Transcripts For CSPAN Key Capitol Hill Hearings 20150313 : c

caribbean citizens who have joined the islamic extremist requests you made a comment people have gone from the caribbean. to syria. can you give us a little bit more where they are coming from what you think they are doing, and whether you have seen any indication they are trying to come back? >> like in our own country there is a small number reportedly that have gone -- radicalized one way or another in the west. larger numbers in western europe. i would suspect they will get good at, while they are in syria, killing. pick up job skills in terms of explosives and beheadings. everyone is concerned if they come home. one would expect they would come back at least as radicalized as they were with couldn't a job skills they picked up in the fight. we have any indication of any scheme to attack the u.s.? no. but the smaller countries, as i say, we take for granted in the u.s. that we have a functioning legal justice system and fbi. layers of clean police men and women. a lot of these countries do not have that. if these people return, or when they return, where we can monitor them and check them. these countries i'm talking about, trinidad, jamaica come a surname -- jamaica, sir uriname. small numbers. some of them get recruited were radicalized off the websites. there are a couple of radical mosques in the region. some of the places i have just mentioned. 100 does not seem like a lot. the little countries they come from have a total inability to deal with it. that is their concern. >> the countries are mainly the ones you are -- >> jamaica, trinidad and tobago. surinamee. i think that is all. >> according to the irs fake -- the senate finance committee examined some of the fraudulent activity used against taxpayers this season. this hearing is 1.5 hours. >> welcome. the committee will come to order. the committee meets to talk about growing criminal activity that is threatening taxpayers across the country. these criminal acts are perpetrated by thieves hiding behind telephone lines and computers, praying on honest taxpayers and robbing them of tens of billions of dollars a year. we are here to hear about federal and state officials on the fight to catch these crooks and protect taxpayers. first, i would you talk about one case in particular. one very large number, by the way. this is a hearing that is long overdue as far as i am concerned. on this committee, we often talk in terms of hundreds of millions, billions, or even trillions of dollars. some joke about a number being referred to as budget dust, even if that number has nine or 10 zeros behind it. let me tell you about a number that is stunning, $15,800. that $15,800 saves hard work sacrifice, and honest living. that is saved for the down payment of a new house for a growing family. that is $15,800 in savings that has been wiped away by criminals who use fear, confusion, and intimidation as their weapons. this is a story of a family from taylorsville, utah. i would like to play a clip of a utah affiliate who tells their story. >> these crooks have gotten a lot more sophisticated and a lot more aggressive. this family learned that the hard way, one week ago. >> brenda and melissa dagen are excited for christmas but only have a few christmas presents under the tree. melissa got a phone call saying she owed taxes from 2009 and was about to be arrested. melissa: i was like, what can i do to fix this? i can't be arrested. i have no one to watch my kids and they would not let me get off the phone. anchor: another scammer was calling her phone with the bogus caller id -- 911. melissa was convinced they were on the way and withdrew $15,800 which he used to pay prepaid cards and gave the code numbers to the thieves. that money was gone before she realized she had been victimized. melissa: i have not been able to stop crying. i cannot eat. i am sick to my stomach. embarrassed, just lost that all of this money we were trying to save for a down payment on a home -- because we need a bigger home to take care of three kids -- and my heart has been totally ripped open because of this. anchor: the story is too familiar to lieutenant doyle of the unified police department which is investigating dozens of these cases. lieutenant: they are demanding people pay and get prepaid debit cards, and they are telling them they have outstanding warrants for the arrest. anchor: for the record, neither the irs or police collect payments over the phone. melissa wishes she had known that one week ago and has a message for the people who did this. alyssa: i forgive you, but it is sick and wrong and i do not have they can live with themselves. i do not know how they can make phone calls and hurt people. not any time of the year, but especially during christmas. anchor: melissa's cousin has started a go fund me page where they can recoup some of those losses. total strangers are giving whatever they can to melissa and brendan's fund to help the family recover. we have put a link to melissa and brendan's go find me page on our website, goodforutah.com. >> that is one family out of millions of that have been targeted and thousands victimized. this is one scam. make no mistake, taxpayers across the country are facing identity theft in record numbers. once again, we have to stop this. taxpayers must be more aware of the risks and better protected from attack. these criminals must be found and brought to justice. we looked over to the testimony of eyewitnesses on today's panel. we will be hearing more about how to accomplish these goals. let me turn the time over to senator wyden. senator wyden: thank you chairman. i appreciate the chance to talk and work on these issues in a bipartisan way. since the days irs opened their doors, scam artists have been hatching up slick new ways of stealing taxpayer dollars from the treasury. what is knew is that the ripoff artists are now stealing americans identities and personally threatening them on an industrial scale while directly robbing them of their hard earned money. the fraudsters constantly dreaming up new tactics, and then they milk them for all they are worth before they start getting caught. then it is lather, rinse, and reapeat. onto the next scam and always one step ahead of the law. today, the committee will examine several of the fraudsters' latest strategies that are plaguing taxpayers. the one that is hitting oregonians hardest is the fake phone call demanding money or personal information on behalf of the irs. in fact, these calls were the number one consumer complaint registered with the oregon department of justice just last year. not everybody knows that the irs simply does not cold call individuals making demands or threats. it is pretty clear from my vantage point, there is a lot more work to be done to defeat this scourge. given the sophistication of this criminal activity, and the fact that a lot of it comes from overseas, this sure looks to me like an emerging type of organized crime. so the real question is, what is it going to take to root it out and get the bad actors on the sidelines? what is the role for more prosecutions, stronger deterrence, more cops on the beat? and what is the best way of getting the word out so taxpayers are not tricked into surrendering their life savings to some intimidating voice on the other end of the phone line? even if our people managed to avoid the phone calls, you can bet that the crooks find other ways to profit. tax preparation software has become the scammer's new fast lane. they acquire data from the black market or hack into commercial databases, and then they filed false returns electronically. the victims might not find out until too late. there have been reports of this in 2015. we will hear some software vendors are not doing enough to prevent fraud. in my view, part of the challenge is getting the state's internet tax services and irs on the same wavelength. they have to work together to make sure the criminals cannot just in a nimble fashion slide from one jurisdiction to the next, as they rip off more unsuspecting americans. so taxpayers may choose to avoid the software, but not even a paid tax preparer is guaranteed to be safe. in fact, many of them do not meet any standards for competence. there are far too many of these con artists out there who are willing and able to pray on the people who come through their doors. in some of the most offensive cases, they secretly falsify their victims returns to boost the refunds and then they pocket the difference. once the tax season ends, the crooks disappear from storefronts they occupy, and there is no trace on where they have gone. a few states like mine have rules in place to help shield taxpayers from this kind of the ripoff. most states do not. senator cardin and i have introduced a taxpayer protection and prepare proficiency act at the beginning of this congress to give all americans the security they deserve. our colleague, senator nelson, is also a leader on this issue of keeping taxpayers save from identity that and fraud. all of us wish, as i indicated to chairman hatch, to work on this in a bipartisan way. the bottom line, there is no end to the ingenuity of the con artist, so my hope is that we will get some fresh ideas for catching up to this wave of fraud and stopping. obviously, it cannot come soon enough. we have a distinguished panel here today, especially pleased that the director of consumer outreach and education in the oregon attorneys general office is here. thank you to all eyewitnesses. we look for to working with you on a bipartisan way. chairman: our first witness is attorney general caroline cirillo of the tax division of the u.s. department of justice. she was appointed attorney general of planning and policy of the tax division in january of this year. prior to that, she was chair of the tax and litigation group in baltimore. we welcome you to the committee and look forward to hearing your testimony. cirillo: thank you. members of the committee, thank you for the opportunity to appear but are you to discuss the department of justice effort to combat identity that and tax refund fraud. the department greatly appreciate the commitment that the committee has brought to this very important issue. combating the theft of personal information to file fraudulent tax refund claims is a problem across the country. your efforts to bring