By webinar let me remind everyone that pursuant to the latest guidance come all individuals attending in person must wear a face mask. And i am wearing mine except to make this statement. Members who are not wearing a face mask will not be recognized. Let me also make a few reminders to those members appearing in person. Well, actually they are not. I time is visible in the room directly in front of you. For all members appearing remotely, i know you are familiar with the webex pineapple that they remind everyone of a few points. First you will be able to see each person speaking during the hearing whether they are in person or remote as long as you have your webex set to active speaker view. If you have any questions about this please Contact Committee staff as soon as possible. Second, we have a timer that should be visible on the screen when youre in the active speaker with thumbnail view. Members who wish to pin the timer to their screens should Contact Committee staff for assistance. Third, a house rules require that we see you, so please have your cameras turned on at all times in order to be an active participant in this hearing. Fourth, members appearing remotely who are not recognized and should remain muted. Fifth, unrecognized members verbally. Members retain the right to seek recognition verbally. Members will be recognized in seniority for questioning. Lastly, if you want to be recognized outside of regular order you can identify yourself in several ways. You can use the chat function to send a request. You may send an email to the majority staff or you may unmute your mic to seek recognition. Obviously we dont want people talking over each other so preference is members use that chat function first or email to facilitate formal verbal recognition. Committee staff will ensure im made aware of your request and i will recognize you at the appropriate time. We will begin the hearing in just a moment when they tell me where ready to begin live stream. Okay. Committee will come to order. Without objection the chair is authorized to declare a recess of the committee at any time. Without objection full Committee Member katie porter, the gentlewoman from california, and representative bill passed grell, the from new jersey on the ways and Means Committee shall be permitted to join this subcommittee of the recognized for questioning during the course of this hearing. Without objection it is so ordered. I now recognize myself for an Opening Statement. The Internal Revenue service collects more than 3. 5 trillion in taxes, roughly 95 of the federal revenue. And it manages the distribution more than 370 billion every year in refunds. The revenue the irs collects for the federal Government Funds critical programs and benefits like Social Security, medicare and Veterans Health services. The billions of refunds distributed to taxpayers each year as a lifeline for many americans, especially those at or living below the poverty line. The irs is a Critical Agency that we turn to in the nations our dire need. Todays hearing hearing will examine how that agency was illprepared to meet those needs. We will look at how decades of deliberate starvation of the irs prompted a dire financial situation and left an agency with what if a Taxpayer Advocate referred to as a prehistoric i. T. Infrastructure. We will show how a decade of attrition hindered the irs ability to meet the complex needs of our nation during the unprecedented pandemic and attendant economic collapse. According to the Congressional Budget Office from 2010 through 2018, when republicans were in control of the Congress Lawmakers cut the irs budget 20 in inflationadjusted dollars. Resulting in a 22 staff reduction. 30 of these staff were in the irs enforcement positions. After years of disinvestment incapacity, unpaid annual taxes owed but not collected are estimated at 450 billion a year. The starvation and chronic underfunding also prevented the irs from investing in i. T. Systems. I ask unanimous consent to enter into the record the treasury Inspector General for Tax Administrations report entitled legacy systems management needs improvement. Which finds that nearly threequarters of the 400 active irs systems reviewed by take to our legacy, meaning very old. Another disturbing finding is that report, in that report was irs does not have a handle on how many legacy systems that actually has or the costs associated with the systems. This does not sound like an agency ready to fully serve the American People during a pandemic. This past year has highlighted just how many individuals rely on the irs. In addition to administering the 2020 tax filing system, the irs was also cast with distributing emergency Economic Impact payments, or stimulus checks, to americans. The irs had to manage the effects of the pandemic while it was simultaneously expected to mail 170 million additional aimless checks to americans in need. Years of i. T. System neglect and the failure to modernize legacy systems that date back to the Kennedy Administration in some cases prevented irs from effectively transitioning to virtual operations. Like many agencies the irs sought to find ways to keep its workforce safe while trying to meet its expanded mission. But it didnt stand a chance. Its gutted workforce and anachronistic i. T. Systems were simply not enough to keep up. The pandemic horse the irs to shut and many of its core operations across the country, including taxpayer phone lines and walk in centers. The agency largely abandoned taxpayers, many of whom are all of our constituents at a moment of great confusion and concern. As i have noticed, the irss operational challenges did not happen overnight. As shown in the tables on the screen, since 2010 the previously controlled Majority Congress