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63–078 2011

THE INTERNAL REVENUE SERVICE OPERATIONS 

AND THE 2010 TAX RETURN FILING SEASON 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 25, 2010

Serial No. 111–46 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

SANDER M. LEVIN, Michigan, Acting Chairman 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

CHRIS VAN HOLLEN, Maryland 

KENDRICK B. MEEK, Florida 

ALLYSON Y. SCHWARTZ, Pennsylvania 

ARTUR DAVIS, Alabama 

DANNY K. DAVIS, Illinois 

BOB ETHERIDGE, North Carolina 

LINDA T. SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

JOHN A. YARMUTH, Kentucky 

DAVE CAMP, Michigan 

WALLY HERGER, California 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

GINNY BROWN–WAITE, Florida 

GEOFF DAVIS, Kentucky 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

DEAN HELLER, Nevada 

PETER J. ROSKAM, Illinois 

JANICE MAYS, Chief Counsel and Staff Director 

JON TRAUB, Minority Staff Director 

SUBCOMMITTEE ON OVERSIGHT 

JOHN LEWIS, Georgia, Chairman 

XAVIER BECERRA, California 

RON KIND, Wisconsin 

BILL PASCRELL, Jr., New Jersey 

JOHN B. LARSON, Connecticut 

ARTUR DAVIS, Alabama 

DANNY K. DAVIS, Illinois 

BOB ETHERIDGE, North Carolina 

BRIAN HIGGINS, New York 

CHARLES W. BOUSTANY, Jr., Louisiana, 

Ranking Member 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

PAUL RYAN, Wisconsin 

JOHN LINDER, Georgia 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also, published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 


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C O N T E N T S 

Page 

Advisory of March 18, 2010 announcing the hearing ........................................... 2 

WITNESS 

The Honorable Douglas H. Shulman, Commissioner, Internal Revenue 

Service ................................................................................................................... 5 

SUBMISSIONS FOR THE RECORD 

Cheryl Latos, Statement ......................................................................................... 38 

Colleen Kelly, National Treasury Employee Union, Statement .......................... 41 


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INTERNAL REVENUE SERVICE OPERATIONS 

AND THE 2010 TAX RETURN FILING SEASON 

THURSDAY, MARCH 25, 2010 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON OVERSIGHT, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:04 a.m., in 

Room 1100, Longworth House Office Building, the Honorable John 

Lewis [Chairman of the Subcommittee] presiding. 

[The advisory of the hearing follows:] 


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HEARING ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

Lewis Announces a Hearing on 

Internal Revenue Service Operations and 

the 2010 Tax Return Filing Season 

March 18, 2010 

House Ways and Means Oversight Subcommittee Chairman John Lewis (D–GA) 

today announced that the Subcommittee on Oversight will hold a hearing on Internal Revenue Service (IRS) operations, the 2010 tax return filing season, and Fiscal 

Year 2011 budget proposals. The hearing will take place on Thursday, March 

25, 2010, at 10 a.m., in the main Committee hearing room, 1100 Longworth 

House Office Building. 

The Commissioner of the Internal Revenue Service, the Honorable Douglas 

Shulman, will be the only witness at the hearing. Any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. 

FOCUS OF THE HEARING: 

In 2009, the IRS collected $2.35 trillion and processed 236 million tax returns, including 144 million individual income tax returns. The Subcommittee will review, 

and discuss any challenges arising during, the current tax return filing season with 

a focus on: the availability of assistance to taxpayers; the most common taxpayer 

questions and errors; tax return processing; and recent tax refund scams. Further, 

the Subcommittee will consider how the economy has affected taxpayers this filing 

season. 

The Subcommittee also will review overall IRS operations. Specifically, the Subcommittee will focus on: (1) the adequacy of taxpayer services, including toll-free 

telephone service; (2) fairness in the examination and collection programs, including 

increased reliance on correspondence examinations and liens; (3) efforts to reduce 

the $345 billion tax gap; and (4) needs related to security at IRS facilities. As part 

of its consideration of IRS operations, the Subcommittee will review the Administration’s Fiscal Year 2011 budget proposal for the IRS of $12.6 billion, an increase of 

4 percent over Fiscal Year 2010 levels. 

In announcing the hearing, Chairman Lewis said, ‘‘A successful filing season 

is critical to confidence in our federal tax system. It is important for taxpayers to know that their returns will be processed efficiently and refunds 

will be issued quickly. I look forward to hearing from the Commissioner on 

the status of the filing season and services that are available to low-income 

taxpayers or those experiencing economic difficulties.’’ 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://democrats.waysandmeans.house.gov, select ‘‘Hearings’’. Select the hearing for 

which you would like to submit, and click on the link entitled, ‘‘Click here to provide 

a submission for the record.’’ Once you have followed the online instructions, submit 

all requested information. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by close of 

business Thursday, April 8, 2010. Finally, please note that due to the change in 

House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to 


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all House Office Buildings. For questions, or if you encounter technical problems, 

please call (202) 225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any supplementary materials submitted for 

the printed record, and any written comments in response to a request for written 

comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will 

be maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://democrats.waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

Chairman LEWIS. Good morning. The hearing is now called to 

order. 

Today the Oversight Subcommittee will review the operation of 

the Internal Revenue Service and the tax filing season. 

Before we begin, I would like to express our continued sympathy 

to the IRS employees in Austin and throughout our country. I want 

them to know that their safety is our top concern. I also want them 

to know that we value the good work that they do to help taxpayers, process tax returns, and collect our federal revenue. 

Mr. Commissioner, we want to thank you for your leadership, for 

your vision, and for your deduction. We are pleased to have you before us. First we would like to thank you for coming to this hearing 

today, and for holding hundreds of open houses this filing season 

to help taxpayers who are having serious financial problems. We 

also would like to learn if there is more that can be done to help 

taxpayers this season, either in person or on the telephone. 

We thank you, Mr. Commissioner, again for your leadership on 

the regulation of tax return preparers. I believe that the regulation 

of tax return preparers will protect taxpayers and enhance compliance. 