attention to this growing crime will help educate taxpayers about the importance of detecting and reporting identity theft and fraud. today's hearing also sends a strong message that the government is determined to identify and prosecute individuals behind these schemes and in doing so, will bring all its resources to bear. the department tax division, which i have the privilege of meeting as acting assistant attorney general, has one purpose. to enforce the nation's tax laws fully, fairly, and consistently through civil litigation and criminal prosecutions. our close working relationships with irs criminal investigation, tigda, the fbi, the u.s. postal service, and other federal state and local law enforcement continue to attend the government possibility to respond quickly, efficiently and forcefully to changing patterns of criminal conduct. stolen identity, is an example of this type of challenge. in surf crimes, they filed a false refund claim and have the refunds of electronically deposited to a bank account or mailed to an address where the wrongdoer can access a check. sirf crimes involve multiple vendors who have large flames of information. sirf crimes hit vulnerable members of our society. these include, and are not limited to, the elderly, the hospitalized, students and members of our military deployed overseas. while the irs will make good on any refund due to the taxpayer there are inevitable burdens and delays while the matter is addressed. the victims often experience a profound sense of violation. moreover, we are all victimized by loss in the u.s. treasury. to this end, the tax division expedites the review procedures in sirf cases. the authority to initiate tax related jury investigation and to charge those involved in complete without prior authorization. the collaborative efforts of the tax division and the law enforcement partners have strengthened the response to the crime. through december 31, 2014, they prosecuted over 1400 individuals and courts are imposing substantial sentences. to further leverage from its investigation, in february, the assistant attorney general created a sirf advisory board. the board works to develop and implement a national strategy to ensure consistent and infected nationwide and prosecution of sirf crimes. for example, they conduct sessions for fraud analyst, they provide training and resources to prosecutors across the country. it works with u.s. attorney offices to develop local task forces. these initiatives enable prosecutors and law enforcement agencies to work together to identify schemes and to pursue the most culpable offenders. while providing the irs with real-time information that can be used to improve its filters and stopped the issuance of fraudulent refunds. the prosecution of sirf crimes is a national priority, and together with our law enforcement partners, we will continue to look for the most effective ways to punish the offenders and bring this conduct to an end. thank you again for this opportunity to provide the department's perspective on this issue. i look forward to answering any questions. chairman: thank you so much. our next witness is timothy, the deputy inspector general at the treasury. camas has served at the inspection service for over 23 years. he has a long career of having successfully investigated cases of domestic terrorism, bribery and fraud. we certainly welcome you and we look forward to taking your testimony at this time. camas: thank you for the opportunity to testify on the topic of the tax schemes and scams during the 2015 filing season. by raising public awareness about criminals efforts to swindle honest americans out of their money, we may provide the next person from becoming a victim, which is a very good thing. each year, the irs compiles what it sees as the dirty dozen tax scams on its website. many of these schemes take during the filing season as people repair returns or utilize the service of paid preparers. my statement today briefly outlines the top schemes and scams currently affecting taxpayers as they have proven to be surprisingly effective ways to steal money, in many cases before the victim realize they have been scammed. the first scams, the phone impersonation scam which landed on the top of the dirty dozen list. it is the largest and most recent impersonation scam we are aware of. it has claimed thousands of victims. here's how it works. the intended victim receives an unsolicited phone call from a person claimed to be an irs agent. the caller uses a fake name and tells the victim a made up badge number. the callers may know the last four digits of the victim's social security number. they say that if they fail to pay, they could lose their drivers license, or be arrested. i received one of these calls at my home on a saturday. tigda has received many reports of these calls averaging between 9000 and 10,000 calls coming to my agency. as of march 9, two thousand 15 over 3000 individuals have been victimized by this by paying a total of $15.5 million for an average of $5,000 per victim. the highest reported lost by one individual was a staggering $500,000. in one particularly sad story, a member of this committee forwarded a letter to us from a constituent whose close relatives suffered a tragic death after receiving harassing phone calls from this. we are reaching out to the media, irs, national trade commission, and providing testimony to this committee it helps to eliminate this type of abuse and to prevent vulnerable individuals from becoming victimized. anotehr scam involves the story the victim has won the lottery. this is a continuation of an old scam and starts with an e-mail or telephone call out of the blue, declaring that the victim has want a lottery. in order to declare the winnings, they must first pay the tax to the irs. the lottery scam often, but not always, originates from outside of the united states. in the end, the victims pay the money, but they never received any lottery winnings. just as serious as these scams the risk of taxpayer refund identity theft. the irs has made improvements in identification of identity theft returns before fraudulent tax refunds are released. continued attention is needed to effectively combat this crime. for example, the irs still does not have timely access to third-party income and withholding information. most of the third-party information is not received by the irs until well after the taxpayers begin filing returns. the deadline for most information returns with irs is march 31. yet, taxpayers begin filing returns, this year, on january 20. this gap in time prevents the irs from conducting validity checks. legislation would be needed to accelerate the filing of the information returns. the irs has taken steps to effectively prevent the filing of identity theft tax returns by locking the tax accounts of deceased individuals to prevent others from filing returns using the departed's name social security number. for 2014, the irs rejected over 338,008 file returns and stopped paper returns through the use of these locks. just 11 days after the filing season began, the irs reported that it had prevented the issuance of more than $2 million in fraudulent refund -- refunds as a result of filters. other schemes, such as prisoner fraud, tax preparers, and phishing scams, are discussed in depth in my written testimony. much work is being done on multiple fronts to address real activities. we hope this work will reduce or eliminate their impact on taxpayers. chairman hatch, ranking member whited, thank you for the opportunity to share my views. i look forward to questions. chairman: thank you so much. i will turn briefly to introduce our next one. >> thank you very much. thank you to the leadership of mike pence and our department of revenue. they developed a plan that stopped $88 million in attempted identity theft in the last filing season. this involves 78,000 fraudulent returns in 12% of all the refund dollars that were requested. the cost to that, as mr. aly will explain, he cost the state $8 million. the return of the investment was $88 million. compared with some of the things we do around here, which is usually the opposite, spend 88 and got eight back. we are currently bringing the needed changes to our state. the commissioner brings a wealth of private commissioner experience and has worked for decades in the banking industry. he is a cpa, he has started businesses, so he understands firsthand how important customer service is for the department of revenue. chairman, i thank you for inviting him to testify and look forward to his testimony. chairman: thank you for inviting me to discuss this important topic with you today. on behalf of governor pence and the citizens of indiana, it is our honor to be here and share our story. i would like to share the points with you today. first, the nature of the problem and overall breadth. steps indiana has taken, recommendations to fully and effectively address this epidemic problem. tax refund fraud is one of the most lucrative platforms for criminals to monetize the volume of stolen identity information. the advent of electronic filing and processing, that has only enhance the ability for us to file large volumes of fraudulent returns at nominal cost. as the senator indicated, in 2014, 12% of the total refund dollars that were requested from indiana were thought to be fraudulent. fortunately, we were able to stop them. it represented 78,000 fraudulent returns that we stopped that contained manufactured or stolen ids. again, we saved the state $88 million in the process. it is still early in the 2015 filing season. we are already seeing a dramatic increase in the use of valid ids, which have been stolen. with the increase of the reporting successful hacks across the united states of u.s. companies, we believe the availability of valid stolen ids has never been greater. the fraudsters have clearly popped -- upped their game and we must do the same. in 2012, we realized we were suffering losses from refund fraud. accordingly, we worked with governor pence and his team to effectively identify a program that we could begin building. we knew that we needed to take significant, systemic modifications and we needed to do it before the next filing season. our staff reached out to states through the federation of tax administrators and also our partners at the irs, to see if there