160 million returns we 
anticipate receiving this year. The situation also affects other 
important interests of tax administration. Modernized technology would 
significantly improve the ability of the IRS to respond to a crisis, 
pandemic-related or otherwise.
    Since the initial release of our Modernization Plan in 2019, our 
operations and infrastructure have changed significantly. We have 
received only limited funding for our efforts: from fiscal year 2019 
through fiscal year 2021, we received only 57 percent of the planned 
Business Systems Modernization funding. But within the funding 
received, we have delivered critical technology improvements and at the 
same time responded to unprecedented demand due to the pandemic. We 
accelerated the development of our digital services. We expanded 
customer callback availability on our toll-free telephone lines. We 
created new web applications such as ``Get My Payment'' to track EIPs. 
We also created the Child Tax Credit Update Portal to help people 
manage advance CTC payments, a first-of-its-kind endeavor. And in 
another milestone, we also achieved the long-time goal of making it 
possible for individuals to e-file their amended tax return.
    Another example of modernization at work involved creating a tool 
last year to help eliminate several steps in the process an IRS 
employee is required to do to reconcile RRC discrepancies between the 
two EIPs that were made in 2020 and what the taxpayer reported on their 
tax return. Prior to the automation, an employee could reconcile about 
100 returns per day. Once we completed the modernization improvement, 
the employee can now process 600 per day. Not only does this 
improvement speed up the ability for the taxpayer to receive their 
refund, but it also avoids adding further to the backlog of inventory.
    We continue to investigate new ways of doing business to optimize 
the important work of IRS employees and improve the taxpayer 
experience; for example, we hope to be able to scan in a paper form and 
file it electronically later this summer, which will help us identify 
the potential for this approach to be used for other forms in the 
future. We are also looking into our ability to leverage an approach 
that we call Scanning-as-a-Service, where we may be able to 
significantly increase the availability of digital images for IRS 
employees to use to perform their work without owning and maintaining 
expensive equipment or paying to store the paper records. Both efforts 
seem straightforward on the surface, and although we are cautiously 
optimistic of their progress to date, it is important to note that they 
are not a sure thing, and a significant amount of work remains to 
confirm the viability of these pilots, as well as their ability to 
scale to other use cases.
    In addition to the above, we continue taking steps to safeguard 
taxpayer data while modernizing platforms to improve taxpayers' 
experiences. Investments in cybersecurity are essential. In 2017, IRS 
was experiencing just over 1 million cyberattacks per day. Today, we 
sustain more than 1.5 billion attacks each year. While IRS network 
defenses mitigate threats and keep our core tax processing systems 
secure, we must continue to advance our cyber capabilities, so we stay 
one step ahead of the bad actors who are attacking IRS systems.
IRS Online Account
    An important focus of our efforts has been the development of IRS 
Online Account, which allows taxpayers to interact with us online and 
perform various types of transactions in a secure environment. For 
example, they can view their payment history, make a payment online or 
request previous years' tax information. Since the initial launch of 
IRS Online Account in 2016, we helped taxpayers securely access the 
information and services they need, with more than 23 million sessions 
and 8.37 million new users in fiscal year 2021. We are continually 
working to expand the transactions taxpayers can conduct through the 
online account.
    In July of last year, we launched a new online feature that allows 
individual taxpayers to authorize their tax practitioner to represent 
them before the IRS with a Power of Attorney (POA), and to view their 
tax accounts with a Tax Information Authorization (TIA). Tax 
professionals can go to the Tax Pro Account on IRS.gov to digitally 
initiate POAs and TIAs. Over time, we will continue building 
functionality so that other transactions involving tax professionals 
can be completed online in a secure digital environment.
    As we expand our digital options, security is always an important 
consideration. For that reason, in February we announced steps to 
change the way taxpayers authenticate their identities when signing on 
to their online accounts. Specifically, we began transitioning away 
from using a third-party service for facial recognition. The IRS is 
working closely with partners across government to roll out Login.Gov 
as an authentication tool for us. The General Services Administration 
is currently working with the IRS to achieve the security standards and 
scale required of Login.Gov, with the goal of moving toward introducing 
this option later this year.
                   efforts to improve tax compliance
    The IRS remains committed to doing everything we can, with our 
limited resources, to track down those who willfully refuse to fulfill 
their tax obligations or who commit tax fraud. We want to maintain a 
strong, visible, robust tax enforcement presence to appropriately 
support taxpayers who comply voluntarily. When taxpayers file their 
returns, they should feel confident others are doing the right thing 
too.
    Our efforts to ensure compliance with the tax laws cover a broad 
range of groups--individuals, small businesses, tax-exempt 
organizations and large entities. In our challenging resource 
environment, large entities are of particular concern because this 
group includes very sophisticated taxpayers--major U.S. corporations, 
multinational companies and complex multi-tiered partnerships--all of 
which require us to have highly trained, highly skilled enforcement 
personnel with special accounting and tax law skills, who can 
understand the issues raised by these returns, root out instances of 
noncompliance and litigate issues where necessary.
    We will continue emphasizing a number of special areas in our 
enforcement activities. This strategy includes keeping a focus on high-
income taxpayers engaged in offshore noncompliance, failure to file, 
unreported and improperly reported virtual currency transactions and 
abusive tax shelters, such as syndicated conservation easements and 
micro-captive insurance shelters, as well as monetized installment 
sales and Malta pension abuses.
    In this challenging environment, the IRS continues working to 
improve coordination of enforcement activities across the agency. In 
fact, the IRS's Office of Fraud Enforcement (OFE), which we created in 
March 2020, is actively encouraging and ensuring this coordination 
across the IRS, promoting compliance, strengthening the IRS' response 
to fraud and working to mitigate emerging threats. The Office of 
Promoter Investigations (OPI), created last year, is helping us better 
identify issues that involve abusive tax shelters as well as 
individuals promoting abusive tax transactions.
    It is vital that we improve our ability to identify and deter 
promoters, and that we do so more quickly--before they are able to 
widely market their transactions, as we have seen with syndicated 
conservation easements and micro-captive insurance. We are seeing many 
aggressive transactions being promoted on social media and the 
Internet, and we continually work to identify and evaluate potentially 
abusive trends and transactions to determine whether they need further 
enforcement actions. I have challenged OPI to lead our efforts against 
not only those who promote abusive tax avoidance transactions we know 
about, but to find the transactions that are being concocted today, and 
to coordinate our efforts to stop those promoters quickly and 
efficiently.
Recent Accomplishments
    We have made progress in a number of enforcement areas. For 
example, over the past 2 years, we have shifted significant examination 
resources and technology to increase our focus on high-income and high-
wealth taxpayers. As a result, examination coverage of the taxpayers in 
the highest income category (taxpayers with over $10,000,000 of total 
positive income) increased to over 8 percent coverage for Tax Year (TY) 
2018, the most recent year for which complete statistics are available. 
This level is the highest coverage rate of this growing population 
since TY 2014, and we expect the TY 2019 numbers will show this level 
of coverage continued.
    Substantially all experienced examiners--those who are the most 
highly trained with substantial accounting and tax law skills--are 
almost entirely focused on tax returns that include complex issues, 
such as high-income taxpayers, pass- through entities, multi-national 
taxpayers involving international tax issues, large pension plans, 
private foundations and the most egregious situations. We also continue 
to focus on employment tax cases where employers have failed to pay 
over taxes withheld from employees or have failed to file their 
employment tax returns.
    An IRS initiative announced in 2020 involves improving tax 
compliance by increasing visits to those generally with incomes above 
$100,000 who failed to file tax returns. These Revenue Officer 
Compliance Sweeps (ROCS) focus on the most egregious non-filers. A 
partnership between our Field Collection operations, the OFE and our 
Criminal Investigation (CI) division also worked to identify common 
attributes of successful fraud referrals resulting in recommendations 
for criminal investigation for non-filers.
    Another example of our accomplishments involves the development of 
a comprehensive, coordinated enforcement strategy to address abusive 
syndicated conservation easement transactions, and we have worked 
closely with the U.S. Department of Justice to shut down the promotion 
of them. Subsequently, the U.S. Tax Court held in the government's 
favor in a number of conservation easement cases, supporting the IRS's 
position on the abusive nature of the underlying deductions in these 
cases. While continuing to investigate these transactions, the IRS has 
also made settlement offers to certain taxpayers with docketed cases at 
the Tax Court involving this type of transaction.
    Our efforts have also borne fruit in another important area--
employment tax fraud. Non-compliance in this area means employers cheat 
the system and their employees without consequence. In so doing, they 
gain an unfair advantage over their honest competitors. We continue to 
work with the Justice Department's Tax Division to identify 
opportunities to better address non-compliance. These opportunities 
include using data analytics to identify egregious noncompliant 
employers. To cite one instance, we used our Innovation Lab's Data 
Analytics Program to identify thousands of taxpayers who reported wages 
on their individual income tax returns where the employer who paid 
those wages did not file their W-2 forms with the Social Security 
Administration and neither filed employment tax returns nor remitted 
taxes withheld from their employees. Seriously noncompliant employers 
were further investigated by the IRS examination, collection and CI 
organizations. This agency-wide commitment ensures consistent treatment 
of taxpayers and fair application of the tax law.
    The IRS's enforcement efforts have extended to preserving COVID-
related financial relief for those legitimately in need of financial 
support during this crisis. For example, the IRS has been working 
diligently to thwart scams related to COVID-19 by alerting taxpayers 
and tax professionals to these scams--especially calls and email 
phishing attempts tied to the EIPs. The IRS and our partners throughout 
the country have been publicizing these scams. Another example involves 
the OFE's efforts to prevent ineligible claimants from obtaining $1.2 
billion in COVID-related employer credits. The credits were intended to 
help employers retain employees who would otherwise be unable to work 
during the pandemic, but bad actors saw an opportunity to exploit the 
program for their own financial gain. Working collaboratively with 
teams of seasoned enforcement employees who identified the questionable 
claims, OFE investigated the suspect claims and either administratively 
disallowed the claims and/or referred cases for further investigation.
    In noting accomplishments on enforcement, I continue to be 
extremely proud of the investigative work done by CI. To take just one 
recent example, CI's Cyber Crimes Unit played a key role in the largest 
cryptocurrency seizure ever recorded for the Federal Government, valued 
at more than $3.6 billion. In February 2022, the Justice Department 
announced the arrest of two individuals in connection with an alleged 
conspiracy to launder cryptocurrency stolen during a 2016 hack of 
Bitfinex, a virtual currency exchange. IRS-CI Cyber Crimes Unit special 
agents were critical in unraveling a sophisticated laundering 
technique, enabling them to trace, access and seize the stolen funds. 
As well as being the largest cryptocurrency seizure, this was also the 
largest single financial seizure recorded by the Federal Government.
    In regard to recent events, CI is prepared to support the U.S. 
government's efforts to impose sanctions on Russia. CI has a track 
record of successfully rooting out and stopping illegal kleptocracy 
money flowing into or through the U.S. CI's special agents expertly 
target those who launder money, including active investigations 
involving Russian oligarchs and politicians, as well as those who 
facilitate the illicit movement of money on behalf of sanctioned 
individuals or organizations. Agents on the Global Illicit Financial 
Team and throughout CI are not only experts in tracing assets and 
understanding the complex global financial world; they also work 
seamlessly with our domestic and global law enforcement partners to 
ensure the integrity of the U.S. financial system on behalf of U.S. 
taxpayers.
Resource Challenges
    Despite the progress we have made, our ability to enforce the tax 
laws against non-compliant taxpayers with complex returns continues to 
be hampered by a lack of resources. We can no longer audit a 
respectable percentage of large corporations, and we are often limited 
in the issues reviewed among those we do audit. These corporations can 
afford to spend large amounts on legal counsel, drag out proceedings 
and bury the government in paper. We are, quite simply, ``outgunned'' 
in our efforts to assure a high degree of compliance for these 
taxpayers. It is unacceptable for the Nation's tax administrator to be 
outgunned when appropriately challenging the return positions of some 
of the most sophisticated taxpayers. We must receive the resources to 
hire and train more specialists across a wide range of complex areas to 
assist with audits of entities (taxable, pass-through and tax-exempt) 
and individuals (financial products; engineering; digital assets; 
cross-border activities; estate and gift planning; family offices; 
foundations; and many others).
    A lack of resources also threatens to reduce the effectiveness of 
our criminal investigative work. Much like other operating divisions in 
the IRS, CI is close to its lowest staffing level in the past 30 years. 
With fewer agents, we have fewer cases and fewer successful 
convictions. A strong, robust criminal tax enforcement presence 
provides significant deterrence to those willing to evade their lawful 
obligations to our country. Without adequate resources, we risk sending 
a much less powerful message to would-be and active tax evaders.
    Because of our current funding and staffing limitations across our 
enforcement functions, we are forced to make difficult decisions 
regarding priorities, the types of enforcement actions we employ, and 
the service we offer. Limited IT resources preclude us from building 
adequate solutions for efficiently matching or reconciling data from 
multiple sources. As a result, we are often left with manual processes 
to analyze reporting information we receive. Such is the case with data 
from the Foreign Account Tax Compliance Act (FATCA). Congress enacted 
FATCA in 2010, but we have yet to be appropriated any significant 
funding for its implementation. This situation is compounded by the 
fact that when we do detect potential non-compliance or fraudulent 
behavior through manually generated FATCA reports, we seldom have 
sufficient funding to pursue the information and ensure proper 
compliance. We have an acute need for additional personnel with 
specialized training to follow cross-border money flows. They will help 
ensure tax compliance by improving our capacity to detect unreported 
accounts and income generated by those accounts, as well as the sources 
of assets in offshore accounts.
    In other programs, we have information but are unable to select all 
high-risk cases identified due to resource and funding constraints. In 
these situations, to the detriment of tax administration, we must make 
difficult enforcement decisions based on resources, return on 
investment, coverage of all types of taxpayers, and other high priority 
work. For example, our information document reporting programs are 
identifying potential discrepancies with taxpayers who have received 
Form 1099-K, Payment Card and Third-Party Network Transactions 
(including potential non-filers), but not all of these have been 
addressed due to resource constraints.
    As we make enforcement decisions, we try to balance resource 
limitations across a number of factors, including evaluating overall 
compliance effect and focusing resources into special projects. For 
example, we currently have fewer than 2,000 revenue officers, the 
lowest number of field collection personnel since the 1970s, and we 
have over 100,000 collection cases in active inventory. In addition to 
our active inventory, we have over 1.5 million cases (more than 500,000 
of which are considered high priority) awaiting assignment to these 
same 2,000 revenue officers. We have classified roughly 85 percent of 
those cases as high priority, many of which involve delinquent business 
employment taxes.
    In discussing our resource situation, another major concern is our 
ability to investigate and take enforcement actions against abusive 
transactions. While we are doing our best with the resources available 
to us, it is important to point out that the lack of funds and staffing 
makes it increasingly difficult for us to keep up with--much less stay 
ahead of--those who promote abusive transactions and the tax evaders 
who engage in them. Shelter promoters continue to innovate and invent 
new ways of gaming the system. We continue working to find them and 
identify their methods, but in order to ensure we can take meaningful 
enforcement actions against them, it is critical that we receive 
adequate resources.
    It is becoming easier for tax shelter promoters to pitch their 
wares to the wealthy, and we are concerned such pitches are taking 
hold. While we are doing what we can, we need more resources if we hope 
to keep these activities in check and continue our efforts to inform 
taxpayers about the problems with these transactions so they will be 
dissuaded from participating in them. These activities shift the 
required funding of our country onto the backs of wage earners. 
Everyone should pay their fair share, and no one should be able to 
inappropriately avoid their obligations.
         looking to the future: irs taxpayer experience office
    Along with our day-to-day efforts to help taxpayers and enforce the 
tax laws, our agency is also committed to delivering on the promise of 
a new IRS. We are continuing the work begun in 2019 with passage of the 
Taxpayer First Act (TFA) to develop an innovative approach to the 
future of tax administration that will better serve everyone, including 
those in underserved communities. The IRS is using the implementation 
of the TFA to make significant improvements in the way we serve 
taxpayers, enforce the tax laws in a fair and impartial manner, and 
ensure our workforce collaborates and is well-trained.
    A key driver of these efforts is our Taxpayer Experience Office, 
launched last year to unify and expand the work being done across the 
agency to serve taxpayers. The Taxpayer Experience Office sets the 
strategic direction for improving the taxpayer experience and 
identifies opportunities to make continuous improvements in real time 
for taxpayers and the tax professional community.
    The Taxpayer Experience Office will identify changing taxpayer 
expectations and industry trends, focus on customer service best 
practices, and promote a consistent voice and experience across all 
taxpayer segments by developing agency-wide taxpayer experience 
guidelines and expectations. The office will be adding staff in the 
coming months to help support the effort.
    Some of the areas of improvement in the near term include expanding 
customer callback, expanded payment options, secure two-way messaging 
and more services for multilingual customers. These activities build on 
recent improvements such as digital tools to support EIPs and advance 
CTC payments, online chat and the online tax professional account.
                the president's fiscal year 2023 budget
    The President's fiscal year 2023 budget proposal for the IRS 
provides $14.1 billion, an increase of $2.2 billion, or 18 percent more 
than the fiscal year 2022 Annualized Continuing Resolution level of 
$11.9 billion, to administer the Nation's tax system fairly, collect 
more than $4 trillion in gross taxes to fund the government, and 
strengthen tax compliance. Because the Administration drafted the 
fiscal year 2023 budget submission ahead of the enactment of the fiscal 
year 2022 Omnibus, the submission was not able to reflect the final 
enacted fiscal year 2022 funding levels. The budget includes 
initiatives to improve the taxpayer experience that should ultimately 
lead to increased voluntary tax compliance. The request also aims to 
ensure we stay current with the paper inventory and improve telephone 
and in-person service; facilitates better oversight of high-income and 
corporate tax returns; and accelerates the development of digital tools 
to enable smarter communication with taxpayers. In addition, the 
Administration continues to support a multiyear investment in IRS 
enforcement to increase tax compliance. An appropriate level of funding 
for the IRS will allow the agency to continue enhancing the taxpayer 
experience, narrowing the tax gap to ensure equitable administration of 
the tax code, protecting IRS systems and taxpayer data, and modernizing 
our information technology systems.
Specific Funding Areas
    The fiscal year 2023 budget requests a total program increase of 
$1.31 billion, including the following:

  --Putting Taxpayers First: $320,200,000 to continue implementing the 
        Taxpayer First Act [TFA], which requires the IRS to put in 
        place a Taxpayer Experience Strategy to improve the taxpayer 
        experience with the IRS. The IRS's Taxpayer Experience Office, 
        in partnership with key internal and external stakeholders and 
        subject matter experts, identified certain areas of focus to 
        inform development and implementation. The fiscal year 2023 
        request focuses on: continuing to protect taxpayer data; 
        increasing outreach and taxpayer education efforts; developing 
        strategies to reach underserved communities; and providing 
        human resources support for implementing the TFA.
  --Enhancing Taxpayer Service: $389,100,000 for increasing the 
        telephone Level of Service (LOS) and enhancing information 
        technologies to improve taxpayer services. This investment will 
        build on the IRS's efforts to improve telephone services for 
        the underserved, such as those who are deaf or hard of hearing, 
        limited English proficiency communities, and victims of 
        identity theft. This investment provides a projected LOS of 85 
        percent in fiscal year 2023 assuming phone demand returns to 
        pre-pandemic levels and the IRS can provide in-person services 
        at pre-pandemic levels. The increase in funding also will 
        improve the ways taxpayers interact with the IRS by enhancing 
        and expanding the range of modern, digital tools provided by 
        the IRS to deliver a service experience comparable to that 
        available in the private sector. By empowering taxpayers to 
        address certain needs without requiring live assistance, 
        development of these tools is essential to the IRS's long-term 
        success in satisfying taxpayer expectations and meeting the 
        ongoing growth in demand for assistance.
  --Increasing Compliance to Ensure Fairness: $469,300,000 to allow the 
        IRS to continue improving upon its compliance strategies and 
        enforcement activities--including examination, collection and 
        investigation--to ensure fairness in the tax system and narrow 
        the tax gap. We continue to develop innovative approaches to 
        understanding, detecting, and resolving potential 
        noncompliance, which helps to maintain taxpayer confidence in 
        the tax system. It is important to note the IRS has an overall 
        enforcement return on investment (ROI) of about $5 for every $1 
        invested compared to the IRS appropriated budget, not including 
        significant deterrence effects.
  --Maintaining Critical IT Operations: $39,500,000 to sustain these 
        operations to maintain optimum network performance and 
        functionality. The IRS continues to transform its technological 
        landscape, and it has made progress on its modernization 
        journey to provide taxpayers with a seamless customer 
        experience, while empowering employees with the tools and 
        systems needed to provide top quality services and enforce the 
        tax law. These successes have increased the need to sustain 
        critical IT operations to maintain optimum network performance 
        and functionality. The IRS continues to deploy and incorporate 
        new, modernized tools for taxpayers, tax professionals and 
        employees. Taxpayer service improvements (additional digital 
        services, up-to-the-minute account information, etc.), 
        enterprise efficiency advances (automation, artificial 
        intelligence, machine learning, etc.) and new employee tools 
        (case management, collaboration, learning platforms, etc.) all 
        require additional bandwidth to sustain a high volume of users 
        processing digitalized capabilities.
  --Fostering Economic Development in Underserved Communities: 
        $10,200,000 to allow the IRS to cultivate new opportunities for 
        adults and students in underserved communities. One focus of 
        our efforts is the Mississippi Delta Region, which currently 
        has the highest rate of poverty in the United States, excluding 
        the U.S. territories. As an initial step, we are opening a new 
        Automated Collection System (ACS) call site in Clarksdale, 
        Mississippi, and have announced plans to hire contact 
        representatives to work at the call site. Initiatives in other 
        regions are already underway, including a significant staffing 
        increase for our ACS operation in Puerto Rico. We have 
        increased staff at this site from approximately 79 employees in 
        fiscal year 2020 to more than 400 as of February 2022. We plan 
        to add another ACS call site in Puerto Rico during 2022 that 
        will accommodate an additional 400 employees. The expansion 
        offers employment to Puerto Rico residents and allows for a 
        significant increase in bilingual ACS employees to better serve 
        taxpayers with limited English proficiency.
Structural Changes to IRS Appropriations to Improve Mission Delivery
    The President's budget also proposes a change to the appropriations 
language that would allow Taxpayer Services and Enforcement funding to 
be used for certain associated support costs that are currently 
reserved for Operations Support funding. Currently, Taxpayer Services 
and Enforcement funding only pays for an employee's labor cost, not the 
cost to hire the employee nor the IT equipment and space needed to make 
them productive. There are significant benefits to this change: By 
including support costs, future IRS budgets would reflect the full cost 
of Taxpayer Services and Enforcement. The changes would also prompt IRS 
business units to be more efficient with their support costs because 
they would stand to directly benefit from savings.
    In addition to the IRS's fiscal year 2023 budget request, stable, 
multi-year funding for the IRS is necessary to facilitate the types of 
longer-term investments that the agency needs to make to adequately 
serve the American people and enforce the tax laws.
    legislative proposals in the president's fiscal year 2023 budget
    Along with the funding requested in the President's fiscal year 
2023 budget request, we are also asking for Congress' help 
legislatively in several important areas that would improve tax 
administration, including the following:

  --Information reporting by financial institutions and digital asset 
        brokers. Over time, the U.S. has established a broad network of 
        information exchange relationships with other jurisdictions 
        based on established international standards. The information 
        obtained through those relationships has been central to recent 
        successful IRS enforcement efforts against offshore tax 
        evasion. The ability to exchange information reciprocally is 
        particularly important in connection with the implementation of 
        the Foreign Account Tax Compliance Act (FATCA). Currently, 
        however, the U.S. provides less information to foreign 
        governments than we receive from them. The proposal would 
        expand reporting by financial institutions and digital asset 
        brokers in a number of ways--for example, by requiring 
        financial institutions to report the account balance for all 
        financial accounts maintained at a U.S. office and held by 
        foreign persons. These new reporting requirements would enable 
        the IRS to provide equivalent levels of information to 
        cooperative foreign governments in appropriate circumstances to 
        support their efforts to address tax evasion by their 
        residents. The proposal would be effective for returns to be 
        filed after December 31, 2023.
  --Require reporting by certain taxpayers on foreign digital asset 
        accounts. Section 6038D(b) of the Internal Revenue Code 
        contains an annual reporting requirement for individuals in 
        regard to two categories of foreign financial assets, but there 
        is no reporting requirement under this section for digital 
        assets. Against this backdrop, tax compliance and enforcement 
        with respect to digital assets is a rapidly growing problem. 
        The global nature of the digital assets market offers 
        opportunities for U.S. taxpayers to conceal assets and taxable 
        income by using offshore digital asset exchanges and wallet 
        providers. The proposal would amend section 6038D(b) to require 
        reporting with respect to a new third category of asset: that 
        is, any account that holds digital assets maintained by a 
        foreign digital asset exchange or other foreign digital asset 
        service provider. Reporting would be required only for 
        taxpayers that hold an aggregate value of all three categories 
        of assets in excess of $50,000. The proposal would be effective 
        for returns required to be filed after December 31, 2022.
  --Extend the statute of limitations for certain tax assessments. 
        Section 6501 of the Internal Revenue Code generally requires 
        the IRS to assess a tax within 3 years after the filing of a 
        return. But for complex audits in the largest cases, critical 
        issues may not be identified until late in the process of an 
        examination, and in many cases these issues cannot be pursued 
        further due to time and resource constraints. The proposal 
        would amend section 6501 to extend the 3-year statute of 
        limitations to 6 years if a taxpayer omits from gross income 
        more than $100,000,000 on a return. This change would give the 
        IRS enhanced agility and flexibility in evaluating and staffing 
        its case inventory and appropriately allocating its limited 
        enforcement resources.
  --Increase oversight of paid tax return preparers. Paid tax return 
        preparers have an important role in tax administration because 
        they assist taxpayers in complying with their obligations under 
        the tax laws. The proposal would amend Title 31, U.S. Code 
        (Money and Finance) to provide the Secretary with explicit 
        authority to regulate all paid preparers of Federal tax 
        returns, including by establishing mandatory minimum competency 
        standards. The proposal would be effective on the date of 
        enactment.
  --Expand and increase penalties for return preparation and e-filing. 
        Inappropriate behavior by paid tax return preparers harms 
        taxpayers through the filing of inaccurate returns, erroneous 
        refunds and credits and personal tax return noncompliance. Tax 
        return preparer misconduct continues, in part, because the 
        amounts of the penalties under current law do not adequately 
        promote voluntary compliance. The proposal would increase the 
        amount of the tax penalties that apply to paid tax return 
        preparers for willful, reckless or unreasonable 
        understatements, as well as for forms of noncompliance that do 
        not involve an understatement of tax.
  --Expand authority to require electronic filing for forms and 
        returns. Under this proposal, electronic filing would be 
        required for returns filed by taxpayers reporting larger 
        amounts or that are complex business entities, including: (1) 
        income tax returns of individuals with gross income of $400,000 
        or more; (2) income, estate, or gift tax returns of all related 
        individuals, eStates, and trusts with assets or gross income of 
        $400,000 or more in any of the three preceding years; (3) 
        partnership returns for partnerships with assets or any item of 
        income of more than $10,000,000 in any of the three preceding 
        years; (4) partnership returns for partnerships with more than 
        10 partners; (5) returns of real estate investment trusts, real 
        estate mortgage investment conduits, regulated investment 
        companies and all insurance companies; and (6) corporate 
        returns for corporations with $10,000,000 or more in assets or 
        more than 10 shareholders. Further, electronic filing would be 
        required for the following forms: (1) Forms 8918, ``Material 
        Advisor Disclosure Statement"; (2) Forms 8886, ``Reportable 
        Transaction Disclosure Statement"; (3) Forms 1042, ``Annual 
        Withholding Tax Return for U.S. Source Income of Foreign 
        Persons"; (4) Forms 8038-CP, ``Return for Credit Payments to 
        Issuers of Qualified Bonds"; and (5) Forms 8300, ``Report of 
        Cash Payments Over $10,000 Received in a Trade or Business.'' 
        Return preparers that expect to prepare more than 10 
        corporation income tax returns or partnership returns would be 
        required to file such returns electronically. The Secretary 
        would also be authorized to determine which additional returns, 
        statements, and other documents must be filed in electronic 
        form in order to ensure the efficient administration of the 
        internal revenue laws without regard to the number of returns 
        that a person files during a year.
  --Improve reporting for payments subject to backup withholding. The 
        proposal would treat all information returns subject to backup 
        withholding similarly. Specifically, the IRS would be permitted 
        to require payees of any reportable payments to furnish their 
        TINs to payors under penalty of perjury. The proposal would be 
        effective for payments made after December 31, 2021.
                               conclusion
    Chairman Van Hollen, Ranking Member Hyde-Smith and Members of the 
Subcommittee, thank you again for the opportunity to update you on the 
filing season and IRS operations.
    We continue to balance multiple unprecedented demands, including 
continuing the filing season and work on important new tax provisions. 
We remain focused on numerous taxpayer-related issues, and we have 
pursued innovative ideas and processes not previously deployed by the 
IRS in an effort to make improvements to the current inventory and 
provide meaningful taxpayer services.
    The reality at the IRS is that we know we need to do better; we're 
committed to doing better, and we are trending in a positive direction. 
We appreciate your patience and understanding and the many expressions 
of gratitude we have received for the efforts of our employees, who 
have consistently stepped forward despite their own health and safety 
concerns. Our employees are doing everything they can. But we need 
Congress to help us by providing adequate resources and a sustained, 
multiyear investment in the agency.
    I continue to be extremely proud of our workforce and their 
dedication to helping American taxpayers fulfill their tax 
responsibilities and resolve tax issues.