Finally, we will explore the agency’s proposed budget. We will 

consider what must be done to provide the agency with the reVerDate Nov 24 2008 00:56 Jun 10, 2011 Jkt 063078 PO 00000 Frm 00007 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\63078.XXX GPO1 PsN: 63078

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sources that it needs to meet its core tax mission and its increasing 

responsibilities, including those under the health reform legislation. 

We on this subcommittee have full confidence that the IRS can 

balance taxpayer service and enforcement with the support of the 

Congress. I am hopeful that others on the subcommittee and in the 

Congress will join me in pledging their support today. 

Now I am pleased to recognize the distinguished Ranking Member, Dr. Boustany, for his opening statement. 

Dr. BOUSTANY. Thank you, Mr. Chairman, and thank you for 

holding the hearing. And I thank you for yielding time to me. 

Commissioner Shulman, welcome. Thank you once again for appearing before this Subcommittee. And more generally, I want to 

thank you and every IRS employee who works for you for their 

hard work and their dedication to public service. 

And I want to make it clear that even when we in Congress criticize certain IRS operations and question certain responsibilities 

and how they are handled, we are doing this in the context of our 

job in oversight. And we are not—I want to emphasize not—personally attacking the fine public servants who work at the agency, and 

we are not attacking your leadership on a personal level. 

I also want to mention the horrific attack on the IRS offices in 

Austin, Texas on February 18th. Let us continue to honor the 

memory of Mr. Vernon Hunter, the IRS employee and Vietnam veteran who lost his life in this very senseless attack. And as I said 

on the House floor on March 3rd, we also should recognize the 

courage and heroism of those men and women, including IRS employees, first responders, and others, who responded to the attack 

to ensure that our country did not suffer even greater losses. 

And I want to offer my pledge to work with you, and that pledge 

also to the agents and employees of the IRS, that we will work to 

ensure that all safety needs are met with your agency. So I just 

wanted to offer that. I enjoyed our conversation yesterday, and I 

look forward to future conversations as well on this issue. 

Mr. Chairman, I want to say though our debate is often sharp 

and contentious, as we saw during the health care debate over the 

weekend, clearly there is no license for violence in our society, nor 

is there license for the kinds of racial slurs and other slurs that 

we heard about. 

And so, you know, we should continue a vigorous debate on the 

issues and try to stay aboveboard and keep it from degenerating 

to, you know, a total lack of civility. So I wanted to offer that publicly. 

Before Commissioner Shulman begins his testimony, I want to 

highlight two issue sort of importance to me. The first is the IRS’s 

role in health legislation that the President just signed into law. 

This legislation envisions the IRS having a central role in administering a new national health insurance system and enforcing the 

rules. 

During the 2008 presidential campaign, then-Senator Obama and 

Candidate Obama attacked Senator McCain’s health care reform 

plan on two main points. In an October 4, 2008 memo, then-Candidate Obama argued against the McCain approach because, ‘‘It 

pays for its new tax credit by taxing employee health benefits for 


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the first time in history,’’ and, ‘‘The new tax credit would go directly to insurance companies, not individuals.’’ 

I find this ironic that the Democrats’ government health care 

plan, in the bill that was now signed into law, does precisely these 

two things. The health care bill imposes a 40 percent tax on what 

the Democrats call ‘‘excess benefits,’’ and turns the IRS into a collection agency for health insurance companies. These so-called tax 

credits won’t actually end up in the taxpayers’ pockets. Instead, 

they will end up in the insurance companies’ profits. 

The second topic I would like to mention involves the Democrats’ 

failed stimulus bill. This past Monday, Commissioner Shulman, 

you joined Vice President Biden and Treasury Secretary Geithner 

in celebrating this year’s increase in average tax refunds. 

And you said, I quote, ‘‘The average tax refund has reached 

$3,036 this year, a $266 increase from a year ago. The Recovery 

Act is a major factor behind these larger record refunds.’’ And then 

you went on to suggest that the tax benefits provided in the stimulus bill were putting more money in people’s pockets. 

But we have done some analysis on the economic data, and we 

see a different story. In fact, higher refunds provide further proof 

that the stimulus bill was a failure. The economic data show that 

people earned less income in 2009 than in 2008 due to job losses 

and wage cuts. 

For instance, between the end of 2008 and the end of 2009, the 

unemployment rate, we all know, went from 7.4 percent to 10 percent. Non-farm private sector employment dropped by 5 million 

jobs over the course of 2009. Yet many people who first became unemployed in 2009 probably over-withheld during the period they 

were working because they set their withholding based on an analyzed salary that either later disappeared or was diminished. 

And as a result, their year-end income was lower than expected, 

and now they are entitled to a tax refund. Thus, larger refunds are 

evidence of a worsening economy in 2009, which in turn is evidence 

of a failed stimulus bill. 

So, Commissioner Shulman, I look forward to your testimony 

today, hearing your thoughts on these and other issues. And Mr. 

Chairman, I yield back. 

Chairman LEWIS. Thank you very much, Dr. Boustany, for your 

statement and for your extended remarks on the climate and atmosphere here in Washington. 

Dr. BOUSTANY. Thank you, Mr. Chairman. 

Chairman LEWIS. Now we will hear from our witness, IRS Commissioner Doug Shulman. I ask that you limit your testimony to 

five minutes. Without objection, your entire statement will be included in the record. Welcome. 

STATEMENT OF DOUGLAS H. SHULMAN, COMMISSIONER, 

INTERNAL REVENUE SERVICE 

Mr. SHULMAN. Thank you, Mr. Chairman, Ranking Member 

Boustany, Members of the Subcommittee. I appreciate this opportunity to testify about the filing season and our 2011 budget. 

2010 filing season has proceeded smoothly thus far. Telephoneassisted levels of service have improved since last year, when they 


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declined due to unprecedented demand and enactment of tax-related legislation. 

Accuracy rates and customer tax law account questions remain 

very high. Overall, filing is down a little bit at this point, which 

we think is due to the severe snowstorms and weather. E–File remains up, and the trend continues in the right direction, where we 

are getting more electronic filing. I would also mention that in this 

challenging economy, average refunds are up by about $266 this 

year, to about $3,036 this year. 