ransacked the irss budget and agency was forced to reduce its workforce by 22 . Thats 20,000 fulltime employees. These significant repeated budget cuts forced the irs to make different after difficult tradeoffs. Leader cut to choose between Quality Customer service to taxpayers and forcing tax laws and updating i. T. Systems. The severe financial technical and staffing problems are a direct result of years of partisan hostility, reckless socalled investigations, and unwarranted budget cuts from the majorities than in control of congress. And today when the American People are relying on the irs, the most, the agencies gasping for air. While our witnesses will testify that the irs did what it could with the available resources, its what didnt get done thats troubling. Its the millions of taxpayers who are unable and still are unable to get the refunds because they filed a paper return. Its the millions of tax returns that hit a snag and the corresponding taxpayers couldnt get assistance because call centers were closed. Its the 9 million americans who have yet to receive that stimulus check from april. Primarily because the irs does not have your information, or because their income is so low they dont qualify to file a return. These are our nations most vulnerable people. We have a duty to help them in the midst of this crisis. Millions of people desperately rely on the irs to receive muchneeded Financial Assistance to pay for medical care, groceries, housing, are still waiting for those refunds and stimulus checks if these people are like my constituent joseph who did not receive his 2018 tax refund until february of this year. Because his wife passed away and the irs held up his return to get more information. They think the issue which the irs promised joseph would not be a problem again plagued his 2020 tax return, which still has not been processed. Asked to insert in the hearing record a statement from joseph about his continued concerns with the irs. Other constituents could follow the rules involved and are being told to just wait. People cant afford to just wait. Wait. They need this Financial Assistance now. On september 16, i wrote the irs asking about these types of delays and the inconsistent responses staff have provided our constituents, irs staff. That was three weeks ago. Ive yet to receive a response. Its also important to point out the budget cuts to the irs have burdened our nations for in another important way. When the irs collects taxes each year it relies heavily on taxpayers to report their income and taiko at the about of tax they owe. Most people, in fact, 99 of them do. Some taxpayers often the most wealthy among us including potentially the current president of the United States fail to properly pay their taxes. They hide earnings, claim dubious deductions such as 70,000 for hairstyling, not a deduction available to most of us, and they fail to properly pay their taxes as a result. Since 2010 as a direct result of these budget cuts from the past, the irs has been less to enforce tax laws because it cant. If you take a look at the chart on the screen you will see that between 20112019, the percentage of individual income taxes it examined dropped by half, half. Thats catastrophic. And it directly impacts revenue for the federal government. The weakening of these vital effort harms both taxpayers and Public Confidence in the tax system. It does help the wealthy and encourages even more of them to. And cheat the tax system. I was pleased with reports on monday indicating the irs is investigating allegations of criminal tax fraud at the National Rifle association. I have long click an great effort asking to arrest and depart for justice to nra and its ceo, wayne lapierre. According to studies out of the university of pennsylvania i simply beating up the auditing capacity of the irs to allow for more oversight of the super wealthy, those claiming more than 10 million in adjusted gross income, our government will collect more than 7. 5 trillion over the next decade. More than paying all of the pandemic related expenses by this federal government combined. Thats the size of the tax gap of the wealthy who fear little consequence right now from a beleaguered irs, and have left in our nations coffers. I look forward to hearing from our Witnesses Today in ways congress can help support the irs, instead of politically targeting the agency and stripping get bear of the resources it desperately needs as we have done all too often in the past. We hope to ensure the irs chief Information Officer and cio throughout the federal government played a pivotal role in developing and beating Agency Performance goals. I look forward to working with my colleagues on both sides of the aisle toward a legislation that does just that. I hope this hearing will garner the evidence and justification needed for congress to build back the agency that is so unjustly ravished over the last decade. And so prepared to help struggling americans in dire need of assistance during the worst endemic in 100 years. And with that i call upon the distinguished Ranking Member mrg statement. Thank you, chairman connolly. I appreciate the opportunity to have an Opening Statement. And like you, i also have constituents who are awaiting refunds, and they have been seeking for them, many of them as far back as february. I certainly share that. I would also just say, mr. Chairman, that i believe its improper for you to accuse the president or seemingly accuse him of not paying his taxes. In the first place, you dont know that. I hope this hearing today will stay focused on issues that are germane to the topic at hand, specifically i. T. Modernization. That is what this should be focused on, and i hope we do that. And with that let me just say that this