    Senator Van Hollen. Thank you. Thank you, Mr. Commissioner. 
I think we will do 6-minute rounds, and we may have more than 
one round. I don't know if other Members of the Committee will 
be joining us at this point or not. And I want to start my 
first round of questions, focused on the backlog and customer 
service issues.
    So Mr. Commissioner, you and I were talking a little bit. 
Can I confirm that it is your goal to eliminate the backlog by 
the end of this calendar year?
    Commissioner Rettig. It is my commitment to you, 
individually and as Commissioner of the Internal Revenue 
Service, for the IRS to eliminate the backlog, and you will 
hear us use and see us use in print is ``get healthy,'' which 
means through the eyes of the taxpayer, doing what they expect 
us to do by the end of this year.
    Senator Van Hollen. Got it. And one of the tools we gave 
you, in the last session, was Direct Hire Authority. I know you 
are using that, right?
    Commissioner Rettig. Absolutely. Congress rescued us. There 
is no other way for me to say that, with Direct Hiring 
Authority. It was part of the Omnibus budget, March 15. On 
March 16, we started with job fairs at our three big processing 
centers. For the last 2 weeks of March we went out on the 
ground, held job fairs and they have been extraordinarily 
successful. We are looking to hire 5,000 people this year and--
5,000 people next year, for a total of 10,000.
    To give you an example we went to the three processing 
centers, Ogden, Utah; Kansas City, Missouri, and; Austin, 
Texas. We went into Austin, Texas and we had 500 people show up 
with resumes, meaning their package is complete. We made 500 
offers on the spot. We have about a 93 percent offer rate to 
people who show up at our job fairs on the spot.
    We are also doing virtual job fairs. And in the next 30 
days, we are doing another round of job fairs at these same 
locations. They have been very successful. They have received a 
lot of local press, in a good way. The government is coming in 
and giving jobs, Federal jobs, to the community.
    Without the Direct Hiring Authority that we got in the 
budget I would not be able to report anything really positive. 
We cannot hire people at $15- to $17 an hour in these 
communities when we are competing with Amazon. We are competing 
with Target, that is $20 an hour. Walmart recently announced 
they are hiring 50,000 people. Walmart recently announced truck 
driver positions at $110,000 a year, and we come in $15 an hour 
Federal jobs. So we need to be able to hire on the spot.
    Senator Van Hollen. Good. Well, thank you for making use of 
that authority. And now just in terms of the, sort of the--and 
I know you have made some progress already, but the mountain 
that we need to tackle in order to achieve your goal, just so 
we are on the same page, and just quick yes or no answers, if 
you can, to confirm the numbers I have got. I am looking at a 
status of unopened mail and backlog inventory issued April 26. 
So it should be pretty current.
    Paper returns waiting to be processed, the calendar year 
2021, over 2.5 million; those received in calendar year 2022, 
just over 8.9 million, for a total of 11.5-plus million, is 
that the system----
    Commissioner Rettig. The paper returns for 2021, as of 
April 21, 2022, are at 1.8 million, received in 2022 are 4 
million, which somebody might dispute whether those were 
backlogged or not. We just concluded the April 18 filing date.
    Senator Van Hollen. Okay.
    Commissioner Rettig. The total paper returns that we are 
sitting on as of April 21, 2022 is 5.8 million.
    Senator Van Hollen. All right, let me stop you there. So 
whoever, just whatever information I have got here is obviously 
incorrect, I thought it came from the IRS but--I guess I have 
got some of the----
    Commissioner Rettig: I am reading the individual returns.
    Senator Van Hollen. Yes. Yes.
    Commissioner Rettig. And if you went to the right, you 
might be reading the total returns. It is the side with this--
--
    Senator Van Hollen. Oh. I am sorry. You are right. I am 
reading--I am reading the total individual in business; you are 
right. I have got--I guess the document that I have got, Status 
of Unopened Mail and Backlog Inventory, issued April 26th, 
2022, is the most up-to-date information?
    Commissioner Rettig. Correct.
    Senator Van Hollen. Yes. I got it. Thank you. So, you know, 
one of the frustrations, and I know you understand this, that a 
lot of taxpayers have, is they, if they get a Notice of 
Deficiency, and they want to get somebody on the line to 
explain it--let me modify that.
    They want to get in contact with somebody quickly, and as 
you well know, given the volume of phone calls that come in 
versus the operators and folks you have got answering them, it 
is really hard to get through by phone. So online, 
communication seems to be the answer. That is the way most 
people do a lot of business in the United States. I mean, you 
can communicate with your bank. You can communicate with other 
entities that way. When will a taxpayer be able to communicate, 
in real time, with someone at the IRS online?
    Commissioner Rettig. There are different levels of 
communication that we have online, but taxpayers can create a 
taxpayer online account, that they can go in and monitor their 
account, and they can change information. They can, on their 
own, without interacting with anybody at the IRS, enter into an 
installment payment arrangement if they owe less than $50,000.
    But we are also mindful that we live in a country where 
there are tens of millions of people who do not have broadband 
access, who cannot go online, who don't have a smartphone. So, 
it is critical that our resources also be deployed in our 
Taxpayer Assistance Centers, which are really our frontline 
retail operations, where somebody can walk in--we prefer by 
appointment--but even unannounced as well as telephone access.
    The driver of the inventories is, for the most part, that 
people who answer the phones also are responsible for 
conducting resolution of paper that we are left with. So, we 
have made various decisions. We leave people on the phones, and 
then in theory, when the phone volume would come down, they 
would move to the paper.
    We have not had either of those volumes come down in 2 
years. We currently have moved people into the paper 
processing, trying to answer the phones the best we can trying 
to get people to interact with us, it is just----
    Senator Van Hollen. Right, and just--thank you for giving 
me your commitment and goal in terms of an-end-of-year deadline 
for the backlog. Can you give us a sense of when I, as a 
customer, as a, you know, one of my constituents who has a 
question for the IRS about, you know, their tax return, when 
they are going to be able to communicate online with the IRS?
    Commissioner Rettig. It depends upon what they are looking 
for, but we get tens of millions of online contacts currently, 
and those operate seamlessly and successfully. Where we really 
want to be, we are about 5 years from being what the Agency 
should be in terms of the ability of the folks who want to just 
interact with us online, to do everything with us online, with 
the exception of filing a return.
    We don't have pre-populated returns, but otherwise to 
provide and interact with us online, I would say that we are 
about 5 years away from that. It could be a little more, 
depends upon the funding that we get, and it depends upon 
technologies that develop.
    Senator Van Hollen. Thank you. Ranking Member Hyde-Smith.
    Senator Hyde-Smith. Thank you very much. Mr. Commissioner, 
we have heard a lot about the historically high backlog, and we 
have discussed your recent pledge that the backlog would be 
resolved by the end of 2022, in large part, due to the IRS' 
ambitious plan to onboard thousands of new employees. How is 
the challenging labor market affecting that hiring plan for 
you?
    Commissioner Rettig. Well, thanks to Congress, we got 
Direct Hiring Authority, so we are in a different world now 
than we were before March 15 when we received that authority. 
And what we are talking about is onboarding folks at our 
Submission Processing and our Accounts Management facilities 
around the country. Submission Processing is dealing with 
paper, whether that is mail or paper returns; Accounts 
Management is resolving a taxpayer issue that they may have 
with respect to an already-filed return.
    We have over 2,500 people coming on board, but we have also 
done a lot of other things that we have not previously done, to 
bring these volumes down. And simply, the way I summarize it is 
to say, we are trending in a good direction. I am comfortable 
sitting here today telling you that we are committed to--and I 
am committed to--being healthy by the end of this year.
    But obviously, not to play lawyer games, but another COVID 
or unforeseen circumstances could interrupt that. But where we 
are today, I am committed to doing that. If we see unforeseen 
circumstances, some type of a surge, whether it is COVID, or 
some other non-COVID-related issue that impacts us, I would 
come back up and let you know that I need to adjust.
    This is my reputation with you, our reputation with you, 
and we want you to see what we are doing. We have also engaged 
contractors to do what contractors could do, about 2,500 people 
coming in. I think it is well known, it has been played up a 
lot that we did surge teams. We brought back employees who have 
been in these two lanes within the last 2 years. We brought 
them back in to do that processing.
    And now we are going for the employees who left within 3 or 
4 years to bring more back in, and all the efforts that we have 
made show that we are trending in a good direction. And 
similarly, with respect to the current filing season, which 
just concluded - without extensions--on April 18.
    We did a lot of messaging and have lessons learned from 
filing season 2021 to filing season 2022, which we are in 
currently. We did a lot of messaging encouraging people to file 
electronically, file an accurate return, file for direct 
deposit. There was one large transmitter of returns for people 
that I heard. I am a tax guy, I came in from the tax 
community--and I heard in a roundabout way that one large 
transmitter was telling its franchisees to start submitting 
returns on January 4.
    I reached out and I said, do not submit returns on January 
4. You need to reconcile the Advanced Child Tax Credits, and 
the Economic Impact Payment that these folks receive before a 
return is filed. We sent out 200 million letters telling people 
what they got for an EIP. We sent out 57 million letters 
telling people who are under the Advanced Child Tax Credit. We 
encourage people to look into their online account and verify 
those amounts, because accurate, electronically filed returns 
where people requested a direct deposit, those are going 
seamlessly.
    Senator Hyde-Smith. Okay. And about the employees that you 
are bringing in, the on board, how many of those you are going 
to have to train? Because I know it can take several weeks to 
train people once you get them there. But you are saying the 
ones you are bringing on are basically already trained?
    Commissioner Rettig. No.
    Senator Hyde-Smith. The fact that they have been out of the 
system?
    Commissioner Rettig. No. Let me give you sort of a summary. 
And then if you want me to back it up and give you the 
individual information that. I think you might be inquiring 
about. All these efforts, when are you going to see an impact 
with trained people in these rooms, processing this 
information? It is going to be in the June range. But we have 
figured that in. When I am telling you we will be current by 
the end of this year, we know the process.
    And some of the people that we are onboarding are going to 
need 2 or 3 days to train. Remember, we are opening envelopes. 
We have people who open envelopes. We have people who monitor 
electronic accounts. It is a broad range of talent that we are 
looking at.
    But when I tell you the end of the year, it is on the 
assumption that these people are in, on board, in the June 
range, and trained. It doesn't help us to put an untrained 
person in these facilities.
    Senator Hyde-Smith. But our information is telling us it 
could be 8 weeks to 37 weeks to properly get someone trained.
    Commissioner Rettig. Not at all. I don't know who told you 
37 weeks. I would like to meet with that person.
    Senator Hyde-Smith. So you, when you come in by June, I 
mean, this is being May.
    Commissioner Rettig. Yes.
    Senator Hyde-Smith. You are going to have all of these 
employees already trained?
    Commissioner Rettig. We don't have 37 weeks left in this 
year, I believe.
    Senator Hyde-Smith. So they will all be trained by June? Or 
is that realistic, or?
    Commissioner Rettig. That is where we are with the people 
coming in. If the people continue to come in at the rates that 
they are coming in, the June range, having our people in the 
seats, trained and handling it, is realistic.
    Senator Hyde-Smith. So you can have them--everybody trained 
in a month?
    Commissioner Rettig. Keep in mind, when we do these surge 
teams, these are already trained people that are just getting 
refreshed--that is a matter of days.
    Senator Hyde-Smith. And that is the majority of the ones 
coming in, there is not newly hired?
    Commissioner Rettig. There is both.
    Senator Hyde-Smith. That has never worked for the IRS 
before?
    Commissioner Rettig. There is both. We are doing every 
lane.
    Senator Hyde-Smith. But you feel confident even those who 
have never worked for the IRS before you can have them trained 
by June.
    Commissioner Rettig. The person who has never worked for 
the IRS before is not going to on board and adjust some 
taxpayer's account because they reported unemployment 
compensation as non-taxable when it wasn't. That would be a 
different category. We have a broad category of people that we 
are bringing in for different levels of work.
    And if I may? If it is different, you will hear from me.
    Senator Hyde-Smith. Okay. It is just an aggressive plan for 
hiring people, and have them all trained and ready to roll.
    Commissioner Rettig. Both of you and this country deserve 
an aggressive plan. We have done a lot of innovative things 
behind the scenes to make things work. We have used our ARP and 
other money for technology that radically improved our ability 
to process certain things, that in a different world we 
probably wouldn't have been able to do, or had the support to 
do it.
    We have also considered things that we did not implement 
because it didn't look like it was going to get us to where we 
needed to be or was more complex. We cannot add complexity when 
we are in the situation we are in.
    I think we have done as each of you would do if you were in 
this seat. We entertained and continue to entertain everything 
that we can to get this right. And we are not done being 
innovative where it will be helpful. We can't be innovative if 
it shorts us on what we are trying to do.
    Senator Hyde-Smith. Thank you.
    Commissioner Rettig. Thank you.
    Senator Van Hollen. Thank you. Thank you, Mr. Commissioner. 
I have one final question on the issue of, you know, the 
backlog and taxpayer service, and then I am going to turn to 
enforcement issues.
    Paper returns, I know your life at the IRS would be made 
much easier if more taxpayers filed electronically, but we also 
know that we have to keep open the option for people filing 
paper returns. If you look at the backlog, as you have 
indicated, it is essentially those paper returns.
    And I am sure you are aware that the Taxpayer Advocate has 
said that, quote, ``Paper is the IRS' kryptonite, and the IRS 
is buried in it.'' And the Taxpayer Advocate has recommended 
that the IRS implement the 2D bar coding, and/or the optical 
character recognition technology to speed up the processing of 
paper returns.
    What plans, if any, do you have to implement this new 
technology that the Taxpayer Advocate argues would speed up the 
process?
    Commissioner Rettig. The technology is not new. We actually 
requested funding in our Congressional Budget Justification in 
2013, and then again in 2014, again in 2015, again in 2016, 
again in 2017, for 2D bar-coding, and we never got the funding. 
And so in 2018 the agency shifted to an emphasis on electronic 
filing.
    We are currently running about 95-96 percent--for the 
current filing season--of the individual returns that we are 
receiving e-filed. There are some returns and some forms that 
cannot be electronically filed. We need to get those so the 
taxpayers have the ability to e-file those. That is a 
technology draw. And we move our resources to areas that are 
there.
    But we are looking at this, and you will see our response 
to the Taxpayer Advocate Directive that was issued. This is not 
new, and it is not new for the agency.
    Senator Van Hollen. Right. Let me just ask you, because I 
agree, and I do appreciate your efforts to move people toward 
electronic filing for the reasons we have discussed. But do you 
agree with the Taxpayer Advocate's recommendations? I 
understand that you have asked for it in past budget requests, 
this new technology, and you haven't received it.
    I don't know if it is in your current request. I don't 
believe it is. And so I guess my question is: What is your 
current assessment of the Taxpayer Advocate's recommendation?
    Commissioner Rettig. I appreciate the efforts of the 
Taxpayer Advocate, and you will see us move in a direction that 
is expansive in this regard.
    Senator Van Hollen. In terms of deploying these 
technologies?
    Commissioner Rettig. It may not be these technologies. If 
we were asking for it in 2013, we are 10 years, essentially, 
technology wise beyond that.
    Senator Van Hollen. Right. Okay. So put aside the specific 
technologies, but I guess the question is, you would be looking 
for technologies that would allow you to convert a paper return 
much more quickly, to be processed rather than having to sort 
of keypunch every item; is that right?
    Commissioner Rettig. Absolutely.
    Senator Van Hollen. Okay.
    Commissioner Rettig. We have a digitalization office that 
is not only doing this--which is outward facing--we are doing 
it inward-facing too to help our employees.
    Senator Van Hollen. Got it.
    Commissioner Rettig. You know, transferring information.
    Senator Van Hollen. Good. Let me turn to enforcement, and 
you have spoken eloquently about the tax gap, and the need to 
get at it. Some have argued that, you know, we should not 
provide you with more authority to close the tax gap. And 
again, I remind people, this is collecting taxes that are doing 
owing; that we should not give you additional tools to do that 
because you are going to go after the little guy, you are going 
to go after small businesses. Is that in your intention, and 
that if you were given these resources what would you do? And 
what would the impact be?
    Commissioner Rettig. I note it is National Small Business 
Week too. I think the Committee should note that I was born and 
raised into a small business. I'm very respectful, and 
understand that small businesses, in my mind, are the backbone 
of this country. The folks that might not have another 
opportunity, employment-wise, tend to open a small business. So 
the respect there is huge.
    The resources that we are looking at when we talk about 
enforcement are at the high-end level. It is the big, and 
super-big corporations. We have cases where we have $10- $15 
billion of tax at issue. We get outgunned in those routinely, 
by the professionals they are able to hire, and the resources 
we are able to bring in, that it can come down.
    And the statistic I use frequently is: last year we had 
over 4 million partnership returns filed. I have 6,500 
frontline Revenue agents all in, and they are all currently, 
and would remain so, dedicated to the high end, most complex 
returns that we receive.
    And so the concept that we would expand examination 
resources to small businesses, or lower-income people, and the 
administration has called for nothing under $400,000. $400,000, 
quite frankly, if you look at where we are, it would be nothing 
under a number significantly greater than $400,000. Typically, 
for taxpayers with up to about a million dollars, we have 
information reporting; we have either W-2s or 1099s.
    When you go to a million dollars plus, you are talking 
about entrepreneurs that use multiple-layered entities, and 
that is where we should be. And it is where we are currently.
    Senator Van Hollen. Thank you. No, I appreciate that 
commitment. I just wanted to underscore that point. Let me ask 
you about conservation easements. These are one mechanism that 
are, if it is used for very wealthy people to escape their tax 
obligations. Can you talk about that particular device?
    Commissioner Rettig. There are criminal indictments in the 
conservation easement cases. There are cases in the United 
States Tax Court, civil cases, where we have amended petitions 
to assert civil fraud penalties that should be indicative of 
what the IRS and Department of Justice believe about the 
syndicated easements.
    We support the intent of Congress with respect to the 
purpose of conservation easements. The syndicated easements are 
different. They have been categorized as an abusive 
transaction. If you read any of the tax court opinions that are 
out there, you will see why, and notwithstanding, we have put a 
lot of resources into this space, from a counsel perspective, 
appeals, and exam perspective.
    We have listed this transaction in 2016, giving people 
notice that we believe this was an abusive transaction and 
notwithstanding our efforts, we have not had an impact on 
essentially slowing the volume of these transactions that we 
receive currently. We need Congressional help. We need a 
statute to help us curb this activity.
    Senator Van Hollen. Well, thank you for that distinction 
between legitimate and important uses of conservation 
easements, and the abuses that you mentioned.
    I do have some additional questions on enforcement, but my 
time is up with this round. And I will turn it again to the 
Ranking Member.
    Senator Hyde-Smith. Thank you, Mr. Chairman.
    You had mentioned the 2D barcodes on tax forms, and the 
efficiencies that are associated with those things. Can you 
speak about the IRS' progress in implementing that on those tax 
form bar codes? Wouldn't the associated cost of implementing 
these--this technology be largely offset by the savings from no 
longer having to pay employees to manually enter this data?
    Commissioner Rettig. No, ma'am. 2D bar coding still 
requires us to receive a paper return that needs to be opened 
and processed. It is a paper return concept. Also with respect 
to transmitters and other returns, there is not a system that 
allows the IRS to seamlessly take the equivalent of a Xerox 
copy or a fax kind of a concept, that drops it into our system 
seamlessly, and all the numbers drop in.
    We still have a lot of manual provisions that we require, 
but we did seek funding to get into this arena. And we are 
going into the direction of being able to automate paper 
returns. As you indicate, it would help from a staffing 
perspective, it would help from a cost perspective, and I think 
it would help across the board in terms of shortening the tail 
on when we can get these returns processed, and get refunds 
out.
    Senator Hyde-Smith. But it wouldn't offset the cost that 
much is what you are saying, although you get the technology?
    Commissioner Rettig. There is not a perfect system that the 
IRS can buy today without a significant cost, both in terms of 
human cost and resources to get us to where we need to be. But 
we are definitely going in that direction.
    Senator Hyde-Smith. Okay. The IRS recently ended the 
practice of requiring individuals to provide biometric data in 
order to create an online account, and the IRS changes course 
by giving taxpayers the option to verify their identity through 
the biometric verification, or during a live, virtual 
interview.
    What level of confidence do you have that the biometric 
data that has already been provided, or will be provided, is 
protected?
    Commissioner Rettig. The biometric data that is provided to 
ID.me, and our memorandum of understanding, the agreement with 
ID.me,-- I think Congress has copies of those agreements--the 
information that somebody would provide currently is destroyed 
within 24 hours.
    Information that was provided prior to the time that we 
shifted was to be destroyed within 30 days. The only pieces 
that are not are where there--are indications of identity 
fraud, and there is considerable amount of identity fraud 
associated in the taxpayer world. We shifted to providing that 
option also with the recognition that we are looking at other 
options to provide taxpayers. And there have been a lot of 
questions as to why the IRS went to ID.me.
    We were receiving about a million visits a week, of people 
trying to create online accounts. The system we had before had 
about a 40 percent authentication rate. Taxpayers who would try 
to authenticate that, yes, this is Chuck Rettig. About 60 
percent were not getting into the system, and had to walk into 
a site, or had to call in, which when we are on our heels from 
an inventory perspective, is not a meaningful thing for the 
people in this country. They deserve better.
    With ID.me, the authentication rate is far in excess of 70 
percent, both on the biometrics part, which is facial 
recognition, but taxpayers have the alternative to get online 
with a live ID.me person. On the facial recognition, that is 
offered in eight different languages; the in-person is offered 
in more than thirty different languages.
    And I think you are aware that we have moved significantly 
from a service perspective, into our multilingual efforts have 
really been there. The last part is Login.gov can handle about 
less than 30 transactions per second. We need more, about 1,500 
transactions per second. We need a level two authentication 
that once this person is in, this is the person.
    We are looking at other alternatives, but know, as the 
level of authentication may come down, people that don't want 
facial recognition or the in-person, what we were hoping to get 
to, and I think the people in the country would help us to get 
to is, once I know this is you, that is your account, I can 
open up a whole list of services that you can do automatically 
online.
    When that authentication level might be different, we have 
to pull back because of the levels of fraud that we encounter. 
And some people think fraud is somebody sitting in their 
backyard, but we are up against nation states. And I think you 
are aware that we get about a 1.8 billion cyber attacks per 
year. And so, to protect the data that people trust us with, we 
have to be at a higher authentication level, or not have so 
many options available.
    And we will explain to you as we get there. These are some 
of the many difficult choices that have to be made, because I 
think, collectively, we all want the person who is capable of 
going online to be able to do 100 percent of their interactions 
with the IRS, online, seamlessly. If we open it up for one, we 
end up opening it up for all. So those are some of the 
decisions that have to be made.
    Senator Hyde-Smith. Okay. Let us talk about the dollar 
figure. Do you know how much money has been spent to date on 
the IRS contract with the ID.me, and what is the status of that 
contract?
    Commissioner Rettig. I could get you the information on 
that.
    Senator Hyde-Smith. You don't have a----
    Commissioner Rettig. I think the contract provided for up 
to something like $88 million, if I am not mistaken, but I can 
get you the information within a day.
    Senator Hyde-Smith. And you had mentioned the Login.gov.
    Commissioner Rettig. Mm-hmm.
    Senator Hyde-Smith. Of the fiscal year 2023 request seeks 
$27 million for user authentication. And how does the IRS plan 
to spend this increase? Will this funding be used to support 
that, the Login.gov?
    Commissioner Rettig. Well, we are----
    Senator Hyde-Smith. On the 2023 request?
    Commissioner Rettig. We are where we are with ID.me. There 
is still facial recognition with an option for the interview. 
We actually are working with Login.gov to try to get their 
transaction-per-second rate up, and to try to get their 
authentication level up to a NIST Standard 2, IAL2 I think is 
the actual terminology. It is a higher authentication.
    And I believe we have the best IT people on the planet, and 
I have asked our people to coordinate with Login.gov. It is not 
an IRS agency, it is another agency.
    Senator Hyde-Smith. Mm-hmm.
    Commissioner Rettig. But it would benefit all agencies. And 
we should bring the best talent there. And if they get to the 
point, I think that we have already indicated that we would 
shift. You would want us to shift, and I am not saying you 
personally, but people of the country want us to have the best 
system, seamlessly helping the people who want to go in that 
lane, and provide as many services as we can. And that is our 
desire as well.
    Senator Hyde-mith. Thank you.
    Senator Van Hollen. Thank you. And just to follow up on 
that. I mean, I understand the authentication challenges you 
have got, given the fraud situation. I do appreciate your 
moving to a volunteer system when it comes to facial 
recognition, but the more people can sort of volunteer into 
your authentication systems, you know, the better off the 
overall process, I think, will be.
    I want to go back to a couple of enforcement issues, 
because, we saw from a recent Treasury Department Report that 
one of the mechanisms that some employers--and I just want to 
address ``some''--use to avoid paying their payroll taxes that 
are due owing, it is employee misclassification.
    They found that, you know, workers being misclassified as 
independent contractors, contributed to a significant tax gap, 
and avoidance of paying the Social Security, Medicare, and 
other payroll taxes.
    What role, if any, do you believe the IRS has in 
addressing, employee misclassification?
    Commissioner Rettig. Well, certainly, people categorized as 
an employee receive wages through a W-2, that is the 
information reporting to the IRS that is withholding the 
accuracy in filing for those folks is typically around 99 
percent. When you get into a lack of withholding, and maybe a 
lack of 1099 type of thing, which gets you into the independent 
contractor status, it drops down below 50 percent, sometimes 
significantly below 50 percent.
    There is a significant issue here, because these are issues 
I was aware of on the outside. An employer would like to 
categorize a worker as a non-employee, so they don't have to 
pay the employer's portion of the employment tax regime that we 
have. So it is less expensive for the employer to do that.
    They might not be providing certain insurance, et cetera. 
But the person might actually be an independent contractor, and 
so that is a determination that the IRS needs to make, through 
a facts and circumstances test.
    There is a form that people can file, the SS-8, and on that 
form they indicate why they believe somebody is or is not, or a 
category of employees are or are not, an employee, and we don't 
get a lot of those forms each year. My reaction is, that 
employers don't want to hear that somebody is categorized as an 
employee, and they would probably rather take the risk.
    But to give you some numbers, in fiscal year 2021, we 
received 2,387 SS-8s, which is the request for a determination 
of employee status. We closed 1,953 of those with an average 
cycle time of about 240 days, which is exactly the cycle time 
we had in fiscal year 2018, meaning that those are not 
backlogged. But quite frankly, in a country the size that we 
have, and the number of workers that we have 2,387 for a fiscal 
year.
    Senator Van Hollen. Right. So I mean, but right now, and as 
I understand it, and the only mechanism, at least via the IRS, 
is this voluntary, mechanism of filing an SS-8 Form. I mean, 
you don't take other steps to try to resolve this; do you?
    Commissioner Rettig. Well, we do. I get all the statistics 
around the country, probably a day doesn't go by that I read 
about somebody either being sentenced or convicted for 
employment tax-related fraud. And all of those start in-house 
with our IRS Criminal Investigation Division.
    We are very aggressive in that arena. Essentially, in that 
case, if I withhold from an employee, withhold the payroll that 
I am supposed to--the taxes I am supposed to pay over to the 
Government, but I don't, and I go and buy a motor home or 
whatever, and that employee files a tax return, the government 
gives that employee credit for the amounts that I stole.
    So, we are hugely aggressive in those arenas. And once a 
person gets indicted, sentenced, and et cetera, those cases 
become public, and they hit the newspapers in the local 
communities and, typically, these are the cases where you do 
see somebody withheld X-dollars, and they have the trips, the 
motor homes, the houses.
    Senator Van Hollen. Right, but you are--these are the wage 
theft cases you are referring to.
    Commissioner Rettig. Yes.
    Senator Van Hollen. I am referring also, though, to these 
employee misclassifications in it.
    Commissioner Rettig. There are some----
    Senator Van Hollen. And I know they are related. Let me 
move on quickly, because I do want to ask you about the 
provisions in current law that says that if you want to be a 
government contractor, you have to be up to date on your tax 
payments. And I know that we have been working with you, and I 
know the IRS has initiative to be able to quickly determine 
whether somebody who is one of your contractors at the IRS, 
meets the test, that they have made their tax payments on time.
    But we want to extend that provision government-wide, and 
facilitate other agencies of being able to quickly determine 
whether or not a proposed government contractor that they would 
do business with, has met these requirements. Where does 
everything--where do we stand on that?
    Commissioner Rettig. Yes as you know, there is a provision, 
and Congress gave us the task to do it but there is not a 
waiver under 6103, which makes every taxpayer's information 
private and confidential. We created what we believed was a 
workaround that does not violate 6103, where a company could, 
essentially, come in and get a certificate from us. And we 
would issue a certificate that they would then take to the 
agency where they want to contract. And it would say: This 
person is current with their tax obligations.
    We are still talking to certain other agencies, but there 
are other agencies that believe that is too much of a burden on 
the taxpayer who is doing a government contract, to actually 
have to go into the system, they can do this automatically, and 
get this certification.
    And we cannot violate 6103, so we are working with the 
other agencies. You know, some Congressional assistance in this 
space I think would help get through the log jam. This needs to 
happen. I mean, I think we all would agree that somebody 
contracted with the United States Government should not be tax 
delinquent.
    Senator Van Hollen. Yes. And, we appreciate the efforts you 
are----
    Commissioner Rettig. We actually do it ourselves for our 
own contractors.
    Senator Van Hollen. Right, I know--I know you are dealing 
with that.
    Commissioner Rettig. And it is effective, so yes.
    Senator Van Hollen. We just want to make sure that the 
benefit of your expertise is shared with the rest of the 
Federal Government.
    And Ranking Member.
    Senator Hyde-Smith. Thank you so much. And going back to 
the issues that my office gets calls on. You know, the high 
backlog, all of it. And you know, the call-answer rate that is 
at 20 percent now, and the customers having to wait an average 
of 28 minutes to speak to someone. Your budget request includes 
a $3.4 billion ask for its taxpayers' services appropriation. 
How will this money be used differently than in the past to 
address these customer service failures?
    And one of the things is: ``Where's My Refund'' tool that 
we hear about. So what is going to be different to address them 
in spending this money?
    Commissioner Rettig. One, I wouldn't say it is a failure. 
We did not get in the situation that we are in because of any 
issue for IRS employees' desire and dedication. We got here 
with changed legislation on these when we had already done our 
technology. During tax season confusion for taxpayers on the 
exclusion of the $10,200, et cetera, et cetera. And the 
inability of taxpayers to reconcile, which we have done better 
this year, and we sent out these letters too.
    We have done the best that we could with what we have. But 
with taxpayer service, what happens is that we have buckets, 
and part of this provision asks for the ability to change the 
buckets. I am where you are on what is referred to as an IAT, 
Inter Account Transfer, not taking money from enforcement every 
year and supporting taxpayer service or operations support.
    If Congress tells us it should be in that lane, that 
bucket, we have four distinct buckets: Taxpayer service, 
Operations Support, Modernization, and Enforcement, and 
Congress tells it should be there. We have an IAT that allows 
us to transfer, I think, up to 5 percent between those, but we 
need to be respectful to that.
    In the taxpayer service lane, what is going to be 
different? Where are we going to go? One, if we get our levels 
current, the taxpayer service funds combined with the 
modernization funds, this year we added a customer call back to 
70 percent of our toll-free lines, which is the lines people 
call when they have an issue. And they get a call back within 
the same business day.
    When I heard it initially, I thought, okay, so we plugged 
something into the system. We had to redo our telephone 
infrastructure to be able to bring that into the system that we 
have.
    There are a lot more complexities to what we have than 
necessarily just plugging something in. But also adding people, 
we received phone calls at the rate of 1,500 per second at 
various points in time during the year. We receive 400 percent 
more phone calls this year than any other year.
    If the country gets back to normal - and we are not 
organizing ourselves for normal, we are organizing ourselves 
that we need to be providing the services that we should be 
providing in the environment that we are currently in--if we 
got 10,000 more employees, but these sort of COVID-related 
issues subsided, I need to find a place to put those 10,000 
employees inside the IRS, to be respectful for the funds that 
we use to hire the people. We are looking at all of that, and 
that is really what we are talking about.
    Bottom line, what you want us to do is to answer the 
phones, open the mail, have our Taxpayer Assistance Centers 
open. We have 358 Taxpayer Assistance Centers which are our 
frontline retail operations. Some of them are in malls; some 
are associated with other agencies.
    You want the ability of any American to walk in and ask a 
question of somebody at the IRS, and have that person be 
trained and capable of answering that question there, whether 
they go into the system or otherwise. So we need to fully staff 
our Taxpayer Assistance Centers, we need to train the people 
who are in those. We are a long way from that. Attrition is 
significant with us. So that is another avenue and there is a 
whole list of needs.
    We need to do better in every lane. I am sure every 
Commissioner has asked for what I have asked for--but I combine 
it with oversight. We are not here to spend money and not have 
people see how we are spending it, or moves that we are 
thinking and making. But the funding concepts for an agency 
that touches literally every American, there are significant 
issues to be able to operate the agency, to the extent that I 
think you all want, but also that every American deserves.
    We touch more Americans than anybody on the planet. And 
during the pandemic, let it be known that Congress called on 
us, not the VA, not Social Security, not some other agency, to 
distribute over $1.5 trillion during the pandemic in three 
rounds of Economic Impact Payments, two rounds of Form 1040 
refunds, and another $93 billion in Advanced Child Tax Credit 
payments, which were distributed over a 6-month period.
    We had to create the vehicles to do that during a pandemic 
and handle the filing season. We are in our third COVID filing 
season. That is where I come to.
    You know I am the end of the runway. It is not my choice to 
leave, but it is the statutory term, November 12, but the end 
of the runway is there.
    And you will hear from me throughout this year and next 
year. Employees of the IRS, they are dedicated, they want to do 
it. And we have all levels. I will close with this. I met a 
lady my first year, in Covington, 61 years with the Internal 
Revenue Service. She showed up every single day at 6:30 a.m. to 
open envelopes. And when I went up and said, hi, I am Chuck. 
She was crying. She was so proud to be there.
    That is the employees that we have. Our employees, we're 
the front line for the United States Government in touching 
taxpayers who lost a spouse, who lost a family member, who had 
somebody in the hospital. One of the issues on phones, people 
are saying, the average time, or the difficulty to pick up, but 
I encouraged our employees to stay on that call.
    If somebody called in on an EIP, or a tax issue, stay on 
that call, because every one of those calls flipped to: I lost 
my husband. I don't want our employees, being representative of 
the United States Government saying, I have got ten more calls 
I have got to go answer.
    I want our employees to be human and say you lost your 
husband. That must be hard and wind that call down. We do this 
thing, Talk Story, where on Zoom I meet with 100-150 
employees--it is scheduled for an hour, and the shortest one we 
have done is about two-and-a-half hours. And we do them weekly, 
all around the country. I talk to employees in Guam.
    And I see our employees get emotional when they tell me the 
stories they are getting from taxpayers, but know that it is 
IRS employees, that we are touching people in their homes 
suffering from COVID during the pandemic, and it is IRS 
employees that made these distributions. And Congress asked us 
to do so as rapidly as possible, three times.
    I have told our employees--don't correct me if I am wrong--
but I have told our employees, Congress respects you. You only 
ask people once, twice, three times, four times when you know 
they can meet that challenge. And I am going to tell you today, 
and I will tell you after my term, our employees will meet that 
challenge.
    We have people on mandatory overtime. I have 6,000 
employees in mandatory overtime for far beyond what we should 
be asking these people to do. And I have 10,000 employees on 
authorized overtime. The reason I say ``far beyond'' is that at 
some point this creates morale issues.
    I am about ready to do a sort of tour to these campuses and 
go and sit with our employees, a thank you kind of a thing.
    I apologize for the long-winded response but we are proud 
of who we are, and we are going into communities. You are well 
aware of our initiatives. We are coming down into Mississippi. 
We went to Puerto Rico. No other agency is going into the 
communities we are going to. We are going to these communities; 
it is the right thing to do. We are not brick and mortar, we 
are not an institution, we are people helping people, but we 
are going to communities that have three and four generations 
unemployed, to bring in and train job skills. We are bringing 
Federal time----
    Senator Hyde-Smith. I am over my time limit.
    Commissioner Rettig. So am I. And I apologize.
    Senator Van Hollen. Mr. Commissioner, first of all, I 
appreciate your initiative in going into underserved 
communities, I know you have 10 million in the budget 
specifically for that purpose and, look forward to working with 
you as you implement that.
    I have one last question for you here, I will submit the 
others for the record, and then I will ask the Ranking Member 
if she has any final questions, and then we will wrap it up. So 
my final question relates to cryptocurrency, as you know, in 
the Bipartisan Infrastructure Bill that we passed last year, we 
had a provision to raise some funds by extending financial 
reporting requirements on brokers to include cryptocurrency 
transactions.
    I have heard estimates that the annual tax gap due to non-
reporting of cryptocurrency gains is estimated at approximately 
$77 billion a year. My question to you Mr. Commissioner is: 
What steps have you taken to implement the provision from last 
year's bill? And how would you assess that figure I just gave 
you with respect to the tax gap in crypto transactions?
    Commissioner Rettig. Let me start by saying that the market 
cap for virtual currency fluctuates between $1.5- and $2.5 
trillion, depending upon if it is Wednesday, Thursday, or 
Friday. Last year there were $14 trillion in transactions in 
virtual currencies, if you do a GNP of the United States, of 
the world's GNP, we are somewhere between 30 and 40 percent of 
possibly $14 trillion in transactions.
    They are based on affidavits in John Doe summons cases, and 
we have done about five or six of these, where we have gone for 
the information, and we received information about taxpayers in 
certain exchanges that have indicia of U.S. contacts. So, we 
know there is a very significant compliance issue there.
    We need information reporting in the virtual currency 
space. We got FATCA as legislation, but we never got the 
funding to implement and modernize the systems to take care of 
the information that we get. It does not make sense to me to 
give us information reporting if we don't get the funding to 
put a system together to do that.
    You want it, and we want it, and we should not end up in 
the same place with virtual currencies. I think we have to have 
virtual currency reporting. We have to have the ability to use 
that information in a meaningful manner. And I am not saying, 
to be able to go after people. If we have the ability to match 
information, we will not go after people as much as we would go 
after unreported transactions.
    The people who report it don't need to hear from us, and we 
should be able to check that on our end before we send out a 
notice. So, it works both ways. Technology helps us know where 
not to go, as well as to know where to go.
    Senator Van Hollen. No, I appreciate that. I mean, this is 
not to prevent innovation in this space. This is, as you say, 
is simply to be able to, you know, collect gains that have been 
made that--that should be taxed like other gains in the 
economy.
    Senator Hyde-Smith, any final questions?
    Senator Hyde-Smith. Yes. I do have a few more. And because 
I have a few more, if you could be brief with your answers----
    Commissioner Rettig. And I will try.
    Senator Hyde-Smith [continuing]. That will be very much 
appreciated.
    Commissioner Rettig. And I apologize for--yes.
    Senator Hyde-Smith. The fiscal year 2023 requests $10.2 
million to establish the Mississippi Delta Hiring Initiative. 
And can you discuss your vision for this initiative, including 
the benefits it will bring to the Mississippi Delta region?
    Commissioner Rettig. I expect the IRS to be the agency that 
revamps the Mississippi Delta region. I think you are aware; we 
are already open to hiring. We did an announcement for 15 
positions in a presently existing facility in Clarksdale. We 
had a tremendous response, which shows that we are headed in 
the right direction.
    We have people on the ground. I had more than a handful of 
people who spent the week there meeting with local officials, 
looking at sites, which GSA would handle. I would love to come 
to talk to you one-on-one with what we envision for 
Mississippi.
    We tried to hire 2,000 people in Austin, Texas, and we had 
100 qualified people. We went into Puerto Rico and did a 
hiring, and we would look for 500, and we got 600.
    So for the Mississippi Delta, your question might be: Well, 
why did this kid from L.A. running IRS in Washington, D.C., get 
to the Mississippi Delta? The equation is pretty simple. We 
looked at the EITC hot map. Where are the most EITC claims that 
we are dealing with? It is in the Delta. We are going to the 
Delta to bring Federal jobs into the Delta.
    What we are doing is pairing up with 4-year and 2-year 
universities and colleges, to bring job skills. It is unfair of 
us to say that every 26-year-old needs a 4-year degree to work 
for the IRS. You need some job skills, which we will do through 
these 2- and 4-year schools.
    And then somebody said to me, well what about what they 
think about the IRS?
    We have over a hundred high schools in this country that 
have VITA programs. We are bringing VITA programs to high 
schools in these communities, so that people understand the 
benefits of giving back to the community. People understand 
what IRS does, and then sort of build the pipeline.
    It is probably, and there is no magic to this, 6-year 
project, but my goal is that in the communities that we go 
into, rather than seeing subsidized housing, where somebody is 
painting an older building, that we see the developers come in 
with new housing, because you have got people with Federal 
jobs. And it is looking like we are going to make this a 
reality, and we are on the ground there.
    Senator Hyde-Smith. And we appreciate that. And can you 
tell me the percentage of your workforce that is still working 
from home?
    Commissioner Rettig. Some of our workforce always works 
from home. We have people who have been telework eligible 
forever, but 99 percent of our workforce is working.
    Senator Hyde-Smith. 99 percent of?
    Commissioner Rettig. Is working, but we have taken----
    Senator Hyde-Smith. But you don't know the percentage that 
is working from home? I mean, what was the normal percentage 3 
years ago that was working from home?
    Commissioner Rettig. I would say that we are probably not 
that far away from where we are today. We have thousands and 
thousands of employees who are telework eligible, and some----
    Senator Hyde-Smith. I mean, that the information I am 
getting is 50 percent work from home; is that accurate 
information?
    Commissioner Rettig. I would say that that is low for where 
we are.
    Senator Hyde-Smith. It is higher than that who are working 
from home?
    Commissioner Rettig. You know, our frontline Revenue agents 
don't need to go into an office. Our frontline Revenue 
officers, our IT people will stay at home. Those are telework-
eligible people. We have a bargaining agreement with the 
National Treasury Employees Union as to who is telework 
eligible, and we abide by that agreement. We have all different 
categories.
    Senator Hyde-Smith. Okay. But it is more than 50 percent is 
what you are saying? That that is a low number that works from 
home for the IRS?
    Commissioner Rettig. I would not hesitate to ask you 
something, but also where somebody is working, the physical 
location is mostly irrelevant, quite frankly, other than our 
people who are processing paper.
    Senator Hyde-Smith. That doesn't hinder the process that 
you are trying to accomplish now?
    Commissioner Rettig. Zero. Those folks were back in June of 
2020 socially distanced, working split shifts. The people who 
process the paperwork split shifts, they have been in their 
facilities since June of 2020. The people on the phones are 
telework-eligible. We went into the pandemic with only 3,000 of 
15,000 telephone staff being telework eligible, and then, 
within 2 months, 15,000 of 15,000 people were telework 
eligible.
    Where that helped us was when we had hurricanes, 
earthquakes, snow, where we would shut down IRS facility, our 
employees continued to work from home on the phones, who were--
--
    Senator Hyde-Smith. but that is inaccurate, more than 50 
percent are still working at----
    Commissioner Rettig. I don't have that number. We will get 
you that number.
    Senator Hyde-Smith. Okay.
    Commissioner Rettig. If you want it, either as a question 
for the record, or we will just get it back to you.
    Senator Hyde-Smith. Yes. When you said that was a low 
number, that there is--that that concerned me.
    Commissioner Rettig. I just know where the people are, and 
they are all working.
    Senator Hyde-Smith. And the 2019----
    Commissioner Rettig. If the question is, how many of our 
people are working, more than 99 percent.
    Senator Hyde-Smith. 2019 Report from the Office of 
Personnel Management found that the IRS employees spent 
hundreds of thousands of hours doing taxpayer-funded warrant 
for their labor union. Are you aware of the hours IRS employees 
spend on union time now? That was in 2019.
    Commissioner Rettig. I am not. But we just concluded our 
union contract. We can get you that, but we are locked into 
that by a contract.
    Senator Hyde-Smith. And the IRS employees that dedicate 
time to union activities on the job; is that fair, instead of 
addressing the backlog of returns of unanswered calls? And 
making sure that that is the best way their time is spent?
    Commissioner Rettig. I would like to have every employee 
who is capable of answering phones, or opening or processing 
mail, doing that. I don't know the category of the folks in 
that. And again, all I can say is, we have a union contract 
that I am required to abide by.
    Senator Hyde-Smith. Okay. And the religious freedom is one 
of the greatest cornerstones of our country. And I am really 
troubled to learn of Federal agencies, including Treasury and 
the IRS, tracking Federal employees who request religious 
exemptions. Can you confirm that the IRS is tracking this 
information on religious exemptions? Are you tracking that 
info?
    Commissioner Rettig. This is the first I have heard that we 
are tracking this. The only reason that we had issues with 
exemptions was under the mask mandate, or when we had a mandate 
that people had to be vaccinated or terminated; we had medical 
and religious exemptions. But I have no more information, and 
you can ask me a question for the record.
    Senator Hyde-Smith. Okay, but----
    Commissioner Rettig. But you are the first I have heard of 
it, and I would oppose us tracking any religious information.
    Senator Hyde-Smith. Okay. Well, my time is out again.
    Senator Van Hollen. Well, thank you. Thank you, Senator 
Hyde-Smith.
    Mr. Commissioner, thank you for being here today; I want to 
also take this opportunity to thank you for your service. I 
don't know if you will appear before this subcommittee again, 
but I am grateful for your testimony, and for the ongoing 
partnership with you and your staff.
    And believe that you were committed to doing the very best 
job you can on behalf of the American people in tough times.