We have taken several steps this year, building on steps we took 

last year, to help taxpayers through some of these unprecedented 

difficult times. The most notable that I would mention is I announced earlier this month that we are changing the eligibility 

rules for our offer and compromise program, where someone can 

settle a tax debt. 

In the past, you looked at three-year average earnings, so you 

looked back. And someone who lost a job would average in, when 

they had a job, their earnings. Now we are just looking at current 

income, making settlement offers with people. And then, if they get 

a job, we will do an adjustment in the future. 

We also mentioned, Mr. Chairman, as you mentioned as well, we 

are holding special Saturday open houses. We are assembling all 

the people needed to make a decision and solve taxpayer decisions 

on the spot. We will hold about a thousand of those this year, the 

first one this Saturday. 

We are also working hard to implement the recent Hiring Incentives to Restore Employment Act, also known as the Jobs Act, 

where people receive a 6.2 percent payroll tax incentive that goes 

directly to small businesses. We are working on guidance; by second quarter, people will be able to claim that, and that should help 

with jobs in this economy. We are looking forward to supporting 

that legislation. 

In recognition of the critical role that the IRS plays in this economy, the President has given us a judicious investment in both 

service and enforcement programs in his 2011 budget. That budget 

is going to allow us to carry out things like our continued focus on 

offshore tax evasion; our focus on making sure high income individuals and corporations pay the proper amount of taxes; our effort to 

oversee the tax return preparer community, which is integral to 

our strategy for compliance and service; and will also give us the 

funds to finish our tax account database projects, which is going on 

for a number of years. We will be able to complete it for the 2012 

filing season, assuming Congress approves the budget. 

Let me end by giving you a quick update on the incident in Austin where an individual flew a plane into an IRS building, killing 

one of our employees. This was an incredibly sad event for the IRS. 

But it is also an event that reminded me of the important work 

that the men and the women of the IRS do every day, and that it 

is work that is sometimes not appreciated by those who would 

blame this agency for the nation’s tax laws. 

First, I will tell you we have no reason to believe that this attack 

could have been prevented. And we have no recollection to believe 

that this was part of any organized opposition to the agency. HowVerDate Nov 24 2008 00:56 Jun 10, 2011 Jkt 063078 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\63078.XXX GPO1 PsN: 63078

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ever, I am very concerned that this incident not fan the flames of 

ignorance about the IRS’s core mission and our approach. 

While we do engage in compliance activities for the small portion 

of Americans who aren’t paying their fair share of taxes, the vast 

majority of our work is serving the hardworking taxpayers of this 

country—processing returns, sending out refunds, answering questions on the phone, trying to help people navigate a complex tax 

system. 

I am incredibly appreciative of the support that this committee 

has shown the agency during the difficult days after Austin. And 

I request that all Members of the Committee join me in explaining 

to the public that the vast majority of Americans experience an IRS 

that is merely trying to help them process a tax return and get a 

refund; and that at its core, we are an agency of public servants 

working to serve the American people. 

Mr. Chairman, this concludes my oral testimony. I am happy to 

answer questions. 

[The prepared statement of Mr. Shulman follows:] 


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f 

Chairman LEWIS. Mr. Commissioner, thank you for your statement. And as Chair of this Subcommittee, and the Ranking Member and I think all Members of the Subcommittee and our Full 

Committee, will do our part in explaining the role of the Internal 


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Revenue Service, all of the employees, in doing the job that they 

are authorized and committed to do. So thank you again for your 

service. 

At this time we will open the hearing for questions. I would like 

to remind members that we will follow the Givens rule for questions. And I ask that each member be brief and abide by the fiveminute rule. 

Mr. Commissioner, are you concerned that there has been an increase in the number of extensions and the use of credit cards to 

pay taxes this filing season? What advice does the IRS have for 

taxpayers in financial distress this filing season? 

Mr. SHULMAN. You know, we haven’t seen any major trends 

that are troubling to us thus far. I think the advice I give people 

this filing season is similar to other advice, with one caveat, given 

that there are more people unemployed than in the past who may 

be unable to pay their tax obligation. 

I mean, in general we tell people, pay on time. If you can’t pay 

on time, still file a return and we will work with you. We are encouraging people to electronically file and direct deposit because if 

you do, you can get your refund in ten days, get cash into people’s 

pockets. 

I think the important thing for this year is, you know, I have instructed all of our people in all of our operations, especially our collections operations where people have—are actually owing the IRS 

money and due to the government, that we need to—while we need 

to collect the money needed to fund the government, we also have 

to meet each taxpayer based on their individual circumstances. 

And so the best advice I can give people is if they can’t pay, they 

should still file. They shouldn’t disappear. They should call us. Our 

people can work with folks. They can put them on an installment 

plan. If they qualify, they can get an offer in compromise. We can 

work through people’s issues with them, and it is important for 

people to remember that. 

Chairman LEWIS. Mr. Commissioner, I notice that the budget 

proposal shifts $9 million to toll-free telephone assistance from lowincome services such as the VITA program and low-income taxpayer clinics. 

Would this affect the IRS’ service to low-income taxpayers? 

Mr. SHULMAN. As you know, Mr. Chairman, we are in tight 

budget times, with deficits higher than the President would like. 

He asked every agency to try to be as efficient as we could and 

make a series of tradeoffs. 

That budget tried to do that. Our telephone service serves a 

number of low-income, elderly citizens, and so it wasn’t where we 

wanted it to be. Some money was shifted from the VITA, the lowincome taxpayer clinics, et cetera. I think it is a very reasonable 

discussion to debate whether that should be shifted or not. 

Chairman LEWIS. Thank you. Now I turn to the Ranking Member, Dr. Boustany, for his questions. 

Dr. BOUSTANY. Thank you, Mr. Chairman. 

Commissioner Shulman, with regard to the increase in average 

refund that I referenced in my opening statement, can you share 

with us evidence that you might have that the higher utilization 

of stimulus tax credits is driving the refund data? 


