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IRS: REVIEWING ITS LEGAL OBLIGATIONS, 

DOCUMENT PRESERVATION, AND DATA SECURITY 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 11, 2016 

Serial No. 114–93 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 


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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

JASON CHAFFETZ, Utah, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

CYNTHIA M. LUMMIS, Wyoming 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

MARK WALKER, North Carolina 

ROD BLUM, Iowa 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

WILL HURD, Texas 

GARY J. PALMER, Alabama 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MATT CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 

BONNIE WATSON COLEMAN, New Jersey 

STACEY E. PLASKETT, Virgin Islands 

MARK DESAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

PETER WELCH, Vermont 

MICHELLE LUJAN GRISHAM, New Mexico 

JENNIFER HEMINGWAY, Staff Director 

DAVID RAPALLO, Minority Staff Director 

HENRY KERNER, Deputy Director of Oversight and Investigations 

JACK THORLIN, Counsel 

SHARON CASEY, Deputy Chief Clerk 


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C O N T E N T S 

Page 

Hearing held on February 11, 2016 ....................................................................... 1 

WITNESSES 

Mr. Terence Milholland, Chief Technology Officer, Internal Revenue Service, 

Washington, D.C. 

Oral Statement ................................................................................................. 9 

Written Statement ............................................................................................ 10 

Mr. Jeff Tribiano, Deputy Commissioner, Operations, Internal Revenue Service, Washington, D.C. 

Oral Statement ................................................................................................. 14 

Mr. Edward Killen, Director of Privacy, Governmental Liaison, and Disclosure, Internal Revenue Service, Washington D.C. 

Oral Statement ................................................................................................. 15 

APPENDIX 

2016–04–07 Mr. Tribiano IRS re: Hearing Follow-up Responses ........................ 52 


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IRS: REVIEWING ITS LEGAL OBLIGATIONS, 

DOCUMENT PRESERVATION, AND DATA SECURITY 

Thursday, February 11, 2016 

HOUSE OF REPRESENTATIVES

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

WASHINGTON, D.C. 

The committee met, pursuant to call, at 1:02 p.m., in Room 2154, 

Rayburn Office Building, Hon. Jason Chaffetz [chairman of the 

committee], presiding. 

Present: Representatives Chaffetz, Mica, Jordan, Walberg, 

Amash, DesJarlais, Gowdy, Massie, Meadows, DeSantis, Buck, 

Walker, Blum, Hice, Russell, Carter, Grothman, Hurd, Palmer, 

Cummings, Maloney, Norton, Connolly, Kelly, Watson Coleman, 

Plaskett, DeSaulnier, Boyle, and Welch. 

Chairman CHAFFETZ. The Committee on Oversight and Government Reform will come to order. Without objection, the chair is authorized to declare a recess at any time. 

We are here today because the IRS’ current leadership has proven irresponsible and negligent. The IRS cannot seem to properly 

preserve documents or ensure both privacy and security in accepting electronic tax returns. The Agency is in desperate need of new 

leadership to put it on a better course. There are already a number 

of examples of IRS incompetence and neglect in the past few years, 

but several incidents in recent weeks have made it clear for the 

need for further serious oversight and meaningful reform. 

As millions of individuals and companies prepare to file tax returns, the IRS must ensure its data systems are secure. Last summer, the IRS suffered a massive hack, leaving the tax information 

of 300-plus thousand individuals exposed. The hackers used that 

information to file fraudulent returns totaling something in the 

neighborhood of $50 million in refunds before the IRS figured out 

what was happening. But it has been well documented billions of 

dollars have inappropriately gone out the door. 

And the facts surrounding the recent events appear very similar. 

On January 25th, 2016, the IRS detected unusual IP traffic on its 

network. This turned out to be a coordinated bot attack or botnet 

aimed at the e-file system. The hackers’ goal was to recover taxpayer e-PINs, electronic pins, which would allow them steal refunds of innocent taxpayers. Roughly 450,000 unique social security numbers were used by hackers in at least 950,000 attempts to 

obtain these electronic PIN numbers. All told, the hackers are estimated to have stolen more than 101,000 of these electronic PIN 

numbers. 


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This latest breach raises serious concerns about the security of 

the system overall as well as the potential for paying out fraudulent claims, but none of this should surprise the IRS. In the last 

evaluation of the IRS’ information security, the inspector general in 

September of 2015 determined, ‘‘Until the IRS takes steps to improve its security program deficiencies and fully implement all security program areas in compliance with FISMA requirements, taxpayer data will remain vulnerable to inappropriate and undetected 

use, modification, and disclosure.’’ It probably does not get any 

worse or dire in terms of a warning. This level of incompetence is 

intolerable for an agency where millions of individuals file their 

most personal financial information. 

