Okay. Good morning. Welcome. I call to order the subcommittee on oversight. I want to thank everybody for joining us today. Were holding this hybrid hearing in compliance with House Resolution 965. Accordingly, i am joined but members here in the hearing room as well as approximately ten members on the remote platform. Thats outstanding, and i want to thank them for joining us. Before we turn to todays important topic, i want to remind the members of a few procedures to endus navigate ther the help us navigate the terrain here. First, consistent with regulations, the committee will keep microphones muted. For those participating virtually to limit background noise. [inaudible conversations] well pause for one moment. [background sounds] members are responsible for unmuting themselves, unmuting themselves when they seek recognition or when recognized for their five minutes. Members here in the hearing room also are reminded to keep your microphones muted when you are not recognized. Second, for the members participating virtually, you must have your cameras on at all times. If you need to step away from the proceeding, please leave your camera on rather than logging9 out. Third, we will discuss pence with our practice of observing the gibbons rule and instead go in order of seniority for questioning,al for nateing between minority alternating between majority and minority. I thank you all [inaudible] a quick technical issue trying to get the streaming from 1100 to show up. Just so youre aware, the audio e is streaming on youtube already. So the video will be going live as well. Once we get the naudible] i thank you all for your continued patience as we navigate these new procedures in order to continue serving our country together in this great time of need. And with that, i will now turn to the important topic of todays hearing, a conversation with the commissioner of the Internal Revenue service. Thats why were here. So good morning. I welcomey colleagues and our only witness. Today the commissioner of the Internal Revenue service, mr. Charles rettig, will join us, and i appreciate that personally and prossionally. Mr. Rettig, this committee has waited a long time for you to join us, and we were looking anxiously, wting anxiously. Nearly two years. It is astonishing this ishe first time youre appearing before the chief taxwriting committee in the house. I mean, put yourself in our shoes. Were trying to do our job, youre trying to do your job, and we have very little communication. With a brand new administration on the horizon, this may be your first or your last appearance before us. Im not suggesting either, but the point of the matter is were glad youre here. Im disappointed you refused to join us for our important hearing on taxpayer fairness a few weeks ago. The United States has had an excellent record of compliance with our tax laws. Americans dutifully pay their taxes assuming the system is fair for all. Whether youre rich as rockefeller or just a regular joe, because of that our voluntary system, tax system has been a model for the world. It really is. At least until recently. Our hearing demonstrated how our system of voluntary compliance has come under assault but the president. By the president and members of his government for five years. The president refused to disclose his tax returns. The president broke with the history of every president since president nixon. In so doing, he sabotaged public faith in our tax system. You have aided and abetted him. As is your job, i guess. Since 2017 ive led Congress Efforts to request mr. Trumps business and personal tax returns. Not because im a snoop. Im far from it, just the opposite. The law is clear though. Under 26 United States code, section 6103f, our committee is legally and absolutely entitled, our committee is legally and absolutely entitled to review anyone within the executive branch of government, the law is very clear, and for 591 days you and secretary mnuchin have broken the law to keep that hidden. I dont know what were hiding, but we have not known, we have not found out yet. It is ouresponsibility to reste the Publics Trust in our tax syste the president s business and peonal returns mus be audited impartially and without political interference. Yetvery time we ask a question, were reminde its still being audited sin 2016, before 2016. So we have some questions. The American People he a right to know whether thats whats ing on. Time is of the essence. Just last month the New York Times reported that selfproclaimed billionaire mr. Trp paid only 750 in taxes in 20172018. 750. And in 10 of the last 15 years he reportedly paid n taxes. When y listen to the explanation of why that happened having nothing to do with you, but when u listen to it, you have toonder is this reading out of a cartoon magazine, or is this really happening . Is this a fantasy or reality . The teachers andirefighters, police officers, the people who collect o garbage in our districts are paying a heck of a lot more. The taxpayer fairness issue manifests itself in many other ways, mr. Commissioner. We hear over and over fro our constituents who have failed to receive their ecomic impact payments. Im vy angry over that, and im sure you are too. Time and time again. I lookorward to discussing how the irs is rectifying these dire situations. No one who is eligible should have toait for their check especially during a pandemic. We are hearing similar complaints about 2019 refunds. Our constituents have waited for months to get their refunds and their records straight. I have a constituent who was ld not to expect a response from the irs on her 2019 return until january. January . I want to know if that is acceptable to you. I hope you will bring us uptodate on your efforts to get through the backlog in returns and