On many essential attributes of a plan. It would be extremely challenging too used to document as a document to hold the iris, the Treasury Department, or anybody else accountable for missteps. The few things it almost entirely lax are quantitative targets to measure against, backup data to analyze, and various key operational details including, for example, who at the irs or Treasury Department is ultimately responsible for making decisions on any particular issue. This does not give any detail on how the irs will implement secretary yellens 400,000 dollar pledge. And details really matter here. It also does not estimate what any of the 42 initiatives or 190 odd key projects are expected to cost or clearly answer the basic question of which initiative or key projects can be fully implemented with the 80 billion dollars in funding. What the document quietly admits is astonishing. Despite contrary rhetoric, the irate did not give the irs enough funding to fully realize the plans division. This, despite having given the agency a slug of funding more than six times its annual budget. The irs is annual budget justification goes for, theyre asking for 15 increases in the irs is discretionary appropriations to make up the short term for areas where the i. R. A. Funding for short, particularly in tax Player Services and i. T. Monetization. The irs annual budget justification also warns that if Congress Fails to increase future irs discretionary budgets on top of the 80 billion, and in particular spend even more for Taxpayer Services and i tomorrow night is a shun. The irss future Service Delivery will actually suffer. Finally, the president s budget requests still more irs funding for future enforcement efforts. 29. 1 billion dollars more. That is on top of the 80 billion dollars. Americans rightly have a hard time understanding how an agency provided more than six times its annual funding can still claim poverty. Given that the plan the irs delivered is not transparent and does not allow for any meaningful accountability, this plea is essentially for another blank check. Ive heard some argue that future uncertainty prevents the iris from making firm estimates beyond a fiscal year or two. Indeed, that sounds like a tacit admission that circumventing the new appropriations process for the 80 billion dollars was a huge spent first plan later mistake. But this uncertainty excuse falls completely flat when one observes the countless other examples of long term budget revenue and cost eliminating both in the public and private sectors. When you last testified before us you promised to write really update the irss spending plan and solicit this committees feedback. Based upon what has just been delivered, i strongly suggest you accelerate your timeline and return to this committee in short order with an actual plan. Returning to the subject of this hearing. My colleagues and i eagerly await discussing the irises and you will discretionary budget request and current performance measures. Ive learned more in the last few weeks about the sometimes puzzling ways the irs measures its own effectiveness, such as on entering phones. What i have learned would be more troubling, if not for the hope that you will adhere to your promise to enhance the rigor and meaningfulness of the irss Data Collection and analysis. I recognize that you are only a few weeks into your tenure. And are already facing momentous decisions that will likely have lasting consequences. I was encouraged by your commitments, which include full and prompt transparency. Utilizing best management practices, making decisions based on sound and unbiased data. Ensuring the irs is strictly nonpartisan, not making any policy decisions that are congresses responsibility. And turning to congress at every possible opportunity for guidance and authorization. How will you adhere to these promises will it determine the legacy you leave the irs in the american tax pitchers as well as you relationship of congress. I urge you to walk the street course and set up positive trajectory. And above all, keep the irs out of the partisan gamesmanship. Thank, you mister chairman thank my colleague and as my colleagues all, know we will have further briefings this week on the Strategic Operating plan by mr. Werfel, we appreciate that. Our witness today is daniel werfel, 50th commissioner of the 1y irs. He has previously amended drink partner at the Boston Consulting Group before it joining the boston its nominate to be controller of the office of management and budget where he served for four years before becoming acting commissioner of the irs in 2013. He began his career at omb in 1997, we welcome. Him why dont you go ahead mr. Werfel and will have questions. Chairman wyden, Ranking Member crapo and members of the committee, thank you for the opportunity to testify on the Filing Season and the irs budget. I am pleased to report that the irs provided substantially Better Service to taxpayers during the 2023 Filing Season. We delivered a strong tax season for the nation. The best in several years. Through april 7th, the irs received more than 101 million individual federal returns and issued more than 69 million refunds. Totaling about 199 billion dollars. Irs employees were able to make substantial improvements this tax season because of the Funding Congress provided to the Inflation Reduction Act. This funding made a difference. It allowed us to hire more than 5000 phone a sisters which led to a phone Level Service averaging 87 during the Filing Season. The average wait time on the phones was four minutes. This is a major improvement from last year. One Service Levels were under 15 and wait times average 27 minutes. Perhaps most telling was this, irs employees answered 6. 