We are also here to discuss the failure of the IRS to properly preserve documents subject to lawsuits, and/or internal preservation 

orders, as well as FOIA requests. We take FOIA very seriously. 

The Freedom of Information Act is the public’s right to know. It 

also allows companies and other organizations to access data so 

they can defend themselves. 

On January 15th of 2016, the Department of Justice disclosed in 

a Federal court filing that the IRS had erased a hard drive belonging to a former senior Agency employee named Samuel Maruca. 

And if this story sounds similar to things we have heard about 

with Lois Lerner and others, it is, and that makes us sick. It is disgusting. It has to stop. We are doing everything we can to highlight. It is inappropriate, and yet it continues. 

The hard drive contained information subject to FOIA litigation. 

Despite the lawsuit, an internal preservation order, and the legal 

obligation to preserve related documents to the IRS, the IRS wiped 

the hard drive and scheduled it for recycling. This involved a multibillion-dollar issue relating to Microsoft. The hard drive likely sat 

in queue and was wiped up to 4 months after the internal preservation was ordered. Again, after. Internal preservation in place, 

then the wiping of a hard drive. 

We cannot say for sure to pinpoint the date because the IRS does 

not know when the hard drive was wiped clean. Hard drives. You 

go to Best Buy, you can buy them for less than a hundred bucks. 

In a multibillion-dollar situation, this is what we are talking about, 

but, again, this continues to be familiar. 

In March of 2014, the IRS destroyed backup tapes containing 

Lois Lerner’s emails which were subject to investigation by Congress, the inspector general, the Department of Justice. There were 

five open investigations, two duly issued subpoenas, and the IRS 

wiped the data. Here we have another case where people properly 

filed FOIA requests, and they wiped it again. This is just 1 month 

after the Agency learned that a significant portion of the Lerner 

emails were missing, and, again, it happened. As it turns out in the 

Maruca case, the IRS, by sheer luck, already copied the hard drive 

because of a different lawsuit. It was not because of competence. 

It was just sheer luck. 

So if you look at the IRS, they have roughly $2.4 billion they 

spent on IT, and it is worthless. Absolutely worthless. 60 to 70 percent of those funds are spent on legacy systems, preserving old 

things like COBOL and other types of things, but there are still billions of dollars in fraud running through the system. 


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We have a situation we are going to talk about today where 

there was a reported hardware failure. The story we got is that 

there was a power outage, but then the redundant power, the 

backup power, it also went out. How does that happen? Why do you 

have redundant power if it also goes out? When we asked through 

questioning about a breach, I put out a tweet pretty quick and said, 

you know, this so-called hardware failure maybe was a breach. We 

start to go and probe and have an investigation. We have a bipartisan staff talking to the IRS, and then they say, oh, we should 

probably tell you about the breach. What breach? 

If you look at the timeline of this, let us go through this because 

this is just days ago. Our committee, Oversight and Government 

Reform, a week ahead email to the press confirmed that there 

would be a hearing on February 11th relating to IRS document destruction and data security. On February 8th, majority and minority committee staff has a call with the IRS regarding the e-filing 

outage and the status of the Maruca hard drive. The IRS gives an 

update on how it planned to recover the hard drive and confirmed 

it had been wiped. After that date, our staff asked about the breach 

referring to the e-filing issue. Mr. Milholland, who is here with us 

today, begins describing the previously unreported and undisclosed 

breach. The IRS legal staff intervened and said that he was talking 

about a different event, so we asked for more information about 

that. 

The next day, February 9th, miraculously in the Wall Street 

Journal, the IRS releases further details regarding the breach in 

another phone call with the majority and minority committee staff, 

and shortly thereafter the IRS releases a statement to the Wall 

Street Journal regarding the breach. If we had not been asking 

about another incident, we would not have known about this incident, and it affects over 100,000 people. 

This is a recurring theme. It is totally unacceptable. We look forward to peppering you with questions, and we expect answers. 

With that I will yield back, and now recognize the ranking member, Mr. Cummings. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I always 

try to start out hearings by stating what I think we can all agree 

on. Today I think we can agree that the IRS should have strong 

systems in place to properly preserve Federal records and to protect its computer systems from cyberattacks. I think we can agree 

on that, and those are valid goals, and I know that the IRS agrees 

with them. 