collecting dust at the irs. Mr. Commissioner, well be following up on my question at the oversight and Government Reform Committee hearing. Are you not auditing wealthy taxpayers and corporations more, tensively than more extensively than low income meshes. Let me now yield to few good friend if, the gentle lady from indiana finish. Thank you were honored that youre here. Thank you, mr. Chairman youve got five minutes. m thrilled to be here. Id also like to thank you, mr. Are rettig, for your hard work at the irs. I also want the thank the dedicated men and women of the irs that have worked so hard to keep the agency up and running, to provide services to our fellow american taxpayers. Congress has asked the irs to go above and beyond this year in response to the coronavirus crisis. The cares act required that the irs talk on a number of tax tasks tasks, but none was greater than sending the Economic Impact payments to more than 160 million americans. That was a huge undertaking, and we should acknowledge that the irs got most of those payments out the door in just a matter of weeks, so we thank you for that, commissioner. Now, with that said, i think all acknowledge the irs still faces a number of challenging things Going Forward, and i have concerns about how the agency plans to meet those challenges. Theres a few main issues i think the agency needs to address. I hope youll be able to provide the committee with some answers on how the agency plans to do so im concerned about t current backlog of mail and unprosed returns that has unprocessed returns. My understanding is that the irs has millions of pieces of unopened mail and an even greater number of unprocessed tax returns. That means millions of taxpayers are still baiting on refunds for tax returns they filed as far back as march and april. Second, given that this mail backlog may not be resolved well until 2021, im concerned about the agencys ability to prepare for what is likely to be another major and difficult Filing Season. Third, on the eip payments, or ill saw that the number of payments you is sent out and how quickly you did so was incredible, but i have heard from a lot of my constituents and i know my colleagues have as well about the situation where folks are still eligible but still have not received anything. So i would appreciate hearing more about what the irs has done and will do to make sure everyones who is eligible for an eid receives their payment. And then i also want to acknowledge that the irs this week released guy e dance on the Paycheck Protection Program related to the tax treatment of expenses paid with a ppp loan that have not been forgiven. Many Small Businesses are struggling to stay abloat all over this country. A afloat all over this country. We need to pull together to insure these Small Businesses have relief, especially those forced to close their doors due to state and local covid restrictions. Id also like a update on the bipartisan Taxpayer First act. As you know, we enacted this important law last as a rult of bipartisan work. This historic overhaul of the irs requires implementation work on the pt of the agency, and id appreciate an update on your progress and what challenges youre nation. I want to make sure we dont let our response to the pandemic hinder the longterm work that still needs to be done to improve and modnize the irs. With that, i thank the commissioner for his testimony, and i yield back, mr. Chairman. Yes. We will dismiss mr. Kelly. Well next hear from our only witness x that is commissioner rettig. And i thank him again for appearing before us today. Your Opening Statement will be made part of the record in its entirety. I ask that you summarize your testimony in five minutes or less. To help you with that time, please keep an eye on the clock. The lights in front of you. If you do go over your time, ill notify we a tap of my gavel, but were here to listen to you. Commissioner, you may begin. Thank you, chairman pascrell, Ranking Member and the rest of the members who are here. I appreciate the opportunity to discuss irs operations and our efforts to help taxpayers during the covid19 situation. Initially, mr. Chairman, respectfully, i would like to indicate that i disagree and take exception to the terminology awedded and abetted, but i cannot speak to any matters associated with that since those matters are in litigation as well as those matters involved to specific taxpayer information which im not able to discuss. But i respectfully wanted to make the record on that for you, sir. Now more than two years into my term as commissioner of the irs, i remain extremely proud to be working with the irs and the exceptional employees at the Internal Revenue service. Knowing that 96 of the gross receipts of our country flow through the irs has strengthened that my belief that its critical to the success and wellbeing of our country. The importance of the irs to every american has become especially apparent since the spring as our nation has faced unprecedented challenges. The irs has been at the forefront of successfully providing rapid Economic Relief to taxpayers during covid19. The response serves to illustrate how critical i is for the agency to receive consistent, timely anddequate multiyear funding such that we can success seed inroviding succeed in providing the services that our country and our citizens so rightly deserve. Employees have worked since mid march to implement major provisions of the cares act, especially the Economic Impact payments which have helped millions of americans during these challenging times. So far approximately 160 million Economic Impact payments have been issued totaling about 270 billion. Many of these payments recognize more than two people in a family. Delivering the Economic Impact payments, the Internal