                     ADDITIONAL COMMITTEE QUESTIONS

    Our Members will have one week to submit questions for the 
record. Those are due May 10th. And I would appreciate if you 
could--and your team--could get back to us as quickly as 
possible in response to any of those questions.
    With that, this subcommittee meeting is adjourned.
    [The following questions were not asked at the hearing, but 
were submitted to the Internal Revenue Service for response 
subsequent to the hearing:]
    No questions were submitted.
    Senator Van Hollen. Thank you all.

                          SUBCOMMITTEE RECESS

    [Whereupon, at 3:51 p.m., Tuesday, May 3, the subcommittee 
was recessed, to reconvene subject to the call of the Chair.]


 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2023

                              ----------                              


                         TUESDAY, JUNE 14, 2022

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2:37 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Chris Van Hollen (Chairman) 
presiding.
    Present: Senators Van Hollen, Coons, Manchin, Hyde-Smith, 
and Boozman.

                      U.S. DEPARTMENT OF TREASURY

             OPENING STATEMENT OF SENATOR CHRIS VAN HOLLEN

    Senator Van Hollen. All right. Good afternoon. The hearing 
will come to order. And I want to start by saying I am pleased 
to be joined by my Ranking Member, Senator Hyde-Smith, also 
just joined by Senator Manchin, and Senator Coons, I think will 
be returning soon. I want to welcome our witness, Deputy 
Secretary of the Treasury, Wally Adeyemo.
    And Mr. Deputy Secretary, thank you so much for being here 
today and for your work at the Department of Treasury. This 
subcommittee oversees the annual budget for the Department of 
Treasury, including funding for the IRS.
    Just a few months ago, our subcommittee provided the IRS 
with its largest funding increase in 20 years in order to cut 
down on the tax return processing backlog, which continues to 
need to be addressed and to improve service for working 
families. It was a big step forward.
    We know that we need to continue that effort this year. For 
today's hearing, we are going to zero in on the budgets of two 
specific agencies within the Department of Treasury to help 
keep money out of the hands of terrorists, criminals, and other 
bad actors, and help to keep Americans safe.
    The first is the Office of Terrorism and Financial 
Intelligence, also known as TFI. The second is the Financial 
Crimes Enforcement Network, also known as FinCEN. At the 
outset, I would like to cover the special importance of these 
two agencies to America's safety and security, and to the 
safety and security around the world.
    The Office of Terrorism and Financial Intelligence has been 
cracking down on terrorist funding and financing for over a 
decade. The mission of TFI is simple, identify, disrupt, and 
disable criminals, terrorists, and other National Security 
threats to the United States and protect the U.S. financial 
systems from abuse by illicit actors. That work has taken 
center stage in the wake of Vladimir Putin's brutal invasion of 
Ukraine.
    The men and women of TFI have been leading America's effort 
to implement our sweeping sanctions against Russia in concert 
with our allies. Because of the work of TFI and your colleagues 
at the Department of Commerce and State, we have made 
significant strides in cutting Russia off from the world 
financial system.
    Hundreds of international companies have left Russia and 
the IMF projects that Russia's economy will shrink by more than 
8 percent in the year 2022. But Mr. Deputy Secretary, we know 
you know that Vladimir Putin and his cronies will do everything 
in their power to evade the sanctions and to hold on to their 
ill-gotten gains, no matter the risk. Which is why the work of 
the second agency we are here to focus on, FinCEN, is more 
important than ever.
    Since its creation in 1990, FinCEN has been dedicated to 
combating money laundering and safeguarding our financial 
system from abuse. That mission has gained fresh urgency as 
Russian entities and oligarchs attempt to evade America 
sanctions by laundering money and hiding their assets across 
the world. FinCEN is one of the main tools we have to stop that 
from happening.
    So we can see how both TFI and FinCEN are working hand-in-
hand to hold Russia to account. I am pleased and proud of the 
actions that Congress has taken to supply these agencies with 
additional resources that they need to do that job. The omnibus 
bill from fiscal year 2022 included $44 million in emergency 
supplemental funding to help TFI and FinCEN respond to the 
situation in Ukraine.
    And the Ukraine supplemental bill passed this April 
provided an additional $23 million for FinCEN. That is on top 
of the $20 million increase the subcommittee secured for the 
annual TFI budget and the $48 million increase the subcommittee 
secured for the annual FinCEN budget. With those funds, 
Congress increased the budgets of TFI and FinCEN over fiscal 
year 2021 by 26 percent and 76 percent, respectively.
    Today, I hope to hear more about how those monies are being 
put to use. I am proud of the work that the Department is doing 
and that you are doing, Mr. Deputy Secretary, to push back 
against Putin's brutal war, and I want to thank you for your 
leadership. You know as well as anybody that the fight is far 
from over.
    And today, I look forward to discussing how we can 
strengthen sanctions against Russia, avoid leakage in our 
current sanctions, and ensure other countries and foreign 
companies are not taking advantage of the strong sanctions for 
their own financial gain and windfall. Unfortunately, we 
continue to see new reports every day of countries and 
companies that are not just maintaining but actually increasing 
their trade or economic relations with Russia, including 
increased imports of Russian oil.
    We cannot stand by while these countries and foreign 
corporations engage in war profiteering that further lines 
Putin's pockets at the expense of everybody else. I think we 
need to be doing more in this area.
    And as you know, Mr. Deputy Secretary, we are in the 
process of drafting legislation focused on secondary sanctions 
to provide additional muscle and ammunition to this effort. And 
we look forward to any input that you and your team have, not 
just today, but in the coming days.
    These are important topics, and I know Russian sanctions 
have been front page news recently, but it is also a fact that 
TFI and FinCEN's work goes beyond Russia, it is worldwide, and 
I want to thank the men and women at these agencies for the 
work they are doing.
    Just 2 years ago, Congress passed the Anti-Money Laundering 
Act of 2020, which requires FinCEN to establish uniform 
beneficial owner reporting requirements for corporations, 
limited liability companies, and other similar entities, and to 
develop a database so that information can be easily reported 
and shared with law enforcement.
    The basic goal of that effort is to ensure who the real 
owners are often behind anonymous shell companies and prevent 
criminals and others from abusing U.S. corporations to launder 
their money and hide their ill-gotten gains. It is a major new 
undertaking, and the subcommittee provided FinCEN with an 
increase of $34 million to your annual budget in the omnibus 
bill for fiscal year 2022 to address these responsibilities.
    It was the right thing to do, but we all know our work is 
not over. We must continue to support funding for these 
agencies. And I and the Ranking Member have indicated to both 
TFI and FinCEN that they should let us know when they need 
additional resources.
    And that is true as well for you, Mr. Deputy Secretary, and 
the Department. We have got a lot of work to do. Look forward 
to the discussion in this hearing. And let me now turn it over 
to the Ranking Member, Senator Hyde-Smith, for her opening 
statement.