However, I do not believe this committee has been serving its intended purpose when it comes to the IRS generally. Unfortunately, 

Republicans have become obsessed with investigating any and 

every allegation relating to the IRS, no matter how small. I believe 

this is because Republicans were not able to find any evidence to 

support their baseless accusations that the White House conspired 

with Lois Lerner to target conservative groups for political reasons. 

They also were not able to identify any evidence that Commissioner 

Koskinen or any IRS employees destroyed evidence in order to obstruct our investigation. 

For the record, this is our 23rd hearing on the IRS. The 23rd. 

23rd. That is amazing. We have now interviewed 54 witnesses. The 


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IRS commissioner has testified six times, more than any other 

agency has over the past 3 years. The IRS had produced more than 

1.3 million pages of documents from 88 custodians in response 

more than 80 requests for documents. Yet despite this exhaustive 

multi-agency, multi-committee, multiyear investigation, this wild 

goose chase continues, and it has come up empty. 

Last year, the inspector general issued his report and identified 

no evidence to substantiate Republican claims of political motivation by the White House or intentional destruction of evidence. 

Specifically, the report found, ‘‘No evidence was uncovered that any 

IRS employee had been directed to destroy or hide information 

from Congress, the DOJ, or TIGTA.’’ 

The Justice Department also conducted an investigation and concluded that, ‘‘Not a single IRS employee reported any allegation, 

concern, or suspicion that the handling of tax exempt applications 

or any other IRS function was motivated by political bias, discriminatory intent, or corruption.’’ The Justice Department also found, 

‘‘no evidence that any official involved in the handling of tax exempt applications or IRS leadership attempted to obstruct justice, 

and no evidence of any deliberate attempt to conceal or destroy information.’’ Amazingly, none of these findings stopped the Republicans from trying to impeach the IRS commissioner, despite the 

fact that there is no evidence that he intentionally obstructed our 

work or destroyed documents. 

The problem now is that our committee is in a mindset where 

we are just trying to get the IRS, and unfortunately the public does 

not always get a complete or accurate picture as a result. For example, the impetus for today’s hearing was a press report that an 

IRS employee, who was leaving the Agency, had his hard drive 

erased in violation of a court order. However, we received a letter 

from the IRS last week explaining that, in fact, the IRS copied this 

employee’s hard drive first. Another example is the outage the IRS 

experienced last week. The chairman stated that his gut reaction 

was that the outage was, ‘‘It really does smell like a hack.’’ However, the IRS has now briefed our committee that, in fact, it was 

due to a mechanical device failure, and there is, ‘‘zero percentage 

chance that this was a cyberattack.’’ 

Yet another example Republicans have focused on is the incident 

involving PIN numbers that occurred in January. What is not mentioned is that, in fact, the IRS successfully blocked the IP addresses 

from which this attack was initiated. As a result, this week the IRS 

confirmed, ‘‘No personal taxpayer data was compromised or disclosed by our IRS systems.’’ These are critical facts, and I hope that 

the public understands them and any press that are here will repeat them. As I said earlier, this is our 23rd hearing on these types 

of allegations against the IRS. 

Imagine instead if we had held 23 hearings on the issue that actually matters to the American people. Imagine if we had held 23 

hearings where we brought in drug company officials to explain 

their skyrocketing prices. Now, that is something that we could 

really help our fellow citizens on and would make a big difference. 

Going forward, I hope we will use the resources and the authority 

of this great committee to serve the interests of our constituents. 


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I want to thank our witnesses for being with us today. I look forward to your testimony. And with that, Mr. Chairman, I yield back. 

Chairman CHAFFETZ. I thank the gentleman. I will now recognize 

Mr. Jordan of Ohio as the chairman of the Subcommittee on 

Healthcare Benefits and Administrative Rules, and recognize him 

for 5 minutes. 

Mr. JORDAN. Thank you, Mr. Chairman. The ranking member 

said Republicans have had 23 hearings where they are ‘‘trying to 

get the IRS.’’ We are not trying to get the IRS. The IRS is trying 

to get conservative Americans who are exercising their 1st Amendment free speech rights. 23 hearings is a pretty small price to pay 

when you are trying to protect fundamental liberties in the Constitution, for goodness sake. So I want to thank the chairman for 

this hearing on document preservation, data security. If anyone 

needs it, certainly the IRS needs a lesson in how to preserve documents. 

