The center for auto ownership at American University. My name is caroline and im attack professor and managing director of the Kogod Tax Policy Center here in the kogod schoolt to introduce you to the time of Tax Policy Center forli those of you who dont know us. We are a nonpartisan Research Center housed in the kogod school of business and we put out research on issues ranging from Small Business tax literacy and education to tax cpliancecht workforce and gig workers, access to capital challenges of Business Owners and partlyor today Tax Administration modernization challenges. Add kogod as though more broadly we are experts on ai, analytics and Digital Transformation. And we built this expertise into research and curriculum. For example, our Research Center earlier this year together witha government urges research on how tax agencies can effectively adopt and administration. This research reflect opportunities and challenges of agencies using ai, and we were able wn, some commissioner werfel, other irish folks and tax Agency Administration folks from aroun■ the world to talk about how ai has went into to improve taxpayer education and outreach how happy i can facilitate exoplanets enforcement activities, and api needs to be rolled out alongside Risk Mitigation strategies and government structures. What whatt it is the irs Digital Transformation plan which will be p introduced by commissioner Daniel Werfel who was marking his oneyear anniversary wit we. And he will be presenting a presentation or 20 minutes and then be in conversation with our very own being david. They worked together on the 2020 president ial transition so will be great to hear them recaps of alltime french had some delight. So thank you so much for joining us. Oneyear anniversary of being irs commissioner, it is anry hor to be here at this historic university. The irs is an agency that affects all americans. And the university is a fitting place to talk about the future irs because you are at thetare e filing your taxes with the irs for many, many yearso right now, the irs stands at a historic crossroads. There is an opportunity we have note had before, and once in the generation opportunity. Of course you may be wondering what opportunity . Same questiond when i was home one friday afternoon in the fall of 2022 when i received a phone call from the Biden Administration asking if i would be willing to serve as irs commissioner. Now once i could get my jaw off the floor, because this was a surprise and a great honor, my first question to the white house and Treasury Department leadership was, what are you hoping that i or any irsld achin this role at this time . And the answer they gave me encapsulates the once in a generation opportunity. They told me the next commissioner will lead the irs through the most important tech enabled transformation of a Government Agency in u. S. History herey jaw dropped to the floor. And i will be honest with you. Part of a suspected that this might be a bit of hyperbole, so to throw my hat in the ring. So the job did it i will show is noonsidered the world that you live in and what you have come to expect to do digitally, ony your phone and tablets, withou paper,■rom wherever you are in the world, i have come to realize that the modernization of the irs is a generational imperative. But ensuring the irs states pace with an everincreasing Digital World is just part of the imperative. Our race to catch with the modern economy if we completed will unlock three critical results. First, it unlocks our ability to ensure access, engaging communities and make Administration Work better. Se increase accountability for those that seek to inappropriate export theax sysm. Ability toir restore trust and increase fairness in the irs and the tax system. So lets dive in. And explore why done to transform the irs is so vital and actually quite i beneficial to you, your■y famil, and your community. Ill tell you about the momentum we have today and where that momentum can take us. Now, i actually remember t moment i realized that this was not height or an exaggeration. It was our morning staff meeting last fall the night before i ive been at the service for America Awards at the kennedy center, the biggest Award Ceremony for c federal employee, the oscars for government. I was excited and■; i challenge the irs team to win one of these big awards next year. They asked before an example of an award winner, and i immediately shared with them myt before. It was a team of nasa scientists who sent a rocket like an asterd 7 million miles away going 40,000 miles peroi hour. These nasa scientists hit the astroid dead center. And not only dedicated bullseye, they changed its trajectory. For the first time a group of nasa scientists and engineers proved that if an asteroid were ever headed forer earth, they could deflectt and save humanity. My team looked at me sheepishly and said, be tough to beat. And sent a shrewd member of my team chimed in and said, but where did nasa get the money for that rocket . Its collected by the irs. And that is a moment i fully appreciated how importantj4 the irs is andec how monumental this task an opportunity. And its not just ensuring we have thecientist can save the planet from asteroids that its ensuring the government has funds to keep our food t safe, our skies safe, roads safe. So if we are essential to fundingal so many of the things that make life in america possible, i am left with one burning question. Why does Homer Simpson not like well, theyre supposed to be a video here. Lets see if it pops on. All right. I dont think we will have the video. But in the video basically, it willll probably pop on one tellg destroyed, homer drives the irs. [booing] oh, boo your self. So why does Homer Simpson not like us . He thinks hes