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Mr. SHULMAN. So I was listening closely when you gave your 

opening statement, and hadn’t—not familiar with the analysis you 

did around employed/unemployed. You know, there are a number 

of things going into refunds, including 1.4—or almost 2 million people have gotten the first-time home-buyers’ credit already, which is 

$7500, which clearly increases refunds. The Make Work Pay credit, 

most Americans are getting $400, or $800 if they are a married 

couple. I would be happy to work with your staff afterwards and 

give you our analysis. 

Dr. BOUSTANY. I appreciate that because it would seem to me 

that some who—or perhaps many who started the year with a certain level of income and saw a decline over the course of the year 

and had withholdings on the front end, that could be a major factor 

in driving up the percentage of their—of refunds, or the increase 

that we have seen. So we would like some data just to sort of, you 

know, really dig into that, to understand what is going on, in the 

interest of oversight. 

And before I get—I have a couple of health care questions. But 

in a previous subcommittee hearing, we talked a lot about the firsttime home-buyer tax credit, and some of the fraud issues. I know 

we have worked with you to address this problem to help with tools 

that you might need. 

And could you give us an update on the correction of some of the 

problems we were seeing with that tax credit? 

Mr. SHULMAN. Yes. I mean, the first thing I would say, any 

time there is a very short term for implementation, narrow window, and a $7500 or $8000 credit, you are going to see fraud. 

What we try to do is balance getting the money out to people, 

where the intent was to get money to people to help stabilize the 

home market and help them buy a home, and minimize fraud. An 

important tool for us is to have math error authority. And so we 

had no authority if we saw an indicia of fraud to actually stop and 

change your refund. We either had to do a full-blown audit, which 

can take time; stop a refund, and sometimes stop a refund from 

someone if we find out that the indicia doesn’t come through; or we 

needed to put the refund out and not do anything. 

We came back and asked Congress to give us audit authority, 

which they did, or math error authority, which was very important. 

We have also now asked for more documentation from home buyers, to see actual closing documents. And so some of the past problems, we think, are solved. 

I will tell you we have taken a major number of audit resources 

and shifted them to first-time home-buyer credit. We have shifted—we probably, by the end of this year, will have opened 200,000 

audits to make sure that there is not fraud in that program. 

Subsequently, Congress passed a second first-time home-buyer 

credit bill that also had a—people who had owned their home for 

five years, lived in it for three consecutive years, et cetera. That is 

going to cause similar issues for us. 

And I think it is important for people to know, when there are 

short-term things and use the IRS to stimulate the economy, we 

are going to do our job. We are going to be a distribution mechanism. But there is also opportunity for fraud, and we are going to 

have to make those tradeoffs and resource tradeoffs. 


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Dr. BOUSTANY. Thank you. And going to health care now, I referenced the premium tax credit and how it will go directly to insurance companies. Is it true that those taxpayers who do receive this 

premium tax credit will not actually see the money in their refund 

checks, but rather the IRS will send tax dollars directly to the 

health insurance companies under the new law? 

Mr. SHULMAN. Let me just say something about kind of our 

role around health care. You know, our role is to administer the 

tax portions of the health care law. And I really think of us as, you 

know, the payor bank that needs to process and do lots of financial 

transactions around that to make sure the benefits are going to the 

right place. 

My understanding is—if you are talking about the tax credits to 

help people buy insurance, yes, my understanding is that we are 

going to try to work that out in a way that is the most efficient 

for the system. 

I think the law contemplates that people will work through the 

exchange. The exchange will give us whatever information is needed. And instead of them sending money to the health care provider, 

that money will be sent directly. 

Dr. BOUSTANY. All right. Thank you. And one final question, 

Mr. Chairman, if you don’t mind. The CBO came out with some estimates, and the figure of $10 

billion over the next decade in additional funding was cited, on top 

of the base budget, to carry out the new authorities that you are 

going to need to deal with the new health care law. 

Do you agree with this estimate, or have you done some internal 

work? Were you consulted on this? 

Mr. SHULMAN. We were not consulted by CBO. That is their estimate. Their tradition is to come up with their own estimates of 

administrative costs. But that is—I think it is 5 to 10 billion is the 

number that is accounted for in the overall cost of the legislation. 

What we do is watch legislation. Clearly, we have been involved 

in planning. Now that the legislation is passed, I have a staff working on the actual numbers that it will cost for us to implement the 

tax portion of the health care bill. And we will be coming up with 

those numbers, you know, as quick as we can. 

Dr. BOUSTANY. And given that a lot of these provisions don’t 

go into effect until 2014 that affect the agency, so this is really a 

six-year figure, in effect. 

Mr. SHULMAN. Again, it is a CBO figure, so I don’t know how 

they came up with them. 

Dr. BOUSTANY. Okay. Well, one final thing. You mentioned the 

additional resources going into dealing with the first-time homebuyer tax credit. And I just want to express my deep concern about 

the resource demand on IRS as this new law is implemented. And 

we will work hopefully very closely with you to examine those requirements. 

Mr. SHULMAN. Yes. No, what is interesting about the tax system is, over time, it has become a very efficient distribution mechanism, not just in this country; all tax authorities are asked to do 

things. We have proven quite adept at it, with the stimulus checks 

under President Bush, Recovery Act under President Obama, the 

earned income tax credit we have administered for years. 


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As the head of the agency, the important thing for me is to be 

given plenty of leave time, being given administrative flexibility, 

and then being given the right resources to implement it. And so 

I feel very confident we can implement well what Congress passes, 

given that we have those three things, which I have confidence we 

will have in the case of the health care legislation. 

Dr. BOUSTANY. We shall see. Thank you. 

Chairman LEWIS. Thank you. Now we turn to Mr. Davis for his 

questioning. 

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman, 

and thank you, Commissioner, for being here. 

Following up a little bit on the question just raised by my friend 

from Louisiana, would this also count as jobs being created, the 

number of additional employees that you might need for Internal 

Revenue Service? 