             OPENING STATEMENT OF SENATOR CINDY HYDE-SMITH

    Senator Hyde-Smith. Thank you, Mr. Chairman. And we are 
glad to have you back. Also welcome the Treasury Deputy 
Secretary to our hearing today, and I certainly enjoyed our 
conversation we had on the telephone. We look forward to your 
testimony this afternoon. And today, we will review the fiscal 
year 2023 budget request for the Treasury Department's Office 
of Terrorism and Financial Intelligence and the Financial 
Crimes Enforcement Network, two very critical areas that are 
very important.
    Both offices play a crucial role in collecting and 
analyzing financial intelligence, as well as implementing U.S. 
sanctions. Treasury is requesting significant increases for 
these offices in fiscal year 2023 compared to the fiscal year 
2022 enacted levels.
    This additional funding would be on top of funding received 
from both of the Ukraine supplemental packages and I hope we 
hear more today about how these funds are being spent, 
particularly those that are used to counter Russian aggression. 
And you have publicly stated that the overarching goal of the 
Administration's foreign policy strategy is to end the invasion 
in Ukraine, but right now it appears to be no end in sight, 
even after imposing hundreds of sanctions.
    Several months after invading Ukraine, Vladimir Putin has 
not reversed course and even appears to have doubled down. It 
has become clear that the previously enacted sanctions have 
failed to make Putin feel the pain and that more must be done. 
I would like to reiterate my and the Committee's commitment to 
helping Ukraine and our NATO allies, and I look forward to 
hearing from you today about the proposed budgets and how we 
may actually stop Russian aggression that we all thought would 
only last a few days.
    I cannot end without acknowledging record high inflation 
hardworking Americans are facing and the Treasury Department's 
repeated denial of the state of the economy. I hope today we 
can discuss the current economic outlook and the inflationary 
impacts of this Administration's spending and energy policies. 
Thank you, Mr. Chairman.
    Senator Van Hollen. Thank you, Senator. And as you can see, 
we don't have a court reporter in the room, but it is been a 
live stream. And I understand the court reporter is doing their 
job from offsite. With that, Mr. Deputy Secretary, welcome 
again and the floor is yours.
STATEMENT OF HON. WALLY ADEYEMO, DEPUTY SECRETARY, 
            DEPARTMENT OF THE TREASURY
    Mr. Adeyemo. Well, let me start out by saying thank you, 
Mr. Chairman, and also to Senator Hyde-Smith for the time you 
took to speak with me yesterday, but also for your leadership 
of the subcommittee.
    I recognize that the issues that you deal with in the 
subcommittee are important. They are both about the domestic 
economy, but also about our National Security. And I want to 
thank you and the Members of this Subcommittee for not only 
your leadership, but your support of the Treasury Department 
and for the funding that you provided both in the omnibus bill, 
but also in the supplemental legislation that has been passed 
over the course of this year.
    And as you well know, we meet today at a moment of historic 
significance, facing the largest land war in Europe since World 
War II, as well as making progress in our fight against the 
public health and economic consequences of the most significant 
pandemic in more than 100 years.
    The hardworking men and women of the Treasury Department 
play a central role in addressing these challenges. I want to 
thank these dedicated public servants for what they do every 
day to advance our mission of creating strong economic growth 
and strengthening our National Security across Administrations.
    Over the past 6 months, Treasury has taken swift and bold 
action to hold Russia accountable for its brutal war of choice. 
We view sanctions in service of two objectives. First, denying 
the Kremlin access to the resources needed to prop up Russia's 
economy or invest in its military.
    And second, degrading Russia's ability to project power. 
Sanctions fundamentally are a tool. They are a part of a larger 
foreign policy strategy. And as a tool, these sanctions have 
had an effect on Russia's economy. You need only listen to 
President Putin, or their central bank governor talk about how 
degraded their economy is and the fact that they are going to 
need to transform it in response to the sanctions that we have 
levied today.
    But there isn't--but what we have made very clear is that 
as long as Russia's aggression continues in Ukraine, we are 
going to continue to take sanctions actions to further degrade 
their ability to fight the war in Ukraine, but also to project 
power into the future, and also trying to take steps that will 
deny them access to revenues that they can use to prop up their 
economy going forward or to continue to build out their 
military industrial complex.
    This work is done primarily by individuals at the Treasury 
Department, both in our TFI unit, which is led by Brian Nelson, 
but also by the dedicated men of our Office of Foreign Assets 
Control, as well as FinCEN. In addition to the work that we do 
at Treasury, we have worked internationally to build up 
coalitions that have done things to not only implement our 
sanctions, but also go after sanctions evasion.
    Efforts like the multilateral Russian elite's proxies and 
oligarchs task force have enabled us to identify and seize the 
assets of those supporting Putin and his war, even where those 
assets are hidden using novel and complex structures. These new 
actions and initiatives require substantial resources, from the 
personnel to conduct the analysis needed to target the right 
entities, to the technology and systems needed to mount a 
global response.
    It is critical that the Treasury as a whole be properly 
resourced to carry out these responsibilities, and we are 
grateful for the funding that you have provided us over the 
course of the last year. But in order to continue this work 
into the future, the President's fiscal year 2023 budget 
request includes a $49 million increase in funding for FinCEN 
to add personnel required to implement the Anti-Money 
Laundering Act and to continue to build the systems we need to 
track beneficial ownership and leverage that information to 
pursue critical National Security objectives.
    Second, the fiscal year 2023 budget request includes an 
increase of $50 million for the Treasury Department offices, 
and $135 million for a system wide investment in cybersecurity. 
The budget also includes an increase of $17 million for the 
Office of Terrorism and Financial Intelligence, which oversees 
our National Security priorities, as well as sanctions.
    These funds will be used to add critical staff and make key 
investments in our classified information systems and other 
tools we use to execute U.S. sanctions policy. But of course, 
we know that fiscal resources are finite, and we do not ask for 
these funds lightly. As the Federal agency tasked with managing 
our national--Nation's finances, we at Treasury are acutely 
aware of the need to raise the revenues needed to fund our 
Government.
    That is why we are asking Congress to properly fund the IRS 
and provide it with the resources needed to enforce our 
Nation's tax laws, especially against those who use tax 
shelters, loopholes, and accounting tricks to starve our 
country of the fiscal resources needed to pay for our domestic 
and National Security priorities.
    Today, economists estimate that more than $160 billion is 
lost every year from taxes the wealthiest 1 percent of 
Americans choose not to pay. In total, we will lose 
approximately $7 trillion in tax revenues over the next decade 
due to unpaid taxes. Unfortunately, it is easy to see how the 
situation developed.
    The IRS budget has decreased by more than 15 percent in 
real terms over the last decade, and its workforce is roughly 
the same size as it was in 1974, even though the U.S. 
population has grown by 60 percent and the complexity of our 
economy has increased exponentially. Moreover, the IRS's 
technology is decades out of date, written in a programming 
language no longer taught, and incredibly expensive to 
maintain.
    The master file that under-grids the tax system dates back 
to the 1960s, when there was no Internet, no cell phones, and 
no spreadsheets or automatic payments. To begin to remedy this 
mismatch between the IRS responsibilities and its resources, 
the President's fiscal year 2023 budget request an increase in 
the IRS budget of 12 percent from total fiscal year 2022 
enacted levels.
    We want to thank this Committee for the increase that 
occurred last year, which was the largest increase in more than 
20 years. But we recognize that more needs to be done to bring 
the IRS into the 21st century going forward.
    And we know that working with you, Members of this 
Committee, we can do that in order to make sure that the money 
that we collect at the IRS can be used to fund the priorities 
we have, including our military, our infrastructure, and 
providing for our children.
    I look forward to the conversation and the opportunity to 
answer your questions and work together to make sure that we 
address the Treasury Department's needs and our country's needs 
at large. Thank you.
    Senator Van Hollen. Well, thank you, Mr. Deputy Secretary. 
We are now going to start questions. We will start with 5 
minute rounds. We may go to longer rounds later. And we are 
going to start with Senator Manchin. Senator Manchin.
    Senator Manchin. Thank you for the consideration, Chairman. 
I thank you very much. I have to run to another committee 
meeting, but I would like to ask a question, a couple. The 
Financial Crimes Enforcement Network or FinCEN was first 
established by the Bank Secrecy Act in 1970.
    Since that time, it has found a careful balance in 
successfully monitoring, prosecuting, money laundering and 
other major financial crimes while also maintaining the privacy 
that we need to feel safe entrusting our money to the American 
financial system.
    Last year, I reintroduced my See Something, Say Something 
Act with Senator John Cornyn, which requires social media 
companies to report suspicious activity to law enforcement, 
similar to the way that the banks are required to report 
suspicious transactions over $10,000 or others that might 
signal criminal activity.
    It also creates an Office in the Department--DOJ, to act as 
a clearinghouse for these reports of major crimes, which is 
similar to FinCEN. So, given that my bill adopts the same 
approach as FinCEN for Internet crime, what are some of the 
lessons that you have learned in information sharing that we 
could apply for sharing information about drug trafficking and 
other major crimes online?
    Mr. Adeyemo. Well Senator, let me start out by saying that 
we support the goal that you have outlined there. And I think 
some of the most important lessons that we have learned in 
terms of FinCEN is one around the idea of, as you put it, 
maintaining privacy, but also making sure that the information 
is available to law enforcement widely.
    So the FinCEN database is available to more than 400 law 
enforcement entities throughout the country in order to help 
them connect the dots. Because ultimately the goal for FinCEN--
--
    Senator Manchin. With that, what--sorry to interrupt you. 
With that, what are you all seeing in regards to terrorist 
financing through the social media and the dark web? Since you 
are sharing that information, what are you receiving back?
    Mr. Adeyemo. So, Senator, the place where we have the best 
insight is probably when it comes to the dark web. And I think 
that what we are seeing is that both criminals and those who--
and terrorists and those who want to use illicit finance are 
trying to use every means to get around the formal financial 
system.
    So the more that we can shine a light on these activities, 
the better we are able to protect our citizens against the 
activities that they are taking there.
    Senator Manchin. That leads me right into the next one on 
cryptocurrency. So there is regulations for virtual currency. 
Many financial regulations can still be evaded if money is 
converted to crypto, as you know.
    So my question would be, in addition to the aforementioned 
reporting, what is the Treasury doing to help account for the 
practice and be able to apply current financial regulations on 
cryptocurrency? And what would be your recommendations on 
putting guardrails on crypto?
    Mr. Adeyemo. Senator I think this is one of the places 
where I am increasingly focusing my attention, and I think 
there are some places where we are going to need to work with 
you in terms of legislation when it comes to crypto.
    When it comes to illicit financing, I do think we have some 
rulemaking authority around things like, how do we make sure 
that some un-hosted wallets are regulated, and we make sure 
that we extend a know your customer regime that currently 
exists for traditional banking sector to cryptocurrency.
    In light of what they do, I think it is going to be 
important for us to think through this carefully, but we are 
going to need to do it in order--
    Senator Manchin. But Treasury has always been pretty good 
at people, you know, find people illegally laundering money. We 
have had a pretty good network and be able to check that back. 
FBI has been pretty successful that.
    Crypto has an awful lot of illicit applications, if you 
will, and there are people that have learned to use it very 
effectively. I am sure you all have been watching that to give 
us some recommendations on what you would suggest would be just 
adequate guardrails that would protect the citizen but also 
bring it into mainstream currency. Do you believe there is 
going to be a mainstream currency?
    Mr. Adeyemo. Senator, I have my doubts that it will ever be 
a mainstream currency, but I do think that it is going to be 
used by all kinds of actors, including some people who want to 
illicitly move money. And I think one of the things that we 
have done so far is that we have sanctioned some of these 
crypto exchanges.
    But I think going beyond sanctions, we do need to make sure 
that our regulatory rules expand in order to cover them. And 
where we find that we can expand our rules, we are going to 
want to work with you to design legislation that gives us more 
authority.
    Senator Manchin. Thank you, Mr. Chairman. Appreciate it.
    Senator Van Hollen. Senator--Senator Hyde-Smith.
    Senator Hyde-Smith. Thank you, Mr. Chairman. And Mr. 
Adeyemo, as we have discussed, I remain really concerned about 
the number of employees on telework status, and it is the 
utmost importance that we bring these employees back to the 
office, as we discussed on the phone.
    And it really leads from another incident that happened 
with another agency this week when I realized there are so many 
people at home and I have constituents tell me that no one is 
answering the phone in these other agencies. But what 
percentage of Treasury employees are currently teleworking? 
Does that include the IRS?
    Mr. Adeyemo. So, Senator, in terms of Treasury employees, 
at the moment, we have every employee has a plan--every 
employee at the Departmental offices is required to have a plan 
in terms of how often they will be in the Treasury Department.
    Senator Hyde-Smith. So how many are teleworking?
    Mr. Adeyemo. So Senator, I can't tell you today how many 
employees are in the office versus which ones are teleworking. 
But what I can tell you is that any employee that needs to be 
in the Department, anyone who works on National Security or 
anyone who needs to be in the office, is in the office.
    What I can say is that before even the pandemic, a number 
of employees of the Treasury Department either had telework 
plans or work from alternative locations. For example, if you 
worked on IT, you didn't necessarily work in the Treasury 
Department building. Sometimes you worked in an offsite 
location.
    But for example, anyone who is working on any of the 
National Security issues that we are discussing today, those 
individuals have to be in the office because you can't do that 
work from home. So they are there on a regular basis. Even 
before I came back to the Treasury Department last year, 
Treasury employees were coming back into the office.
    For example, at the IRS, individuals who opened the mail, 
they came back to work, back to the office in July of 2020, 
long before we had a vaccine, and since then, they have been 
ramping up the number of people who have been in IRS offices 
throughout the country. In addition to those employees, we have 
employees who have been back since the summer of the pandemic 
helping to do things like print currency.
    And today, our goal is to make sure that we are having 
every employee who needs to be in the office, in the office, 
and that we are making sure that we are monitoring 
productivity. My goal is to try and optimize what we are 
getting out of our employees so that the employees we need in 
the office are in the office--
    Senator Hyde-Smith. Okay, my time is running a little short 
here, if you don't mind me interrupting you. And what was the 
pre-pandemic percentage of Treasury employees that teleworked? 
Before COVID and anybody had the need to do that, what was the 
percentage of your employees or the employees at the Department 
that were working from home before the pandemic? Not the 
ability to, but the ones that were doing it.
    Mr. Adeyemo. So Senator, I can get you that data, but I 
think that my understanding is less than 20 percent of 
employees were working from home before the pandemic. And 
today, I think that you probably find that we are in the same 
neighborhood in terms of people who full time work from home is 
probably still less than 20 percent of time.
    We do have a number of employees who have hybrid schedules, 
who come into the office maybe 3 to 4 days a week and work from 
home maybe 1 day a week. But the thing that we have now that is 
better than before the pandemic is we have better technology 
that allows us to both make sure that they are fully engaged in 
their work, but also allows us to make sure that we don't need 
to request additional space.
    Because one of the challenges we have at Treasury is that 
we have limited space. So by being able to have a bit of 
flexibility, we are also able to manage our space better so 
that we don't have to rent additional space.
    Senator Hyde-Smith. Do you intend for the Department to go 
full time, no one working from home unless it is absolutely 
necessary? Or do you continue to plan to have about 20 percent 
at home?
    Mr. Adeyemo. So, Senator, I don't have a target in terms of 
the percentage. My goal is to make sure that anyone we need in 
the office to do their job is in the office full time, and then 
for other employees to make sure that they are in the office as 
needed, partially because I think that from my standpoint, that 
gives us the flexibility to both optimize space, but also to 
optimize retention.
    What we found was in some of the positions when we required 
them to be full time, for example, in some of the HR 
operational functions, we were losing some of those employees 
to places where they would have flexibility in their 
employment.
    So if we had the ability to give flexibility because we 
don't need the person to be in the office, they are working in 
HR, they are working in IT and things where they don't need to 
interact with other employees, we may give them flexibility 
going forward. But my goal and the thing that I appreciate is 
making sure that when we need people in the office, we have 
them in the office full time.
    Senator Hyde-Smith. Well, I just feel the FT, when they 
fill out that application means full time and in the office for 
any Federal Government employee unless it is absolutely 
necessary that they are not there.
    Because we just had a lot of issues with constituents in my 
office dealing with people who are not at work. And I just hope 
you have got the controls in place to ensure that they are 
working when they are teleworking. And how do you monitor that?
    Mr. Adeyemo. So one of the things that we have had to do is 
do training with managers to make sure that they are monitoring 
employees who are working from home to ensure that they are 
working.
    But in addition, one of the things that we did when we came 
into this Administration was we made investments in 
technologies like Zoom so that instead of just doing conference 
calls, we would be able to see people to make sure that when we 
are in meetings, we can see them in order to make sure that 
they are engaging.
    If, Senator, there are issues that your constituents have 
with regard to Treasury employees, please feel free to bring 
them to me. But I think one of the things that we have been 
very focused on is making sure that we are training our 
managers to supervise employees who may be in the office 1 day, 
may not be in the office the next day in order to make sure 
that we are able to do things in a hybrid fashion.
    I think that you are right that this is one of the 
challenges we face, but it is frankly a challenge that 
private--when I talk to CEOs, all of them are dealing with this 
as well in terms of how do I have a hybrid workforce, because 
that is the only way we are going to be able to recruit the 
talent that we need.
    But I want to reassure you that for positions where people 
need to be in the office, we are requiring them to be in the 
office full time.
    Senator Hyde-Smith. But does that give the managers extra 
duty that they are having to spend extra time on it to go to 
this training and to spend the time to ensure they are working 
from home? Doesn't that make the manager have more 
responsibilities throughout the day?
    Mr. Adeyemo. My sense as a manager myself in the 
institution is that, no, I don't think it increases your 
duties. What it does is, for example, how do you run a hybrid 
meeting? And it is something that we have had to do regardless.
    You are going to have to learn how to do regardless, 
because frankly, we never--at Treasury, all of the same people 
don't work in the same building. So if you are a manager, you 
may be managing people who work in main Treasury, but they may 
also have employees who work in West Virginia or work out of 
State or work in a foreign country if you are working 
international sections.
    So you have had to do this work already in terms of having 
to deal with some employees who are sitting in front of you, 
and some employees were sitting in different offices. Now, 
instead of sitting in a different office, they may be sitting 
in their home. But ultimately, the type of responsibilities are 
the same. We have increased the training because now we have 
new technology that is helping to make that easier to do.
    For example, you are not just talking to them on the phone 
anymore. Now you are able to talk to them on Zoom or use other 
products. But ultimately, these are the type of 
responsibilities that if you are a manager in a global business 
or in a global--in a global Federal agency like the Treasury 
Department, you are going to need in order to advance.
    Senator Hyde-Smith. Okay. One last thing. So you are 
telling me that about 20 percent were working from home before 
the pandemic and you have got about 20 percent that are 
currently working from home now, is that correct?
    Mr. Adeyemo. So, Senator, I want to get you the precise 
number. Please give me time to come back to you. That is what I 
believe--that is where I would estimate it to be. But I want to 
make sure that I give you precision on that. And I am committed 
to coming back to you with that after this hearing.
    Senator Hyde-Smith. Thank you.
    Senator Van Hollen. Thank you, Senator. And the Ranking 
Member anticipated the fact I was going to go to 8 minute 
rounds next. And so we will do that back and forth just so that 
we can get into some in-depth questioning, which I think is 
helpful. Mr. Deputy Secretary, as you know, in order to ensure 
that Putin's invasion of Ukraine is seen as a strategic failure 
by history, we are going to require a sustained effort.
    And that means making sure that Ukrainians have the 
military support they need, and it also means making sure we 
have an effective sanctions regime. So I want to cover a couple 
areas where I am very worried about leakage in sanctions. Some 
of the--we don't have secondary sanctions in place right now 
for the most part, but it seems to me we want to explore that 
option going forward.
    So I want to start with military, supporting countries or 
entities around the world that may be supporting the Russian 
military. You, at the Department of Treasury, have already 
applied a list of sanctions. As we gather here today, do you 
know of any countries or companies, foreign companies that are 
violating our sanctions regime with respect to support of the 
Russian military?
    Mr. Adeyemo. Senator, as I sit here in front of you today, 
I can't speak to any companies that I know of that are 
wittingly assisting Russia in violating our sanctions regime. 
But what I do know is that Russia is attempting to find ways 
around our sanctions regime by setting up trusts and proxy 
companies that would allow them to purchase the things that 
they are not allowed to purchase legitimately.
    Senator Van Hollen. So as of today, you don't know, for 
example, whether any Chinese entities are supplying Russia with 
weapons systems or components that are sanctioned by the United 
States?
    Mr. Adeyemo. No, I don't.
    Senator Van Hollen. And I understand that we need to, you 
know, track the efforts by the Russian military to set up, you 
know, front groups and other entities to disguise their 
efforts. The Department of Commerce, of course, also has a list 
of components that we are preventing the export to Russia of, 
and that has a sort of long arm impact.
    And I saw in June that they would put together an expanded 
entities list of companies, countries that would be barred from 
export of certain U.S. origin items. Does the Department of 
Commerce have any authorities, or do you have any role in 
implementing the Department of Commerce's sanctions, or is that 
done strictly through the Department of Commerce and DOJ?
    Mr. Adeyemo. So, Senator, that is done by the Department of 
Commerce, and I believe with assistance from DOJ. But in lots 
of circumstances, what we have done is work together with 
Commerce to figure out where export controls can play a role 
and where sanctions can play a complementary role. So if they 
put something on the export list, we may also go out and 
sanction companies that produce that thing in order to make 
sure that we help best address evasion.
    Senator Van Hollen. All right. Let me turn now to the 
energy sector, because, as you know, energy exports represent a 
large part of the Russian economy. Do you have a ballpark 
figure of what portion of the Russian economy is reflected in 
those exports, coal, gas, oil?
    Mr. Adeyemo. So in terms of Russian exports, the vast 
majority of them come from commodities, Senator.
    Senator Van Hollen. So we, of course, in the United States 
have now, you know, borrowed our--we are not importing Russian 
oil. We know that the EU is working diligently, I believe, 
toward trying to phase out their dependence on Russian oil. We 
need to move on the gas front as well.
    But there are countries that are not only continuing to 
maintain imports of Russian oil at the levels they were before 
the war but are increasing their overall imports of Russian 
oil. Can you talk about some of the countries that are at the 
top of that list?
    Mr. Adeyemo. So, Senator, it is--one of the challenges we 
have is that we don't have direct data in terms of what this 
looks like because a great deal of the oil is sent in means 
that don't allow us to produce it. But we know that the data we 
have seen is that countries that have traditionally imported a 
great deal of Russian oil include Europe, but also China, 
India, Japan, and South Korea, and Turkey.
    Senator Van Hollen. Right. But I am looking specifically at 
countries that have increased their volume of oil imports from 
Russia. And as I look at the list, China is on the list, India 
is on the list. Maybe a few other countries are on the list. Do 
you know of any other countries that have increased their 
volume of imports of Russian oil since the war began?
    Mr. Adeyemo. No, I don't. Senator.
    Senator Van Hollen. Okay. And would you agree that those 
countries that have increased their volume of imports of 
Russian oil are, in a sense, engaging in war profiteering? That 
they are benefiting from the fact that countries like our EU 
partners have reduced their imports of Russian oil.
    Mr. Adeyemo. So, Senator, I think part of what we--so, I 
think that what I would say is that right now we are in a place 
where what our goal has got to be is to find ways to limit the 
amount of revenue that Russia is making off the sale of its 
oil, partially because one of the challenges with oil is that 
you don't always know where it is coming from.
    So there may be--some of these countries may be aware that 
the oil that they are getting is directly from Russia. But what 
we have seen in the context of other sanctions programs is that 
countries do, once sanctions extend to energy, they try and 
disguise where the energy is coming from.
    So the thing that I am increasingly focused on is what can 
we do not only to stop Russian oil from flowing to our country 
and to other countries that are in our alliance, but as it 
continues to flow, how do we reduce the revenue that Russia is 
making?
    What we know today is that Russia is selling less oil in 
terms of per barrel than they were before the invasion. But 
because of the increase in price, they may be making more 
profit. So the goal for us is really to reduce that revenue 
level even as countries may purchase Russian oil going forward.
    Senator Van Hollen. So how do you do that, right. I mean, 
can you talk about your plan? Because, you know, right now we 
have a situation, whereas I indicated, and there is plenty of 
public reporting on countries that have increased their imports 
of Russian oil since the war began, and they are buying it at a 
discount, right.
    So, you know, consumers in that country are benefiting from 
the discounted oil prices, while consumers in other countries 
that are not importing as much Russian oil compared to their 
pre-war levels are seeing higher prices.
    How can we make sure that some consumers around the world 
aren't benefiting getting a windfall from reduced prices of 
Russian oil while others are paying more? How do we do that?
    Mr. Adeyemo. Yes, I think, Senator, the challenge, of 
course, is that while they are paying a discount, the truth is 
that they are paying more today from Russian oil than Russia is 
making off of their oil before the invasion because the price 
of oil in general has went up. So one of the things that we 
need to do is increase production, which is something we have 
been focused on.
    But I think that there are a number of options in terms of 
reducing Russia's revenue. There are things like introducing a 
price cap, which has been talked about in the academic 
literature in terms of a price cap, in terms of how much can be 
paid for Russian oil. There is also the idea of over time 
limiting the amount of Russian oil that can be sold.
    But all of this from our standpoint, the chief objectives 
that we have are, one, celebrating the fact that Europe has 
taken this important step in their six package to limit their 
dependance on Russian oil. Number two is, what can we do to 
limit the amount of revenue that Russia is making?
    And our final goal is making sure that we don't spike the 
price of oil overall in order to make sure that our consumers 
don't bear the cost of what we are doing here. And I think 
there are ways for us to do that in terms of looking at things 
like potential capping the price of Russian oil going forward, 
or over a period of time, reducing the amount of Russian oil 
that is able to be sold.
    But we want to make sure we do that in a manner that is 
consistent with our allies and partners. I think the fact that 
Europe is taking this important step over the next several 
months is going to put us in a position to make sure that 
Russia can't use oil as a strategic weapon against Europe going 
forward.
    Senator Van Hollen. Thank you. Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman. Thank you, 
Ranking Member--I got to get situated--Hyde-Smith, for having 
this hearing. Thank you, Mr. Secretary, for being here. I would 
like to start by asking you a few questions about beneficial 
ownership and FinCEN rulemaking. As I am sure you would agree, 
complex definitions of beneficial ownership will be hard for 
small businesses to implement. Is this something FinCEN is 
considering in its rulemaking?
    Mr. Adeyemo. Senator, yes, it is top of mind for us in the 
rulemaking is making sure that we in term--we think about the 
regulatory burden on small businesses all over the country.
    Senator Boozman. Very good. Will FinCEN work to more 
closely align the beneficial ownership definitions with those 
that currently exist and that businesses already have 
experience providing information on?
    Mr. Adeyemo. Yes. Yes, Senator. And I know that we, as you 
know, we put out a proposed rule. And as part of that, we 
received comments from small businesses and their associations. 
And we are currently considering those because we want to make 
sure that the final rule addresses some of these comments that 
we have received.
    Senator Boozman. Very good. Also, will you work to minimize 
the reporting burdens on small businesses by allowing financial 
institutions to rely on the registry for their beneficial owner 
collection and verification requirement?
    Mr. Adeyemo. So, Senator, we share that--we share your goal 
in terms of reducing the burden. I think that there is one 
rulemaking that we have already done. The second one is around 
CCD--CDD.
    And I think we want to make sure that we align those as 
closely as possible, but we are still going through the 
rulemaking process. But I can tell you that we share the goal 
in terms of making sure that people don't have to report 
numerous times the same information or slightly different 
information going forward.
    Senator Boozman. Good. Thank you. Let's talk a little bit 
about the Treasury market. As you know, the Treasury market has 
been described as the biggest, deepest, and most essential bond 
market on the planet.
    Historically, investors view treasuries as risk free or 
near cash assets and safe havens during market crisis. However, 
the resiliency of the Treasury markets has been called into 
question by recent disruption events in which market price 
volatility increased and the amount of available liquidity 
decreased.
    As a result, some market observers have called for 
structural and regulatory changes to enhance the capacity and 
resiliency in the market. While the Treasury Department 
continues to study possible reforms, it is important to ensure 
that reforms do not harm the market and do not cause unintended 
ancillary effects.
    I believe that any proposals or recommendations on any 
structural regulatory changes should be vetted and supported by 
investors. In that light, where is the Department in its review 
of Treasury market structure? Do you expect to put out reforms 
or recommendations? And if so, how far are you in the process?
    Mr. Adeyemo. Senator, to your point, I agree that we want 
to make sure that we consult with stakeholders as we think 
through these reforms. That is why we announced recently that 
we are going to put out a request for information which will 
give the private sector and other stakeholders an opportunity 
to provide us with advice as we think through our reform agenda 
going forward.
    Late last year, we put out a framework in terms of the 
areas that we are looking to focus on with regard to reform, 
with the idea being that you are right, that the Treasury 
markets are the deepest, most liquid in the world.
    The United States takes a great deal of benefit from this. 
And what we want to do is make sure that the reforms we make 
will only strengthen those markets. And in order to do that, we 
want to make sure that we rely on information from market 
participants as we go forward.
    Senator Boozman. Do you have any ideas how you will 
actually get the views of the investors?
    Mr. Adeyemo. Yes, Senator. I think one of the things we are 
going to do is that we are going to put out a request for 
information where they can formally provide us with detailed 
feedback in terms of how they think we should think about 
reform through an open process that they can formally use.
    But in addition to doing that, we are, of course, speaking 
to market participants on a regular basis to hear from them in 
terms of the reform agenda as well, and working closely with 
the regulators as well.
    Senator Boozman. Very good. I also wanted to touch on anti-
money laundering, AML. As you know, FinCEN recently issued an 
RFI reviewing AML regulations and guidance under Section 6216 
of the Anti-Money Laundering Act.
    What are your intended steps, and can you preview some of 
the proposals you will be making in your Congressional report 
to eliminate outdated, redundant, or non-risk based AML 
expectations?
    Mr. Adeyemo. So, Senator, I think part of our goal here is 
to implement what U.S. Congress passed as part of the in terms 
of the anti-money laundering and beneficial ownership laws. But 
as we do that, to also step back and to think through now that 
we are building out this regime, which is going to allow us to 
be comprehensive, what does it allow us to do in terms of 
eliminating some of the things that we have done previously as 
stopgaps?
    And what we are hoping to do is that as we build--we have 
at the moment two more--we are going to put out a final rule 
with regard to the beneficial ownership rule we were talking 
about earlier. And we are also going to put out information in 
terms of how we are going to build out the database. And I hope 
that at that point it will put us in a position where we can 
look back and say, based on this, how do we think through our 
regulatory approach going forward?
    We look forward to working with you and the Committee on 
this and providing greater information to industry and to 
stakeholders in terms of what this will look like going forward 
once we have completed the rule makings regarding beneficial 
ownership.
    Senator Boozman. Very good. I am also concerned about 
potential rule makings around artificial intelligence in the 
insurance industry. As I am sure you know, is used in insurance 
to price risk, manage operations more efficiently, and detect 
and predict fraud.
    All of these are aimed at inclusivity in the market and 
work in tandem with the use of actuarial risk based pricing, 
and ensures all policyholders are paying the lowest possible 
premium. Further, since AI affects a consumer's insurance 
coverage, insurers are already highly regulated and are 
obligated to explain and justify decisions to customers.
    Significantly, the EU is currently in the process of 
finding finalizing a regulation designed to harmonize rules on 
AI. According to the EU, the purpose of the regulation is to 
improve the functioning of the internal market by laying down a 
uniform legal framework for the development, marketing, and use 
of AI in conformity with EU values.
    My concern is that creating new regulations for AI used by 
insurers who are already subject to regulatory frameworks which 
address the concerns would lead to regulatory duplication that 
ultimately hurts policyholders. I guess the question is, does 
Treasury have any plans to engage with the EU on this topic?
    Mr. Adeyemo. So Senator, this is a topic that I am not 
familiar with, but now that you have raised it, I am committed 
to going back to my staff and talking about it and finding out 
where we are with regard to the EU, and then we will follow up 
with you.
    Senator Boozman. Well, based on your answers to the other 
questions and the good job you have been doing, I am surprised 
that we caught you in one that you didn't have any knowledge 
of.
    Mr. Adeyemo. Well, I appreciate you bringing it up to me, 
because it does sound like an important issue and one that I 
will pay attention to and come back to you shortly on.
    Senator Boozman. No, we appreciate that. Thank you, Mr. 
Chairman.
    Senator Van Hollen. Thank you, Senator. And thank you, Mr. 
Deputy Secretary. I want to push you a little bit more where we 
left off in our question with respect to Russian oil revenues. 
I am looking at a piece that was in The New York Times 
yesterday titled, Russia's Oil Revenue Soars Despite Sanctions 
Study Finds.
    And they cite a study from the Center for Research on 
Energy and Clean Air out of Helsinki, Finland, that points out 
that while the EU reduced its imports of Russian crude by 18 
percent in May, that dip was made up by India and the United 
Arab Emirates, leading to no net change in Russia's oil export 
volumes.
    And they point out that China continues to be the largest 
importer of Russian fossil fuels overall over the 100 day 
period they looked at. And as you know, Secretary Yellen has 
been talking about this idea that you referenced today about 
essentially, you know, countries forming a bloc that would 
negotiate, demand a price reduction in Russian oil, because 
right now we have the totally unfair situation where some 
countries are getting bargain prices by increasing their 
volumes and helping offset the pressure on Russia that the EU 
and others have put in place.
    So could you just talk a little bit more about how this 
design would work? Because we need to figure this out pretty 
quickly. And if not, we are going to have to be applying 
secondary sanctions and maybe having to apply secondary 
sanctions as part of getting more countries on board. Can you 
just spell out in a little more detail what you are thinking of 
at the Department?
    Mr. Adeyemo. Yes, I am happy to do that, Senator. I think 
part of this I will reserve for maybe a classified setting, but 
I am happy to talk to you about this in detail. But I think 
part of the goal here is that fundamentally at the moment, as 
you know, energy prices are far higher post-invasion than 
before invasion.
    And even if you are buying Russian crude at a discount, the 
price you are paying for Russian crude today is higher than you 
paid pre-invasion. So even there, if there is a discount, the 
truth is that Russia is making more today off of crude than 
they were pre-invasion.
    And our analysis at least tells us this is slightly 
different than what you have seen in The New York Times, that 
Russia is probably not producing as much crude as they were 
pre-invasion, but they are potentially making more resources--
more revenues because they are selling at a higher price.
    So the goal is to make sure that you reduce the price that 
they are able to gain from selling their crude going forward by 
working with other countries to agree to a certain level that 
you will pay for Russian crude going forward.
    It really is trying to make sure that you are in a place 
where Russia is not benefiting from the fact that because of 
their invasion of Ukraine, prices of not only Russian crude, 
but crude in general have gone up.
    This is something that we are talking about with our allies 
and partners. And I think I am happy to brief you in more 
detail about in terms of where those conversations stand in a 
classified setting.
    Senator Van Hollen. Okay. Let me turn to the sanctions that 
we have imposed on Russian oligarchs who have been complicit 
with Putin and other corrupt actors. And as you know, this is 
also an area where sanctions are only as effective as our 
ability to stop those oligarchs from being able to hide their 
assets in other places. Sometimes they do it surreptitiously.
    Sometimes they do it in countries that are willing to look 
the other way. Can you talk a little bit more about that 
effort? To my knowledge, we have not imposed any secondary 
sanctions on any other countries or entities. I know we have 
given some warnings, but I continue to read about 
circumvention.
    In fact, you were yourself quoted in the May 13 New York 
Times piece saying that you have seen a number of Russian 
yachts move from ports in countries that have extended 
sanctions to countries that haven't.
    And that same article mentioned the UAE, especially Dubai, 
as one of these destination points. What are we doing to make 
sure that we are having an effective sanctions regime on 
oligarchs who can, you know, take their yacht from port to 
port?
    Mr. Adeyemo. And Senator, what I will do is I will make 
sure we send this to you. But a few weeks ago, we actually put 
sanctions on a yacht servicing company. So this was us using 
the material support provision of our sanctions to go after a 
company that we found that was providing material support to 
the yachts of those who had already been sanctioned.
    So we have actually went after companies in third countries 
where we have seen them providing material support to those who 
have been sanctioned, using our--using the sanctions authority 
that has been given to us by Congress and by the President.
    I think what we have been trying to do, in addition to 
using our material support provision, is building a coalition 
with other countries that will not only be in a position to 
freeze some of these assets, but actually to seize them going 
forward. And we have seen the seizure of a number of property 
tied to many of these Russian elites, not only here in the 
United States, but around the world, which is different in kind 
than what we have seen in other sanctions programs.
    And our goal here is to make sure that we strengthen this 
coalition so that it is not just our traditional allies, but we 
also have partners that are joining us in this effort so that 
these Russian elites know that there is not a place where they 
can hide their assets outside of the realm of the sanctions 
that we and 29 other countries have implemented.
    So we have already started to take action in third 
countries. We are planning to take more. Part of our goal is to 
have conversations with not only financial institutions, 
because I think what we have found is that financial 
institutions understand the scope of our sanctions. We haven't 
largely seen financial institutions that have been willing to 
do business with individuals or entities that have been 
sanctioned.
    But when it comes to other companies in an economy, be it 
companies that help service yachts or planes or deal in real 
estate that aren't as familiar with our sanctions regime, that 
is the place where we have had to act, and we have had to spend 
time with authorities and also with those companies to explain 
to them that ultimately the providing material support to an 
individual or an entity that has been sanctioned could make you 
subject to sanction.
    And we have used that authority already in third countries, 
and we think that doing that has sent a clear message to these 
companies that ultimately, if you provide material support, no 
matter where you are, we are going to be willing to use our 
sanctions authority to go after you.
    Senator Van Hollen. All right. I look forward to following 
up with you and your team. I am about to turn to another 
category of questions, so why don't I--Senator Hyde-Smith, I 
don't--let me turn it over to you. I don't know if you have 
another round of----
    Senator Hyde-Smith. I do.
    Senator Van Hollen. Absolutely.
    Senator Hyde-Smith. Thank you very much. Let's talk about 
the Bank Enterprise Program. It is pretty popular in 
Mississippi, and it is well received by local banks and credit 
unions because it allows them to leverage their own assets to 
invest in the small businesses and the startups, which gives 
them the ability to support job creation and retention in areas 
that really need it in a lot of States.
    But I was really disappointed to see that the budget cuts 
from the Bank Enterprise Program by $11 million from the fiscal 
year 2022 enacted level. What were the reasons for these cuts?
    Mr. Adeyemo. Senator, let me start out by sharing your 
commitment to these communities where the Bank Enterprise 
Program has been effective in helping. And I think what we are 
trying to do is figure out where we can most effectively put 
the limited dollars that we have available to have the impact 
that we both care about.
    As you know well, in many of these communities, you have 
CDFIs and MDIs that are also doing business there. And what we 
have done, based on the funding that Congress provided us, is 
provide a great deal of capital to these institutions. So more 
than 9--about $9 billion of capital through the Emergency 
Capital Investment Program went to CDFIs over the course of 
this year that we have placed in them.
    In order to make sure that that money is invested well, we 
have asked for additional money for the CDFI program to help 
monitor but also provide resources to those institutions. I 
think I am happy to talk to you about how we are thinking about 
this, but I think our goal largely is to make sure that we are 
building up an ecosystem there that is based on providing 
resources to those lenders, then also ensuring that we have 
provided support to them.
    So it wasn't--our goal is not to step away from these 
communities, but rather to try to most effectively to provide 
funding to them going forward.
    Senator Hyde-Smith. So I think he just answered the program 
is oversubscribed compared to other programs because it is so 
popular. But how do you intend to support investments in 
economically distressed areas with reduced funding? I mean, you 
are saying you are going in another direction and how do you 
expect that to compensate?
    Mr. Adeyemo. Well, Senator, I think our goal is to make 
sure that on top of the public money that Congress has provided 
to these communities, that we attract private money as well. So 
the--our goal, similar to what we are doing with the Small 
Business Credit Initiative, is to make sure that we attract 
private investment into these communities, because we know that 
that is the sustain--is a sustainable way to make sure that 
they have the access, the resources they need.
    We think that we have a real opportunity to do that, 
working closely through our CDFI office with the money that you 
have already provided. And that is what we would want to do 
here, is to ensure that in areas where there is a need for 
additional capital because all these programs are 
oversubscribed, that we would work to attract private capital.
    Senator Hyde-Smith. And what is the status of the 2022 
grants right now?
    Mr. Adeyemo. Senator, I would have to get the team to 
provide you with an update on where we are in the grant making 
process at the moment, but we haven't completed it. But I am 
happy to get you--to provide you with an update after this 
hearing.
    Senator Hyde-Smith. Has it been implemented well, or I 
mean, do you have any idea if it has been beneficial or----?
    Mr. Adeyemo. So my view is that, as you know well, this is 
a program that has been very popular and has been implemented 
well by staff across Administrations, and that continues to be 
the case. I think my overarching goal is to make sure that 
across the suite of programs that Congress has authorized, we 
take your resources, and we try and find creative and 
interesting ways to try and pull the private sector in as well 
to crowd in private capital.
    Because ultimately, what we know about these communities 
where we have these programs right now is that they have 
unfortunately been starved of the type of private capital that 
is needed to building housing, to starting small businesses, to 
making sure that those small businesses can thrive.
    So a big push from my standpoint, from Secretary Yellen's 
standpoint, is what can we do to take the resources you have 
provided and use them in a way that attracts private capital to 
join them in a way that is sustainable over time?
    Senator Hyde-Smith. And the--one other thing I wanted to 
talk about was the, in February, Treasury received the $61 
million in the supplemental funding to address the war in 
Ukraine and the Russian invasion. About a month ago, an 
additional $52 million was provided to the Treasury in the 
second Ukraine supplemental appropriations package. So how much 
of these funds right now have been obligated?
    Mr. Adeyemo. So, Senator, I don't have the precise number 
in terms of the obligated amount today, but I am happy to get 
that to you. But I can tell you that money has been used. We 
have done really two things with that funding. One, is invest 
in additional personnel, and two, is invest in technology.
    On the personnel front, one of the things that we have 
needed is additional people to help, not just in the 
traditional areas where we have dealt with sanctions in the 
past but given the complexity of Russia's economy and how 
interconnected it is with the global economy, we need 
additional staff in places like economic policy to help us do 
economic analysis on how we can better target Russia's economy 
while mitigating the impact on our economy.
    Given how interconnected Russia is to the financial system, 
we have needed additional resources in domestic finance so we 
can understand the interconnections between Russia's financial 
system and our own financial system.
    When it comes to technology, a big deal--a great deal of 
what we have had to do is invest in technology in places like 
FinCEN, because one of the things we want to make sure is that 
the information that we are collecting on Russia and on the 
illicit behavior that they are conducting is analyzed and 
provided to law enforcement in our country, but also to our 
partners around the world.
    So we have made huge investments both in personnel and in 
technology, in order to put us in a position to better address 
what is happening in Russia, Ukraine, and also in prosecuting 
some of the criminal enterprises that we are seeing develop 
around this.
    As I mentioned earlier, one of the things that Russians 
have perfected in terms of evading our sanctions is setting up 
proxies and trust companies that allow them to get around our 
sanctions, and that is around the world. So we are doing 
everything we can to go after those as well.
    Senator Hyde-Smith. So you have done a lot. So would you 
think that over 50 percent have been allocated--obligated so 
far?
    Mr. Adeyemo. So, Senator, I think--I want to make sure that 
I come back to you with a precise number in terms of how much 
has been obligated. But I do know that one of the things that 
we have been focused on is both getting the technology in place 
as fast as possible and hiring people as quickly as possible. 
In terms of when that has gone from being in the budget to 
actually being obligated, I want to get you precise numbers.
    Senator Hyde-Smith. Thank you.
    Senator Van Hollen. Thank you, Senator. Mr. Deputy 
Secretary, we have talked a little bit in this hearing about 
the updated Corporate Transparency Act, as well as the broader 
Anti-Money Laundering Act, which I think are important 
authorities and tighten the regime that we have to prevent 
people from anonymous ownership of different companies in the 
United States.
    But I am concerned about what I see as a loophole in that 
overall architecture with respect to private investment 
companies like hedge funds who are exempt from reporting 
information on the identity of their clients, as we require for 
banks, mutual funds, and other parts, other segments of the 
financial sector.
    As I understand it in any way, under current law, a hedge 
fund manager can manage large sums of money without knowing the 
real identity of their investors, which would allow corrupt 
actors to evade sanctions.
    My understanding is the Department of Treasury has 
authority to require these private entities to report on the 
identity of their clients. Let me first ask if that is your 
understanding. Do you have that authority?
    Mr. Adeyemo. So Senator, my understanding is that in the 
legislation, Congress did provide an exception for certain 
businesses. I think the scope of that exemption is something 
that we are still working through in terms of the rule writing 
process.
    My goal, of course, is to try and cover as much of the 
world as possible with regard to the beneficial ownership rule, 
because the last thing we want is to create avenues for illicit 
money to flow. But I don't want to get ahead of the rulemaking 
process. What I can commit to you is that we are going to be as 
expansive as we are legally permitted to do.
    And if we find that ultimately we can't get at some of the 
companies that exist in our ecosystem, and we think that there 
is--that that is a place where illicit money might flow, we 
will come back to Congress and request that you take additional 
action.
    Senator Van Hollen. Well, let me ask you, how do we know? 
Do we have any idea what the magnitude of this loophole might 
be?
    Mr. Adeyemo. So, I think the real question, Senator, is how 
broadly can we define--how broadly are we legally permitted to 
define this? And then the question becomes, how big is the 
ecosystem that exists outside? It is going to be hard to know 
how much illegal money is flowing into that part of the 
economy. And the thing that we also know is that, if there are 
things that aren't covered by the beneficial ownership rule 
making, it is more likely that illicit finance will flow in 
that direction.
    So we are going to be in a place where, no matter what, I 
think we are going to need to come back to you as we see this 
develop to talk to you about whether we are going to have to 
further change the rule. And if we don't have the ability to 
change the law because we lack the legal authority, what 
additional legal authority that we need.
    But what I can say is that because of the legislation that 
you have passed, we are in a better position to make sure that 
we root out illicit finance within our country. But we also 
know based on other countries that have put in place beneficial 
ownership systems, is that at the edges where the rulemaking 
doesn't allow you to go is where illicit finance will start to 
flow. So we are going to need to think about this in multiple 
approaches.
    One is finalizing the rule based on the authority that 
Congress has already given us, and then seeing if we have the 
ability to use other rulemaking authorities to get at places 
where we see potentially illicit finance flowing. And if we 
don't, coming back to you and the members in terms of getting 
additional authorities.
    Senator Van Hollen. No, I appreciate that, right. Because 
you can shut one door and just opens the other door. And as you 
point out, if you are an illicit actor, you are going to look 
for the other open door and push on that.
    Can you give us an idea, your timeline here in terms of the 
rule and your determination of the extent of your authorities 
under existing law and what other authorities, if any, you may 
need? Your timeline there.
    Mr. Adeyemo. As you would expect, our notice of proposed 
rulemaking, we got a lot of comments from industry and our goal 
is to make sure that we carefully consider each one of those as 
we finish up the rulemaking.
    I have asked the staff to complete the rulemaking as soon 
as possible, with my hope being that before the end of this 
year that we will finalize the rule. But we also, as you know, 
have a number of other rule makings tied to setting up the 
beneficial ownership system. They are also looking to complete 
as quickly as possible as well.
    Senator Van Hollen. Thank you. In December, Secretary 
Yellen also, as she was discussing the updated CDA--CTA said, 
and I quote, ``we are also ensuring a similar principle applies 
to real estate because many corrupt actors can hide their money 
in Miami or Central Park's skyscrapers the same way they do in 
shell companies.''
    What actions are you taking? Is that part of the rulemaking 
or is that a separate effort with respect to making sure that 
real estate companies are not used as conduits for any illicit 
financing?
    Mr. Adeyemo. So it is both related but also separate in 
terms of the way we are thinking about this. And I think that 
our view is that we need to make sure that, and this speaks to 
the conversation we are just having, that people can't find 
other avenues for illicitly storing resources.
    And we know that real estate is a place where a number of 
people have bought in the past. And we want to make sure that 
both in terms of as we are thinking about beneficial ownership 
at large, we are doing everything we can in terms of rulemaking 
to prevent that from being a place where illicit finance can 
live in this country.
    Senator Van Hollen. So in this category of questions, there 
is just one final question, which is that, is there a feedback 
mechanism between FinCEN and law enforcement that lets you and 
the folks at FinCEN know the extent to which the information 
they are providing is being useful and actionable.
    Because obviously we are, you know, providing additional 
resources, as Senator Hyde-Smith mentioned, to--for the 
reporting mechanism. It would be, I think, important to have 
some back and forth so that we can be assured that the 
information that is being gathered is actually being put to 
effective use.
    Mr. Adeyemo. And I think, Senator, my--the best example of 
this, I think, is the repo task force, which I mentioned 
earlier. The repo task force, as you know, was established both 
by Secretary Yellen and the Attorney General.
    And we work very closely with the Department of Justice 
with regard to the repo task force and share the data and 
information that is coming in from FinCEN and from Treasury 
closely with DOJ. And it has helped in terms of helping take 
some of the actions that we have already taken, but also in 
terms of building cases.
    So I think the best example of the impact of the funding 
that you have already provided is some of the law enforcement 
cases that have already taken place, but also some of the law 
enforcement cases that are being developed today. Ultimately, 
the goal for us is to make sure that we have this information 
in order to both help our National Security agencies, but also 
our law enforcement agencies going forward.
    And I think if you speak to them, they have found the 
information that FinCEN has provided, as well as OFAC, has 
provided quite useful in terms of thinking about how we can use 
our criminal authorities going forward. And the final thing 
that I mention is that one of the things that we have been able 
to do through the repo task force is improve information 
sharing among some of our closest allies.
    It had existed long before Russia's invasion of Ukraine, 
but I think that the attention that Congress has put on this, 
as well as the importance of this issue, has allowed us to 
strengthen those information exchanges so that we are in a 
place where the information we have here in the United States 
is being shared with our allies and partners.
    But in addition to that, we are getting and requesting more 
information from them in order to get a holistic picture as to 
how Russian elites and oligarchs are attempting to hide their 
wealth, not just here in the United States, but around the 
world.
    Senator Van Hollen. Thank you. Senator Hyde-Smith.
    Senator Hyde-Smith. Continuing somewhat on that, can 
cryptocurrencies like Bitcoin, can that be used to evade 
Russian sanctions?
    Mr. Adeyemo. So, Senator, I think that what we found is 
that those who are looking to use any means can find a way to 
use cash, can use cryptocurrencies to try and evade Russian 
sanctions. What I can say is to date we haven't seen this to be 
a main route of evasion.
    But what we do know is that Russia itself is a--has been a 
host to a number of cyber criminals who have been using 
cryptocurrencies as a means to further their criminal 
enterprises.
    That is why we have used sanctions authorities to go after 
exchanges that exist in Russia. And we are committed to 
continuing to do so where we see illicit finance, where people 
are attempting to use crypto to evade our sanctions.
    Senator Hyde-Smith. Have you seized any crypto assets?
    Mr. Adeyemo. Oh, we have not--we have frozen exchanges and 
we have went--we have used our sanction authority against 
exchanges. But in terms of seizure at the Treasury Department, 
we, of course, have the right to freeze things, Senator, but we 
don't have the right at Treasury to seize things.
    Senator Hyde-Smith. And are you worried about the overuse 
of sanctions?
    Mr. Adeyemo. I am, Senator. And I think one of the things 
that I did before the Russia, Ukraine--Russia invaded Ukraine 
was Secretary Yellen asked me to do a review of the use of 
sanctions, and I conducted a review of the sanctions use from 
after 911 to this year. And I am happy to provide that 
information to you.
    But one of the things--many of the findings of that review 
have influenced the way that we have used sanctions with regard 
to Russia, Ukraine. And in the United States alone, we have 
placed a thousand sanctions on Russian entities and individuals 
over the course of Russia's invasion.
    I think one of the most important things we learned from 
the review was that sanctions were best placed when we did them 
in a multilateral fashion for a number of reasons, one being 
they had much more of an economic effect, and that is what we 
are seeing in Russia today. But it also meant that by doing it 
that way, you also had a bigger political effect, and you 
protected the U.S. economy from taking on--taking this on its 
own.
    So one of the things we have done at the President's 
direction is make sure that we do everything as much as 
possible in a multilateral way. The second point was that we 
wanted to make sure that we did serious analysis before we put 
sanctions in place, so we understand the economic consequences 
on the target, but also the economic downsides on the United 
States.
    And I want to thank you and the Members of this Committee 
for the money you provided in the supplemental, because that 
has helped us greatly to get the type of people into Treasury 
that have helped us through from economic policy to 
international affairs to domestic finance, to do a more robust 
economic analysis as we have put sanctions in place against 
Russia.
    In addition to doing that, there is a number of other steps 
that we are taking based on that sanctions review to ensure 
that we don't, to your point--or we use sanctions in a way that 
is the most effective without overusing them.
    Senator Hyde-Smith. And can you specifically tell us how 
Russia's economy, how it has affected it or how it has changed 
since Treasury's sanctions were imposed? What is the condition 
of their economy right now because of this?
    Mr. Adeyemo. To put it simply, Senator, the economy is 
smaller today than when they started the invasion of Ukraine 
because of our sanctions. And it is getting smaller every day. 
And it is also becoming harder for Russia to produce the things 
that it needs for its military, but also for its economy.
    Today, Russia--two of Russia's top tank producers, are not 
operating because of our sanctions and export controls. We know 
that it is harder for them to produce the missiles that they 
need to continue the war in Ukraine, but also to project power 
into the future.
    The Kremlin has been forced to introduce economic stimulus 
to help both their pensioners, but also others in the economy 
who are suffering.
    But the thing that we want to make clear to the Kremlin is 
that as long as the invasion of Ukraine continues, we are going 
to continue to use sanctions and export controls to constrain 
their ability to prop up their economy and to invest in their 
military going forward. And we continue to have a number of 
ways to do that in partnership with our allies and partners.
    Senator Hyde-Smith. And as horrible as this invasion has 
been and as many people that have lost lives there, why has the 
Treasury and the Administration not imposed a full trade 
embargo yet to force Putin's hand?
    Mr. Adeyemo. So, Senator, there is actually very little 
trade between the United States and Russia. We are not a major 
trading partner of the Russian Federation. The biggest trading 
partner for Russia is Europe. China is also a major trading 
partner. So what we have done is that we have taken significant 
actions here in the United States.
    For example, the President announced a ban on Russian 
energy coming into the United States. Europe is taking the 
steps to do that as well as they work towards energy 
independence.
    And our goal ultimately is to try and find additional ways 
to constrain Russia's economy going forward by going after the 
key inputs to their economy and the things that they need to 
prop up the economy and also to continue to build out their 
military industrial complex. And the best way to do that is to 
do that in collaboration, in coalition with our partners and 
allies, especially in Europe.
    Senator Hyde-Smith. So you don't think a trade embargo 
would increase that? That it is not needed?
    Mr. Adeyemo. So I think my--the thing that we are trying to 
do, Senator, is make sure that any action we take, we take it 
in concert with our allies and partners in Europe. The biggest 
economic impacts on Russia are felt by actions that are taken 
in this way, because Russia's biggest trading partner is 
Europe.
    The United States has very little trade with Russia. And we 
have taken a number of steps to limit that even further. For 
example, blocking the import of Russian energy into the United 
States and preventing many goods and services from coming from 
Russia to the United States, which leaves us in a place where 
we can continue to use our sanctions authorities and our export 
controls, but I do think that a full trade embargo from the 
United States would have a marginal impact on Russia's economy 
at best.
    Senator Hyde-Smith. And how do you analyze or how do you 
measure the effectiveness of that? Is it just truly a dollar 
amount or another reduction that you see in something? How do 
you analyze?
    Mr. Adeyemo. The way I think about it, Senator, is what 
will it do to economic growth, inflation, and Russia's economic 
future. Those are the things that I look to in terms of the 
impact.
    So the things we have tried to do is take actions that have 
reduced the amount of revenue that Russia is taking in in order 
to make sure that we are forcing them to have harder and harder 
choices to make, choices between whether you invest in propping 
up your economy or whether you invest in your military 
industrial complex.
    Every day, because of the sanctions we have already put in 
place, those choices are harder for the Kremlin, and they know 
they are going to get harder over time because they don't have 
key inputs to their economy. When you think about our export 
controls regime, for example, what we did was we built a regime 
where we prevented Russia from being able to get access to key 
technologies that they need to continue to build out their 
economy.
    And these are technologies that China doesn't have, so 
China can't give it to them. The only people who have these 
technologies are ourselves and our allies in Europe and our 
allies in Asia. So ultimately, the thing we are looking to is, 
how do we further constrain their economy and make their 
choices harder in terms of where they make investments.
    Senator Hyde-Smith. And my time is up. Thank you.
    Senator Van Hollen. Thank you, Senator. So, Mr. Deputy 
Secretary, just to follow up on that point a little bit. As you 
said at the outset, sanctions are just one tool among many. And 
I agree with you entirely. They are more effective when they 
are put in place multilaterally. Of course, the Iran sanctions 
was an example where secondary sanctions ended up having a 
multilateral effect because other countries did comply.
    Obviously, Iran is not Russia. But I do think that is an 
example of where secondary sanctions proved effective in 
achieving the goal of bringing Iran to the table to negotiate 
back in the day. And as you have pointed out, we have been 
working with our European partners. We have gotten--well, they 
also undertook the effort to reduce their reliance on Russian 
energy, especially oil, and looking for other sources of gas 
going forward.
    But when other countries increase their overall imports of 
Russian oil above what they were pre-Ukraine war, that is a 
pressure reliever on Russia. So I--true, that Russia is still 
selling that oil at a higher price than before, but it is still 
a discount to those countries and Russia is able to sell more.
    So I look forward to continuing that conversation. I just 
have about 5 minutes for questions. I want to turn to North 
Korea. And thank you. You and I got together months and months 
ago to discuss the sanctions on North Korea. You know, another 
example, whether they are an imperfect tool, but one of the 
things that we have available to increase pressure on North 
Korea.
    Thank you for taking a look at the leakage in that 
sanctions regime and the measures you took with respect to the 
two Russian banks under the authority of the Otto Warmbier on 
North Korea Nuclear Sanctions Act of 2019 that was coauthored 
by myself and Senator Toomey.
    So I appreciate your attention to that. As we discussed, 
the UN panel of experts issues an annual report, I believe, 
they issued one in March of this year, that documented a number 
of other entities and categories of entities that contribute to 
leakage in the North Korea sanctions regime. They pointed 
specifically to China based entities in shipbuilding and 
shipping. And so I would encourage you to use that as a guide.
    I recognize that in order for us to impose sanctions, that 
we have to do a lot of due diligence and make sure we dot our 
I's and cross our T's. But can you assure me that you are 
continuing to look at that UN report with an eye toward seeing 
whether they qualify for U.S. sanctions?
    Mr. Adeyemo. Let me say a word of thanks to you, Senator, 
for providing that authority. That is a mandatory authority. 
And I can commit to you that our staff is looking very closely 
at that report, as well as any information we have to see what 
we can do in terms of imposing additional sanctions on North 
Korea in light of their destabilizing activity. As you 
mentioned recently, we did place sanctions on a number of 
entities that we had discussed previously and the team that 
continues to do research and work to identify additional 
targets.
    Senator Van Hollen. I appreciate that. I would just ask you 
to look at the China based entities only because they are front 
and center and they--in terms of being identified by the UN 
panel of experts. So my last question relates to something that 
we have covered a little bit, but in a different form, which is 
ransomware.
    I know you have been very focused on this issue. Can you 
talk a little bit about what the Department of Treasury is 
doing specifically? Obviously, we have lots of Federal agencies 
that are interested in cybersecurity.
    But what the Treasury Department is doing, what you are 
doing to recover funds that have been paid to some of the 
ransomware attackers, what we are doing to prevent future 
attacks, and the role of cyber currency in this effort.
    Mr. Adeyemo. So, Senator, I think this is an issue of grave 
importance to our entire economy, and it is a global issue. And 
one of the things and something that I have been focused on, I 
think what we are trying to do is increase the cost to cyber 
criminals in terms of their criminal activity by taking apart 
the ecosystem that allows them to operate.
    In some of those cases, that ecosystem does flow through 
cryptocurrency exchanges. We have taken action against some of 
those exchanges in particular, some of them that exist in 
Russia by sanctioning them, but also by thinking through what 
we can do to better make sure that companies that are subject 
to these cyber criminals are reporting the information to us, 
so we better understand the typologies of the attacks that are 
taking place and that we are in a position to best inform 
others in industry of what is happening.
    So a big piece of this for us is both working with the DOJ 
and with the other agencies in the Federal Government to make 
sure that we are taking actions with our relevant authorities, 
which includes sanctions at Treasury, but also in terms of 
providing guidance both from OFAC and FinCEN and collecting 
information.
    So at FinCEN, as we have talked about previously, they are 
doing a great deal in order to collect information from 
industries that have been targeted by cyber criminals, 
especially those using ransomware, in order to put us in a 
position to go after those criminals, but also to go after the 
networks and ecosystems that allow them to conduct these crimes 
going forward.
    I think this is a challenge that we feel as if the goal 
will be--the goal has to be working in partnership with the 
private sector. And the thing that we need to get the private 
sector to do is to work with us in order to improve the 
cybersecurity of their systems.
    As you know, Treasury is tasked with being the agency that 
works closely with the financial services sector. And this is 
not just our biggest institutions, but it is small institutions 
all over the country as well.
    And I am spending a great deal of time with these 
institutions, making sure that they are taking the steps to 
protect themselves from ransomware attacks, but also to make 
sure that we are sharing information, because ultimately the 
goal has got to be to better understand where these criminals 
are coming from so that we can go after them.
    So it is a holistic strategy at Treasury that we have 
developed that includes enforcement, information sharing, 
working closely with not only our partners here in the United 
States Government, but also with our allies abroad in order to 
make sure that we are protecting the system.
    Senator Van Hollen. I appreciate, and I agree that we have 
to have partnerships with the private sector as well as others 
overseas. Thank you. Senator Hyde-Smith.
    Senator Hyde-Smith. I want to talk about the FinCEN's 
beneficial ownership database. We have gotten a few calls about 
this because the new regulation means that the banks, credit 
unions, and all the financial institutions, they have to gather 
this information and verify this information about the 
individuals who run a business before a new account can be 
opened, any new account.
    You know, even if it is a new account for a current 
customer. So there is a lot of concern out there about this. 
But Treasury estimates the proposed rules to implement this 
Act, the Corporate Transparency Act, will require more than 25 
million existing small businesses to spend an aggregate amount 
of more than $4 billion to submit their reports on the 
beneficial owners to the Financial Crimes Enforcement Network.
    Is this an accurate estimate of the cost of the compliance 
for small businesses? And being that small businesses are the 
backbone of the economy, is it really wise to place more 
mandates on them at a time when we are just on the verge of a 
major recession? So do you think that is accurate?
    Mr. Adeyemo. So Senator, my understanding is that the costs 
to the average small business will be quite modest. You are 
right that those numbers in terms of total small businesses in 
our country is quite large, which I think is something that we 
want to grow at the Treasury Department.
    We want to create room for more small businesses in the 
country rather than less. And what we are going to do is make 
sure that we set up this regulatory regime in a way that is as 
scaled to the challenge as possible, so that small businesses 
reporting requirements are as modest as possible in light of 
the requirements that Congress has provided us with.
    Our goal is not to create a regime that will ask for more 
information than is needed, but rather to be in a position 
where we are able to protect the National Security for those 
small business--all the small businesses in this country as 
well.
    So we are happy to--we are going to continue to work with 
small businesses who submitted a great deal of comments to make 
sure that we set up a regime that is best suited to the 
challenges that they face going forward. And we are not looking 
to set up something that is overly robust.
    Senator Hyde-Smith. When do you think that they will have 
to start complying with this rule?
    Mr. Adeyemo. So Senator, I think we are going to continue 
to work through that. I don't want to--I don't have a sense at 
the moment as to when compliance will be required. But our goal 
is to try and put out the final rule as soon as possible and to 
build a database that is useful, frankly, to law enforcement 
going forward.
    Ultimately, I know that the thing that small businesses 
that I have talked to about this rulemaking but about 
regulation in general that they view is, they want to make sure 
that they can do what they can to help protect our country as 
well. But they want to make sure that the information they 
provide is actually going to be useful to helping to protect 
people in their community and around the country.
    So in addition to putting out the rule, we want to make 
sure that we create a database that is going to be useful to 
law enforcement in their communities, but around the country, 
and also to our National Security community. So we want to make 
sure that whatever we are collecting is going to be used and it 
is going to be used effectively going forward.
    Senator Hyde-Smith. Can you talk about any exceptions?
    Mr. Adeyemo. Exceptions to the rule----
    Senator Hyde-Smith. That they would not have to comply? Is 
there any exceptions that a business would not have to comply?
    Mr. Adeyemo. So, Senator, I think the goal for us is to 
make sure that we build a database that is inclusive of as many 
companies as possible in order to protect the National 
Security. To the conversation I was having with Senator Van 
Hollen, the challenge we have is that when we create 
exceptions, what then happens is that those who want to 
illicitly move money than simply create companies that fit 
within that exception.
    So our goal really is to try and find a way to make 
something that is comprehensive, but in which the reporting 
requirements are as modest as possible in order to make it as 
easy as possible for companies to comply and for us to have a 
holistic database in this country.
    Senator Hyde-Smith. A lot of people really see this just as 
an extra mandate and as extra work. So I hope that it does 
prove to be a very beneficial tool in addressing this issue 
because it will be extremely burdensome for a lot of people. 
Thank you.
    Mr. Adeyemo. So Senator, our goal is to take your feedback 
and the feedback of countless people to mind in terms of how we 
design this to make sure that we reduce the burden as much as 
possible.
    Because we know that ultimately the reason a bipartisan 
majority of Congress passed this legislation was because they 
cared deeply about our National Security. But they also want to 
make sure that we don't overly burden our small businesses. And 
we have kept those two things in mind as we think about the 
design of this regulation.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Van Hollen. Well, thank you, Senator. Thank you, 
Deputy Secretary Adeyemo. Thank you for your service. Thank you 
for being here today, for this hearing. Our Members, the 
Members of this Subcommittee will have one week to submit 
questions for the record. They are due June 21.
    Mr. Deputy Secretary, appreciate it if your office could 
respond to those questions once they are submitted as soon as 
possible. Again, thank you for being here.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
    No questions were submitted.
    Senator Van Hollen. Thanks for your service and the 
subcommittee meeting is adjourned.