were some ideas we could borrow and implement rapidly. the response was very supportive and we noted partial solutions and fragmented efforts across the group. with strong support from governor pence, we initiated a program to screen all returns for suspicious identities. this program used lexis-nexis, a third-party, to screen returns and note identity theft information such as name address, social security information, and other identifiers. we would tell the ones that proved to be suspicious and sent a confirmation letter to have them confirm identities. again, this had a dramatic impact in our ability to recognize fraudulent identities and stop those refunds. the identity confirmation quiz is only part of a larger process. it became very clear in the beginning that the department would need to make some systemic changes by making significant investment in both staff technology, and further, we needed to change our approach to how we deal with fraud. for the 2015 filing season, we have implemented new pre-filter platforms that include decision-makers that will allow us to better identify those valid ids. we have also defined great expectations from our certified software vendors as to the information they will provide to us and the level of fraud they send our way. we are still battling this problem, but a few key lessons have been learned. first, it must be a strategic priority. identity theft and refund fraud is here to stay away to address it. it requires leadership, staff, technology, and third-party resources. second, collaboration. no one has all the answers and we cannot solve this problem by ourselves. sharing data, best practices experiences, among all the revenue agencies across the states as well as the federal and software vendors, is going to be important. having access and ability to communicate on a timely basis is critical. we have got to develop targeted solutions. fraudsters will continue to change approaches and we have got to stay ahead. finally, note that prepaid debit cards is an issue that needs to be addressed. it is a preferred tool of fraudsters in receiving refunds. we found that over 50% of those returns with prepaid of the cards are fraudulent. in terms of some recommendations on things we can do, we consider that the solution really encompasses a three legged stool. each has unique data perspectives, and capabilities that the system requires in order to make better decisions. the irs is in a great position to help us manage highly sophisticated fraud. states must work together. finally, software vendors also have the information and can be helpful in providing and sharing their intelligence. in conclusion, i just want to summarize that the problem is here to stay and we got to address it. secondly, collaboration and sharing of information among the irs and state, reducing some barriers. anonymous aggregate information is critical. third, we have to make investments. we made an investment that yielded a 10 times return. i am confident that providing continuing investment is the only way to get out ahead of this and beat it. on behalf of the citizens of indiana, thank you for allowing us to share our story. thank you for allowing us to be here. >> thank you, we appreciate you making an effort to be here. our next witness is john valentine with the united states tax commission. he was a member of the state senate where he served with distinction until 1988 until his commission as the tax commission chair in 2014. before that he was in the utah house of representatives and was an attorney in private practice. chairman valentine, we are grateful you have taken time out of your schedule to be with us today. and for joining the hearing this morning. >> thank you chairman hatch. and member wyden, thank you very much. i'm here to discuss ways to reduce the tax frauds that we are seeing develop. there are issues you need to consider. first, strength and information sharing between the irs and states. second, stricter regulation of the financial prepaid debit cards. three, regulate the practice of applying refunds to payment of fees for filing services. a practice in the industry called refund transfers. four, a third-party funding services tightening front insecurity using multifactor authentication and other measures to secure data from unauthorized disclosure and identity theft. prior to the commencement of the 2015 filing season, utah installed a state of the art software system to identify fraudulent returns. on january 20, tax commission open filing of tax returns deployed the system. as we processed returns, the system started sending out error notices saying these were fraudulent. we followed up with verification letters of the suspicious returns to the taxpayers. within 10 days of opening the filing season we received calls from taxpayers saying we have not filed returns yet. we initially thought these were isolated incidences, but it was clear they were not. we found several factors that were common in all of the calls. one, the returns had direct deposit information from previous years bank accounts to a debit card. the returns contained routing numbers that were different from the federal and state returns. most of the returns appear to have the exact 2013 return data populated in the 2014 return. the next issue that was common with the address on the returns that was the same as the address on the 2013, even when there were errors in the address. finally, since most were made through one vendor, it appears something in their process was compromised. after communicating with that vendor, and notifying other states, we talked with the internal revenue service saying we think there may be a compromise of the modernized electronic finance system. the accounts in question that we identified were sent to the service center. 31 returns in the first week were confirmed suspicious. we asked in a phone conversation to confirm on their side, we are waiting to hear from them. many have asked what actions were undertaken when we discovered the attack. we hurried. we stopped refunds until we could get our arms around it. during the first week we found 5 fraud schemes. four we had seen before. the institutions and preparers. one was new. someone had actual tax returns. not identity thefts, but tax returns from prior years. as we continue to prevent the outflow of fraudulent refunds, we found difficulty determining the nature of the financial institution and account information. specifically, we found there was no uniformity in numbering to determine traditional debit cards from traditional bank accounts. we could not tell whether we were refunding to a prepaid debit card or funding to a legitimate bank account. there is an easy fix. it is to require the financial industries to have identifier numbers in the routing number or account number identifying this as a prepaid debit card. we do that with checking and savings accounts already, not with prepaid debit cards. in the investigation we found a practice perpetrating fraud without anything at risk to the refund transfer. the fraudster deducts the third-party funds from the refund. the third party gets paid, the fraudster gets the cash, the state is out the money. third-party finance services lack front end security measures. quality firewalls need to be installed by third-party vendors. both for the irs and state tax commissions. thank you chairman and ranking member wyden. >> finally, i welcome ellen clem. she serves as a director of consumer education and outreach at the attorney general's office working to protect oregon residents from financial scams including the scams and schemes we are working on today. we welcome you here and look forward to taking your testimony. >> thank you senator hatch and ranking member wyden. every day i hear stories from oregon residents about a wide variety of frauds and scams. these stories have focused exclusively on the irs in mpostor scam. that is because as senator wyden mentioned, in 2014 this scam topped oregon's list of consumer complaints. last year we received more than 1300, twice the number as the next highest category. what is worse, the victims reported losses more than $75,000. we know from testimony presented today that is the tip of the iceberg. that is why i hear today to tell you the story of two victims and to talk about what the oregon attorney general is doing to prevent this from happening to others. the first story is of a woman i will refer to as diane. in august she lost $15,000 to an irs imposter scam. this is the largest individual loss reported to the oregon department of justice in 24 2014. like many victims she had a message on her answering machine from a man claiming to be from the irs directing her to call him back at a 202 area code. the person who answered let her an affidavit for her arrest, threatened her with a $25,000 fine, and 18 months in prison, and told her she would be arrested later that day. diane was terrified. the scammer said he could settle the matter for $15,000 on prepaid money cards. diane made the only choice she thought she had. she confide with the request and was out $15,000. individuals like diane, who send money to the scammers, i'm not the only victims. in september of 2014 marissa phillips contacted me. her employee, linda, was victim to an imposter scam. after sending a small amount of money, linda realized she had been had and did not pick up the phone. when it was clear they would not get a hold of linda, they called marissa's small business that provides in-home care services for seniors and those with disabilities. they called at a rate of 100 phone calls per minute for 20 minutes. the calls prevented her from providing help to those who needed it. the seniors, their families, hospitals, and staff. marissa was forced to change her phone number, and all of the marketing materials. thankfully, not everyone in oregon who receives a phone call from an irs imposter becomes a victim. i would like to think that is because we are working hard to educate oregon residents. the oregon attorney general has several educational tools aimed at scam prevention, because she and i know that well-informed oregon residents are more likely to recognize broad and less likely to become victims if they are educated. we know the scams can be hard to track and prosecute. the oregon attorney general has invested in strong partnerships with