Mr. SHULMAN. You know, I don’t know. Sure. If there are jobs, 

you know, if I hire someone, that is a job in the Federal Government. I think generally the President’s approach has been to have 

jobs bills focused at the private sector, growing small businesses, 

growing the economy that way. 

Mr. DAVIS OF ILLINOIS. Well, I think a job is a job, especially 

if it is one that is needed, and it becomes part of the job creation. 

But let me ask you: There is some concern about how helpful the 

Service is being to low-income taxpayers, given that we are in the 

season, earned income tax credits and those kinds of things. 

Could you explain how impactful you think the Service is being 

right now for low-income taxpayers? 

Mr. SHULMAN. Sure. We are very focused on trying to do outreach, help people get their returns prepared, work with volunteer 

organizations across the country. My belief is, you know, while we 

are a large financial service organization for many people, we are 

not like a financial service company who gets to choose its customers and decides which customers it wants to serve and which 

it doesn’t want to serve. We need to serve every last taxpayer, and 

we need to serve them well. 

And so some people want internet service. Some people are going 

to go hire an accountant. But often elderly, lower-income taxpayers 

need specialized help by the IRS. We have low-income taxpayer 

clinics which can help people resolve issues, which we fund. 

We have an extensive VITA program, which is the Volunteers in 

Tax Administration, where we train people, give them computers, 

et cetera. Our biggest VITA partner is AARP, but we work with 

any number of nonprofits across the country, 10,000 sites. 

We have tax clinics for the elderly. We do earned income taxpayer outreach events. One was done with the Chairman; we would 

love to do it with other folks. We have taxpayer assistance centers 

all over the country. 

If a low-income taxpayer clearly can’t meet their obligation, I 

mentioned in my opening statement, we have some special programs like an offer in compromise program. We are adjusting that 

during these really difficult economic times. We are holding a thousand open houses, where people can come in and get their tax problem resolved. 


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You know, we do have limited resources, and we need to balance 

the resources across all of our demands. But I think that this agency has a special obligation to meet people who can’t afford an accountant or don’t have a computer to use tax software. So we have 

got a number of programs, and we spend a lot of time, a lot of effort, on outreach, education, and service. 

Mr. DAVIS OF ILLINOIS. There has been some concern in the 

past about the ability of people who are incarcerated to perpetuate 

scams in terms of filing, getting checks, having relatives and 

friends cash them. 

Can you give us an update on how that has been handled? 

Mr. SHULMAN. Yes. You know, before I came into the job, I 

know this was a major focus. The IRS has stepped up its efforts 

working with state and federal law enforcement agencies, prison 

systems, et cetera, to make sure we can try to match and make 

sure that someone incarcerated isn’t perpetrating fraud. 

Sometimes, I will tell you, though, someone was employed for 

half a year, is then incarcerated, and actually can file a return 

from prison. So that happens. 

The big problem, sir, really, at the end of the day, is now if someone perpetrates fraud, the biggest penalty we can have is we 

have—they are under criminal investigation and they go to jail. 

Once somebody goes to jail, that penalty has already been taken 

care of. And so the question is: When someone perpetrates fraud 

in jail, what is the penalty for them? 

We also have limitations around we can’t share with the warden 

someone’s tax information because of tax privacy laws. And so we 

think we have made great progress. It is never going to be fully 

eradicated. But, you know, we have been quite focused on this. 

Mr. DAVIS OF ILLINOIS. Thank you. Mr. Chairman, can I have 

a second here? I have got—there is some concern that has been expressed by secondary filers that your computer system may not 

pick up the information as readily. I will submit that in writing, 

and see if we can get a response to it. 

Mr. SHULMAN. Absolutely. 

Mr. DAVIS OF ILLINOIS. Thank you. Thank you, Mr. Chairman. 

Chairman LEWIS. Thank you. 

Now we turn to Mr. Etheridge for his questioning. 

Mr. ETHERIDGE. Thank you, Mr. Chairman. 

Mr. Shulman, thank you for your testimony. Thank you for being 

here this morning. 

Let me just mention an issue with IRS that is very pleasant. 

Last month I was able to participate in an IRS free file event that 

we held in North Carolina at Fayetteville Tech. And I was pleasantly surprised. 

We had over 20 community-based organizations, and roughly 60 

students and a number of families from Fort Bragg, which is, as 

you probably know, right adjacent there and a large installation. 

They came and used the free file system that you are working with. 

And North Carolina is a free file state, as you probably know. 

So let me thank you and all your people who were able to help 

because this is a great process between the federal and the state, 


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doing taxes online for free. And I personally enjoyed it. I think the 

folks there really appreciated the outreach and the help. 

And let me just congratulate you because I am glad that you 

have now signed, I think, a new five-year deal with the Free File 

Alliance to provide this service to the American taxpayers. And I 

think that is a great help to people who really don’t have a real 

sophisticated—but it helps them get it done quickly. They can do 

it online and get the returns quickly. So I congratulate you on that. 

Let me move to another point now because I am pleased that you 

mentioned the HIRE Act in your testimony a little while ago. And 

I know that these credits are going to and can make a big difference for businesses. And I think it will help our economy grow. 

But one of the biggest criticisms of the 1977 to 1978 Tax Credit 

Act was that folks didn’t know about it, or at least said they didn’t. 

I was in business, happened to know something about it, and used 

it. 

But my question to you this morning is: What has IRS done and 

what are you doing to make sure through groups that businesses 

are aware that this is available to them and can use it to their advantage? 

Mr. SHULMAN. Thanks for the question. So we immediately, 

you know, put out press around this, worked with press offices 

around the country. Frankly, the whole administration is mobilizing around this, is supporting it. 

And so, you know, sometimes a tax provision gets passed and the 

IRS publicizes it. Now, you know, we have got the advantage of important jobs acts. We have got the White House. We have got the 

Treasury. Everybody is mobilized to get the word out. 

We are also working with practitioners. Most small businesses 

use an accountant or a tax preparer, someone else to work on their 

taxes. And so we are getting the word out through our extensive 

practitioner network, which is important, and the payroll providers. 

A lot of people, you know, do the payroll tax through the payroll 

providers, and so we are holding regular conference calls. We are 

pushing that information out. 