5 million calls to help taxpayers, that is 2. 5 million more calls than last year. And improvements were seen in other areas, we increased face to face visits at our Taxpayer Assistance Centers to 474,000. That is up more than 30 from the year before. We expanded digital scanning efforts to speed up the processing of paper returns. Providing a better Filing Season experience this year was an important step but more work remains. The long term funding from the Inflation Reduction Act gives us a unique opportunity to transform our agency over the next decade. Historically, the irs receives funding that allows our staffing and operations to keep pace with the size of the u. S. Population. In 2010, that changed. Cuts in annual funding caused iris Staffing Levels to decline by nearly 17 to less than 80,000 fulltime employees by 2022. While the irs shrank, the u. S. Population grew by more than 7 . Reaching 334 million. These reductions caught up with us. You could see that in the poor taxpayer Service Levels in previous years, including last year. We were able to improve this Filing Season by shifting Inflation Reduction Act funds over to our day to day operations. If we continue using Inflation Reduction Act funding this way, however, focused on short term operations, rather than long term systemic improvements, we will not be able to transform the taxpayer experience, modernize outdated Iris Technology and deliver more effective enforcement of the tax laws as the Inflation Reduction Act in visions. The i. R. A. Funding was designed to restore irs core operations and prepare the agency to serve the nation and its future. But that work is outside of our base level funding. That level of funding, which is 12. 3 billion dollars for fiscal year 2023, has not materially increased since the fiscal year 2010, in fact, in real terms, we are 33 below our funding level and fiscal year 2010 if we had just received inflationary in just minutes. It is not enough resources to fund a tax system in an economy that grows in size and complexity every year. So i ask for your help to build on the remarkable progress we saw this Filing Season by supporting the 1. 8 billion dollars in incremental discretionary funding requested for fiscal year 2024. This funding will enable us to maintain our current performance in the next Filing Season, while allowing us to use the Inflation Reduction Act resources as congress intended, to modernize our operations so that we can sustain and improve our service to taxpayers into the future oceanic operating plan lays out in detail our path forward, describing how we will improve all aspects of our operations. The plan, which i call our public to do list, lays out roughly 200 projects from improvements for taxpayers, Tax Professionals and irs employees that will transform our work on the phones, in person and online. Inflation reduction act funding also gives us an important opportunity to improve enforcement efforts to promote fairness while respecting taxpayer rights, the agency will follow secretary yellens directive, not to raise audit rates above historical levels for Small Businesses and households making less than 400,000. I want to be crystal clear, we are not increasing audit rates for hard working taxpayers making under 400,000. That is my pledge, there is no surge of new audits coming for workers retirees and others. We have plenty of other areas we need to focus on. Instead, we will build capacity to pursue high income and high wealth individuals, complex partnerships and large corporations that are not paying the taxes that they owe. We will use Inflation Reduction Act resources to hire highly skilled employees to address noncompliance among this group of taxpayers. I plan to provide regular updates to congress in the public on our efforts to transform the irs and i would be happy to delve deeper into the details with committee members. For example, i will provide a supplemental document that provides in one place extensive details on planned expenditures over a tenyear period and on hiring over a threeyear period. Within the next 3 to 6 weeks, i will be able to add more detail, showing expected hiring across the full tenyear window. I am optimistic that we can build on the accomplishments of this Filing Season. The question is not whether the irs can improve service to taxpayers, this year we proved that dramatic improvement is possible. The question is whether we can continue to improve. I am confident that we continue this trajectory if we have adequate annual funding for daytoday operations coupled with the long term resources, combined, these will transform the irs over the long term and into an agency the taxpayers and the nation expect and deserve. Chairman wyden, Ranking Member crapo, and members of the committee, that concludes my statement. I would be happy to take your questions. Thank, you mr. Werfel, we know in this country, we have a tax gap of hundreds and hundreds of billions of dollars. This is money owed to the american taxpayer, but not collected. Your predecessor sat where you are this morning, not very long ago and he said the tax gap maybe as high as a trillion dollars a year. And he also said that you are not going to be able to collect those monies, deal with the tax gap unless you go after the very wealthy tax cheats. And that is because, and youve mentioned, this the workers who have wages and salaries, we already know essentially a lot about them