federal, state, government entities, community organizations, advocacy groups and members of the media. through these partnerships we share complaints, coordinate investigations, and disseminate investigation to the public. our partners give us a stronger voice to share information and keep oregon residents like diane, linda, and marissa safe. thank you chairman hatch and senator wyden for the opportunity to share the stories. >> we want to thank you and the witnesses. i think a lot of people will be surprised at how this is growing. let me turn to you commissioner valentine. i want to thank you for coming back here to testify in the midst of filing season. i applaud the innovative approaches you are taking, you and other state commissioners like you and commissioner ally are taking. in your testimony you said you would like to strengthen information sharing between the irs and the states. i would appreciate it if you could elaborate to explain what information would be useful, and what information you could provide the irs that would be of use to them. if you have suggestions about how the finance committee could facilitate that, i would also like to have your information on that. >> as a background, we have a great working relationship with the irs, especially the ones we deal with. we share information. the trouble is it is not being shared in real time. the information is very delayed. sometimes, we are not doing getting information we could use to look at the returns as they are coming. one thing that the finance committee may consider is the idea of moving up the filing deadline for the w-2s for employers. as senator wyden indicated, we have a problem. as w-2s go out to the individuals on the 31st, we have a gap. employers do not have to have them out until march 31. there is pressure as is the federal government to make the refunds. yet, we cannot give them the refunds without knowing for certain that the right person is getting the refund. that gap is a big problem. that would help a lot. another is for the senate and house to encourage the irs to have a more formalized sharing of information. i gave you the example of the 31 returns six weeks ago. they should have a quick response. we have identified them as fraudulent, confirmed that they had not been filed by the taxpayers, yet we do not hear back in real time. those are things that could really help. >> thank you very much. let me ask you this. i want to thank you and the inspector general for all of your efforts to catch the criminals and to educate the public about these scams. in my opening statement i showed a video about a family. the same criminals are targeting other americans. is your office doing everything in their power to track them down and stop them? can i have that commitment? >> you more than have that commitment. those who work at the tax administration are working day and night, and partnering with other law enforcement agencies as well. it hurts us when these victims are victimized as described. we instruct our agents when you hear from a victim who has lost money, we spend time with them and hear their story, and attempt to get as much information as possible. we have an aggressive ongoing investigation at this time. i hope we can describe the success of that investigation in the near future. >> a scam that worries me is the stolen identity refund fraud it was calculated the irs paid $5.8 billion in fraudulent refunds to identified theives in 2013. you have suggestions on how the irs can detect this type of fraud earlier and a stop fraudulent payments from going out the door? >> as was noted by the opening statements of the witnesses and committee members, one of the challenges is the criminals are watching the internal revenue service. they know one point $3.1 trillion goes through the irs, refunds. as they irs continues to advance filters in response to the approaches, the criminals change because it is such a lucrative environment. our audit staff is looking at the filters and recommending additional and approved filters. we have seen improvement in some, but it continues to be a major challenge to keep up with a criminal enterprise. >> this has been a suburb panel. thank you for the wonderful work you are doing in our state particularly for older people. i am really glad you're out there on that beat. very important. let me ask you about the question of the foreign government. it looks as though, and you mentioned in your testimony, and it is clear that the phone scams are originating overseas. it looks to me like this is essentially an emerging form of organized crime. you are conducting an investigation, and i realize there are things you cannot say, but let's talk about the things we should look at from a policy standpoint. the question of whether we should initiate efforts in terms of work with foreign governments. and what they can do to assist us. the second, what is the rule for local law enforcement? you can go after the money runners who collect the payments, in other words the ripoff artists overseas, they need money runners to collect payments. let's start with those and other opportunities. i know we have strike forces for medicaid. tell us about, and nothing will compromise your investigation, but tell us about what we can look at those give you more tools to fight the ripoff artists that have done so much damage from overseas. >> thank you for the opportunity. the challenge is getting our hands on these people. the relationship with various foreign governments can create issues. the problem that we are seeing is that because there has been money paid, we are seeing spinoffs of this crime. although we are focused and think we know where it originated to start, we are seeing indications that other criminals have ripped off the original idea, and are launching these types of attacks. it continues to be a challenge but i think we are onto something. it would be something we could use help on down the road, in terms of getting our hands on a foreign national and bringing them to justice in the united states for a white-collar crime. senator wyden: can you give us an example of those problems? camus: the integrity of the financial system is suffering these types of scams. that is why my agency takes these so seriously. there are those out there that do not feel bad for the united states and are not interested in helping us bring these types of criminals to justice. wyden: let's move onto the anthem case. this shows the industrial scale of these ripoffs. 80 million people. cyber identity theft. they are one of the biggest health insurers in the company -- in the country, and have indicated 80 million americans may have been hacked. opening the door for fraudulent health claims and criminal enterprises that we are talking about today with identity theft, including tax fraud. a question i raised with the inspector general in the past. it appears to me that blocking this type of tax fraud, is increasingly falling on the shoulders of tax collectors, both in the irs and the state. i am interested in the panel's recommendations on what else we need to do to give you the tools to fight identity theft from cyber attacks. any of you that would like to get into it. i saw the state officials nodding their heads. let's hear from indiana to keep things in the center. i like to get to the center before the far right and far left. alley: thank you, senator wyden. we are seeing the impact of that. many of the steps they are taking, corporations across the country are taking, are doing more multifaceted authentication. i think many companies have not invested adequately to prepare for that and allow themselves to be vulnerable. that is one thing that corporate america, and all of us in the government level need to focus on. in terms of what we can do as a group, it goes back to the three legged stool. we get a lot of information that we share with each other, but it is not on a timely basis. i would like to see the irs to take a greater role in driving the standards and expectations. we have 50 states. many have taxing mechanisms. they're all doing disparate things. if we could have the irs help to bring everyone together to establish a coordinated collaborative set of standards and expectations from software vendors, financial institutions, i think that could be a great deal in bringing everyone together on the same platform. senator wyden: that sounds too logical. we will have to pursue it. >> thank you for holding this hearing, and thank you for the panelists for being here and testifying. i think every taxpayer should feel confident knowing their information is secure when they file with the irs, and there will not be a false return fraudulently filed in their name. i think we have seen the impact that identity theft could have on a family's well-being. and hopefully we are able to move legislation forward in congress. one measure for preventing identity theft has been recommended by number of commentators. that the irs identify information from a third party like the social security administration. i'm wondering, what are your thoughts on how much fraud that would prevent, and are there potential downsides? mr. camu? camus: generally speaking, as mr. valentine pointed out, the fact the irs does not have a w-2 and its automated system to match at the same time the taxpayer files their return, that inhibits their ability to do a simple validity check before issuing a refund. there's a great expectation to get the refunds as soon as possible. anything we can do to increase the timeliness, or two get the time the taxpayer can file the return, this year it was january 20, to jive with the time the administration has the information that is not due until march 31, that will help. senator thune: any downsides? camus: there are three points that can affect the fraud issues. one on the front end. the authentication issues. the next on the discovery phase. the transfer of information back and forth between the different tax agencies. the third is the method that you pay. that is why my comments try to affect all three. any of those are helpful. in all three areas, you have a better chance of cutting down on fraud. >> it has been a number of years since congress enacted a taxpayer's bill of rights. when a taxpayer has a fraudulent return filed in his name, is the recourse with the irs sufficient? camus: our audit staff