Let me give you a quick little history here. Several years back, 

Brian Downing orders destruction of documents that TIGTA needs 

in their audit. The person who was ordered to destroy the document comes forward as we want whistleblowers to come forward 

when something wrong is going on, comes forward and tells Stephen Whitlock, the then acting director of the Office of Professional 

Responsibility, and he says just keep destroying the documents. 

Fast forward to 2013. Again, the IRS gets caught with their hand 

in the cookie jar. Lois Lerner’s now famous speech, May 10th, 2013, 

where she goes to the Bar Association, lies to the American people, 

says it was not us, it was just those folks in Cincinnati. Complete 

lie. It was folks in Washington orchestrating this targeting against 

conservative groups. Later that year, later in 2013, Mr. Koskinen 

is brought in to clean up the mess. In fact, the President himself 

said, ‘‘He’s the expert at turning around institutions.’’ 

So what has the turnaround been? The chairman just talked 

about it, right? What has the turnaround been? We had this case 

with Microsoft where an IRS employee, Sam Maruca, his hard 

drive is wiped clean when there is a preservation order in place not 

to destroy any records relative to that court case and that investigation. And, of course, the one that I think is most important, Mr. 

Koskinen, brought in as the turnaround expert, learns that Lois 

Lerner’s hard drive has had problems. He waits 2 months before 

he tells Congress and the American people, and, more importantly, 

under his watch, 422 backup tapes are destroyed after there are 

three preservation orders. Three orders, one from Mr. Milholland 

himself, do not destroy anything. And what does the IRS do? Three 

preservation orders, one from the IRS themselves, one from TIGTA, 

one from the Justice Department doing a criminal investigation, 

and two subpoenas from this committee, what does the IRS do? 

They destroy 422 backup tapes containing potentially 24,000 

emails relevant to a congressional investigation and a criminal investigation. So there is a pattern here. 

Now, finally, Mr. Chairman, just to add insult to injury, guess 

what the Internal Revenue Service did? That very first example I 

gave you about Mr. Whitlock who said, no, keep destroying the documents that the whistleblower came forward and said we are 

doing. Guess what happens? I guess at the IRS if you destroy docuVerDate Sep 11 2014 11:20 Dec 16, 2016 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\22591.TXT APRIL

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ments, you get a promotion. Mr. Whitlock was just named head of 

the Office of Professional Responsibility. 

So to the ranking member, I think a 24th hearing with that kind 

of history at this organization is more than warranted, for goodness 

sake. There is a pattern of destroying records, a pattern of destroying documents, and, frankly, a pattern of destroying records and 

documents when you have been told not to. Preservation orders 

and whistleblowers coming forward, and yet it continues, and when 

that happens, some people get promoted at the IRS. Of course we 

need this hearing, and I look forward to hearing from our witnesses. 

Chairman CHAFFETZ. I thank the gentleman. I will now recognize 

the gentleman from Virginia, Mr. Connolly, for 5 minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you, Mr. 

Ranking Member. 23 hearings on the IRS. You know, when you 

cannot prove it, charge it anyhow. Repeat it. Do it louder. Try to 

suborn the TIGTA to make sure that his audit is limited with direct advice from you and your staff. Accuse people without facts. 

Hammer it home on your favorite network, and hopefully it will 

sink in and become true even if the facts belie it. 

Chairman CHAFFETZ. Will the gentleman yield? 

Mr. CONNOLLY. No. I am tired of these hearings. I am tired of 

insinuation. I am tired, frankly, of what looks to a lot of people like 

demagoguery. 

Chairman CHAFFETZ. Will the gentleman yield? 

Mr. CONNOLLY. No, Mr. Chairman, sadly I will not. I will finish 

my statement. We need the IRS. We need it to be functional. The 

same people that want to pillory you here today for your performance do not want to take responsibility for the fact they have 

starved the beast. They have cut a billion dollars from the IRS 

budget, degrading service, making it very difficult for the IRS to 

actually do its job. We leave $350 billion on the table every year, 

taxes owed, but not collected. That could make a big dent in the 

debt. We could reduce the debt over 10 years by $3 and a half trillion without raising anyone’s taxes and without cutting any essential services, but we do not want to do that. 