with respect to the taxes owed. It is that wealthy tax cheats who can pretty much decide what they want to, pay when they want to pay it, they are the challenge. So my question is, a couple of weeks ago, the Senate Finance committee can leak pleaded a long investigation, finding that the big bank credits wes violated a plea deal with the department of justice where, again, you are seeing massive tax evasion by thousands of wealthy americans. Our Investigations Team uncovered an ongoing conspiracy in one instance involving a single familys failure to disclose 100 Million Dollars in secret offshore accounts. If that wasnt bad enough, the investigation found the credit sweeps in total concealed from u. S. Authorities, 23 large accounts worth more than 700 million. And this kind of flagrant abuse, flagrant attacks of asian highlights the point that you and i have been talking, about this ball game is all about going after these wealthy tax cheats. So my question to you is, commissioner how will they agencies, the irs use the funding you have got to step up enforcement to crack down, for example, on the use of secret offshore accounts. Something that is ongoing by wealthy americans. How are you going to use the funds to tackle that . Well, as i have said, mister chairman, the enforcement funds in the Inflation Reduction Act will be focused to improve capacity in these areas of reviewing the taxes of high wealthy individuals, large compressions complex partnerships. Its a place where weve been severely under resourced to take on and the Inflation Reduction Act provides muchneeded resources for us to finally build the capacities that we havent had. To your point, its critical to doing this to i. D. Certain patterns of activity where tax dodging is most rampant. And you point out, you know, offshore, youre not the only one to point that out. In a recent g. A. O. Report on the tax gap, and they i. D. d abusive tax shelters as an area where the irs has to do more. So our plan is to build capacity, and that means subject matter experts, specialized accountants, data scientists, lawyers, all of which understand how these things are set up and how it can help us navigate them and figure out where the funds are that should have been paid back to the nation that havent been. And so you will go after foreign banks like Credit Suisse and the reason i want to ask that question first is, Credit Suisse got busted almost a decade ago. For doing what we found they have continued to do, in other words, they came to the federal government, their ceo raised his right hand, promised 100 percent compliance and then all of the sudden, what we found is we are dealing with it all over again. So youve got recivet people who have ripped off the american taxpayer because it is those working class people that pay when the wealthy americans get out of their obligations. And i think it is very important that the American People hear that when you are talking about a recidivist, like Credit Suisse, who promised that they would stop doing it and then continue to do it, i think its important that we know those are the kinds of people that you are going to go after. Mister chairman, im prohibited from discussing individual taxpayer in a public setting im talking about the kind of action that i believe needs to be a priority. You dont need to go into specifics. I was going to say, lifting up absolutely the goal is to understand these patterns of behavior across these very complicated organization they haves. Many divisions an subdivisions operating across different countries, different financial structures. It is a lot to impact. My time has expired. Your last point is very much on point where you said the patterns are what is important. Credits weeks, the pattern was all there. Huge violations. Huge violations, entered an agreement with the government and basically after a little time goes by they do the same thing. When you talk about patterns, it is exactly the kind of issue credit suites presented because after they made these grandiose promises they went back to ripping off the american taxpayer. I want to start with an issue my colleague, senator wyden, raised where we have a disagreement, whether the irs should be the entity that prepares peoples taxes for them. Some want the irs to prepare tax returns for taxpayers and several colleagues of introduced legislation in congress to authorize the irs to do that. The ira gave the irs 15 million to study such a thing. That idea is concerning and not just because of the apparent bias in favor of doing so by those selected to conduct this study but for a lot of other reasons. Having the irs act as tax preparer, Tax Collector and tax enforcer raises significant conflicts of interest in many of our minds. It would incur billions of dollars of cost in developed and and expose exponentially more taxpayer information to misuse or abuse. The private industry, the private sector of this country already prepares and files free tax returns for tens of millions of americans and millions more of americans are already eligible for that. The irss Strategic Plan has an entire initiative devoted to an irs run Tax Preparation Program which seems to me because it is still being studied right now. The question i have for you is has the irs made the determination that it is going to pursue this and if so where does the irs find its statutory authorization to do so or the funding allocated to do so . No decision has been made on moving forward with direct File Solutions because of the point you raise, the Inflation Reduction Act mandated the irs produce a