looks at that. what they can do to help the victim. we continue to look at that and recommend changes or improvements in the program. senator thune: are there additional measures to get them the assistance they need? camus: it is traumatic for the victim. any time identity is compromised they are very upset. i'm not going to comment on where we are at, but from our auditors i understand there has been an improvement, and they work to make that experience better for the victim. >> we have a focus on that issue. a way to process quickly without having to go through the bureaucracy. we have done that with our services division in a letter that we sent out to authenticate that the person who's calling is the right person. that type of thing may be something service could consider, as well, as a way to expedite a particular complaint of identity theft. senator thune: the recent hack there worries and breaches on turbotax that made national news. other electronic providers of tax service haven't. how preventable is this? >> i am not so sure that others have been impacted. we have realized and identified the breaches that occurred with the one vendor. taken additional steps to try to mitigate. but i think we are finding that it is not just them that have been impacted by this but the fraudsters move with great agility. as they impact one and half success and those doors close they readily moved to another open door. i think it is a systemic issue and really brought across the entire industry, not limited to any particular vendor or party. and it are warner thank you -- senator worn: thank you, mr. chairman. one of the things that we could do, we have some legislation on this -- the irs currently interprets the law saying that they don't believe that, if they find out that you have been the victim of identity fraud they don't even tell you as a citizen that you are a victim of that fraud. so the notion, whether i believe they can do it administratively, we have written them. perhaps you writing them might shake them up a little bit more, but if we cannot get them administratively one step to make sure the irs is a partner in this identification when it comes to their attention that someone has been a victim of identity for them that we notify them and law enforcement. i think we see some nods from the panel. again, the numbers are huge as you pointed out in your testimony. a second item i think we ought to consider, this is something i have an working on the inking committee. some level of mandatory data breach reporting. it is a very gray and developing area particularly on the retail side, we have seen countless indications of data breach. but there is no obligation or standards about when a company needs to report this information and i think there needs to be such a standard. one of the things we have urged from the banking committee side is that, you know, this is an area where there is a lot of finger-pointing between the retail sector and the financial sector and rather than creating another interchange battle trying to have the financial sector and the retail sector were actually collaborate better again, i am going to get to a question here. it would seem to me as well -- and one thing that i would like the panel's comments on, is there not a way, either through the irs or in collaboration with the private providers, the turbotax -- i agree with the panels comments that this is not just a turbotax problem. we need the private sector who has a very vibrant business as well, why haven't we created a single easy-to-use portal so that, when mrs. smith or the lady who was in the story in utah, there is a single place where you can at least check whether this is a real claim or not. do you all want to speak to that notion of how we do a better job in consumer education, why we haven't had the irs more act it in collaboration with the state tax apartments and others an easy to find fight and what would be the responsibility as well of the private sector providers, the turbotax is and others to collaborate with that one single portal question -- one single portal? . chair valentine: we actually tell them. we don't have the impediments that the irs has in that regard. we have an easy system now for taxpayers to check whether they have received their return or not. we sent out authentication issues. you can determine whether your return has been filed. we have been doing a public service announcement saying police to check -- please check to see if your return has been filed. senator warner: wouldn't it be better to have some education process here since the fraud is taking place at the federal level rather than at the state level? chair valentine: i agree as well. senator warner: i would simply say that, when we are looking at 5.8 million dollars in fraud the washington post says this year we have seen a 37 fold, 30 teva -- 37 times increase in raw jalandhar claims -- in fraudulent claims. on behalf of senator grassley, the treasury inspector general for tax administration has detailed how irs needs to do more to reduce improper payments for the earned income tax credit and the child tax credit. for 2013, 2 $.5 billion in proper payments were made and between $5.9 billion and $7.1 billion for the child tax credit. both of these credits pay tax benefits, making them a prime target for looking to engage in tax friends -- tax fraud. the rules governing how these -- the rules governing both these credits are complex, opening them to innocent human error. in your opening, what amount of improper payments would you attribute to fraud and to innocent error? inspector general camus: it is clear that the fraudsters look for any opportunity to get at that money and they are rooms loose in their attempts. the fact that they use credits readily available to folks using tax returns -- i do not have that information but i will meet with my staff and try to get a response to senator grassley. senator hatch: i would like that information as well. senator isakson: my wife said you need to listen to the voicemail i kept this week. it is the phone call you are talking about. it was to call a 202 number or they file suit next week. being a member of this committee, i realize that probably wasn't true. the next morning, i was doing a free file event . he told me this can't. because we do not make any solicitation by telephone. and i thought to myself, i should know that, but the american public ought to know that as well. it would seem like that there would be more ombudsman ship. enforcement are all done by mail. it was a very convincing phone call. ms. klem: yes, that is why they are so successful. . we do share information like this in photographic in front of me right now. happy to share it with the committee, about the irs and posture scams. it says "warning signs, how will the irs contact you? by phone? no. by mail? no. by e-mail? no. by mail? yes." senator isakson: we have a department created by the administration called the consumer financial protection bureau which is in the business of protecting their rose. -- protecting consumers. they try to help people who are victims of business fraud and they should protect them of tax fraud as well. i think that is something that the irs can do as well. the irs has been putting out youtube. i will take any television interview put in front of me. not because i am a him because i believe in my heart, if we protect one taxpayer from having these horrific stories, that is a good day for us. i am so happy about this hearing because this will also help get the word out. when you get those calls, please hang up the telephone. we are really try to work with that viewer. senator ericson: i hope that mr. cartwright will be as aggressive on tax fraud as with other things. i noticed in your testimony that a member of the medical team at fort benning had stolen the identification of a number of soldiers and tax fraud was perpetrated against them. did you coordinate with the department of defense, that they need to watch out? ms. -- ms. ciraolo: thank you for that question. i joined the department two months ago so i was not involved in those types of discussions. i don't have that information with me today, but i can certainly report back on what efforts were made by the department of defense. we certainly take seriously any allegations and efforts by offenders to commit these offenses. we are particularly focused on the victims of our society including our military members. mr. irix -- senator isakson: each of the state directors made a comment about information sharing. that would be a key to stopping this. one of the problems that existed , the senate and house has not done a cyber security bill. the pending bill we hope will be before us soon, there are provisions for idea sharing and to the antitrust law. i would hope we will get -- we are part of the problem. our cyber laws are way out of date with our cyber criminals. the quicker we encompass act on that legislation, the more taxpayers will be safe from fraud. that is my editorial comment. chairman hatch: thank you. i am looking at a small sampling of headlines. the name of the dust the title of the news article about which the reporting is called "irs fraud scams ramp-up in eerie." then over by the eastern border of our state "irs scam widespread in pennsylvania." and then "irs phone scam reaching more in northwest pennsylvania." a lot of what you heard and had direct expense with trying to stop. i guess i would start with the attorney generals, a particular question about your assessment of where we are in light of what i have seen. i was in berks county, in eastern side of our say -- our state. walking through some of the basic challenges from the prosecutorial standpoint, he emphasized, among other things that the perpetrators were first highly organized number two organized in jurisdictions far away from the victims, and also beyond the reach of local authorities. he also pointed to perpetrators residing in foreign countries. so that is one of -- that is among the many challenges them much of your testimony's pony -- pointed to. i don't want to be pessimistic because i do want to get to part of your testimony where you talk about what has been happening with the justice department and some of the success you have had , but there is a sense, because of the scope and gravity of the problem that we are not winning. just