I would also note, in the health care legislation, the first thing 

we are going to need to implement is a tax credit for small businesses who put—to help them offset their costs of providing health 

care to their employees. And so we are immediately mobilizing 

around that effort. 

Mr. ETHERIDGE. And how much is that? How much is that? 

Mr. SHULMAN. It is 35 percent—— 

Mr. ETHERIDGE. Thank you. 

Mr. SHULMAN [continuing]. Now and it will go to 50 percent, 

I think, when it is—you know, by 2014. 

Mr. ETHERIDGE. And what is the starting date on it? 

Mr. SHULMAN. Starting date was last January 1, so it is for 

this tax year. 

Mr. ETHERIDGE. Thank you. One other question. I just think 

it helps to get—every time we get an opportunity to get it out, we 

need to remind folks when it is. 

As you know, many Americans are struggling, and that is why 

we are doing many of the things we are doing. And I think all of 

us talk about our experiences, and certainly, as you know, North 


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Carolina is really above the national average in terms of unemployment, which is a little unusual for us in our state. I have counties 

in my district where it is approaching 15 percent. 

So my question is, I guess, what additional steps can we take 

and are you able to take to help make folks know what tax cuts 

that have been passed are available to many of these people? You 

have talked about it some already. And how can taxpayers reduce 

their taxes currently as a move forward? 

Because I think—I notice that you talked about compromise, and 

that the IRS offers in its compromise, it dropped to about 72 percent during the last administration. Is this a measure that you 

plan to implement more often as we move into these very difficult 

times we now have? 

Mr. SHULMAN. So a couple things. We actually just started a 

program this month where we are partnering with state unemployment offices to promote the tax credits people can get, to promote 

our open houses, et cetera. 

And so recognizing that unemployment is a problem everybody is 

trying to tackle, we are actually going to the unemployment offices 

so when people show up there, they will be able to get IRS literature. They will be able to understand that they should claim the 

Make Work Pay Credit. If they get out of work, they can get a 

COBRA subsidy, things like that. 

We are also letting them know about the changes in offers in 

compromise, the open houses. We are publicizing in state unemployment offices at a local level. And so we are going to go the 

extra mile. 

I mean, we have this fine line to walk. I mean, I am responsible 

to raise all the money to fund the government. And people who can 

pay need to pay, and we need to run our programs for that. But 

again, we also need to walk in taxpayers’ shoes. 

And if you are struggling and trying to put food on the table and 

have medicine and put your kid through college, if we can be helpful and use our flexibilities to help people through this tough time 

to keep them, you know, in good financial condition for the long 

term, for their own benefit and also to be taxpayers, that is good 

for the IRS and it is good for them. 

On offers in compromise, that program has declined dramatically. I think it is a good program. We are looking very hard at 

what we can do to reverse this. I think the single most important 

one is one that I compliment the Chairman and the rest of the committee for supporting, which is repealing the 20 percent down payment, which came into effect at about the same time this started 

plummeting. I don’t think there is any reason people should have 

to put a 20 percent down payment when, by definition, they are 

having a hardship situation. 

We are also looking to see when in the collection process is the 

appropriate time to introduce it. How can we streamline the program, potentially have some online tools so people can go in and 

figure out if they are eligible. And so I actually have a whole team 

looking at this because I think it is a program that is under-utilized. I would like to figure out how to get the utilization back up. 

Mr. ETHERIDGE. Mr. Chairman, thank you for your time and 

your patience because we do want everyone to pay what they are 


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due to pay but, you know, fairness to help those who need help, 

too. Thank you, sir, and I yield back. 

Chairman LEWIS. Thank you. 

Now we turn to Mr. Kind for his questioning. 

Mr. KIND. Great. Thank you, Mr. Chairman. 

Mr. Shulman, thank you again for being here to testify. We appreciate the job you and everyone at the IRS does on behalf of the 

country. 

You know, Dr. Boustany raised the issue of the health care reform bill, and I think there is a lot of misinformation and a lot of 

misperception about the role that the IRS is going to play in the 

implementation of the recently passed health care bill. So let me 

ask you a series of questions, and as much as you can, just answer 

yes or no to clarify some questions that I have about the exact role 

that the IRS will play. 

The health care bill that was just signed by the President is not 

going to fundamentally alter the relationship of the IRS with the 

American taxpayer, will it? 

Mr. SHULMAN. No. 

Mr. KIND. And you said that right now you are moving forward 

as far as doing calculations as far as the costs and the staffing 

needs that the IRS has. But you haven’t made any of those final 

determinations yet, have you? 

Mr. SHULMAN. That is correct. 

Mr. KIND. And the IRS agents are not going to be going out and 

auditing taxpayers to verify if they have obtained acceptable health 

insurance, will they? 

Mr. SHULMAN. No. 

Mr. KIND. In fact, it is going to be the insurance companies that 

will be merely certifying whether or not an individual has obtained 

health care coverage. And they will be certifying that to the IRS? 

Mr. SHULMAN. Yes. Let me—it is probably worth me just—— 

Mr. KIND. Sure. 

Mr. SHULMAN [continuing]. Being very clear because I think 

there have, you know, been some misconceptions out there. 

The way we envision this working is HHS, Department of Health 

and Human Services, and the exchanges will be working with the 

insurance companies to determine what is acceptable coverage. All 

that will happen with the IRS is similar to a current 1099, where 

a bank sends the IRS a statement that says, here is the interest 

someone has, and they send it to the taxpayer. 

We expect to get a simple form that we won’t look behind that 

says, this person has acceptable health coverage. There are not 

going to be any discussions about health coverage with an IRS employee. 

Mr. KIND. In fact, I would envision that the major role the IRS 

will play is trying to get information into the individuals’ hands 

and businesses about the various tax incentives that the health 

care reform bill has, and how they can best access those incentives 

and utilize them. Is that right? 

Mr. SHULMAN. Yes. I mean, the role of the IRS is going to be, 

again, the tax portions of this, not the health portions of this. And 

what we are going to do is try to make sure people are educated. 