paying too much in taxes. It maybe he thinks his taxes are far too complicated these are ae of the irs control. We do not set the tax rate or write the tax code. But if homer and other taxpayer americans are upset that we are not answering the phone or we are taking too long to send a refund or otherwise increasing strend frustration as they navigate the tax responsibilities rather than decreasing it, then we can and should turn things around. But we have a large mountain to climb. These are snapshots of the irs just a few years ago. Paper returns piled up and always in cafeterias, shuttered Tax Assistance Centers so people couldnt get help. So i suppose i can understand why we may be booed by Homer Simpson or other noncartoon americans for being frustrated with the irs. But how did we get to this point . S overwhelmed by paper tax forms when the resthe of the world had moved the on paper, deteriorating customer service, and munich audit rates, stagnant chno result of two trends over the last couple of decades. The first trend, t■uhers far too long. From. From 20102021, the irs budget was slashed more than 22 . During this decade of budget cuts the American Population grew and annual returns increased by more than 15 million. Along with countless changes to tax laws and increasingly complicated financial environment, globalization, additional currencies, exponential growth in digital commerce, and other factors that increased t size and complexity of americas taxnc system. As her budget declined but our plate of responsibility grew, irs employees worked through it. Long hours and sweat equity would often get the job done, because Innovative Technologies were not available. Enter the pandemic. The irs workforce heroically managed to the pan tax system and successfully getting emergency payments to hundreds of millions of the country, but eventually the bottom fell out. Come out of the pandemic we were so bit rate in paper backlog, understaffed and hobbled by stagnant technology,le we literally no longer after thehe phones or keep our walkin centers open. Enter the Inflation Reduction Acthe in 2022, and finally we hd new funding to not only built the irs back to par performers, but also to build it for the future. And even though this new law provides you attain your runway for the irs to rebuild, it has been clear since day one that we needed to show results immediately. Well, this is our awesome cafeteria today. Funds from the new law allowed us to dig out of a deep hole, back to Better Service standards, and laid the foundation for the transformation to come. New funds arens catalyzing a new f the irs. The era of unprocessed returns in hallways in cafeterias has ended. Our phone center is back in operating with record efficiency. All of our walkin centers are open fully staffed and expanding around the country, and we have new tools irs. Gov and a scene record traffic to the site. We have launched mor last two yn we were able y to launch in the last 20. And sometimes its the little■< things, like this Filing Season we had a callback option on her main 1800 the air of taxpayers being required to stay on hold listening to elevator music. When you are funded, you can make these types of improvements. When you are not, you operations remain in the past. Now we have an opportunity to move on just days performers and built a 21st century tax agency to serve the American People in the manner they expect and the level they deserve. Our vio the future is an irs that is too effective in easingx tax law. Simple reforms, more intuitive processes, and a staff that is increasingly transparent areas of empathynd understanding who have the tools to help taxpayers meet the obligations easily and fairly. Even more real for you. My parents who are in their 80s have never used an atm. They go into the bank, talk to. My children on the other hand, or in their 20 have never set foot in bank. Not to open an account and certainly not to get cash. Think about how you interact with your bank. When you buy something with a debit card that transaction shows up on your online account before you even leave the store. But when you make a payment to■ the irs they can take days, even a week to show up on your online account. When your bank is concerned about fraud, it will text you and let yt sort it out instantly from your smartphone. When the irs answer may be fraught with your account, we send you a letter. We are working to change that. And to transform to be ready for the new digital economy. With histocing an irs where all taxpayers can meet all the responsibilities including all interactions with the irs from questions to paymentsnt to resolutions in a completely digital manner, if theyho transformation because a Digital First irs is a generational imperative. Its how most taxpayers want to interact with us in the 21st century. But the Digital Transformation is also the keystone that helps unlock the True Potential of the irs. Heres how. When financial retail and travel everything online, which accelerated during covid, the number of people calling their 1800 numbers dropped precipitously as did the number of people showing up for other locations. Our vision is not only where we can deliver everything for taxes online. Its one where we redeployed our capacities, our employees and will actually still need our employees will now have the time and tools to focus on helping the people that need it most, and increasing scrutiny on bad actors and purposeful tax if it is the entrance of unlocking capacity told the people that need our help the most, less time on phones means more time our employees can be victims of Identity Theft and less times correcting 1044 smear it was can spend more time engaging in communities supporting walkin sites and volunteer tax clinics