from a national perspective, i want to ask you how would you assess the war or the battle. mrs. ciraolo. we prosecute the offenders and we hope to change the calculus with substantial censuses that we -- substantial sentences we are receiving. in addition, we share information we obtain from these cases in real-time with the irs. is working very hard to improve better identify fraudulent returns and prevent the issuance of fraudulent refunds. so that is the tax division's role. these cases certainly present unique challenges and we will continue to devote our available resources in this area. senator casey: i know much of what you might say in a short answer and it is already admitted in your testimony but if you had to itemize one or two or three action items we could work on, resources or other tools that you need to do your job and i am sure others who may not be in the federal government but play a role in this, what do you hope we would do by way of authority or authorization or by way of appropriation? ms. ciraolo: taking information back to your home states and make sure that the information is out there as often and as loud as hostile. many of these scams can be stopped if the american public is educated and having a centralized location for that information is a wonderful idea. i am very happy to see the representatives here on the panel from across the country. senator casey: maybe i would ask the remaining witnesses -- what should congress do? inspector general camus: it is so simple. when the money dries up, the criminals will go away. by getting our hands on them and bringing them to justice in a historic way -- it's one of the things it we want to do because we want people to pay for this. but it is not the solution to the crime. it is people hanging up the phone and not being victimized. commissioner ally: the criminals will continue to be very agile. senator casey: commissioner thank you. you still have to be able to cut off the vector of the money. it is something the congress can require the financial industry to do. we know that this is going to be a prepaid debit card. we won't refund it that way. >> i travel the state every day and speak to mostly older adults about this fraud and it is devastating to hear their stories. frequently come after they have shared them with me, they say, gosh, i wish i had talked to you last week. if we can get more awareness more education more media spotlight, that would be great. senator cantwell: i would like to join my colleagues who have been bringing up these issues about identity afghan fraud, but specifically to point out that the 111th congress increased the irs's responsibility while decreasing the funding. so the irs is not responsible for employment -- and lamenting the -- lawmakers will have the -- the irs is being urged to combat identity theft, reduce errors in tax programs, and generally reduced tax fraud. i think we need to take this into consideration as it relates to the budget this year and make sure the resources are there to do this. i am concerned the taxpayers will ultimately -- we need to get a handle on what has been happening with identity theft. it was found that 22 per at that -- 22% of the identity theft cases, the irs closed without taking the appropriate steps to fully resolve the victims' account. so during fy 2014, nearly 270,000 identity that returns of this type were closed. so if that reported rate them a 22% of that group about 60,000 taxpayers were burdened by having our case is closed in a premature fashion. what do we need to do to fix that. inspector general camus: that is a job that would fit in our portfolio. one of the things i always look at is the victim interface and how the irs are -- how the irs is processing the claims and the correspondence. i know the auditors are doing work in that area as we speak. senator cantwell: will we have this resolved for this season? inspector general camus: unfortunately, it is always in hindsight. the audit team looks at the work that was done. they need to make sure that the cases are closed before they can look at can see how they were handled. i will share the sentiment. senator cantwell: anybody else have any thoughts about this? we need to do something better than to have these taxpayers affected this way. mr. valentine: i agree. we work with taxpayers who have had their identities compromised and to make sure there return has been properly reflected in their account and is properly accounted for. we need to do the same thing at all levels. senator cantwell: every committee has been out to address the ideas of cyber security and to move forward. i think our committee should look at this particular aspect making sure that our tax filers are also secure as well. so thank you. thank you, mr. chairman. senator wyden: i did not want to wrap up without giving a chance to talk about seniors. i think we know how outrageous it is that seniors get ripped off this way. we've got millions of older people in this country who are walking an economic tight walk every single day. their fuel building and housing costs. they get ripped off this way and it is not some ash action. they really suffer. as we wrap up -- i just wanted to finish with this. what do you think this committee can do to beef up the fight to protect seniors from these kind of ripoffs? ms. klem: that is a great question. it is true that this imposter scanned disproportionally affects vulnerable adults, especially older adults who are home during the day. they answer their phone and that is because they grew up in a time where they were taught that it is rude not to answer the phone and listened to the caller on the other end. i think some of the suggestions we have heard today are wonderful but i am going to keep beating the drum of education and awareness. i think that is really key. if we can let people know that this is a notoriously awful scam and they should be alert to it and it's not rude to hang up the phone in this particular case. i think it is a wonderful educational tool for people, especially older adults. it is very tough. i talked to them everyday. it's going to be a struggle, but i think the more information and awareness we can get out there the better. i always tell people who come to my presentations or call me on the phone to share their stories with one or two other people because i think that personal story, that personal touch from somebody who may be not that phone call and almost fell victim or did fell victim let others know that it's important. senator menendez: thank you to all of our witnesses. thank you for your testimony. as many of you noted, the density -- the identity theft and tax schemes are the growing crimes in the united states. not only the victims who are disproportionately low income and vulnerable populations lose millions of dollars to the schemes, each year are subject to months if not years of overwhelming paperwork, credit problems, and inconvenience. one constituent of mine who i will just refer to as sandra, experienced this nightmare firsthand. she contacted my office in march 2013 to request help to restore her identity which had been stolen in 2010. she didn't receive her tax refunds for 2010, 2011, 2012 and was getting nowhere with the irs in fixing this situation. finally, after an additional two years of working with her, the irs and the taxpayer advocates office who were finally able to resolve this situation earlier this year. mr. camusso -- mr. came us -- mr. camus is the irs doing enough to resolve cases of identity theft in a timely manner? the -- is the four to five year waiting period that sander experienced reasonable in your view? inspector general camus: no. in the audit work i have read done by my agency, the irs has made great strides try to be better and faster and more responsive to the victims. one of the things they put in place is an identity theft victim 10. in future years, when the taxpayer files, they use that number and that helps validate their identity. i understand they are not always 100% on that either. but my observation from reading the audit reports from my staff is that they are making great strides and they are endeavoring to improve. senator menendez: what would you say is the status after someone finding themselves in that situation? what would you reasonably expect the time that the issue would be resolved? inspector general camus: i would expect it to be better than 2010, 2011 and 2012 . senator menendez: better is a relative question. what is the average? a year? inspector general camus: i wish i had that information available but i do not. senator menendez: i would like to get it from the irs at the end of the day. in responding to a question i raised, he said "the irs is very concerned about unscrupulous tax providers -- tax preparers. i know the irs tried to regulate paid taxpayers a few years ago and was rebuffed by the d.c. circuit court of appeals which argued congress does not exquisitely authorize that kind of legislation. i find it extremely strange and inappropriate that many states require hair barbers to have a license but someone providing -- but someone preparing a book at returns do not need a license. inspector general camus: i think it is critically important that anybody who do such an important job in such an important area tax administration, that there is training available and held accountable and arson and that need to be kept. we work closely with our partners in irs criminal investigation and the department of justice tax division. when we come across an unscrupulous tax preparer, to bring them to justice. it is important for elderly folks and others who trust folks, that they do not become victimized by the very people they trust. senator menendez: can you or miss ciraolo quantify for me in anyway how much fraud is related to unscrupulous tax preparers? miss ciraolo: we share your concerns and believe taxpayers should be able to trust that person to be competent and qualified to prepare the returns and to prepare an honest and accurate return. in the last year alone, the tax division has obtained injunctions against more than 40 fraudulent preparers and promoters and will continue to prosecute those individuals who willfully assist in repairing the return. senator menendez: so you have no idea how many tax preparers there are? miss ciraolo: i do not have that information front