There is information. We process payments quickly. We also will 


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make sure that there is no fraud and abuse in the system, as we 

always do. 

Mr. KIND. So the IRS is still going to pick up the phone and answer questions in regards to tax incentives under health care bill? 

Mr. SHULMAN. Yes. 

Mr. KIND. And I assume the IRS will try to build some type of 

online education service, too, for people to access as far as what 

they are eligible for? 

Mr. SHULMAN. Absolutely. 

Mr. KIND. And you will probably be performing some additional 

outreach services with businesses and taxpayers about the health 

care bill? 

Mr. SHULMAN. Absolutely. 

Mr. KIND. And as you indicated to Mr. Etheridge, you are already moving forward on the 35 percent tax credit that small businesses are going to be getting this year already with the enactment 

of the health care bill? 

Mr. SHULMAN. That is our first move. 

Mr. KIND. And no taxpayer is going to be subject to any IRS 

liens or levies or jail time for failing to disclose insurance requirements to the IRS? 

Mr. SHULMAN. That is what the legislation calls for, yes. 

Mr. KIND. And as soon as your internal review is done, I assume 

you are going to report back to Congress what type of resources 

you will need for staffing or for additional funds in order to implement the health care bill? 

Mr. SHULMAN. Yes. I do want to be clear, as I was with Mr. 

Boustany. We will need resources to implement the tax provisions 

in this legislation. And we will look forward to working with the 

committee to make sure we have the proper resources to serve the 

American people. 

Mr. KIND. Thank you. And let me just ask you a final question, 

that reports are coming out that there is roughly a 10 percent increase in the average return for taxpayers filing. And I think you 

have indicated and made public statements that that in large part 

is attributed to the various tax relief that taxpayers are receiving 

under the American Recovery Act. Is that your opinion? 

Mr. SHULMAN. Yes. I mean, clearly the Recovery Act is a major 

portion of that. 

Mr. KIND. So more money in taxpayers’ pockets during this 

tough economic time due to the Recovery Act. And the only proviso 

to that is that the returns coming in are a little bit slower. And 

so we don’t have the complete returns, or even the typical number 

of returns, at this point of the year. Is that right? 

Mr. SHULMAN. Yes. It is 3 percent down. We have about half 

the tax returns have come in at this point, which is more or less 

average. It is a small decline, but it is not statistically significant. 

Mr. KIND. The number that I am looking at here, that in 2009 

the average tax return was about $2,770. But now in 2010, that 

jumped up to $3,036, so roughly a $266 additional refund to the average taxpayer. 

Does that sound about right to you? 

Mr. SHULMAN. That is the current run rate, yes. 

Mr. KIND. Great. Thank you, Mr.—— 


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Dr. BOUSTANY. Would the gentleman yield? 

Mr. KIND. Yes. I would be happy to yield. 

Dr. BOUSTANY. Just for clarification on the health care issue, 

Commissioner, could you talk to us about the compliance side with 

regard to the individual mandate? Obviously, in terms of being able 

to enforce compliance, what is going to be your role with regard to 

any penalties paid in this? 

Mr. SHULMAN. Yes. So my understanding of the bill—and 

again, you know, this is a bill that some of it has passed; a big portion has passed, but there are still some, you know, pieces of the 

reconciliation which adjust things—you know, the insurance company will send to us whether or not somebody has coverage or not. 

People will do their self-filing, as they always do. 

If they file, they will—if they file, and they have to have insurance if they have money to have insurance, so not everybody has 

a requirement, as I understand it; there is also an exception for 

lower-income people who can’t afford insurance—it will come in 

and they will adjust their tax rate, and based on whether they 

have insurance or not. 

And the Tax Code is used, and the tax return is used, as the financial incentive around this. So our role will be people will either 

pay their taxes or not. If they don’t pay their taxes, then they will 

get a letter from us saying what you owe. 

Mr. KIND. Mr. Chairman, just one last question, reclaiming my 

time. 

Just so we are clear, there is no mandate for individuals to have 

to go out and purchase insurance under the health care bill. They 

can choose to purchase insurance. But if they don’t, we are going 

to be asking them to contribute a little bit so that if they do get 

sick or injured and they do go into the emergency room, that those 

costs aren’t going to be passed on to people who are paying for insurance or swallowed by the health care providers themselves. 

But it is going to be an individual choice whether they want to 

have insurance or not. But if they don’t, for the first time we are 

asking them to contribute a little bit so that the cost of the uninsured isn’t passed on to Americans who have insurance in our current system. 

Thank you, Mr. Chairman. 

Dr. BOUSTANY. If the gentleman would yield? 

Mr. KIND. My time is expired. 

Chairman LEWIS. Thank you. 

Now we turn to Mr. Becerra for his questioning. 

Mr. BECERRA. Thank you, Mr. Chairman. 

Commissioner, good to see you. Thank you for being here. And 

I want to congratulate you and offer you our support—I won’t say 

condolences, but support. Because condolences, support, are required because you are now going to be tasked with additional 

work to try to make sure that the $40 billion in tax credits, tax 

cuts that small businesses will receive under this health care bill, 

and the close to around $400 billion in tax cuts that individuals 

will receive to help them cover the cost of health insurance because 

of their tax credits, will be administered through your shop. 

And so support because we need to make sure that you do this 

well, and condolences because we always expect you to do more 


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than is humanly possible, given the time and the resources that 

you have. So make sure that it is more support than condolence 

that we ultimately give you in that regard. 

Mr. SHULMAN. I will ask of that, sir. 

Mr. BECERRA. Absolutely, and please. The last thing I think 

anyone in this committee would like to see is that we delay the 

ability of Americans to purchase affordable and quality health care 

simply because we are unable to get them their credits, tax credits, 

quickly enough. So let us know how we help you administer this 

as you go on and do your business. 

I also wanted, as I said, to congratulate you because you just 

issued regulations on something I think is very, very important for 

those of us who represent a large population of middle class and 

modest income families. 