                           SUBCOMMITEE RECESS

    [Whereupon, at 4:06 p.m., Tuesday, June 14, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2023

                              ----------                              

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

                       NONDEPARTMENTAL WITNESSES

    [Clerk's note.--The subcommittee was unable to hold 
hearings on nondepartmental witnesses. The statements and 
letters of those submitting written testimony are as follows:]
  Prepared Statement of the American Friends Service Committee (AFSC)
    Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the 
Committee, thank you for the opportunity to submit testimony. My name 
is Daniel Jasper and I am the Asia Public Education and Advocacy 
Coordinator for the American Friends Service Committee (AFSC). We are a 
peace and social justice organization that has worked for over a 
hundred years to address the root causes of violence and conflict 
throughout the world. We appreciate the opportunity to address the use 
of sanctions before the subcommittee today, as this foreign policy tool 
now serves as a primary response to geopolitical conflict. 
Specifically, my testimony addresses (1) report language addressing the 
need for the Government Accountability Office (GAO) to conduct impact 
assessments on comprehensive sanctions regimes, and (2) the need for 
the Treasury Department's Office of Foreign Assets Control (OFAC) to 
conduct regular and comprehensive reporting on licensing procedures.
    The urgency and importance of conducting impact assessments on 
comprehensive sanctions regimes cannot be understated. In 2021, The 
Treasury Department's sanctions review found that sanctions 
designations have risen from 912 to 9,421 in the last two decades, 
representing an increase of 933%.\1\ However, despite this accelerating 
rate of usage, government agencies have indicated that the impact of 
sanctions is often unclear.
    According to a 2019 GAO report, implementing and relevant agencies 
only conduct ad hoc assessments and do not monitor ``the overall 
effectiveness of existing sanctions programs in achieving broad policy 
goals.'' The report found that officials only ``informally'' evaluate 
the overall efficacy of these measures. However, given the immense 
impact of sanctions on ordinary civilians and the global economy, 
informal evaluations are grossly insufficient. Notably, officials 
indicated that one major reason for the lack of comprehensive 
assessments is that ``there is no policy or requirement'' for this type 
of analysis.\2\ It's clear, then, that until Congress enacts such a 
policy, the executive branch is unlikely to undertake such critical 
assessments on its own accord.
    Throughout AFSC's more than one hundred-year history, the 
organization has accompanied countless communities under sanctions 
regimes and borne witness to the varied impacts of these measures. Our 
organization, for instance, was among the first to support South 
Africans in their call to sanction the apartheid regime. While the case 
of South Africa has been considered a success, we have found that 
critical to that success was that it was led by the impacted 
communities themselves.
    Conversely, we have seen that the impacts of these measures are far 
more damaging when implemented unilaterally and without the support of 
the local population. In recent decades, the U.S.' propensity to 
unilaterally impose comprehensive sanctions without the support of 
local civil society efforts has created large pockets of vulnerable 
communities throughout the world.
    These communities--in many cases entire nations like the Democratic 
People's Republic of Korea (or ``North Korea''), Iran, Venezuela, and 
Cuba--are left in a State of arrested and reversing development. Given 
the mounting global challenges such as the COVID-19 pandemic and global 
food supply chain disruptions, these communities represent an open 
wound on the collective body of humanity. It is in these conditions 
that viruses mutate, conflict arises, human rights are violated, 
humanitarian crises develop, and violent ideologies take root. It is, 
therefore, imperative that the subcommittee act to fill this immense 
gap in monitoring and evaluation as policymakers must understand the 
true impacts of these widespread tools.
    Here, I would like to stress that while administration officials 
have stated that there are humanitarian exemptions for comprehensive 
sanctions regimes, in practice these exemptions are insufficient for 
aid operations and peacebuilding initiatives.
    For instance, AFSC has operated the longest-standing NGO program in 
North Korea since 1980. Prior to the pandemic, our program worked to 
improve conservation agricultural techniques in four cooperative farms 
outside of the capital city of Pyongyang. These activities had over 
84,000 direct and indirect beneficiaries as we worked to improve food 
access for local communities.
    We have witnessed many impacts of sanctions in our work on the 
ground in places like North Korea such as a chronic shortage of basic 
supplies, increases in manual labor, decreases in the availability of 
transportation and fuel, and a general attitude of resentment toward 
the U.S. government. A recent and dramatic example of the impact of 
sanctions was the increasingly restricted space for the delivery of 
humanitarian assistance since 2017.
    As a consequence of the U.S.' ``maximum pressure'' campaign and a 
U.S.-led UN sanctions resolution, we witnessed deeply disturbing 
situations where lifesaving assistance to North Korea was delayed or 
denied by bureaucratic procedures. In at least 42 instances, aid 
operations were severely disrupted even in cases where agencies 
obtained the correct paperwork. This resulted in patients undergoing 
surgery without anesthesia, children going without nutritional 
assistance, and increased mortality risks for a population already on 
the margins. While some of these issues have been resolved, the damage 
to key humanitarian channels had been done; relationships and 
operations were largely unable to recover in the years leading up to 
the pandemic.\3\
    As the COVID-19 outbreak erupted in China in early 2020, North 
Korea largely closed its borders to incoming travel and cargo and has 
continued these border closures throughout the first half of 2022. 
Despite a ``maximum pressure'' campaign and over 2 years of a self-
imposed embargo, North Korea's missile and weapons development 
programs--a primary target of sanctions measures--continue unabated. 
Instead, AFSC has witnessed that it is the ordinary people, who have no 
say in their government's actions, that often bear the true cost of 
sanctions.
    In 2019, Korea Peace Now, a global movement of women mobilizing to 
end the Korean War, commissioned one of the few assessments of the 
impact of sanctions on citizens. The study found that ``[s]anctions 
destabilize North Korean society in ways that have a disproportionate 
impact on women, resonating with patterns observed in other sanctioned 
countries. The resulting economic pressure tends to exacerbate rates of 
domestic violence, sexual violence, and the trafficking and 
prostitution of women.'' \4\ These types of impacts on the human rights 
and humanitarian situations of local communities are seldom captured by 
the ``informal'' impact assessments offered by administration 
officials.
    At the beginning of the Biden administration, 55 nongovernmental 
organizations--representing over 65 million supporters--sent a letter 
to the President outlining urgently needed sanctions reforms. Among the 
key recommendations included in the letter was the need to institute 
``ongoing reporting protocols that monitor the impact and human cost of 
sanctions.'' \5\
    The administration has not taken action on these reforms to date, 
and with millions of lives in the balance, Congress must champion the 
voice of civil society and institute common sense monitoring policies. 
We strongly urge the subcommittee to adopt report language requesting 
impact assessments on all comprehensive sanctions regimes from the GAO.
    In many heavily sanctioned contexts such as North Korea, it is now 
routine for aid operations to go through extensive OFAC licensing 
procedures to send aid shipments. Throughout my tenure at AFSC, I have 
seen this process take anywhere from 9 months to 2 years.
    The application process is strenuous--often filled with vague 
guidance on high-stakes procedures. Communication and status updates 
are typically infrequent from OFAC and the process requires the aid of 
expensive legal counsel. Further, OFAC staff turnover and/or the sheer 
volume of applications mean that we are continuously educating 
policymakers and bureaucrats about our work. This means that in moments 
of humanitarian crisis (and sometimes in moments of geopolitical 
opportunity), aid workers are spending precious moments navigating red 
tape and re-hashing the most basic elements of longstanding programs 
instead of responding to critical situations.
    Consistent with the Treasury Department's commitment to 
``modernizing'' sanction regimes and supporting legitimate humanitarian 
actors,\6\ OFAC must begin regular and transparent reporting on 
licensing procedures. Moreover, making this data publicly available 
would improve the speed and consistency of these processes, reduce 
humanitarian response time, and improve our collective understanding of 
the impacts of sanctions on civilians.
    Amid increasing global security challenges, sanctions have emerged 
as a primary tool of the U.S. in dealing with its adversaries. These 
tools are sometimes enacted with an alarmingly cavalier attitude toward 
their potentially devastating human impact, and with a severe lack of 
oversight. Given the widespread nature of these instruments, their 
impact on the global economy, and the hundreds of millions of lives 
they impact, we urge you to support these proposals in order for the 
U.S. government and public to fully understand the consequences of 
these policies.
---------------------------------------------------------------------------
    \1\ 2021 Sanctions Review. U.S. Department of Treasury, Oct. 2021, 
https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-
review.pdf.
    \2\ Economic Sanctions: Agencies Assess Impacts on Targets, and 
Studies Suggest Several Factors Contribute to Sanctions' Effectiveness. 
U.S. Government Accountability Office, Oct. 2019, https://www.gao.gov/
assets/gao-20-145.pdf.
    \3\ Jasper, Daniel. ``Why the World Should Care about the COVID 
Outbreak in North Korea--38 North: Informed Analysis of North Korea.'' 
38 North, 27 May 2022, https://www.38north.org/2022/05/why-the-world-
should-care-about-the-covid-outbreak-in-north-korea/.
    \4\ ``The Human Cost and Gendered Impact of Sanctions on North 
Korea.'' Korea Peace Now. Oct. 2019, https://koreapeacenow.org/wp-
content/uploads/2019/10/human-costs-and-gendered-impact-of-sanctions-
on-north-korea.pdf.
    \5\ ``Civil Society Groups Call on Biden to Provide Immediate 
Sanctions Relief and Legal Reform.'' American Friends Service 
Committee, 26 Mar. 2021, https://www.afsc.org/newsroom/civil-society-
groups-call-biden-to-provide-immediate-sanctions-relief-and-legal-
reform.
    \6\ 2021 Sanctions Review. U.S. Department of Treasury, Oct. 2021, 
https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-
review.pdf.
---------------------------------------------------------------------------
                                 ______
                                 