of me. senator menendez: 40 sounds like a small number control -- compared to the universe of preparers out there. is that based on complaints or is that based on the services's on investigation? ms. ciraolo: based on the evidence we receive, we followed that evidence where it leads for injunctions against preparers. senator menendez: do you have a number of complaints filed with you? ms. ciraolo: since 2000, we have filed 500 and junctions. senator hatch: i want to thank all the witnesses and the senators who participated. i think this has been a very good hearing and hopefully we can move on from here. any questions for the record should be submitted no later than wednesday, march 19. so this hearing will be adjourned at this point. thanks so much. and thanks to all of you. we really appreciate it. >> coming up, road to the white house coverage featuring senator lindsey graham speaking at the breakfast in new hampshire. more from new hampshire with rick perry. followed by a senate finance committee hearing examining tax scams being used during filing season. labor secretary thomas perez is one of the speakers friday at the consumer federation conference looking at consumers concerns about the internet and the future of investigative journalism. at 12:15 p.m., defense secretary ashton carter visiting fort meade in maryland to discuss cyber security with staffers. announcer: on q1 day, on how pharmaceutical companies lobby congress and -- on q and a, on how pharmaceutical companies lobby congress. >> while it is illegal for a company to market a drug before it has been approved the fda, it is not illegal to market a disease. so drug companies have sometimes invented diseases or exaggerated the importance of certain conditions or exaggerated the importance of a particular mechanism of a drug, for example, and then blanketed medical journalism and medical meetings and other venues with these messages that are meant to prepare the minds of clinicians to accept a particular drug and also to prepare the minds of consumers to accept a particular condition. announcer: sunday night at 8:00 eastern and pacific on q and a. announcer: eric holder called wednesday night's shooting of two police officers in ferguson missouri, disgusting and cowardly. he promised that the justice department will offer resources to help solve the crime. here are some of his remarks. attorney general holder: the attacks against two w o brave officers -- two brave officers in ferguson, missouri last night. i vehemently and disgusted by these repugnant attacks. americans across the country are praying for the safe recovery of those two officers. i stand ready to offer the full investigative resources of the united days department of justice, the fbi, to solve this crime and to hold these perpetrators fully accountable. my brother is a retired law-enforcement officer. he always tells me that cops have the right to come home at night, you know? that is exactly right. these are people who protect us, who keep us safe and they have the right to come home at night. seeing this attack last night turned my stomach. in the last weeks, the justice department released a report in ferguson and i that we had begun to see important signs of progress. they were good faith steps and taking the leader said -- the city's leadership to move in more cooperative directions. but make no mistake. we still have a long way to go to bring about systemic change that is needed and that is long overdue in that area. but i think the early indications have been truly positive. what happened last night was a pew or ambush. what happened last night was a pew or ambush. this was not someone trying to bring healing to ferguson. this was a damn punk that was trying to sew discord in a community that has been fractured for too long. this really disgusting and cowardly attack may have been intended to unravel any sense of progress that exist, but i hope that that does not happen. incidents like the one we have witnessed, conversations like we have convened today and that we will be having to build trust between law enforcement and the communities that they serve are really so important. announcer: this weekend's road to the white house is in new hampshire with potential 26 -- 2016 presidential candidates. they will be in new hampshire tomorrow for a first audition before granite state leaders and party activists. the former chair of the gop says , in new hampshire, if you cannot connect before the rotary club and the chamber of commerce or in people's navy -- people's living rooms and individual voters, no amount of money can paper that problem. just ask steve forbes. watch live as jeb bush attends a meet and greet at the home of the former gop chair live at 7:45 p.m. eastern. on sunday, governor walker speaks at concord. that is live at 11:45 eastern also here on the span. -- on c-span. announcer: lindsey graham made his first trip to new hampshire on monday since announcing he is considering a presidential run in 2016. he spoke at the bedford village in at a breakfast hosted by the new england council and the new hampshire institute of politics. this is just over an hour. [applause] senator graham: thank you. i feel better already knowing it's free. normally, you get what you pay for. [laughter] the national guard, i didn't know you could say like you did but that's great. this has been a wonderful experience. if this -- if this is like -- if this is what it's like to run for president, it could be fun. the panel you mentioned, who was in it? barney and wells? >> [indiscernible] senator graham: anybody been to south carolina? come back. spend money. [laughter] a little bit about politics and eggs, whose idea was this? >> [inaudible] did you go into the wood and egg business before this? [laughter] start charging after i leave. i don't know what i'm going to do yet but i know this -- coming to new hampshire and thinking coming to new hampshire the first event i went to was the snowshoe hut. anybody know what i'm talking about? >> snowshoe club. sen. graham: club. so, you have like 50 or 60 people who love asked me every question known to mankind. very informed. they put me in front of a roaring fireplace, which was nice for about five minutes. [laughter] i literally almost caught on fire. i thought the witch trials were over but, i guess the trial by fire is what new hampshire is all about. at least, it was for me. don't ever lose what you've got. i will go into talking about politics in a minute. but if it weren't for new hampshire and iowa and south carolina, you could buy the presidency. you are an antidote to big money. i'm going to do weddings, bar mitzvahs, anything it takes to get known up here and everybody is expected to show up and ask hard questions hopefully in front of a roaring fire. and there is no substitute for what you have a created for the american people and it is a contest where you actually have to get to know a person who wants to be your commander in chief. i don't know what i'm going to do but i am compelled to look at it for a couple of reasons. central south carolina, anybody have any idea where that is that? the girl that went to clemson? my dad owned the liquor store five miles from clemson. we met almost every clemson graduate. [laughter] we love clemson. it was good for business. but she transferred from harvard to go to clemson. go tigers. it is a small town in south carolina near clemson university. it was a textile town. anybody have family members who grew up in the textile business? you know, the northeast and the south had that in common. every plant i knew growing up is just about closed now. we'll talk about that in a little bit. but, my dad owned a liquor store, a pool room, and a restaurant. everything i know about politics, i learned in the pool room. it was really good training. that is why i know the iranians are lying. people like the iranians came to the pool room and you could not trust them. so at the end of the day, folks, this job of running for president, being united states senator, is something i never envisioned even remotely possible for a guy like me. one thing i want to tell you is the first guy i met said, you wear a sweater to politics and eggs. he was a sweater salesman, apparently. [laughter] and a democrat. [laughter] but, the irs will come meet him. i grew up in the back of the liquor store in one room with my parents and they went to work every day whether they felt good or not because if you don't open up, you don't get paid. it was a wonderful life. it was the neighborhood bar and people would come in as the shifts changed full of cotton and lint. some people had missing fingers. i will never forget that as long as i live. you get to know each other pretty well. i had a lot of aunts and uncles. you learn diplomacy. i can remember fred. his wife called one night when i was about eight years old and i answered the phone and his wife asked, is fred there? so i ran up and said, fred, your wife wants to know if you are here. and he said, tell her i am not here. so i went back and i said, he said he was not here. [laughter] so, i learned diplomacy at an early age. you don't have to repeat everything you are told. running a small business is challenging and rewarding. my sister is nine years younger. i never went on a vacation i can remember until high school. because you cannot leave your business unless you can find someone who won't steal you blind and that is pretty hard. so, things are rocking along pretty good. i am at the university of south carolina, the first guy in my family to ever go to college. i lived in fear of failing. but, i made it. and i am a junior in college and things are going pretty good. i come home one weekend and my mom is diagnosed with hodgkin's disease. and about six months later, she passes. she was 17 years younger than my dad and we always thought she would be around and he would go first. what can i tell you? there is no script in life. so, we got hit hard financially. we were an underinsured family. we had insurance to cover the four of us and when it comes to health care reform, [phone ringing] -- is that me? oh, tell then we said hey. it is that democrat calling. [laughter] anyway, we got wiped out financially and i paid bills health care bills when i got out of the air force. about 15 months later, my dad passed. i'm 22, my sister has just turned 14. my whole