RevenueService Employees balance the statutory requirement to deliver these payments, quote, as rapidly as possible as dictated by the cares act with the need for accuracy and a concern about potential fraud. The irs correctly computed the amount of the payments of the first 157 million payments according to our Inspector General 98 of the time. I think thats miraculous, and its a tribute to the strength of our employees and the dedication of our employees. However, we readily acknowledge that there is more to do. Although the strength of our employee our agency is the employees, the interaction of our employees in the communities in which they reside is equal lu important. During this period of time, our employees have been out, involved in and engaged with community, local Community Organizations trying to generate Economic Impact payments for people who are needy. Were essentially to the point of interacting with the unsheltered communities. We have interacted directly with more than 4,000 homeless shelters, numerous different os around the country. Ill have more specifically set forth in my more lengthy written testimony. Tomorrow is the deadline for registration of the Economic Impact payments on our nonfilers portal, and i would like to encourage people who have not yet provided information through the portal to do so. During the pandemic within a matter of days we initiated the People First Initiative which postponed the deadline for filing to july 15th, the latest time in the history of our country. We also temporarily adjusted numerous processes to help people and businesses during these uncertain times. As we will discuss, we have also just delivered a historic Filing Season 20 not only in terms 2020, not only in terms of the volume of tax returns that have been processed, refunds that have been processed, but also in terms of the number of tax returns processed per minute and per second. We have, importantly and one of the matters that im probably as proud as anything else, and we have a lot to be proud of, and i do want to, tend the opportunity to meet extend the opportunity to meet with each of you at your leisure, when you ask we will be there, but importantly, for the first time in the history of the Internal Revenue service, we will be delivering the form 1040 this year in both english and spanish. Taxpayers will have the opportunity to check a box to indicate the language they wish us to interact with them. Taxpayers who call on our phone lines will have the option to receive Translation Services in more than 350 languages. Is so when i got onboard, these numbers were between 699, and this all came 69, and this all came together i opened the doors for our employees, but our employees proudly walked through these doors to provide services in the underserved communities of our country. Our phasedin reopening was couched in terms of trying to mountain the health and safety of our employees, balancing that with our responsibilities to this country which we take seriously. And, sir, before i turn it back over to you, i would be remiss if i didnt call attention to somebody whos been by my side since i came on board two years ago who has been at every hearing that ive testified in the house as well as the senate. And, respectfully, is more than my right hand. The person i look up to more than probably nub else in the Internal Revenue service who is not only a sounding board, but is sitting right behind me, diane grant. On december 1 of this year, we are celebrating her 50th anniversary with the Internal Revenue service, and i do appriate, sir, your with acknowledgment of her. Shes an amazing individual. [applause] now that ive embarrassed her, sir, i will turn it back to the committee. Im glad, commissioner, to hear somebody Say Something nice about our employees, and you have sir, i came onboard for the employees, taxpayers and you guys. Thank you for bringing that to our attention, and congratulations, ms. Grant. I will open the hearing for questions. Without objection, each member will be recognized, and we are joined by my good friend, mr. Kelly from pennsylvania, who walked all the way from pennsylvania to get here this morning. [laughter] each member will be recognized for five minutes to question our witness. If the witness will respond with short and concise answers, if the congressmen will ask questions short and concise. Thats unusual but well try. All members should be able to ask questions. As mentioned earlier, we will not observe the gibbons rule, we will instead go in order of seniority for questioning. Alternating between minority majority beginning with members of the oversight subcommittee. Members awe tending remotely are reminded to unmute yourselves when youre recognizing for five minutes. Ill recognize myself for five minutes, mr. Commissioner. Mr. Rettig, when President Trump took office, former Congress Former commissioner koskinen volunteered to resign before his term ended. You stated this week that you plan to finish your term. That term ends in 2022, if im not mistaken. Do you agree that you serve at the pleasure of the president , yes or no . Yes. Mr. Rettig says yes, and i want to thank the commissioner. Im glad we agree. Will you proffer your resignation to president elect biden, yes or no . No. If relate ugh well, youre saying no to that particular question, right . Right. Im asking you, mr. Commissioner, to proffer your resignation to the incoming president to facilitate the transition to the new administration, and i recommend that it be accepted. Mr. Commissioner, under a new administration, if you are asked to provide soontobe former President Trumps tax returns to the committee, will you ply . Ply will you comply . Sir, as you are aware, i cannot discuss issues pertaining to the tax returns because they are invol