     Prepared Statement of Coalition for a Prosperous America (CPA)
    Dear Chairman Van Hollen and Ranking Member Hyde-Smith:

    For the reasons outlined below, the Coalition for a Prosperous 
America (CPA) strongly urges the subcommittee on Financial Services and 
General Government to approve an increased appropriation for the 
Financial Crimes Enforcement Network (FinCEN) to $210.3 million for the 
Fiscal Year 2023. CPA is concerned the Corporate Transparency Act (CTA) 
will not be implemented promptly without these resources. The CTA 
prioritized our National security by denying the most egregious means 
of obscuring the actual owners of different types of property.
    The Coalition for a Prosperous America is a nonprofit, nonpartisan 
organization that represents the interests of domestic producers across 
the country engaged in agricultural production, agribusiness, and many 
manufacturing supply chains. We are concerned about foreign 
intellectual property theft, offshoring of industry, and the decline of 
the quality of jobs in the US due to the loss of supply chains.\1\
        fincen needs to implement the corporate transparency act
    The FinCEN, tasked with codifying and implementing the CTA, has 
already missed deadlines due to resource shortages.\2\ Therefore, CPA 
strongly supports the subcommittee on Financial Services and General 
Government approving increased appropriations for the Financial Crimes 
Enforcement Network (FinCEN) to $210.3 million for the Fiscal Year 
2023.
    Congress passed the Corporate Transparency Act in 2020 as part of 
the Anti-Money Laundering Act. This bipartisan landmark legislation 
sought to improve anti-money laundering laws and deny the benefits of 
anonymous shell companies.
    Hidden `beneficial' owners include foreign kleptocrats and 
criminals who pose a grave security threat to the United States. Our 
recent attempts to hold Russian kleptocrats accountable for the 
invasion of Ukraine exposed our vulnerability and our need to 
strengthen our economic' borders.' American producers need information 
regarding the competition they face from autocratic non-market foreign 
owners.
         kleptocracy threatens america's financial independence
    The FinCEN advisory on Kleptocracy and Foreign Public Corruption 
(FIN-2002-A001), released on April 14, 2022, specified that 
``Kleptocratic regimes and corrupt public officials may engage in 
bribery, embezzlement, extortion, or the misappropriation of public 
assets, among other forms of corrupt behavior, to advance their 
strategic, financial, and personal goals.'' \3\
    These behaviors are not limited to the country of the foreign 
kleptocrats. Once a US financial enterprise becomes involved with these 
tainted funds, the enterprise has a vested interest in promoting a 
continued relationship for the sake of management of this ``property.'' 
The vested self-interest divides the financial enterprises' allegiance 
from the United States' competitive economy, moral values, and even the 
Nation's national security interests.
    Consider the problems concerning London's enmeshing with Russian 
kleptocrats. A former Russian correspondent, Oliver Bullough, gives 
``kleptocracy tours'' in the capital of the United Kingdom, showing how 
illicit funds affected the city.\4\ Despite criminal activities, 
including the 2018 poisoning of Sergei Skripal and his daughter on 
United Kingdon soil by Russia's leader Putin, British elected officials 
took few actions against the Russian kleptocrats until the invasion of 
Ukraine. In effect, London's political class was a willing hostage 
because it had become dependent on kleptocrat money.
    With a GDP of over 500 Billion (just under $650 
billion) in 2020,\5\ London's economic size did not guarantee 
protection against this form of foreign political manipulation. In 
2020, only 10 of our 50 American States had a greater GDP than 
London.\6\ It is no small leap to assume entire American States are 
vulnerable when we do not know the identities of the beneficial owners 
of investments in the United States.
    Meanwhile, our intended sanctions revealed how ill-prepared the US 
financial system is to respond to actions like Russian aggression. When 
the White House announced its comprehensive legislative package to hold 
the Russian government and oligarchs accountable for President Putin's 
war against Ukraine, Russian forces had invaded Ukraine for over 2 
months.
    The White House proposal had to take time to streamline specific 
ways to enable the seizure and implementation of the sanctions because 
they had been playing a game of whack-a-mole with Russian kleptocrat 
funds. In the future, these mechanisms should be easy to implement and 
clearly outlined against any hostile power. FinCEN's work is essential 
to simplifying the knowledge of foreign-based beneficial ownership in 
the United States.
    Despite the successful bipartisan efforts to pass the Corporate 
Transparency Act, its implementation must be accelerated, not 
restricted. FinCEN is too underfunded to be effective in its current 
funding state, and that weakness in our economic infrastructure must 
end.
    Russian kleptocrats are not the final concern as a price for our 
lack of financial transparency. Any autocratic government seeking to 
manipulate the United States would have good reason to use their 
wealthy kleptocrats to invest in it. Chinese ``greenfield'' investments 
have already been a significant concern to members of the Senate.\7\ 
These Chinese-held subsidiary investments can use corporate anonymity 
to disguise non-market intent.
    The Coalition for a Prosperous America contends that the US 
underestimates our National producers' competition with non-market 
firms that sacrifice market-based results in exchange for future 
monopoly dominance or illicit political capital due to a lack of 
information.
    The Coalition for a Prosperous America does not directly oppose 
foreign financial investment. But it is crucial to know which foreign 
citizens of autocratic regimes own what property, how much is held, for 
what purpose, and how much wealth ends up in foreign jurisdictions.
    Therefore, the Coalition for a Prosperous America urges the 
subcommittee on Financial Services and General Government to approve an 
increased appropriation for the Financial Crimes Enforcement Network 
(FinCEN) to $210.3 million for the Fiscal Year 2023. The Corporate 
Transparency Act (CTA) prioritized our National security, but the 
necessary regulation and enforcement need these resources to implement 
the will of Congress as soon as possible.

    Sincerely,
    David Morse, Tax Policy Director
    Coalition for a Prosperous America
---------------------------------------------------------------------------
    \1\ About page Coalition for a Prosperous America. https://
prosperousamerica.org/about/.
    \2\ Das, Himamauli, US Treasury FinCEN Acting Director, Statement 
before U.S. House of Representatives Financial Services Committee. 
April 28, 2022. https://financialservices.house.gov/uploadedfiles/hhrg-
117-ba00-wstate-dash-20220428.pdf.
    \3\ Advisory on Kleptocracy and Foreign Public Corruption. US 
Treasury, FinCEN April 14th, 2022. https://www.fincen.gov/resources/
advisories/fincen-advisory-fin-2022-a001.
    \4\ Keefe, Patrick Radden. How Putin's Oligarchs Bought London. New 
Yorker Magazine. March 28th, 2022. https://www.newyorker.com/magazine/
2022/03/28/how-putins-oligarchs-bought-
london.
    \5\ Gross domestic product of the United Kingdom in 2020, by region 
(in million GBP). Statista. https://www.statista.com/statistics/
1004135/uk-gdp-by-region/.
    \6\ Gross Domestic Product by State, 4th Quarter 2020 and Annual 
2020 (Preliminary). US Commerce, Bureau of Economic Analysis. https://
www.bea.gov/sites/default/files/2021-03/qgdpstate0321.pdf.
    \7\ Senator John Kennedy. Kennedy introduces bill to increase 
scrutiny over Chinese investments on U.S. soil. Press Release. October 
21, 2021. https://www.kennedy.senate.gov/public/2021/10/kennedy-
introduces-bill-to-increase-scrutiny-over-chinese-investments-on-u-s-
soil.
---------------------------------------------------------------------------
                                 ______
                                 
             Prepared Statement of Coalition for Integrity
Dear Chairman Van Hollen and Ranking Member Hyde-Smith:

    We at Coalition for Integrity support and encourage the 
subcommittee on Financial Services and General Government to approve 
increased appropriations for Financial Crimes Enforcement Network 
(FinCEN) in line with the President's budget request for the 2023 
fiscal year.\1\
    Coalition for Integrity is a non-profit, non-partisan 501(c)(3) 
organization. We work in coalition with a wide range of individuals and 
organizations to combat corruption and promote integrity in the public 
and private sectors both in the United States and internationally. An 
important area of focus for us is ending impunity for corrupt public 
officials and oligarchs around the world. We have previously submitted 
comments to FinCEN on a proposed rule that would address the 
vulnerability of the U.S. real estate market to money laundering and 
other illicit activity.\2\ We have also submitted comments on notice of 
proposed rulemaking (NPRM) to implement the beneficial ownership 
reporting requirements in the Corporate Transparency Act (CTA).\3\
    FinCEN remains one of the leaders entrusted with combatting illicit 
finance and addressing deficiencies in the anti-money laundering regime 
in the first U.S. Strategy on Countering Corruption.\4\ FinCEN's work 
is critical to keep the proceeds of corruption and other crimes from 
being laundered through the U.S. financial system. Deputy Secretary of 
the Treasury Wally Adeyemo expressed during his testimony before the 
subcommittee on Financial Services and General Government, the U.S. 
Treasury has ``taken unprecedented measures . . . [but] these new 
actions and initiatives require substantial resources'' to conduct the 
necessary analysis and produce a global response.\5\ These remarks echo 
FinCEN Acting Director Himamauli Das' testimony before the House 
Financial Services Committee where he explained that ``while the AML 
Act made significant improvements to the AML/CFT framework, these 
improvements come at a cost. FinCEN employs a team of about 300 
dedicated employees, including intelligence analysts, investigators, 
AML/CFT policy strategists, enforcement and compliance officers, 
outreach specialists, data analysts, regulators, and economists . . . 
[yet] FinCEN has significant staffing requests that remain unfunded.'' 
\6\
    The Strategy on Countering Corruption recognizes the real estate 
and private investment sectors are vulnerable to abuse by illicit 
actors seeking to launder the criminal proceeds.\7\ FinCEN is 
responsible for rulemaking in these sectors as well as implementing the 
beneficial ownership transparency rule of the CTA.\8\ FinCEN's role 
continues to grow as it follows the money.\9\
    The Coalition for Integrity urges the subcommittee on Financial 
Services and General Government to approve the full $210.3 million in 
order for FinCEN to fulfill its duties to combat money laundering and 
its related crimes such as terrorism and promote national security.\10\ 
Coalition for Integrity also endorses FACT Coalition's letter in 
support of increased FY 2023 appropriations for FinCEN.
    Thank you for your time and consideration. Please contact me with 
any questions at [email protected].

    Sincerely, Shruti Shah
    President & CEO Coalition for Integrity
---------------------------------------------------------------------------
    \1\ The White House, Budget of the U.S. Government: Fiscal Year 
2023, Feb. 2022, https://www.whitehouse.gov/wp- content/uploads/2022/
03/budget_fy2023.pdf.
    \2\ The letter was written in response to FinCEN's request for 
comment. See Letter from Shruti Shah, President & CEO, Coalition for 
Integrity, to Himamauli Das, Acting Dir., FinCEN, U.S. Department of 
the Treasury (Feb. 21, 2022), https://www.coalitionforintegrity.org/wp-
content/uploads/2022/02/C4I-FinCEN-Comments-Feb-21-Real-Estate-
Final.pdf; see also FinCEN, 86 Fed. Reg. 69, 589 (Dec. 8, 2021), 
https://www.govinfo.gov/content/pkg/FR-2021-12-08/pdf/2021-26549.pdf.
    \3\ See Letter from Shruti Shah, President & CEO, Coalition for 
Integrity, to Himamauli Das, Acting Dir., FinCEN, U.S. Department of 
the Treasury (Feb. 7, 2022), https://www.coalitionforintegrity.org/wp-
content/uploads/2022/02/FinCEN-Comments-Feb-7-Final.pdf.
    \4\ The White House, U.S. Strategy on Countering Corruption, Dec. 
2021, https://www.whitehouse.gov/wp-content/uploads/2021/12/United-
States-Strategy-on-Countering-
Corruption.pdf.
    \5\ U.S. Department of the Treasury, Testimony of Deputy Secretary 
of the Treasury Wally Adeyemo before the subcommittee on Financial 
Services and General Government, Committee on Appropriations, U.S. 
Senate, June 14, 2022, https://home.treasury.gov/news/press-releases/
jy0815.
    \6\ Statement by Himamauli Das Acting Director Financial Crimes 
Enforcement Network U.S. Department of the Treasury before Committee on 
Financial Services, U.S. House of Representatives, 12 (April 28, 2022), 
https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-wstate-
dash-20220428.pdf.
    \7\ Supra note 4 at 22.
    \8\ FinCEN, 86 Fed. Reg. 69, 589 (Dec. 8, 2021), https://
www.govinfo.gov/content/pkg/FR-2021-12-08/pdf/2021-26549.pdf.
    \9\ FinCEN, What We Do, https://www.fincen.gov/what-we-do.
    \10\ FinCEN, Mission, https://www.fincen.gov/about/mission.
---------------------------------------------------------------------------
                                 ______
                                 
      Prepared Statement of Congressional Fire Services Institute
Dear Chairman Van Hollen and Ranking Member Hyde-Smith:

    On behalf of the Nation's fire and emergency services, we write to 
urge your support for vital funding to enhance life safety across the 
country by preventing illness and death related to carbon monoxide 
exposure. As you consider the Fiscal Year (FY) 2023 Financial Services 
and General Government (FSGG) Appropriations bill, we urge you to 
provide $10 million to the Consumer Product Safety Commission (CPSC) 
for grants required by section 204 of the Nicholas and Zachary Burt 
Memorial Carbon Monoxide Poisoning Prevention Act of 2022 (Public Law 
117-103).
    Carbon monoxide (CO) poisoning is a proven threat to Americans 
across the country, claiming at least 430 lives annually. Additionally, 
approximately 50,000 people are sent to emergency rooms every year due 
to unintentional poisonings, according to the Centers for Disease 
Control and Prevention (CDC).\1\ Since CO is an odorless, tasteless, 
and colorless gas, many people are initially unaware they are even 
being poisoned.
---------------------------------------------------------------------------
    \1\ https://www.cdc.gov/nceh/features/copoisoning/index.html.
---------------------------------------------------------------------------
    Carbon monoxide poisoning can result in death, but it can also 
cause lifelong neurological and cardiac issues, in addition to other 
harmful, long-term health conditions. While anyone can be harmed by 
exposure to CO, it is especially dangerous for babies, children, 
elderly individuals, and individuals with preexisting chronic health 
conditions, such as cardiovascular disease, anemia, and respiratory 
issues.
    The Nicholas and Zachary Burt Memorial Carbon Monoxide Poisoning 
Prevention Act established a grant program at CPSC to help States and 
local governments implement CO alarm installation programs and ensure 
that families across America are protected from CO poisoning. It is 
critical that this program is adequately funded to help mitigate the 
harmful-and even fatal-effects of CO poisoning.
    Our organizations look forward to working with you on funding this 
important public safety grant program.

    Sincerely,

    Congressional Fire Services Institute
    International Association of Fire Chiefs
    International Association of Fire Fighters
    International Code Council
    National Association of State Fire Marshals
    National Fallen Firefighters Foundation
    National Fire Protection Association
    National Volunteer Fire Council

    [This statement was submitted by Michaela Campbell, Director of 
Government Affairs for the Congressional Fire Services Institute]
                                 ______
                                 
                 Prepared Statement of Demand Progress
Dear Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the 
subcommittee:

    Thank you for the opportunity to submit written testimony regarding 
the FY 2023 Financial Services and General Government Appropriations 
Bill. My organization, Demand Progress, conducts research and engages 
in advocacy focused on strengthening Congress's ability to legislate 
and conduct oversight. In furtherance of this mission, I urge the 
Committee to direct the public disclosure of in-person and virtual 
visitors to the White House and the Vice President's residence, which 
would further Congress's oversight role and greater governmental 
accountability.
                 disclosure of white house visitor logs
    Disclosure of White House visitor logs--records of in-person 
visitors to the White House--is an important element of government 
accountability and serves as a proxy for disclosure of meetings by 
lobbyists and special interests with government officials. These 
records of in-person meetings are generated by the activity of the 
United States Secret Service, which monitors visitors and clears them 
to the White

House complex using records from two automated systems.\1\ These 
records track visitors from the initiation of a request that they be 
cleared for access until the point that they exit the White House 
complex.
    On September 15, 2009, the Obama administration began voluntarily 
disclosing the majority of the information in the White House visitor 
logs to settle then-ongoing litigation brought by civil society 
organizations over the issue of public access to these records under 
the Freedom of Information Act.\2\ In doing so, the White House 
recognized the ``right'' of ``Americans'' to ``know whose voices are 
being heard in the policymaking process.'' As implemented, the posted 
records included names of visitors, the dates and times they entered 
and exited the White House compound, and the names of the White House 
staff requesting that they be cleared for access. (Ultimately, the 
Federal courts held the records are not legally Secret Service 
property, but rather White House records, and are thus covered by the 
Presidential Records Act and not the Freedom of Information Act.)
    Under its disclosure policy, the Obama administration released 
nearly 6,000,000 records, which opened a new window into the 
functioning of the White House and helped inform the public, directly 
and through countless news stories, about who was going into the White 
House to meet with administration officials. This also offered 
opportunities for civil society groups to analyze the data in an effort 
to hold the administration accountable.
    Experience under the Obama administration's voluntary disclosure 
policy demonstrates how important these records are for public 
accountability. The Washington Post reported that the visitor records 
released by the Obama administration included ``scores of lobbyists.'' 
\3\ For example, one news report examining records from an 
``unremarkable'' day in January 2012 revealed the ``regular presence'' 
of lobbyists at the White House, with ``lobbyists with personal 
connections to the White House enjoy[ing] the easiest access.'' \4\ At 
the same time, the Obama disclosure policy protected the interests of 
the president, his family, and the Nation by excluding purely personal 
guests of the president's family, records implicating national security 
interests, and records of particularly time-sensitive meetings that 
were temporarily withheld.
    Eight years later, President Trump closed that window when he came 
into the White House, leaving the public in the dark about who was 
going into ``the people's house'' and fueling multiple lawsuits. 
Regardless of who is president, information about White House visitors 
should continue to be publicly available. These records help inform 
Congress and the public about those individuals and entities that seek 
to influence presidential decision-making and Executive branch 
policies, and the basic day-to-day workings of our government--the 
information the FOIA was designed to access and the voluntary 
disclosure policy was meant to address.
    The Biden administration has chosen to reverse the Trump 
administration's decision to discontinue the voluntary disclosure 
policy. This is a welcome development, but one granted at the 
sufferance of the current administration and liable to reversal at any 
time. Congress must step in to guarantee access for itself and the 
American people.
    To that point, the House of Representatives included language in 
the Protecting Our Democracy Act, Section 2203 of H.R. 5314 (117th 
Congress), which establishes ``not later than 90 days after the date of 
enactment of this act, the President shall establish and update, every 
90 days thereafter, a publicly available database that contains covered 
records for the preceding 90-day period, on a publicly available 
website in an easily searchable and downloadable format.'' While the 
House passed H.R. 5315 on December 9, 2021, it has yet to see any 
action in the Senate. The measure paralleled legislation introduced by 
Rep. Mike Quigley in section 602 of the Transparency in Government Act 
over multiple Congresses.\5\
    Appropriators routinely require the administration to provide to 
Congress records appropriate for legislative oversight of Executive 
branch activities, including requiring the public disclosure of these 
records. White House visitor logs are quintessential oversight records. 
The House has already given its blessing for requiring White House 
visitor log disclosure and the Appropriations Committee is best 
positioned to vindicate Congress's will. I urge you to ensure 
uninterrupted congressional and public visibility into visitors to the 
White House and the Vice President's residence regardless of who 
occupies the White House. The policy adopted by the White House with 
respect to which records to disclose and which ones may be withheld is 
reasonable, by and large, and should be put into law. To that end, I 
recommend the following bill language that codifies the current White 
House policy and vindicates Congress's oversight needs and the public's 
right to know:

        White House Visitor Logs.--Not later than 30 days after the 
        date of enactment of this act and updated every 30 days 
        thereafter, the White House Office of Administration shall 
        report to the Congress, the Senate Homeland Security and 
        Governmental Affairs Committee, the House Committee on 
        Oversight, and make contemporaneously available online, a 
        searchable, sortable, downloadable database of visitors to the 
        White House and the Vice President's residence compiled in the 
        White House Worker and Visitor Entry System that includes the 
        name of each visitor, the name of the individual who requested 
        clearance for each visitor, and the date and time of entry for 
        each visitor. Notwithstanding this requirement, the White House 
        Office of Administration, after consultation with the United 
        States Secret Service and the President or his designee, may 
        exclude from the database any information that would (1) 
        implicate personal privacy or law enforcement concerns or 
        threaten national security, or (2) relate to a purely personal 
        guest. In addition, with respect to a particular sensitive 
        meeting, the White House Office of Administration shall 
        disclose each month the number of records withheld on this 
        basis and post the applicable records no later than 365 days 
        later.
             disclosure of white house virtual visitor logs
    As described above, the Biden Administration reinstated the Obama 
administration's policy to disclose the vast majority of records of 
visitors to the White House. However, many White House meetings are 
taking place virtually and are not covered under that policy. The move 
from in-person to virtual meetings in response to COVID-19 could not 
have been anticipated when the disclosure policy was first implemented 
in 2009.
    The Financial Services and General Government FY 2022 
Appropriations Bill Report (H. Rept. 117-79, p. 37) requested ``[t]he 
Executive Office of the President to explore the feasibility of 
disclosing 'virtual' visitors to the Executive Office of the President 
in a manner that provides similar information as provided for other 
visitors and that is retroactive to January 20, 2021'' and ``directs 
EOP to provide a briefing on this topic no later than 120 days after 
enactment of this act.''
    I applaud this action from the Committee and believe access to 
``virtual'' visitor disclosures should become a permanent practice. I 
encourage the Committee to move forward to direct the Executive Office 
of the President to provide a report on the cost and implementation of 
making ``virtual'' visitor log disclosures permanent. To that end, I 
recommend the following bill language:

        White House Virtual Visitor Logs.--The White House Executive 
        Office of the President, within 60 days of enactment of this 
        legislation, shall provide a report to Congress on how it 
        recommends implementing a requirement to make contemporaneously 
        available online on at least a biweekly basis a searchable, 
        sortable, downloadable database of ``virtual visitors'' to the 
        White House and the Vice President's residence. A virtual 
        visitor is a person who meets with Executive branch office 
        staff whose normal place of work is at the White House or the 
        Vice President's residence. This list should include the name 
        of each visitor, the name of each person they met with, and the 
        date and time of each meeting. This is intended to be an 
        analogue for disclosure of White House Visitor Logs.

    As part of its report to Congress, the Executive office of the 
President may evaluate whether to include a provision that would 
exclude from the biweekly public disclosure any information that would 
(1) implicate personal privacy or law enforcement concerns or threaten 
national security, or (2) relate to a purely personal guest. In those 
instances, the Executive Office of the President shall still disclose 
the total number of records on a biweekly basis, but withhold the 
applicable record for no more than 365 days.
    The report shall also address the costs of implementing such a 
system.
    Thank you again for the opportunity to submit written testimony.
---------------------------------------------------------------------------
    \1\ 18 U.S.C. Sec. Sec. 3056, 3056A.
    \2\ Peter Baker, The White House Will Disclose Visitor Logs, New 
York Times, Sept. 4, 2009, available at https://
thecaucus.blogs.nytimes.com/2009/09/04/the-white-house-will-disclose-
visitor-logs/.
    \3\ John Wagner, Trump will keep list of White House visitors 
secret, Washington Post, Apr. 14, 2017, available at https://
www.washingtonpost.com/news/post-politics/wp/2017/04/14/trump-to-
discontinue-obama-policy-of-voluntarily-releasing-white-house-visitor-
logs/.
    \4\ T.W. Farnam, White House Visitor Logs Show Lobbying Going 
Strong, Washington Post, May 20, 2012, available at https://
www.washingtonpost.com/politics/2012/05/20/gIQA2ok4dU_
story.html.
    \5\ See, e.g., H.R. 2055 (117th Congress).

    [This statement was submitted by Hajar Hammado, Policy Advisor]
                                 ______
                                 
          Prepared Statement of Harbor Bankshares Corporation
    Chairman Van Hollen, Ranking Member Hyde-Smith, and members of the 
subcommittee, good afternoon. Thank you for inviting me to discuss the 
important work of Community Development Financial Institutions (CDFIs).
    My name is Joseph Haskins. I am a founding Director, Chairman and 
CEO of Harbor Bankshares Corporation, headquartered in Baltimore, 
Maryland.
                              bank history
    The Harbor Bank of Maryland (Harbor Bank) opened its door for 
business in September of 1982. The Bank had its origin dating back to 
the early 1970s when Baltimore's African American leadership was 
seeking ways to enhance economic opportunities for minority communities 
in Baltimore City.
    One of the major issues identified as limiting economic 
opportunities was the lack of access to capital and more importantly 
access to banking. To address these issues Harbor Bank was found.
    Harbor Bank focused on providing banking services in the following 
areas:
  --Minority Business/Commercial Lending
  --Faith Based (Church Financing)
  --Residential Mortgages

    Increased demands for financial services coupled with increasing 
bank regulations required and expanded operations.
    In 1992, Harbor Bank formed a holding company, Harbor Bankshares 
Corporation (The Corporation), allowing for additional financial 
services.
    Establishing the holding company led to the formation of three (3) 
subsidiaries and a non-profit Community Development Corporation (CDC).
    Today, The Corporation oversees a $350 million Bank and 
subsidiaries that directly and indirectly control another $300 million. 
While the Bank remains the primary subsidiary, the other operations 
provide the Baltimore community with access to more diverse capital and 
financial services.
    Some of the expanded services include:
  --Lower priced loans
  --Equity investment support
  --Financial literacy programs
  --Real estate development programs
  --Specialized tax benefits

    Over the past thirty-nine (39) years, the significance of the 
Corporation and Bank to the development/revitalization of communities 
is evidenced by:
  --The development of the Inner Harbor East where Harbor Bank was the 
        first money to help build a hotel, office building, and 
        residential housing.
  --The Canton Community where Harbor Bank was the first money to 
        support a residential housing project and the converting of old 
        warehouses to office and retailed space.
  --East Baltimore Development Inc. (EBDI), a non-profit, was aided by 
        Harbor Bank's seed money to help an 88-acre community known for 
        poverty and crime to be revitalized and become livable. Johns 
        Hopkins Science Park is a part of this community's 
        revitalization. This community is now a national model.
  --University of Maryland at Baltimore (UMAB) Science Park where 
        Harbor Bank was the first money to support land and project 
        development West of Martin Luther King Boulevard.

    As a corporation in the financial services space, our role evolved 
to that of being a catalyst and advocate for revitalizing and restoring 
abandoned, forgotten, and disregarded communities in Baltimore.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             the cdfi role
    The Corporation and Bank seeking to enhance financial services and 
bring more resources to the Baltimore Community applied over 20 years 
ago to become certified Community Development Financial Institutions 
(CDFI). Today, the Corporation and two of its subsidiaries are CDFIs. 
Also, The Corporation's non-profit CDC is a certified CDFI.
    Under the Department of Treasury's CDFI Program, the Corporation 
and its subsidiaries have participated in several of funds programs and 
have successfully won/earned:
  --13 Bank Enterprise Awards (BEA) totaling $3,893,753 which helped to 
        increase lending in lower income communities. The BEA Award is 
        important to CDFI Banks because of its leverage capacity. 
        Records show that 90 percent of BEA monies go to the lowest 
        income census tracts.
  --Financial Assistance (FA) award totaling $649,000. ($500,000 was 
        for loans and $149,000 persistent poverty).
  --Nine rounds of New Market Tax Credit (NMTC) awards totaling $384 
        million helping to leverage over $3 billion of development and 
        create 4,000 jobs. Projects include science buildings, 
        community schools, and healthcare facilities.

    Many projects involve multiple level of participation from The 
Corporation. A project could include New Market Tax Credit (NMTC), 
Harbor Bank loan and advisory services.
                            maryland profile
  --The programs of the CDFI Fund are very important to the state of 
        Maryland. Maryland is home to 15 CDFIs, two of which are banks 
        or bank holding companies, while two additional CDFI banks 
        based in the District of Columbia provide significant services 
        within the state.
    --In 2020, Maryland-based CDFIs and CDFI banks serving Maryland 
            (Maryland and D.C. based) received $6.7 million in CDFI 
            Financial Assistance (FA) and Technical Assistance (TA) 
            awards. CDFI banks serving Maryland received $202,898 in 
            BEA funds.
    --In the past 3 years Maryland-based CDFIs and CDFI banks serving 
            Maryland have received $31.4 million in FA and TA awards, 
            while CDFI banks serving Maryland have received $1.15 
            million in BEA funds.
    --Since the CDFI Fund's inception in 1996, Maryland-based CDFIs and 
            CDFI banks serving Maryland have received $119.5 million in 
            total awards. In that same period, CDFI banks serving 
            Maryland have received $14.5 million in BEA funds.

  --Maryland is among the poorest States in the Nation. Like other 
        States with persistent poverty, Maryland has a lot to lose if 
        the CDFI Fund and BEA Program do not have adequate funding.
    --Approximately 9.1 percent of all Marylanders live in poverty--
            with the poverty rate in 8 counties (Somerset, Baltimore, 
            Dorchester, Allegany, Wicomico, Garrett, Kent and 
            Washington) equal to or exceeding the 12.3 percent United 
            States total
    --Baltimore City, Maryland's USDA designated persistent poverty 
            county, has a poverty rate 160 percent higher than the 
            United States total. Somerset County has a poverty rate 190 
            percent higher than the United States total.
                           covid-19 pandemic
    The crisis of COVID-19 highlighted the importance of CDFI banks and 
other community based financial institutions. CDFI banks reached and 
helped the businesses that required loans to survive, the ones 
disproportionately operating in low to moderate income communities and 
desperate for banking services and in particular financial assistance. 
The government offered stimulus programs--especially the Paycheck 
Protection Program (PPP) proved to be a lifeline to many of these 
businesses, especially in the distressed communities.
    Harbor Bank stepped to the front of the line providing assistance 
through the PPP program. Harbor Bank met and assisted over 1,000 
potential PPP applicants and processed 674 applications totaling $67.5 
million. Adjusting out the 10 largest borrowers, the average size of 
Harbor's PPP loan was $52,000.
    The government met the economic call from the community and Harbor 
Bank was a part of the delivering channel.
    In summary, the Treasury's CDFI Program is vital to the growth and 
restoration of the communities that have been depressed or deprived for 
years. It is difficult to provide the capital that these communities 
need without a CDFI Program. My fear today is that the absence of the 
PPP Program will render businesses incapable of continuing on the 
survival path.
    I urge the members of the subcommittee to recognize the significant 
economic benefits of funding the CDFI Fund programs. Not only do these 
programs provide access to capital in historically disadvantaged 
regions of the country, but they do so by leveraging private 
investment. The CDFI Fund programs are a market-based strategy for 
addressing chronic economic challenges.
    I thank Chairman Van Hollen, Ranking Member Hyde-Smith, and the 
members of the Committee for the opportunity to tell you the story of 
Bank of Anguilla, the work we do, and the communities that we serve.