life turns upside down. there are people with stories far more compelling than this. but i just want to let you know we are a summation of our lives. if it weren't for family and friends and faith, i wouldn't be standing here today. we moved in with an aunt and uncle who worked in the textile plant. it was in seneca. they never had children and they helped me raise my sister. i tried really hard to get through college before my mom passed but didn't quite make it. there are two things that mean something to me in life -- the ring my mom bought me and the shotgun my dad gave me when i was 16. i have never been much of a material person. so, when my parents passed, we moved in with my aunt and uncle and they tried to run the liquor store for a while and i would come home on the weekends to help. i made it through college. if it weren't for social security survivor benefit checks coming to our family, to my sister, i don't know if we would have made it. where are the aarp guys? we will have a talk in a minute about social security. when she wanted to go to college, darlene, i had just got started in the air force and college loans were there for her. if it weren't for the college loan program, my sister would not have gone to college. i am a republican. proud of it. but, we are one car wreck away from needing someone to help us. all i can tell you is that life is challenging and you'll eventually get a curveball coming your way. as i try to serve the people of south carolina and think about going to the next level, i want to make sure if you are down in this country, you have a chance to get back up. the goal of getting you back up is to getting you a job and a rewarding career, not to keep you on the couch. what i learned as a young man growing up in a rural part of south carolina is that i don't take much for granted. when it is all said and done when we are in our last days, if you are lucky enough to live a long life, you will not be thinking about any bill that you passed or any speech you gave. i will be thinking about those that were there for me when i needed them the most. between now and when that day comes, and if i can do the strong thing, i have 40 more years -- and i will miss a lot of y'all. [laughter] steve, you have been a good friend. >> thanks, buddy. sen. graham: you have to go, you have to go. so i got out of the college, i went into the air force, and one of my best buddies in the air force, pete carey is here today. pete, could you stand up? he lives in new hampshire. [applause] he was the defense attorney in europe and i was the prosecutor. when we had trials in places like greece, his guys got incredibly good deals because we'd drag that trial out as long as we could. where do you live now, pete? pete carey: [inaudible] sen. graham: and you have a bed and breakfast? pete carey: i do. sen. graham: 10% off for anybody that signs up today. who is your buddy on my promotion board? pete caret: bob. sen. graham: bob, stand up. another air force man. [applause] the first time i have for met -- i ever met bob was today. he was on my promotion board. bob, that was before you had glasses, apparently. so, i went into the air force. i have been a prosecutor, a defense attorney, and military judge. i got to serve overseas with pete for 4.5 years. that was in the mid-80's when ronald reagan was president. one of the reasons i became a republican is the first two years of being an air force officer, i got a 25% pay raise and i said, i like ronald reagan. [laughter] he rebuilt the military. wearing the uniform of an air force officer, being an air force lawyer is one of the greatest prides of my life. i have been to iraq and afghanistan. any of you have any family or have been in the service yourselves? thank you all for what you do. being a part of the military has shaped me in a very positive way. i would give anything if the congress could act like a military unit for 30 seconds. in a military unit, you don't focus on the differences. you don't focus on the political differences, on religious differences, on the fact you may support different baseball teams. you focus on the fact that the mission comes first. you focus on the fact that you are not going to let your buddy down. in politics, the mission does not come first. it is not about protecting your buddy, it is about doing as much damage to the other side as you can. that is how you get $18 trillion in debt. it takes both parties working overtime. it is going to take both parties working together to get us out. so, two things i want to talk to you about and then i will take your questions. the biggest threat of our generation in my view is radical islam acquiring weapons of mass destruction. you are pretty close to new york. do you remember where you were at on 9/11? i do. i was in washington getting ready to go to work. i was on the phone in my office. they said turn on the tv something is going on. a few minutes later, the second plane hit the towers. i had my staff come to my house off capitol hill because we did not know where to go. we did not have a plan. i said, just bring everybody down here. we watched tv like you did all day. that night, we walked across the street, all members of congress, to go to the steps of the house. i stopped in the middle of the street and i looked down the street both ways. not a car on the road. every light was blinking yellow. not a plane in the sky. we went over as a group. the leadership of both parties spoke. somebody behind me started singing god bless america. i will never forget that as long as i live. i am going to do everything i can to make sure that never happens to our country again. radical islam is a movement that cannot be appeased, compromised, or negotiated with. it is a minority view of a great faith. and to those who think we brought this war on ourselves, you don't understand who we are fighting. they're motivated by a twisted version of their religion, the islamic religion to peer if i there -- to purify their religion, to convert or kill those who stand in the way, and destroy the jewish state. the only reason 3000 of us died on 9/11 and not 3 million is because they could not get the weapons to kill 3 million of us. do you believe they would if they could? you believe they would kill as many americans as they could if they had the capability. my goal is to keep the war over there and to fight as hard as i know how to never allow the marriage of radical islam and weapons of mass destruction. this iranian negotiation is one of the most important decisions we will make in my political lifetime. the iranians for the last 30 years have been wreaking havoc throughout the region, killing american soldiers in iraq and afghanistan and when they say they're not going to build a nuclear weapon, they are liars. how many of you think they have been trying to build a nuclear weapon? if you don't believe that, you should not be allowed to drive in new hampshire because you are a danger to yourself and others. i want to stop their nuclear ambitions through negotiations and i applaud the administration for trying. i will issue a challenge today to every person wanting to be commander in chief -- do not honor a deal with iran unless the congress approves it. i have legislation that would require any deal with iran's nuclear program to be approved by the congress before we relieve congressional sanctions that we created. why? i want as many eyes on this deal as possible before it becomes binding and i want you to know what is in it. you feel like you know anything about the deal? you don't and you deserve to know. if it is a good deal, i will vote for it. if it is that come i will stop it. people ask me what is next. a bad deal is worse than no deal. the worst outcome is a north korean outcome of where we negotiate with a regime, declare victory over declaring their nuclear ambitions, they cheat and one day, you wake up with a net job -- nutjob likely have in -- like we have in north korea. sunni arabs have told me anything you give the iranians, we will want that and more. the most worst possible outcome would be nuclear arms in the middle east. the last thing we want is a bunch of nations 11 fighting each other for 2000 years to have the capability to kill us in an instant. a bad deal will lead to a nuclear arms race in the mideast, the worst possible outcome. that is what the arabs tell us. israel fought to have nuclear weapons. not one arab nation felt the need to get a nuclear weapon of their own because they know israel will not wake up one day and blow them up. iran is a disrupting and if you give them our money, do you think they would build hospitals and schools, invest in military? i would tell the administration to keep trying. try to get a better deal. to the uranium's --iranian'a, if you want a peaceful program, you will have it. if you try to break out, we will stop you by the use of force. if i were president come i would tell them that. i would give them a way to get what they say they want without putting our nation and israel at risk. if i saw a breakout coming, i would stop it and i would tell them the following -- if you want a nuclear weapon, and you are willing to go to war to get it, a war you will have. and you will lose. that is the only thing they understand over there. our military is going to historic lows because of budget cuts. the next president needs to give us the capability to defend against iran or anybody else that would threaten our shores. the last challenge is an $18 trillion crushing debt that is growing over time. anybody here born between 1946 and 1964? anybody born after 1964? good luck. [laughter] we want our money. their 80 million baby boomers about to retire in

Related Keywords

New York , United States , New Hampshire , Trinidad And Tobago , Taylorsville , Utah , Missouri , Berks County , Pennsylvania , Afghanistan , Iran , Brazil , Indiana , Jamaica , Clemson University , South Carolina , Virginia , Syria , Oregon , Washington , District Of Columbia , Hampshire , Maryland , Iraq , Longwood University , Israel , Iowa , North Korea , Bedford , Capitol Hill , Greece , Americans , America , Iranians , Iranian , Afghan , North Korean , Trinidad , American , Ashton Carter , Lindsey Graham , Steve Forbes , Ronald Reagan , Pete Carey , John Valentine , Caroline Cirillo , Jeb Bush , Ellen Clem , Thomas Perez , Rick Perry , Marissa Phillips ,