that assist lowincome filers and helping taxpayers who cant afford to hire an accountant to get it rightht the first time. Less time processing paper returns meanset our employees cn spend more time helping every taxpayer, regardless of income, claim credits like the earned income tax economic lifeline for so many. Yet 7 million eligible low income taxpayers■ eachea credi. We can unlock our potential to do more to help them. At digital irs does not mean wep the people who need it the most. Our digital deformation to unlock these new capacities has already begun. For example, we made significant upgrades this year to witness my refund a tool . Also this Filing Season we joined, we launched direct file, a system where taxpayers in 12 pilot states can file their tax returns online directly with the irs for free. Direct file is almost teller madelormade for students and young people is simple tech situation. So if your home is in a state pilot, check it out, go to direct fileotot qualify. And heres an example of whats coming in the near future a clear way to communicate with the irs and help protect taxpayers from scams and schemes. Know if the irs is trying to contact you. Why is this important . We have too many bad actors calling and texting, pretending to be the irs tricking americans are pulling out their credit card and paying them a fake tax debt. In the future if you get such a call or text you will just teach about your online account. If it shows a green banner like this actual irs is not trying to reach you. It is not us. Hang up, ignore the text and if if you are willing, report this online so we can investigate and hold about actor accountable. There crackdown but also increase on those that intentionally evade responsibility. Illcantly down the employees to focus on the complex complex areas of noncompliance overwhelmingly occur on the highest well and largest taxpayers. Many wealthy large taxpayers are doing the right thing many are using it as a way to inappropriately shield theirap income. Less resources dedicated a return means more resources and Artificial Intelligence city and find hidden income. ■n in fact wee of ai the largest in the world for hiding income behin complexity that same ai helps with the precision partnerships playing by the rules and doing the right thing. Using the new ai modelsudits on 76 hyatt risk complex partnerships including hedge funds and publicly traded partnerships. Unlocks new capacity to broaden our reach scrutinize a lot more high risk complex filers that we previously could. At unlocks to focus our enforcement efforts on the high income groups that for too long have fallen under the radar. With new funding weve already served notices to 125,000 highho file a federal income tax return since 2017. Including 25000 people with incomes over 1 million. These nonviolence represent more than 100 billion in financial activity. We are cracking down on 1600 millionaires and billionaires ae individuals to fail, through their basic civic duty of filing a tax return and paying with ao. A more digital irs unlocks our ■oee ability to audit inappropriate writeoffs for personal use of corporate assets such as corporate jets. In my first year here the irs team has already collected nearly 500 million millionaires and billionaires to ensure fairness in our tax system. And we are just getting started. So, this is how our digital platform for taxpayers will unlock our employees capacity to scrutiny where it is needed most. Perhaps most critical new funding inner transformation to unlock our ability to ensure they are desperate for everyone who plays by the rules and helps restore trust in the system. No issue is more important than fairness. Just over a year ago, inacate confirmation hearing, researchers at several universities and the u. S. Treasury published a study that black taxpayers three times more likely to be audited than other taxpayers. Our processes were impacts on t. Not only committed to fixing this top priority confirmed but i became moreed to become the irs commissioner. I wanted to fix this. Any indication of racial bias in our work is unacceptable. I immediately met with the irs team setting the issue. Too quickly evaluate the extent to which art priorities or the processes in the data we contributed to the spit disparity paid since ive been commissioner ive been meeting with communities that were impacted, hearing their ncerns, sharing our regrets and outlining the actions we are taking on substantially reducing the number of audits or they were identified. Making changes to our algorithms specifically intended to address the disparities. We are now ready to invest new resources to help identify any di age, gender and geography. We are using that research toinr approaches across compliance efforts. Were trying to rebuild trust overhauling appliance and hold ourselves accountable for the taxpayers we serve. For one or 50 years dating back to president lincoln but more recently the evolved. Tax laws are increasingly playing a larger role addressing the most pressing challenges of our time. Irs employees are hard at work on programs to cut child poverty. Programs to expand Healthcare Access until age 26 the Affordable Care act. As to the irs and taxes. To address the threat of Climate Change because the hundreds of billions of dollars tax credits. With defendant we can support policies to improve the lives of all americans. Moment in tax collection and beyond. But to succeed and century we need you. We need to count lawyers and finance experts. We also need data scientists, engineers, experts and ai in human behavior. No matter what you are studying your expertise and most importantly your passion for change in service. The summer of 1963 john f. Kennedy came here to Americans University commencem