subcommittee has been tracking, as you all know, the legacy i. T. Systems and the reality that those legacy systems pose a risk to federal Agent Missions and the purpose that many of our agencies have. And with many of these agencies, especially the irs, some of these older i. T. Systems, they are very complicated and they are going to require modernization. It is inexcusable for us to be facing some of the issues we are facing, and for our constituents and the american taxpayers to be the ones who are taking it in the gut over this. And without modern Technology Systems that can meet modernday challenges, our Agency Missions are at risk, and taxpayer resources will continue to be spent on archaic and inefficient Technology Systems of ages past. This committee understands how the federal government continues to spend a majority of the i. T. Budget nearly maintaining physical legacy systems instead of investing in i. T. Modernization reforms, which needs to occur. With a majority of agency i. T. Spending going to the operations and maintenance of these old systems, new investments are crowded out. I think thats what we need to get some answers today. We have talked a lot about different approaches that can be utilized and bring multiyear i. T. Funding mechanism to be established. I think we need to go beyond talk and start actually getting some answers and hearing what some of these agencies are doing to implement modernization efforts. And it is up to each of these agencies to utilize some of the resources that have been made available. With the irs specifically. Some modernization efforts, despite repeated large investment by congress which, lets keep in mind, they are really investment from the american taxpayer. In spite of these large investments, the irs continue to drag on and seemingly never reach completion of modernization. We need answers for those types of problems. How in the world can congress have faith that another one or 2 billion, or whatever it may be, at the end of the day that will be proposed by the house and the senate will actually get anything in return . Again, i say we need answers to these questions. This committee wants to understand how these pervasive and continual challenges can be addressed. This is a bipartisan issue with potential bipartisan legislative solutions. But we have to understand the actual problems preventing agencies like the irs from moving into modern, agile and Robust Technology operation environments in the future. To be fair, we all know that in a Rapid Response to the global pandemic, there have been a number of emergency assistant programs that have been passed into law this year, and it has been unprecedented. We all understand that. There have been a lot of mandates that have been involved, and as a result we have seen nearly every american taxpayer received checks, and that occurred in an extraordinarily swift manner by the irs. And for that we are grateful. You look back at the economic stimulus act of 2008. It took weeks in weeks for that to be doled out. But like every other large enterprise in the world, the irs has set its operational challenges related to the pandemic. We get that. There have been issues with the cares act stimulus payments reaching their intended destinations. There have been a number of issues but not all the issues, and they get this as well, not all the issues and problems have been technologically related. There have been legal issues, procedural issues, workforce issues, data access challenges. But we need to understand the actual calls of problems before we can recommend any policy solutions. And i hope that the hearing today will provide some information in that regard. And to that point, commissioner rettig, hope you and the other Witnesses Today can help me and my colleagues understand how we can address the underlying carriers preventing Successful Technology modernization so that we can assure the success of the irs is critical mission. Congress cannot afford to blindly continue throwing money at i. T. Problems. Weve got to find a new approach. Weve got to have answers. Weve got to have modernization. And so with that, mr. Chairman, i want to thank you i do want to thank our witnesses for bearing with congress in these proceedings. I i thanked him for participatig in todays hybrid hearing, and i appreciate the opportunity to be able to at each of them here today. With that, mr. Chairman, i yield back. I thank the gentleman and i look forward to working with him and i thank him for the spirit the bipartisan spirit he has laid out for us moving forward in terms of trying to address especially the Technology Challenges irs is facing. I would also asking and was considered that series of articles talking about the president s tax situation, including the assertion that in the last two years he paid 750 per year, and no taxes for ten of the previous 15 years come that such is the chairmans opinion, that is a series of analyses based on documents not denied by the white house called fake news but not a single item including the deductions in the payments i cited has been denied by the white house. I enter that into the record so that its clear its not just one members opinion, including this member. With that i see the chairwoman of our full committee is on and i want to defer to or for any opening remarks she may have with respect to this early. Welcome, chairwoman maloney. Thank you so much to my good friend and colleague, chairman connolly, for holding this important and timely hitting on the irs and the pandemic. First i want to congratulate you on already convincing the irs to move back the deadline for low income individuals to register for an Economic Impact payment. Until monday the deadline to register for the eit was next wednesday, oc