    [This statement was submitted by Joseph Haskins, Jr., Chairman and 
Chief Executive Officer]
                                 ______
                                 
Prepared Statement of Leadership Engagement of the National Congress of 
                            American Indians
    On behalf of the National Congress of American Indians (NCAI), 
thank you for this opportunity to provide testimony on FY 2023 funding 
for the Office of Management and Budget (OMB), Department of the 
Treasury (Treasury), the Small Business Administration (SBA), and the 
Federal Communications Commission (FCC). A brief history of Native 
American policy in the United States contextualizes the need for 
increased and improved financial services in Indian Country and greater 
representation in OMB. Specifically, the U.S. legacies of genocide, 
isolation, forced assimilation, complete termination of Tribal 
government recognition, revocation of Tribal government jurisdictional 
authority, and forced conversion of Tribal lands, contribute to the 
systemic negative socio-economic conditions in Tribal communities, 
including a lack of access to deposit and credit services in Indian 
Country. Policies failing to consider that Tribal Nations and their 
citizens do not have the same capital equity as other American 
governments and citizens cause Federal programs and initiatives to be 
less successful than intended. Federal spending policy for programs 
that benefit Native Americans must be considered holistically across 
appropriations subcommittee jurisdictions and recognize the unique 
historical and political position that was forced upon Tribal Nations 
by the United States.
    For example, other governments in this country can raise revenue 
through tax-exempt debt. The issuance of tax-exempt bonds are a 
valuable tool to raise capital because they have a longer payback 
period and lower interest, in general. Tribal Nations do not have 
parity in access to issuance of tax-exempt bonds because of the 
``essential government function'' test, which requires a Tribal Nation 
to prove that it is going to use the money for an essential government 
function. However, the Department of the Treasury (Treasury) has not 
defined what it means, nor has the Internal Revenue Service (IRS). Tax-
exempt debt used to be a market in Indian Country, but without an 
essential government function definition, banks backed out of those 
sort of activities. So, when Tribal governments raise capital for 
economic purposes, the same purposes we are uniquely reliant on to 
generate revenue, we are not able to use tax-exempt debt. Tribal 
governments are not able to use it for housing and other activities 
that, again, have other collateralized asset barriers when they take 
place on Trust lands. Indian Country needs patient capital. Changing 
this discriminatory practice around the issuance of tax-exempt debt 
would free up a lot of capital that other governments take for granted.
    Another example can be found in alignment of a banking and credit 
deserts map with a map of Tribal communities, which reveals a crisis 
for Tribal citizens and governments attempting to access cost-effective 
capital and banking services.\1\ Unbanked and underbanked areas in the 
United States are known as ``banking deserts.'' \2\ According to a 2013 
national survey of unbanked and underbanked households by the FDIC, 
16.9 percent of American Indian/Alaskan Native households did not have 
an account at an insured institution (unbanked) and 25.5 percent with 
an account also had to obtain financial services and products from non-
banks, alternative financial services providers, in the prior 12 months 
(underbanked).\3\ The general U.S. population is unbanked at about 7.7 
percent and underbanked at about 20 percent.\4\ Access to credit, 
especially for small businesses, declines as the distance between the 
bank and borrower increases.\5\
    The President's FY 2023 Budget Request to Congress calls for a 
historic shift in the paradigm of Nation-to-Nation relations that seeks 
to restore the promises made between our ancestors and the United 
States in several key programs. It includes requesting mandatory 
funding for: Indian Health Service, Department of the Interior Contract 
Support Costs and Section 105(l) Tribal Leases, and water settlements 
operations and maintenance; along with a myriad of investments in 
Indian healthcare, education, public safety, natural resource 
management, and infrastructure. The Biden-Harris request represents the 
most revolutionary presidential budget and policy proposals for Tribal 
programs ever, which have long been advocated for by Tribal leaders, 
are long overdue, and are prepaid for by our ancestors. The President's 
FY 2023 Budget for Federal agencies within this subcommittee's 
jurisdiction is largely a continuation of the status quo that results 
in Native Americans ranking near the bottom of all Americans in terms 
of health, education, and employment \6\ and the persistence of banking 
deserts that inhibit economic development, but this subcommittee can 
make a substantial difference by providing critical funding for 
programs beyond the norm.
    Cross-referencing OMB Native American Crosscut data with 
Appropriations Committee reports reveals that FY 2022 spending for 
Native American programs represents approximately 0.43% of total 
regular appropriations budget authority within this subcommittee's 
jurisdiction. With Federal investment metrics such as these, it is no 
surprise that Indian Country is in a State of catastrophe by national 
standards. Despite this chronic underinvestment, Indian Country is an 
important economic driver in the U.S. Economy.\7\ Collectively, Tribal 
Nations comprise the 13 largest employers in the United States, with 
Tribal businesses employing more than 700,000 employees, providing 
economic opportunity for both Native and non-Native workers.\8\ 
Evidence indicates that where Tribal Nations are successful with 
economic development that poverty rates, arrest rates, and health issue 
rates are lower, while educational outcomes and real per capita income 
are higher. Further, revenue generated on Tribal lands results in a 
spillover effect that supports local workforces and generates tax 
revenue.\9\ Ultimately, prosperity for Indian Country increases market 
penetration across sectors and productivity in the American labor 
market, as well as improves outcomes associated with other Federal 
spending that maximize value ratios of Federal input to desired 
output--in simple terms, good governance. As such, an investment in 
Indian Country is an investment in America for all Americans.
                    office of management and budget
    The United States has a unique legal relationship with Tribal 
governments--a Nation-to-Nation relationship that extends to all 
Federal agencies. On April 26, 2021, OMB released its Tribal 
Consultation Plan of Actions to: improve executive branch compliance 
with Executive Order 13175; consider establishment of a Tribal affairs 
advisor; conduct regular consultations with Tribal Nations and Tribal 
officials; develop an OMB Consultation Policy; consider providing 
additional information on Tribal funding; review its policies and 
procedures; and identify legislation of potential interest to Tribal 
Nations. Yet, OMB reports zero Federal funding for programs that 
benefit Native Americans in its FY 2015 through FY 2023 Native American 
Funding Crosscuts. Dedicated offices to promote and fulfill the Federal 
Government's trust and treaty obligations are a proven policy mechanism 
to reduce programmatic inefficiencies and improve outcomes, making 
government work better with and for Tribal Nations. Congress must 
provide OMB the resources to establish this ongoing expertise and must 
break down the historic institutions of discriminatory gatekeeping that 
harm Tribal Nations. It is a matter of fulfilling its trust 
responsibility. Congress can promote this government-wide efficiency by 
providing $2.5 million to OMB for an Office of Tribal Affairs to be 
bureaucratically located within and report directly to the OMB 
Director. The crosscutting nature of Tribal spending and policy 
throughout the Federal Government necessitates that this expertise be 
within the Office of the OMB Director.
                       department of the treasury
    Treasury maintains a long standing and significant role in matters 
that substantively impact the sovereignty and welfare of Tribal 
Nations. Treasury invests in economic development and financial 
services for Indian Country, primarily through funding and technical 
assistance for Community Development Financial Institutions (CDFIs). 
However, Treasury has other programs that make decisions affecting 
Tribal Nations and their citizens, such as the Internal Revenue 
Service, the Office of the Comptroller of the Currency (OCC), and the 
Office of Recovery Programs. The Native American Community Development 
Financial Institutions Fund Assistance Program (the NACA Program) has 
been successful and effective in infusing desperately needed financial 
capital into low-income Tribal communities through technical and 
financial assistance grants; however, the CDFI bond guarantee program, 
and the New Market Tax Credits program have not had the same success. 
Native CDFIs provide a wide range of loans to microenterprises, small 
businesses, consumers, and homeowners; financial education and 
entrepreneurial development training; small business planning and 
homebuyer education; and counseling on credit, foreclosure prevention, 
debt relief, and other ways to improve financial capacity. Due to 
limited funding, far fewer Native CDFI applications are approved than 
submitted. Barriers to capital access, aggravated by the COVID 
pandemic, necessitate greater funding for existing Native CDFIs and 
awards to more grant applicants to generate more loans, financial 
literacy, and entrepreneurial development counseling in Indian 
communities.
    Although regular appropriations funding levels for Treasury 
programs increased in FY 2021 for the first time in more than a decade, 
the increase has not kept pace with CDFI and Native CDFI growth during 
that same period, resulting in lost economic opportunities throughout 
Indian Country. Even with the increase in FY 2021 (which was flat-
funded for FY 2022), cross-referencing OMB Native American Crosscut 
data with Appropriations Committee reports reveals that FY 2022 
spending for Native American programs represents approximately 0.15% of 
total regular appropriations budget authority provided for Treasury 
within this subcommittee's jurisdiction. The subcommittee should 
provide at least $30 million to the CDFI Fund Program Account for 
Native CDFIs and $2.5 million for an Office of Tribal Affairs within 
the Office of the Secretary of the Treasury. Establishment of a 
permanent Office of Tribal Affairs within the Office of the Secretary 
of the Treasury will promote institutional expertise and guidance 
across Treasury policy and activity. Congress and Treasury should 
welcome this opportunity to reduce costs and increase efficiencies 
associated with necessary operations of the agency, while 
simultaneously maximizing the American taxpayer's investment in this 
country and growing local, regional, and national economic 
productivity.
                     small business administration
    SBA focuses on capital access, contracting, and entrepreneurial 
development. The SBA's Entrepreneurial Development budget includes a 
small line item for Native American Outreach that funds the Office of 
Native American Affairs (ONAA) which coordinates all SBA program 
activities to help Tribal Nations and Native-owned businesses navigate 
SBA contracting, business assistance and lending programs. In the COVID 
pandemic's wake, the ONAA needs more outreach funding to engage in 
multi-agency workshops and Native supplier initiative events, encourage 
greater use of SBA loan guarantees, assist Native recipients of 
Paycheck Protection Program loans and disaster loans, and strengthen 
Native contractors' participation in the SBA's 8(a), HUB Zone, and 
other small business contracting programs. In order to provide 
meaningful services, outreach, and education that is national in scope 
to Tribal Nations and Native-owned businesses, this subcommittee should 
provide at least $5 million for the SBA's ONAA.
                   federal communications commission
    Tribal lands experience lower rates of both fixed and mobile 
broadband deployment as compared to non-Tribal areas of the United 
States, particularly in rural areas.\10\ The FCC Office of Native 
Affairs and Policy (FCC-ONAP) States that, ``[u]nderstanding the 
complexity of the digital divide in Indian Country requires an 
appreciation of the unique challenges facing Tribal Nations, which 
include deployment, adoption, affordability, and access to spectrum, as 
well as lack of investment dollars and access to credit and start-up or 
gap financing.'' Through this Tribal engagement, the FCC has revamped 
regulations to assist in bridging the digital divide on Tribal lands. 
However, the FCC-ONAP office was created without dedicated funding, and 
it was not until passage of the FY 2014 Omnibus that the Office 
received $300,000 to support its Tribal consultation and training 
directives, an amount that is not commensurate with the scope of the 
mission tasked. This subcommittee should expressly provide $2.5 million 
to FCC-ONAP to promote an office with the resources to address barriers 
that exacerbate the digital divide in Indian Country.
                               conclusion
    Our people have paid for every penny obligated to Indian Country 
hundreds of times over by providing this nation with our land. In order 
to uphold this Nation's promises to its people, it must first uphold 
its promise to this land's First People. We expect to continue to be 
treated as sovereign nations and with governmental parity. When we work 
together we can achieve so much. We must now continue down that path of 
Nation-to-Nation growth, and only then will all of our people be able 
to fully flourish.
---------------------------------------------------------------------------
    \1\ Native American Finance Officers Association (NAFOA), Comments 
Re: Community Reinvestment Act Modernization, Docket ID: OCC-2018-0008, 
2.
    \2\ Donald P. Morgan, Maxin L. Pinkovskiy, and Bryan Yang, Banking 
Deserts, Branch Closings, and Soft Information, March 7, 2016, https://
libertystreeteconomics.newyorkfed.org/2016/03/banking-deserts-branch-
closings-and-soft-information.html.
    \3\ Federal Deposit Insurance Corporation, 2013 Federal Deposit 
Insurance Corporation National Survey of Unbanked and Underbanked 
Households, 16, https://www.fdic.gov/householdsurvey/2013report.pdf.
    \4\ Id.
    \5\ Id.
    \6\ U.S. Commission on Civil Rights, Broken Promises: Continuing 
Federal Funding Shortfall for Native Americans, 1, available at: 
https://www.usccr.gov/files/pubs/2018/12-20-Broken-
Promises.pdf, accessed on: May 25, 2022.
    \7\ Patrice H. Kunesh, Getting real about Indian Country--
surprising progress in the heartland, https://indiancountrytoday.com/
opinion/getting-real-about-indian-country-surprising-progress-in-the-
heartland, Accessed: April 6, 2022.
    \8\ Id.
    \9\ Id.
    \10\ See FCC, Fixed Broadband Deployment Data from FCC Form 477, 
available at https://www.fcc.gov/general/broadband-deployment-data-fcc-
form-477; FCC, Mobile Deployment Form 477 Data, available at https://
www.fcc.gov/mobile-deployment-form-477-data.

    [This statement was submitted by Larry Wright, Jr., Director]
                                 ______
                                 
                 Prepared Statement of Lincoln Network
Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the 
subcommittee:

    We are writing on behalf of Lincoln Network to encourage this 
subcommittee to provide additional funding to the Federal Trade 
Commission (FTC) and to direct funds for the hiring of additional staff 
technologists.
    In March, Congress passed the Consolidated Appropriations Act that 
appropriated $376.5 million to the FTC for FY 2022.\1\ The FTC 
requested that this subcommittee appropriate $490 million for FY 2023, 
an increase of $139 million.\2\
    The report language from the House Appropriations Committee for FY 
2023 recommended fully funding the FTC's requested budget at $490 
million.\3\ This report also encourages the Commission to address 
several concerns related to the technology industry, including 
deceptive data collection practices, fraud related to cryptocurrencies, 
online misinformation, and online privacy for children. Addressing 
these concerns requires deep technical expertise that is currently 
lacking at the FTC.
    In its own appropriations bill, the subcommittee should fully fund 
the FTC's FY 2023 budget request and specify that a significant portion 
of this funding should go toward bolstering technical expertise at the 
Commission.
                               background
    The FTC, in conjunction with the Department of Justice Antitrust 
Division, is primarily responsible for enforcing laws related to unfair 
and deceptive business practices and other anticompetitive activity. 
Over the past few decades, the Commission has increasingly exercised 
its authority over the technology industry. The Commission regularly 
scrutinizes the business practices of tech firms and reviews mergers 
and acquisitions in the technology sector. As the size and complexity 
of the tech industry have grown, it is essential that the FTC has 
sufficient technical expertise to properly evaluate consumer impacts in 
this sector.
    Recently, the FTC has taken dozens of enforcement actions against 
tech firms, particularly regarding user privacy and data security 
practices.\4\ The Commission has settled cases against Google, 
Facebook, Twitter, and several other tech companies recently for 
privacy violations and for violating previous orders. Perhaps most 
significantly, the FTC is currently engaged in litigation against 
Facebook (now Meta), alleging that the company has abused its 
``monopoly power'' to implement ``an anticompetitive scheme that 
prevented differentiated and innovative firms from gaining scale, thus 
enabling Facebook to maintain its dominance.'' \5\ All of these actions 
require the Commission to have a firm grasp of the technical issues at 
play in addition to legal and economic factors.
    The FTC's technical expertise, while great, tends to lag behind 
other global enforcement agencies. For example, the FTC's Division of 
Privacy and Identity Protection has 40-45 employees. The United 
Kingdom's and Ireland's enforcement agencies have over 700 and 150 
employees, respectively.\6\ While this comparison is imperfect, 
comparing one Division to entire foreign agencies, this analysis 
highlights that the FTC's technical staff deserves to be fully funded.
    Increasing technical expertise at the FTC will not necessarily 
result in more cases being brought against tech firms. The primary 
value-add for investing in technical expertise at the Commission is to 
help its lawyers and economists more accurately evaluate potential 
consumer harms, establish enforcement priorities, and develop 
technological solutions to operational challenges.
              the need for technical expertise at the ftc
    The FTC has long recognized the need for expanded technical 
capacity, both for enforcement and general operations. In its FY 2023 
budget request, the Commission asked Congress to increase its 
appropriation by $65.4 million to hire 300 additional full-time 
equivalent employees. Among other areas, this increase would go to 
support increasing technology enforcement capacity and developing 
technological solutions to casework and litigation challenges.\7\ With 
regard to enforcement, the Commission further explained:

        In FY 2020, the Commission established the Bureau of 
        Competition's Technology Enforcement Division (TED) to 
        reinvigorate and refocus BC's
        commitment to identifying and challenging anticompetitive 
        mergers and conduct in complex and increasingly pervasive 
        technology markets. While pursuing this work, FTC staff are 
        severely outmatched by the resources that dominant technology 
        firms can deploy, such that the number of attorneys and experts 
        working for defendants can outmatch FTC by ten to one.\8\

    Federal agencies are often outgunned when engaging in enforcement 
actions against tech firms. Giving the FTC the resources it needs to 
hire more technical experts for the TED and other tech-focused 
departments would undoubtedly help it more effectively and efficiently 
police anticompetitive activity in tech markets.
              the need for qualified economists at the ftc
    The Bureau of Economics is crucial to the Commission's antitrust 
and consumer protection missions. It ``helps  . . .  evaluate the 
economic impact of  . . .  actions by providing economic analysis for 
competition and consumer protection investigations and rulemakings.'' 
\9\ The Bureau employs numerous Ph.D. economists, research analysts, 
accountants, and other staff necessary to support the analysis it 
provides to the Commission.\10\ Throughout the decades, the Bureau's 
responsibilities have increased to include analysis supporting 
antitrust investigations, merger review, and support for other types of 
investigations and cases.
    In addition to increased technical staffing levels, the FTC's 
budget justification requests that Congress provide funding for 20 
full-time employees to ``provide increased support and economic 
analysis  . . .  and to increase the amount of economic analysis that 
guides the Commission's consumer protection and competition policies 
and enforcement.'' \11\ Within the justification document, the 
Commission expresses a desire for the prospective full-time employees 
to be economists focused on antitrust, including ``merger and nonmerger 
enforcement investigations and litigation, and research to help the FTC 
focus antitrust enforcement to maximize the agency's ability to 
maintain competitive markets.'' \12\
    The Commission's primary role is protecting consumers, not solely 
competition. Even the competition model should ask the question of 
whether the presence or absence of competition harms consumers. The 
Commission and Bureau should be focused on ensuring that government 
practices do not harm consumers by restricting entry, limiting 
competition, chilling innovation, or restricting choices.\13\
    Given the Bureau's nature supporting the Commission's work, the 
core request seems appropriate. However, this subcommittee should focus 
on the Bureau and Commission's broader work. While additional staff 
should help the Commission's antitrust efforts, this subcommittee 
should make it clear that any new staff should be used to support the 
Bureau's broader mission of protecting consumers.
                            recommendations
    This subcommittee should fully fund the FTC's FY 2023 Budget 
Request.
    As we have argued previously, complex technical challenges and 
increased workloads at the FTC necessitate additional resources.\14\ 
Just as their House counterparts did, this subcommittee should fully 
fund the FTC's FY 2023 budget request of $490 million. While funding 
alone is insufficient, granting the Commission the resources to expand 
its technical capacity would result in more effective supervision of 
tech markets and more efficient operations at the FTC.
    This subcommittee should include language in the FY 2023 
appropriations bill that directs funds toward hiring additional 
technical staff.
    The need for additional technical capacity at the FTC is clear and 
immediate, and it is incumbent upon appropriators to ensure that the 
Commission has the resources it needs to address this challenge. 
Specifically, this subcommittee should direct the necessary funds of 
the $65.4 million requested for additional, full-time employees toward 
hiring individuals with technical or economics expertise. These new 
roles could help close capacity gaps within the Technology Enforcement 
Division, Division of Privacy and Identity Protection, Office of 
Technology Research and Investigation, Bureau of Economics, regional 
offices, and other relevant parts of the FTC. In all cases, this 
subcommittee should also ensure that the Commission remains committed 
to its original and statutory purposes of protecting consumers, with a 
focus both on government practices and private sector practices that 
harm consumers.
---------------------------------------------------------------------------
    \1\ Consolidated Appropriations Act, 2022, Public Law 117-103 
(2022).
    \2\ Federal Trade Commission, Federal Trade Commission Fiscal Year 
2023 Congressional Budget Justification (March 2022), p. 8, https://
content.mlex.com/Attachments/2022-04-04
_X75ZUQW17T5GT2LS/FTC%20-%20FY23%20CBJ.pdf.
    \3\ Financial Services and General Government Appropriations Bill, 
2023, p. 69-72, (2022), https://docs.house.gov/meetings/AP/AP00/
20220624/114951/HMKP-117-AP00-20220624-SD002.pdf.
    \4\ Federal Trade Commission, FTC Report to Congress on Privacy and 
Security, (Sept. 13, 2021), p. 2 (focusing on efforts on health apps; 
accuracy of data for housing, employment, and credit; 
videoconferencing; and education technology, https://www.ftc.gov/
system/files/documents/reports/ftc-report-congress-privacy-security/
report_to_congress_on_privacy_and_data_
security_2021.pdf).
    \5\ Federal Trade Commission v. Facebook, Inc., 1:20-cv-03590-JEB 
(2021).
    \6\ Ibid., p. 7.
    \7\ Federal Trade Commission, Federal Trade Commission Fiscal Year 
2023 Congressional Budget Justification (March 2022), p. 10, https://
content.mlex.com/Attachments/2022-04-04_X75ZUQW17T5GT2LS/FTC%-
%FY23%CBJ.pdf.
    \8\ Ibid.
    \9\ Federal Trade Commission, ``Bureau of Economics,'' https://
www.ftc.gov/about-ftc/bureaus-
offices/bureau-economics.
    \10\ Michael Salinger and Paul Pautler, ``The Bureau of Economics 
at the US Federal Trade Commission,'' Federal Trade Commission, April 
2006, https://www.ftc.gov/sites/default/files/
attachments/careers-bureau-economics/06beover.pdf.
    \11\ See 2023 Budget Justification, p. 9-10.
    \12\ Ibid., p. 13.
    \13\ Paul A. Pautler, ``A History of the FTC's Bureau of 
Economics,'' September 8, 2015, p. 82, https://papers.ssrn.com/sol3/
papers.cfm?abstract_id=2657330.
    \14\ ``Providing Resources for the Federal Trade Commission to 
Promote Healthy Digital Markets and U.S. Leadership in Technology 
Governance'' (2021), https://lincolnpolicy.org/wp-content/uploads/2021/
02/FTC-approps-letter-final.pdf.

    [This statement was submitted by Jonathon Hauenschild, M.A., J.D., 
Policy Counsel and Luke Hogg, Policy Manager]
                                 ______
                                 
     Prepared Statement of the National Association of Drug Court 
                             Professionals
    Chairman Van Hollen, Ranking Member Hyde-Smith, and distinguished 
members of the subcommittee, I am Meg Kaiser, prevention associate with 
the Harford County Office of Drug Control Policy in Maryland. I am 
honored to have the opportunity to submit my testimony on behalf of 
40,000 treatment court professionals working in adult drug courts, 
family treatment courts, juvenile drug treatment courts, Tribal healing 
to wellness courts, impaired-driving courts, and veterans treatment 
courts. I am requesting Congress provide level funding of $3 million to 
the authorized Drug Court Training and Technical Assistance Program 
(Public Law 115-271) at the Office of National Drug Control Policy for 
fiscal year 2023.
    Across the country and in my home state of Maryland, treatment 
courts are on the front lines of saving lives, reuniting families, 
cutting crime, and saving money. They unite public health and public 
safety to transform the justice system's response to substance use and 
mental health disorders by offering an evidence-based alternative to 
incarceration that combines individualized, evidence-based treatment 
with accountability. Continued education and training for the 
multidisciplinary court team (which includes the judge, treatment 
providers, defense, prosecution, law enforcement, community 
supervision, and others) is vital to ensuring fidelity to the 
successful treatment court model. In fact, research shows treatment 
courts whose teams participate in training see a 55% reduction in 
recidivism among program graduates.
    I know firsthand the importance of training and technical 
assistance (TTA) for treatment courts. Prior to becoming a prevention 
associate, I served as drug court case manager. In my current role, I 
work closely with the Harford County Drug Court and see how training 
and technical assistance (TTA) at the local and national level pays off 
in ensuring fidelity to the treatment court model. Our participants 
come from different backgrounds and face unique barriers to recovery 
when they enter the program. From incentives and sanctions to 
medication for addiction treatment and so many other relevant topics, 
training is fundamental to enabling the court team to effectively serve 
the unique needs of program participants.
    I not only attest to the importance of TTA in my professional 
capacity but also in my personal capacity. In 2018, I graduated from 
the Harford County Drug Court. I had casually and sporadically used 
substances in college but spiraled into heavy substance use in 2012 
after I was sexually assaulted. I became dependent on opiates as I 
self-medicated my trauma, and my life unraveled. I was dismissed from 
the University of Maryland right before my senior year, and I began 
stealing to support my addiction. For a long time, I managed to conceal 
the trauma of my sexual assault and my substance use disorder from my 
family, but eventually I could not hide my struggle. While in 
treatment, I resumed use after receiving news that a dear friend had 
overdosed. I don't like to think about where my downward trajectory 
could have landed me. Had my parents not turned me in, and the drug 
court program not accepted me, I'm confident I wouldn't be here today.
    I'm grateful every day for the redirection my life took once I got 
into drug court. The treatment, supervision, coaching, and recovery 
support from the multidisciplinary treatment court team helped turn my 
life around. The court team was highly functional and well trained. 
They worked together seamlessly to respond to every bump in the road 
and ensure I had the tools I needed to find and sustain recovery. The 
treatment providers developed an individualized treatment plan for me 
that included medication for opioid use disorder to help stabilize me 
in early recovery. More than 3 years after graduating, I'm in long-term 
recovery without medication, and I'm once again a proud daughter, 
sister, friend, taxpayer, and employee. I have dedicated my career to 
helping people turn their lives around and stay in recovery.
    Now more than ever, TTA are needed to educate treatment courts on 
critical issues such as medication for addiction treatment, overdose 
prevention, and equity and inclusion. Understanding and implementing 
best practices improves service delivery and outcomes and helps 
treatment courts address the most pressing issues facing our justice 
system.
    I am one of 1.5 million people who have found long-term recovery 
through treatment courts. Supporting TTA for treatment courts is 
critical to ensuring these programs continue providing quality, 
evidence-based care to participants struggling with mental health and 
substance use disorders. I encourage this committee to provide level 
funding of $3 million for the Drug Court Training and Technical 
Assistance Program at the Office of National Drug Control Policy.

    [This statement was submitted by Margaret ``Meg'' Kaiser, 
Prevention Associate, Harford County Office of Drug Control Policy, 
Maryland]
                                 ______
                                 
        Prepared Statement of the National Coalition for History
    The National Coalition for History (NCH) supports the Biden 
administration's recommended funding level of $426.5 million for the 
National Archives and Records Administration's (NARA) Operating 
Expenses (OE) budget in fiscal year (FY) 2023, which is an increase of 
$38.2 million from the FY 22 level of $388.3 million.
    NCH also supports the Administration's base funding level of $9.5 
million in FY 23 for the National Historical Publications and Records 
Commission (NHPRC) grants program. That represents an increase of $2.5 
million over the FY 22 base level of $7 million. The NHPRC received a 
total of $12.3 million in funding in FY 22. However, $5.3 million of 
that was the result of congressionally directed funding which we expect 
will fluctuate from year to year.
    The National Coalition for History (NCH) is a consortium of 43 
organizations that advocates and educates on Federal legislative and 
regulatory issues affecting historians, archivists, political 
scientists, documentary editors, teachers, students, genealogists, and 
other stakeholders. As researchers, teachers, and conservators of 
American history and culture, we care deeply about the programs and 
activities of NARA and the NHPRC.
    NARA has reached an inflection point. Recently, David S. Ferriero 
retired after 12 years as Archivist of the United States (AOTUS). We 
want to recognize and thank him for his leadership, dedication, and 
integrity during what have been challenging times for NARA.
    The new Archivist will face tremendous challenges in both the short 
and long term. For far too long, NARA has been neglected and 
underfunded. NARA has made progress but continues to struggle with the 
transition from paper to electronic records. As the quantity of 
material increases exponentially, NARA will have difficulty keeping up 
with Federal records generated each year, let alone tackling the 
massive backlog of older, historically important paper records that 
should be digitized. Perhaps most importantly, the quality and quantity 
of services provided to our citizens will further deteriorate if not 
addressed in this budget cycle. There are indications that NARA may be 
unable to manage these important responsibilities, a trend that has 
only been exacerbated by the pandemic, the ensuing shutdown and delayed 
restoration of on-site services. This limitation owes less to 
management issues than to inadequate funding.
    NARA's operating expenses (OE) budget has remained stagnant for 
more than a decade at a time when the transition to use of electronic 
records by Federal agencies is well underway. Investment in human 
capital, including professional archivists, is vital for providing an 
elevated level of service to the public. For too long Congress and the 
administrations of both parties have, unfortunately, viewed NARA as a 
mere housekeeping agency, rather than as a vital agency that ensures 
transparency, efficiency, and historical documentation for the Nation.
    NARA's FY 22 operating expenses budget is $388 million, which is 
only $3 million more than the FY 18 level of $385 million. NARA 
requires a level of appropriations commensurate with its vastly 
expanded responsibilities. This chart provides a summary of the NARA OE 
and NHPRC budgets over the past decade.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In inflation-adjusted dollars, NARA's OE budget has declined for 
more than a decade.--No Federal agency can absorb such significant 
reduction in funding without concomitant decreases in public services. 
Even before the pandemic, NARA had to reduce hours at its research 
rooms.
    We fully understand, and agree, that NARA must prioritize the 
safety of its staff, researchers, and visitors and we realize they are 
doing the best they can under unusual and trying circumstances. 
Currently, customers must make appointments in advance to visit NARA's 
research rooms and the wait time varies from location to location. In a 
vast number of cases, researchers working on a project cannot complete 
their work in a single visit, thus increasing the time required to 
conduct research.
    Researchers may be coming from some distance to use the records at, 
for example, a presidential library, and being unable to conduct 
research on consecutive days is not merely an inconvenience. It may 
make it impossible to do the research at all. To its credit, NARA has 
tried to enhance the customer experience by allowing the researcher to 
request the records to be pulled in advance. However, the current 
system simply cannot be allowed to continue indefinitely.
    We appreciate the additional funds you provided to address the 
backlog of over 500,000 requests for veteran's records at the National 
Personnel Records Center (NPRC). However, these are not the only 
category of NARA's holdings that are experiencing delays. There are 
tremendous backlogs in responding to Freedom of Information Act (FOIA) 
requests. In addition, NARA is also facing backlogs in the 
declassification of records hampering the ability of historians and 
others to perform research. Delays in the processing of records and 
responses to records requests at presidential libraries have also 
increased.
    In recent years Congress and the executive branch have placed 
additional responsibilities on the agency without providing the funding 
necessary to assume these functions. These include transitioning from 
the preservation and storage of paper records to the preservation and 
storage of electronic records. NARA also faces the continued addition 
of presidential libraries. Each new presidential library created and 
placed under NARA's care adds additional costs for staff, maintenance, 
and records management.
    The Federal Government's transition to electronic records, 
including email, has exponentially increased the number of records that 
NARA must process and catalog. In 2019, NARA and the Office of 
Management and Budget (OMB) announced that the agency will no longer 
accept paper records from Federal agencies as of December 31, 2022. We 
are concerned that with diminished resources and the impact the 
pandemic had on its ability to perform even its most basic functions, 
NARA will not be prepared to continue this transition without serious 
disruptions. We doubt that this deadline can be met without additional 
resources, both human and technological.
    Despite the additional appropriations you provided for this purpose 
in the FY 22 budget, NARA lacks the funding needed to meet the 
imperative for digitization and accessibility. This need was made even 
more obvious during the pandemic which showed the public's expectation 
that the Federal Government's records can be easily found on the 
internet. In addition, the need to manage large volumes of textual 
records is not diminishing. Proactively funding NARA's records 
management programs ensures that agencies operate more efficiently and 
that permanent records are preserved. We urge you to provide NARA the 
additional funding necessary to ensure a seamless transition to all 
digital recordkeeping in the coming years.
    While not an issue that can be addressed in the appropriations 
process, we urge you to press the authorizers on the House Committee on 
Oversight and Reform to pass legislation strengthening and clarifying 
the Presidential Records Act (PRA). Events of the past few years have 
shown how woefully inadequate the statute has proven in ensuring that 
the complete historical record of an administration is preserved. 
Increased accountability and oversight are necessary.
    national historical publications and records commission (nhprc)
    The National Historical Publications and Records Commission (NHPRC) 
is the grant-making arm of NARA. It enables the National Archives to 
activate resources that connect the American people with archival and 
historical materials of deep significance to the present. Archive-
specific work includes the preservation and access of electronic 
records and disaster preparedness for vulnerable collections. 
Historical grants provide for the creation of documentary collections 
(websites, podcasts, books, databases, transcripts, and audio 
resources) of nationally significant groups and individuals. Some 
examples include the documentary histories of people like George 
Washington, Willa Cather, Thomas Edison, Frederick Douglass, Walt 
Whitman, Albert Einstein, Martin Luther King, Jr., and Eleanor 
Roosevelt. NHPRC grants also fund the curation of content pertaining to 
noteworthy institutions like the early Supreme Court, the First Federal 
Congress, and the Freedmen's Bureau. In addition, the NHPRC has funded 
an ongoing project to make the papers of the Founding Fathers available 
for free online.
    NCH supports the Administration's minimum base funding level of 
$9.5 million in FY 23 for the NHPRC. That represents an increase of 
$2.5 million over FY 22 base level of $7 million. The NHPRC received a 
total of $12.3 million in funding in FY 22. However, $5.3 million of 
that was congressionally directed pass-thru funding, an amount which we 
expect will fluctuate from year to year. $9.5 million would enable 
continued support of ongoing programs and modest investment in new 
ones.
    Thank you for the opportunity to present our views on the FY 23 
budgets of NARA and the NHPRC.