What you issued recently as regulations is critical, saves hundreds of dollars, in some cases thousands of dollars, and perhaps 

lots of headache for a lot of these families that end up filing returns using tax preparers and thinking that they have now done 

the right thing by using a tax preparer, who should be more skilled 

and knowledgeable on the preparation of tax filings. 

And yet they find out that they were either incorrect in their filing or they were duped in their filing, and certainly in many—and 

too often in the cases that they were overcharged for the filing. 

And so I wanted to just make sure I understand what your regulations call for that are now out there for consideration and comment. It is the case—it is the case today that just about anyone can 

put out a shingle and say, I will prepare your taxes and charge any 

amount. In fact, in most states there is more regulation over who 

cut your hair or my hair than there is over who prepared your 

taxes or my taxes. 

And you issued some regulations to try to help us provide some 

sanity within this industry because more often than not, we find 

Americans who could have filled out the simple 1040 form being 

charged hundreds of dollars to do what could have been done by 

a basic computer program, or perhaps the person by himself or herself, just reading the basic instructions of the IRS instruction manual. 

And so I am hoping you give me a quick synopsis of what your 

regulations are proposing. 

Mr. SHULMAN. Sure. So we put out a report which gave a road 

map over about three years of moving from a place where we largely have minimal oversight over tax return preparers to really trying to bring a minimal level of competency to all tax return preparers. We think there are about a million of them. We think that 

is a good, efficient use of leveraging our resources for service and 

effort. 

The basic road map is this. People will have to get an identification number if they prepare returns, which we call a PTIN in those 

regulations we just put out yesterday. And we are hoping to get the 

PTINs up and running for next filing season. 

Next, people will have to take a minimum competency exam, basically that they can do a 1040. And then we are looking at doing 

a small business exam, too, to make sure small businesses are receiving the same level of service. 


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They will have to have continuing education, which is general 

tax education except for some of that will have to be ethics and 

some of that will have to be tax law changes; because of the pace 

of tax law changes, it is an important thing where people can make 

mistakes. 

We will then put a database out. This will come down the road, 

once people take the test and have continuing education responsibilities, so the American people can look up and say, are they 

working with a registered return preparer, give them some level of 

confidence, their working with them. 

And then we are going to shift some oversight and enforcement 

resources into this area because there will be people who go underground, and we want to find them and make sure they are not preparing returns. 

And so that shift will happen over time. But immediately, we actually did thousands of visits to preparers this season to remind 

them of their obligations. We sent out 10,000 letters to remind people of their obligations. So we are already starting to make that 

kind of education and enforcement shift. 

Mr. BECERRA. And let’s be clear. The legislation I have, which 

would move in the direction that you are proposing in your regulations, and I believe the regulations you have issued, would not 

apply to a tax accountant or an attorney who we already can tell, 

from their education and their work experience, are prepared or 

are versed in the preparation of tax filings. 

This is for folks who we are not certain what type of educational 

background they have, what type of experience they have. And so 

what we are trying to make sure is that there is level of competency that gives them the right and the opportunity to go out 

there and sell themselves and tax preparers. 

Mr. SHULMAN. That is correct. We exempted people who already have a professional competency test, a minimal level of competence. They need to prove ongoing education—attorneys, enrolled 

agents who are enrolled with the IRS, and CPAs. 

With that said, I did say that over the next couple of years, once 

we start tracking people, we are going to see and be able to see 

what differences there are between the accuracy of returns. And it 

is something we are willing to revisit if, you know, we go down the 

line. 

But we didn’t think we should put an extra level of requirements 

on a group that already has requirements. 

Mr. BECERRA. And, Mr. Chairman, one final question, if I may. 

Commissioner, when we say we are going to require this competency of people who prepare these forms, someone could try to 

get away by saying, well, I am the one that signed the form, but 

I have a shop of people who help prepare these. 

How do you make sure that the people who actually do the preparation will be required to have the competency so that we make 

sure that someone can’t try to skirt this new regulation by saying, 

I signed it, I prepared it, yet in fact they have a whole bunch of 

folks who don’t have experience who are actually doing the work? 

Mr. SHULMAN. There are a couple of things. One is we want 

to make sure the people you are talking about, who are sitting in 

a shop actually coaching taxpayers through their return, helping 


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them with their return, get registered. We also don’t want to make 

someone who is a front office receptionist, who takes tax returns 

and types in the information and doesn’t use any judgment calls 

and doesn’t have any conversations with the taxpayer—we don’t 

want to put the requirement on everyone who ever touches a return. 

And so we have tried to craft these regulations carefully. One is, 

you know, if someone is sitting there and you think they walked 

you through your return and they are your preparer, then they are 

going to need to sign. 

We can usually see—there is usually a threshold number of what 

is humanly possible as far as sending in returns in a time basis. 

So if we see somebody sending in, you know, a couple thousand returns under their name, we are going to send somebody out to see, 

you know, who is really doing all those returns. 

We will also be doing, you know, random blank audits of folks. 

And we will also be looking for lots of mistakes. And so we will be 

putting in place compliance programs on the back end around this 

requirement. 

Mr. BECERRA. Commissioner, thank you. Chairman, thank you. 

Chairman LEWIS. Mr. Commissioner, thank you for your time 

and for your testimony. We wish you well. The Subcommittee appreciates your views, and we look forward to another meeting with 

you in the days and months and years to come. 

Also like to thank the staff on both sides of the aisle for your 

help on this hearing, and thank the Ranking Member and all of the 

Members for attending. 

There being no further business, the hearing is now adjourned. 

[Whereupon, at 10:57 a.m., the Subcommittee hearing was adjourned.] 

[Submissions for the Record follow:] 


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anorris on DSK5R6SHH1PROD with HEARING63078A.022
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anorris on DSK5R6SHH1PROD with HEARING63078A.023
44 


anorris on DSK5R6SHH1PROD with HEARING63078A.024
45 


anorris on DSK5R6SHH1PROD with HEARING63078A.025
46 


anorris on DSK5R6SHH1PROD with HEARING63078A.026
47 


anorris on DSK5R6SHH1PROD with HEARING63078A.027
48 

Æ 


anorris on DSK5R6SHH1PROD with HEARING63078A.028