    [This statement was submitted by Lee White, Executive Director]
                                 ______
                                 
           Prepared Statement of National Security Counselors
    Chairman Van Hollen, Ranking Member Hyde-Smith, and members of the 
Financial Services and General Government Appropriations subcommittee, 
thank you for the opportunity to provide this testimony.
    This testimony will discuss an area where I believe that 
Congressional action is needed to address a subtle issue which 
nonetheless has significant deleterious effects for transparency and 
accountability, namely, agencies' expansive use of secret filings in 
Freedom of Information Act (``FOIA'') cases and the resulting inability 
of journalists, academics, and members of the public to access these 
court filings years or even decades later.\1\
    FOIA cases are somewhat unique in civil litigation, due to the fact 
that the agency being sued must demonstrate through admissible evidence 
that information must be withheld from disclosure without disclosing 
the information in question. Agencies generally do so by submitting 
sworn declarations from FOIA officers which ``must prove that each 
document that falls within the class requested either has been 
produced, is unidentifiable, or is wholly exempt from the act's 
inspection requirements.'' \2\ These declarations ``must be 'relatively 
detailed' and nonconclusory,'' \3\ but ``would not have to contain 
factual descriptions that if made public would compromise the secret 
nature of the information.'' \4\ In some cases, an agency will assert 
that it cannot meet its burden on the public record, and in such cases 
it generally attempts to file a declaration in camera and ex parte so 
that only the judge-and not the plaintiff or their attorney--sees it. 
This mechanism is an imperfect compromise at best, but it is 
increasingly overused and abused by agencies with the passive 
acquiescence of judges, who cite the presumption of good faith that 
they must afford to agency declarations and virtually never refuse to 
accept such filings.
    It is not unheard of for a judge to grant summary judgment to an 
agency solely on the basis of an in camera declaration, in which the 
agency kept from public view not only the facts which would support its 
case but even the legal arguments. In such cases, the actual legal 
brief for the agency's motion includes little more than boilerplate 
language about the burden of proof and the proper conduct of FOIA 
litigation, and then refers the judge to the in camera declaration for 
all the relevant analysis. For instance, one of the FOIA cases 
involving the memos written by former Federal Bureau of Investigation 
(``FBI'') Director James Comey about his meetings with former President 
Trump was decided solely on the basis of in camera testimony, where 
even the arguments were kept secret from the plaintiffs (although the 
judge in that case did agree to review the memos themselves in camera, 
which is very much the exception to the general practice).\5\ In 
another such case, the judge found not only that the declaration filed 
in camera by the FBI was proper, but that the plaintiff did not even 
deserve a chance to file an opposition brief because ``the evidence 
presented in camera was so conclusive as to the questions presented 
that further briefing and argument was clearly unnecessary.'' \6\ 
Bizarrely, that same judge had the following to say about this 
purportedly incontrovertible proof:
    Nonetheless, the court must state that Hardy's unredacted 
declaration is the quintessence of bureaucratic obfuscation. While 
attempting to decipher its meaning, I recalled one of Orwell's 
observations when confronted with such writing:

        As soon as certain topics are raised, the concrete melts into 
        the abstract and no one seems able to think of turns of speech 
        that are not hackneyed: prose consists less and less of words 
        chosen for the sake of their meaning, and more and more of 
        phrases tacked together like the sections of a prefabricated 
        henhouse.

    George Orwell, ``Politics and the English Language,'' in A 
Collection of Essays 162, 165 (Anchor Books 1954). Which begs the 
question, why did the government resort to hackwork here? Orwell again:

        The inflated style is itself a kind of euphemism. A mass of 
        Latin words falls upon the facts like soft snow, blurring the 
        outlines and covering up all the details. The great enemy of 
        clear language is insincerity. When there is a gap between 
        one's real and one's declared aims, [the writer] turns, as it 
        were, instinctively to long words and exhausted idioms, like a 
        cuttlefish squirting out ink.\7\

    My research has determined that the number of such filings has 
shown a slow increase over time, from approximately 15 instances in 
1994 to the high-water mark of approximately 56 in 2017.\8\ I was only 
able to identify three instances of a judge denying an agency's request 
to file an in camera declaration since 1993. My personal litigation 
experience has suggested an increase in the expansiveness of agencies' 
claims that information must remain secret. In the past, I have 
occasionally received redacted versions of such declarations through 
FOIA or similar means, despite the fact that the agency insisted they 
could not possibly be filed on the public record without serious 
consequences.\9\ Some of the newly released information has been 
mundane, and some has been of significant historical importance. For 
example, in the landmark FOIA case Weberman v. NSA, the National 
Security Agency (``NSA'') argued that it could neither confirm nor deny 
the existence of records about a telegram that Jack Ruby was alleged to 
have sent to Havana the year before the assassination of President 
Kennedy.\10\ The district court and the 2nd Circuit granted summary 
judgment to NSA on the basis of an in camera classified declaration, 
and it was not publicly revealed whether NSA had intercepted such a 
telegram. However, in 2011, I obtained a redacted version of the 
classified declaration from NSA, which revealed for the first time that 
NSA had not intercepted the alleged telegram because it had lacked the 
technical capacity at the time.\11\ This was historically important 
information which would never have seen the light of day but for my 
efforts, but the public's access to such information should not depend 
on people like me pursuing it.
    It is for these reasons that I bring this issue to the 
subcommittee's attention. It is arguably beyond the jurisdiction of 
this subcommittee, or even of the Appropriations Committee as a whole, 
to make a significant change to the way in which in camera declarations 
are handled in FOIA cases, but such an effort should not be undertaken 
without hard data. It will be important for legislators to understand 
how prevalent this practice truly is and under what circumstances these 
filings are made by agencies and accepted by courts. To this end, I ask 
that the subcommittee appropriate sufficient funds from within the 
Administrative Office for U.S. Courts account (Salaries and Expenses) 
directing to that office to conduct a comprehensive survey of all in 
camera agency declarations filed in FOIA cases within the past 10 years 
(or another reasonable time period), specifically for the purpose of: 
(1) identifying with certainty the number of such filings; (2) 
identifying any geographic or temporal trends; (3) specifying whether 
the agency sought leave for the filings or simply filed them without 
asking; (4) indicating the depth of the court's discussion of the 
appropriateness of the in camera filings; (5) indicating the nature of 
the claims being supported by the in camera filings; and (6) providing 
any other relevant data.
    I also ask the subcommittee to appropriate sufficient funds to the 
Administrative Office to perform a feasibility study for a process in 
which all agency declarations filed in camera in FOIA cases would 
automatically be filed on the public record after 5 years (or another 
reasonable time period). This study would allow Congress to 
intelligently decide whether it would be appropriate to legislate such 
a proposal, so that these important court records would ultimately 
become accessible to journalists, academics, and the general public 
without relying on individual persons to pursue their release as I did. 
If any type of sealed court filings should be presumptively open after 
a period of time, it would most assuredly be filings made in litigation 
over government transparency.
---------------------------------------------------------------------------
    \1\ NSC's Deputy Executive Director Bradley Moss provided oral 
testimony elaborating on this topic as part of the 30 April 2021 Demand 
Progress Webinar on fiscal Year 2022 Appropriations Public Witness 
Testimony, at https://www.youtube.com/watch?v=qsUc5nLcZDk (testimony 
begins at 43:56).
    \2\ Nat'l Cable Television Ass'n. v. FCC, 479 F.2d 183, 186 (D.C. 
Cir. 1973).
    \3\ Goland v. CIA, 607 F.2d 339, 350 (D.C.Cir. 1978).
    \4\ Vaughn v. Rosen, 484 F.2d 820, 826-27 (D.C. Cir. 1973).
    \5\ CNN, Inc. v. FBI, 293 F. Supp. 3d 59, 66-67 (D.D.C. 2018).
    \6\ Truthout v. DOJ, 20 F. Supp. 3d 760, 770 (E.D. Cal. 2014).
    \7\ Id. at 768-69.
    \8\ This research was performed by searching court dockets from 
1993-2018 for the term ``in camera'' and then parsing out the 
appropriate entries. These dockets were provided by the Transactional 
Records Access Clearinghouse's FOIA Project. The degree to which these 
dockets accurately reflect court filings during this time period cannot 
be ascertained at this time, and so these figures may not represent the 
totality of the practice. Detailed information about this analysis and 
my bases for making any other claim in this testimony is available upon 
request.
    \9\ However, as of the last few years, agencies have resisted 
releasing such in camera declarations through FOIA or Mandatory 
Declassification Review (``MDR''), taking the position that because 
they were sealed by a court the agency is powerless to release them. 
The result of this shift in many cases is that courts will not unseal 
them because they remain classified, while agencies will not declassify 
them because they remain sealed, making it literally impossible for 
them to be made publicly available except when the agency voluntarily 
decides to release them.
    \10\ 668 F.2d 676, 677 (2d Cir. 1982).
    \11\ I obtained this record by filing an MDR request with the NSA 
pursuant to Executive Order 13,526. MDR is a different mechanism than 
FOIA which is limited to classified documents.

    [This statement was submitted by Kel McClanahan, Executive 
Director]
                                 ______
                                 
              Prepared Statement of Never Again Coalition
Dear Chair Van Hollen and Ranking Member Hyde-Smith:

    We are writing to urge you to support increased funding for the 
Financial Crimes Enforcement Network (FinCEN) in FY2023 FSGG 
Appropriations. Today, the House Appropriations FSGG subcommittee has 
approved $210.33 million in FinCEN funding in their FY2023 bill \1\.
    The Never Again Coalition is an organization dedicated to the 
prevention and cessation of genocide and mass atrocities everywhere by 
focusing on five core areas: Sudan, South Sudan, Democratic Republic of 
Congo, Burma and Bangladesh. We seek to empower those affected by mass 
violence through community-led initiatives, awareness building, 
partnerships, and advocacy. The United States government is our most 
powerful ally in these goals and that is why we are urging increased 
funding for FinCEN, to allow them to enact and enforce effective laws 
that will disrupt the cycle of corruption that enable genocide and mass 
atrocities to occur.
    Effective laws, and their enforcement, are part of the 
infrastructure that is necessary for a healthy society. Without them 
the financial system loses integrity, threatening common goals of the 
United States and its allies: basic human rights, democracy, 
sustainable development, and peace. Congress recognized this and passed 
the Corporate Transparency Act in December 2020, in a bipartisan vote. 
Thus directed, Congress must now provide the tools to FinCEN to make 
this act reality. The absence of integrity in our financial system has 
been made stark by the war in Ukraine. When they were most in need, the 
tools were not sufficient. We can do better, and we must.
    It isn't just Russian oligarchs and corrupt government officials 
that we must safeguard our financial system from. It is the duty of the 
U.S., as the leading economy in the world, to prevent bad actors, 
wherever they are, from using and manipulating U.S. laws and financial 
infrastructure for illegal activities. The $210.3 million dollars 
FinCEN is requesting, and the House FSGG subcommittee approved, to 
implement and enforce the CTA, is nearly imperceptible in the scheme of 
costs associated with corruption. In Africa alone, ``Every year, an 
estimated $88.6 billion, equivalent to 3.7% of Africa's GDP, leaves the 
continent as illicit capital flight, according to UNCTAD's Economic 
Development in Africa Report 2020, almost double the amount it receives 
through international development assistance.'' \2\
    This begs the question--is it more effective to systemically fight 
corruption with laws and enforcement, or deal with the resulting famine 
and mass displacement that stems from corruption and kleptocracy?
    The U.S. is wasting resources through development aid if corruption 
isn't stopped and missing opportunities for affected communities around 
the globe to live fulfilling and productive lives when they are not 
reaping any of the benefits from development aid and investment. For 
the U.S. to fulfill its vision of basic human rights for all, there 
must be a commitment to invest in the tools needed to stop illicit 
financial flows. According to a recent report from Transparency 
International, ``Up to the Task'' \3\, the U.S. financial system 
generates thousands of suspicious activity reports (SAR) each year, but 
we staff our enforcement team to only investigate a small fraction of 
these: 10,000 SARs for each staff person, per year. In Germany and 
France the equivalent ratio is 600:1. Without robust and sustained 
resources, ours is a system bound to fail.
    The U.S. can lead on anti-corruption, and the world needs this 
leadership. FinCEN is the correct agency to work with the financial 
system, law enforcement, domestic and international governments to 
effectively implement and enforce these critical laws. We urge you to 
support increased funding for FinCEN, in line with FinCEN's request and 
the House FSGG approved $210.33 million, in your FY2023 budget.

    Thank you,
    Kelly McDermott
    Financial Accountability Analyst
    Never Again Coalition
---------------------------------------------------------------------------
    \1\ https://docs.house.gov/meetings/AP/AP23/20220616/114911/BILLS-
117-SC-AP-FY2023-FServices.pdf.
    \2\ All-Party Parliamentary Groups (APPG) on Anti-Corruption & 
Responsible Tax and the APPG on Fair Business Banking, ``Economic Crime 
Manifesto'', https://www.appgbanking.org.uk/wp-content/uploads/2022/05/
Economic-Crime-Manifesto-1.pdf.
    \3\ Vincent Freigang and Maira Martini, ``Up to the Task?'', 
Transparency International, https://images.transparencycdn.org/images/
2022-Report-Up-to-the-task.pdf , May 13, 2022.
---------------------------------------------------------------------------
                                 ______
                                 
                    Prepared Statement of The Sentry
    On behalf of The Sentry, we urge the subcommittee on Financial 
Services and General Government to approve increased appropriations for 
the Financial Crimes Enforcement Network (FinCEN) to $210.3 million, in 
alignment with the President's fiscal year 2023 budget request.
                         fincen's critical role
    The Sentry is an investigative and policy organization that seeks 
to disable multinational predatory networks that benefit from violent 
conflict, repression, and kleptocracy. Launched in 2016, The Sentry 
produces hard-hitting investigative reports and dossiers on individuals 
and entities connected to grand corruption and violence. We advocate 
for the use of tools of financial and legal pressure, including anti-
money laundering and illicit finance measures, targeted network 
sanctions, criminal prosecutions, compliance actions by banks and other 
private companies, and asset recovery. As a result of our work, money 
laundering routes have been exposed and shut down, assets have been 
frozen, travel has been banned, and corrupt networks have been cut off 
from the international financial system.
    One of the principal agencies The Sentry collaborates with to 
achieve these objectives is FinCEN. Since The Sentry's launch, we have 
worked closely with FinCEN leadership and staff to take action against 
the money laundering that underlies violent kleptocracies, particularly 
in East and Central Africa. In 2017 and 2018, FinCEN issued important 
Advisories on illicit finance in South Sudan and on the connection 
between serious human rights abuse and corruption, which helped to 
elevate the risk profile of these concerns for the banking community. 
More recently, FinCEN released an Advisory focused on the risks from 
kleptocracies, highlighting Russia in particular.
    FinCEN plays a crucial role in protecting the U.S. economy from the 
threat of money laundering and illicit finance, from both domestic and 
foreign sources. From the current threats posed by the Russian 
government and network of oligarchs (some of whose wealth comes via 
exploitation of natural resources in sub-Saharan Africa) and their 
gatekeepers to regimes such as Iran and Venezuela to more general 
concerns such as money laundering through real estate and 
cryptocurrency, FinCEN's mandate and scope is uniquely local and 
international at the same time, given that the U.S. financial system is 
itself at once both local and international.
    In the years ahead, FinCEN's role will only grow more important to 
the ability of U.S. regulatory and law enforcement to catch up with and 
even get ahead of the array of risks the financial system faces. FinCEN 
plays a central role in implementing the U.S. Strategy on Countering 
Corruption, as well as several critical new proposed rules and 
initiatives, and in tracking new and emerging threats, including the 
impact of the ongoing crisis in Russia and Ukraine.
                       strong cta implementation
    At the top of the list of FinCEN's priorities is implementation of 
the bi-partisan Anti-Money Laundering Act and the Corporate 
Transparency Act (CTA)--landmark pieces of legislation. If robustly 
implemented, the provisions of both laws will be cornerstones in 
FinCEN's ability to address current and emerging risks.
    The CTA in particular needs swift and strong attention. In 
February, The Sentry was pleased to lead a coalition of 23 human rights 
organizations from around the globe in urging implementation of the 
initial proposed rule focused on the CTA's required establishment of a 
corporate registry of beneficial owners. This registry will help bring 
transparency and accountability to human rights abusers who have been 
benefiting financially from their malign activities, and it will begin 
to address the problem of anonymous corporate ownership that has been 
widely reported, including in the blockbuster ``Pandora Papers'' series 
that firmly pointed the finger at U.S. financial secrecy.
    FinCEN is unfortunately behind in its rulemaking and implementation 
efforts. FinCEN must be given the resources it needs so that it is able 
to satisfy congressionally mandated timelines. Given that 
implementation of the CTA is also a priority related to the Summit for 
Democracy and that the United States will serve as host to the next 
International Anti-Corruption Conference, FinCEN's delivery of final 
products for these events in December would prove U.S. commitment and 
provide encouragement to other countries.
               addressing money laundering in real estate
    A recent study by Global Financial Integrity found that at least 
$2.3 billion has been laundered through the U.S. real estate market in 
the past 5 years. In November 2021 as part of a massive reporting 
project connected to a leak of banking documents, The Sentry reported 
on money laundering scandals involving Congolese officials moving 
illicitly obtained funds into the U.S. real estate market, including in 
Rockville, MD--Congress' backyard--and receiving tens of millions of 
dollars in bribery payments related to massive mining and 
infrastructure deals from Chinese companies and middlemen. These are 
just two of the myriad money laundering schemes routing through the 
U.S. financial system from networks like those of former Congolese 
President Joseph Kabila. Such schemes threaten not only the potential 
for peace and good governance in foreign countries, but also the 
integrity and soundness of the U.S. economy.
    Though the Treasury Department and national security officials 
identified the US real estate market as a money laundering 
vulnerability more than 20 years ago, real estate professionals have 
had a ``temporary exemption'' from having to fulfill anti-money 
laundering obligations similar to those required of other financial 
institutions, thereby offering a gateway to the U.S. financial system. 
In December, FinCEN initiated a rulemaking to update U.S. anti-money 
laundering safeguards for the U.S. real estate sector.
    FinCEN must have the necessary resources to deliver a timely 
proposed rule instituting safeguards for the U.S. real estate sector, 
as another demonstration of U.S. commitment to combat corruption and 
illicit finance.
                               conclusion
    To implement the CTA, tackle money laundering in real estate, track 
Russian oligarchs' assets and target their enablers, as well as 
continue to deliver on the agency's baseline priorities, FinCEN 
requires high-level and trained professionals to keep up with both the 
financial institutions the agency partners with and the criminal 
networks they seek to disrupt and penalize. As the ``FinCEN Files'' 
showed in 2020, in many potential money laundering investigations, 
banks are fulfilling their end of the bargain by submitting the 
Suspicious Activity Reports required of them; the issue is that FinCEN 
lacks the staff and resources to follow up on these leads.
    FinCEN serves a crucial function to uphold U.S. national security 
and, by extension, to protect human rights. This has been made ever 
clearer by Russia's invasion of Ukraine. The Sentry encourages the 
Senate Appropriations Committee to approve the full $210.3 million for 
FinCEN.
                                 ______
                                 
            Prepared Statement of Transparency International
    Dear Chairman Leahy and Vice Chairman Shelby:

    On behalf of Transparency International U.S., we write to urge you 
to support increased funding in the amount of $210.3 million for the 
Financial Crimes Enforcement Network (``FinCEN'') in the FY2023 
appropriations process. This is the amount that FinCEN has requested 
\1\ in order to effectively fulfill its mission.
    Transparency International U.S. is a U.S.-based nonprofit 
organization that is part of the largest global network of 
organizations dedicated to combating corruption. One of our top 
priorities is stemming the flow of corrupt and other criminal funds 
into and through the U.S. financial system.
    Corruption causes serious and widespread harm. The wealth drain 
from victimized countries robs people of access to healthcare \2\ and 
basic public services. It drives away private investment and economic 
development opportunities \3\ that are necessary for sustainable 
economies. It props up authoritarian regimes \4\ that engage in human 
rights abuses and undermine democratic values, institutions, and 
practices. And, as demonstrated in the current crisis in Ukraine, 
corruption has played a central role \5\ in emboldening Russian 
leadership to threaten global security.
    Our collective understanding of transnational corruption has been 
enhanced in recent years through a series of blockbuster reports \6\ by 
teams of investigative journalists and others who've exposed the global 
architecture of illicit financial flows. We now know that effective 
enforcement of our anticorruption laws--the ability to ``follow the 
money''--is nearly impossible without a well-resourced financial 
intelligence unit.
    In the U.S. that entity is FinCEN. In a new report, Up to the Task, 
released on May 24, 2022, Transparency International U.S., in 
collaboration with our global network, wrote that:

        Financial intelligence units (FIUs) are one of the most 
        important government agencies tasked with combatting financial 
        crime. Their core function is to receive and analy[z]e 
        suspicious [activity] reports (SARs) and produce financial 
        intelligence for further investigation by law enforcement and 
        other authorities, where relevant. They also support and 
        coordinate the exchange of information with foreign FIU 
        counterparts. In some countries, FIUs have additional 
        responsibilities as they function as the primary regulators 
        and/or anti-money laundering supervisory bodies.

    A key finding of the report is that compared to several financial 
intelligence counterparts that have joined the U.S. to form the Russian 
Elites, Proxies, and Oligarchs (``REPO'') Task Force, FinCEN resources 
are woefully insufficient to address the current crisis in Ukraine and 
to meet the longer-term mission of protecting the U.S. financial system 
from abuse by corrupt officials and other criminals. As a proxy for the 
relative size of the covered financial sectors among REPO participating 
countries, consider the following: Germany and France's financial 
intelligence agencies each receive fewer than 600 suspicious activity 
reports per staff person, per year. In contrast, FinCEN, even with an 
additional allocation this past year, receives more than 10,000 such 
reports per staff person, per year.
    FinCEN's ability to work with federal, state, territorial, Tribal, 
and local law enforcement agencies and to respond to Congress and 
financial institutions with anti-money laundering obligations is 
clearly hampered by a lack of resources.\7\ The bureau we ask to 
safeguard our $20- plus trillion economy has a staff that is smaller 
than the staff of the financial intelligence unit of Australia. 
Additionally, the bureau has outdated equipment and software, and 
limited funds for licenses to access other data to do proper and 
necessary analysis--frustrating partners in law enforcement and the 
private sector.
    The invasion of Ukraine and the subsequent search for sanctioned 
funds is a stark reminder of why a robust financial intelligence bureau 
is so important. The bipartisan call for an effective response to the 
crisis has led to an important bipartisan agreement \8\ to increase 
funding for asset tracing and other improvements to our defenses 
against financial crime. We urge your continued support for increasing 
the FinCEN budget to a level at which the bureau can effectively and 
efficiently manage the data analysis, legally mandated rulemakings, and 
timely support to public and private sector partners.
    Thank you for your consideration of our views. If you have 
questions, please contact Scott Greytak, Director of Advocacy for 
Transparency International U.S., at [email protected].

    Sincerely,
    Gary Kalman, Executive Director
---------------------------------------------------------------------------
    \1\ The Office of Management and Budget, ``Budget of the U.S. 
Government Fiscal Year 2023,'' the White House, March 2022, available 
at https://www.whitehouse.gov/wp-content/uploads/2022/03/
budget_fy2023.pdf.
    \2\ Karen Hussmann, ``Health Sector Corruption,'' U4 Anti-
Corruption Resource Center, June 2020, available at https://www.u4.no/
publications/health-sector-corruption.pdf.
    \3\ Shamim Adam, Laurence Arnold and Yudith Ho, ``How Malaysia's 
1MDB Scandal Shook the Financial World,'' The Washington Post, July 28, 
2020 available at https://www.washingtonpost.com/business/energy/how-
malaysias-1mdb-scandal-shook-the-financial-world/2020/07/28/dade64d6-
d094-11ea-826b-cc394d824e35_story.html.
    \4\ Natasha Hall, Karam Shaar, and Munqeth Othman Agha, ``How the 
Assad Regime Systematically Diverts Tens of Millions in Aid,'' Center 
for Strategic & International Studies, October 20, 2021, available at 
https://www.csis.org/analysis/how-assad-regime-systematically-diverts-
tens-millions-aid.
    \5\ Amanda Taub, ``To Keep Putin and His Oligarchs Afloat, It Takes 
a System,'' The New York Times, May 11, 2022, available at https://
www.nytimes.com/2022/05/11/world/europe/putin-russia-corruption.html.
    \6\ Michael Hudson, et al., ``Offshore havens and hidden riches of 
world leaders and billionaires exposed in unprecedented leak,'' the 
International Consortium of Investigative Journalists, October 3, 2021, 
available at https://www.icij.org/investigations/pandora-papers/global-
investigation-tax-havens-offshore/.
    \7\ Himamauli Das, ``Statement by Himamauli Das Acting Director 
Financial Crimes Enforcement Network United States Department of the 
Treasury before the Committee on Financial Services U.S. House of 
Representatives,'' Financial Crimes Enforcement Network, April 28, 
2022, available at https://financialservices.house.gov/uploadedfiles/
hhrg-117-ba00-wstate-dash-20220428.pdf.
    \8\ Senator Sheldon Whitehouse and Senator Charles Grassley, 
``Whitehouse, Grassley Lead Senators in Call to Fully Fund FinCEN's 
Anti-Money Laundering Operations,'' the office of Senator Sheldon 
Whitehouse, May 17, 2022, available at https://
www.whitehouse.senate.gov/news/release/whitehouse-grassley-lead-
senators-in-call-to-fully-fund-fincens-anti-money-laundering-
operations.
---------------------------------------------------------------------------
                                 ______
                                 
 Prepared Statement of Zero Emission Transportation Association (ZETA)
    The Zero Emission Transportation Association is a public interest 
non-profit of over 50 member companies advocating for 100 percent 
electric vehicle sales by 2030. Our membership spans the entire 
electric vehicle (EV) supply chain and includes critical materials, 
charging companies, utilities, vehicle manufacturers, and battery 
recyclers.
    We request the Senate Appropriations subcommittee on Financial 
Services and General Government fully fund the General Services 
Administration (GSA)'s Electric Vehicle Fund, as proposed in the Fiscal 
Year (FY) 2022 White House budget. Additionally, we request that the 
Committee include language in its FY 2022 appropriations report that 
directs GSA to implement policies that will help achieve the 
President's stated goal to rapidly electrify the Federal fleet.
    We offer the following report language suggestions:
  --The Committee directs the General Services Administration to 
        rescind delegated authorities for agency vehicle ownership and 
        unify fleet management and acquisition under a single updated, 
        government-wide fleet management and acquisition system.
  --The Committee directs the General Services Administration to use a 
        Total Cost of Ownership (TCO) procurement model that accounts 
        for vehicle operating costs, including fuel/charging, 
        maintenance, and public health savings.
  --The Committee directs the General Services Administration to work 
        with the U.S. Department of Energy to develop a TCO model which 
        uses statewide variables, regional variables, and inventory 
        variables to estimate the cost of electrifying the Federal 
        fleet and accounts for the social cost of carbon.

    [This statement was submitted by Joe Britton, Executive Director]




 
       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------                              
                                                                   Page

Addressing Money Laundering in Real Estate.......................    93
Adeyemo, Hon. Wally, Deputy Secretary, Department of the 
  Treasury, Statement of.........................................    42

Background.......................................................    84
Bank History.....................................................    78

Covid-19 Pandemic................................................    80

Department of the Treasury.......................................    83
    Disclosure of White House:
        Virtual Visitor Logs.....................................    77
        Visitor Logs.............................................    75

Federal Communications Commission................................    83
Fincen Needs to Implement the Corporate Transparency Act.........    71
Fincen's Critical Role...........................................    93

Hyde-Smith, Senator Cindy, U.S. Senator From Mississippi, Opening 
  Statements of 




Kleptocracy Threatens America's Financial Independence...........    72

Maryland Profile.................................................    80

National Historical Publications and Records Commission (NHPRC)..    89

Office of Management and Budget..................................    82

Recommendations..................................................    86
Rettig, Honorable Charles P., Commissioner, Internal Revenue 
  Service:
    Prepared Statement of........................................     5
    Statement of.................................................     4

Small Business Administration....................................    83
Strong CTA Implementation........................................    93

The CDFI Role....................................................    80
    The Need for:
        Qualified Economists at the FTC..........................    85
        Technical Expertise at the FTC...........................    85

Van Hollen, Senator Chris, U.S. Senator From Maryland, Opening 
  Statements of 







 
                             SUBJECT INDEX

                              ----------                              

                                                                   Page

                       DEPARTMENT OF THE TREASURY

Additional Committee Questions...................................    68
                               __________

                        INTERNAL REVENUE SERVICE

                                                                      1
Additional Committee Questions...................................    38
Effects of the COVID-19 Pandemic and the IRS Response............     7
    Reducing Inventory of Paper Returns and Correspondence.......     8
    Other Taxpayer Assistance Offerings..........................    10
    Responding to Unprecedented Demand for Phone Assistance......    10
Efforts to Improve Tax Compliance................................    14
    Recent Accomplishments.......................................    15
    Resource Challenges..........................................    16
Legislative Proposals in the President's Fiscal Year 2023 Budget.    19
Looking to the Future: IRS Taxpayer Experience Office............    17
The President's Fiscal Year 2023 Budget..........................    17
    Specific Funding Areas.......................................    18
    Structural Changes to IRS Appropriations to Improve Mission 
      Delivery...................................................    18
Update on Modernization Efforts..................................    13
    IRS Online Account...........................................    14
Update on the 2022 Filing Season.................................    11
    IRS Online Account...........................................    11
    Providing Help to Navigate a Challenging Filing Season.......    11
    Improving Service to Diverse Communities.....................    12


                                 [all]