We do not want to do that because illogically the IRS is such a 

juicy target for our base and making the case that you represent 

the hard knell booted government on our necks. And why in the 

world would we want to do anything to strengthen you? And as a 

result, we have IT systems, according to John Koskinen, that go 

back to the Kennedy Administration. That is 53 years ago. And we 

wonder why things are not totally functional? We wonder why IRS 

is not fully efficient? We wonder why hard drives crash when the 

average age of a computer at IRS with 91,000 employees is 7 years 

plus. In the private sector it is 2 to 3 years. 

So to archive stuff, we have to print and save because we cannot 

trust aging legacy technology systems, and this Congress will not 

reinvest in you to bring you up to the 21st century because that 

would make you more efficient. That actually might make you be 

able to better do your job, and dysfunctionality serves our purposes 

illogically and politically. 

So, yeah, that is why we have 23 hearings, and we demonize people, and we deny them their 5th Amendment rights, and make 


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charges that turn out to be without foundation. It does a disservice 

to this committee, in my opinion, and I have sat through every one 

of these hearings. 

And I began truly concerned. Was this, in fact, going on? Did 

IRS, in fact, target a particular group or philosophy? As the ranking member said, all of the facts tell us no. Was there ineptitude? 

Was there political tone deafness? Yes. Was there a deliberate attempt by a Federal agency to target a particular political group or 

set of groups because of their political philosophy? No. And you can 

charge to the contrary all you want, but the evidence trail does not 

tell us that. But it makes for good television, and it riles up the 

base, and it probably raises money, but it is not worthy of the 

Oversight and Government Reform Committee. 

And as the ranking member said, had we spent 23 hearings looking at price gouging on pharmaceuticals, we actually might have 

improved someone’s life. We might have actually helped some seniors better afford the drugs they need. We might have made a contribution to bettering government. But this is a charade. This is 

not about making government better, and it is not even really 

about holding you accountable. I wish it were. It is to pillory you 

for political purpose, and I regret that. 

Now, Mr. Chairman, I do yield. 

Chairman CHAFFETZ. For you to suggest and try to assign a motivation to our attempt here to get at the truth is beneath the gentleman from Virginia. Name one thing that I said in my opening 

statement that is not true. Name it. You do not have anything. 

Mr. CONNOLLY. You do not have anything, Mr. Chairman. 

Chairman CHAFFETZ. Yes, I do. 

Mr. CONNOLLY. I reclaim my time. 

Chairman CHAFFETZ. Will the gentleman yield? 

Mr. CONNOLLY. No. 

Chairman CHAFFETZ. I have a point I want to make about IT. 

Mr. CONNOLLY. The chairman can use his own time because he 

has got plenty of it, and he is more than prepared to use it. I reverse it. I echo what the ranking member said. I do not think you 

have proof. 

Chairman CHAFFETZ. The gentleman’s time has expired. The 

gentleman’s time has expired. 

Mr. CONNOLLY. Okay, thank you. 

Chairman CHAFFETZ. With the concurrence with the ranking 

member, I would like to make a point about IT because I think 

that is part of the heart of why we are here today. Is the gentleman okay with that? 

Mr. CUMMINGS. Go ahead. 

Chairman CHAFFETZ. I was elected at the same time as President 

Obama, so use that as a marker. The Federal government has 

spent more than $525 billion on IT, and it is worthless. One of the 

questions I have here with an operating budget for the IT sector 

roughly $2.4 billion a year, why is it that we have such poor systems? Why is it that we have DOS, and COBOL, and other things? 

We have got good hardworking, patriotic people that work at the 

IRS. We have 4,000 of them in the State of Utah, and they are 

using an old dilapidated system. I do not know how they do it. 


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They try to patch and Band-Aid this thing together, and they cannot seem to have enough resources. The President puts out a thing saying I need $3 billion more? We were only $3 billion short? What happened to the other $525 billion? That is a legitimate bipartisan question. It is part of the reason I am here today. How is it that the IRS goes via the Department of Justice and tells a judge that they do not have these 

records? And it is not until this committee in a bipartisan way with 

the staff says where is this information that miraculously they 

said, oh, we actually do have it. 

That is a legitimate question. It is why we have another hearing. 

I did not even start the week before last thinking we were doing 

an IRS hearing. I yield to the gentleman from Maryland. 

Mr. CUMMINGS. Questions have been raised by the chairman. I 

would hope that you would address those. One of the things that 

all of us, and I know the gentleman from Virginia is one who is 

an expert in IT and has spent a phenomenal amount of time trying 

to make sure our government properly functions effectively and efficiently. And the question that the chairman just raised with regard to the use of old systems when we should be in the modern 

age are questions that, I think, are legitimate questions. 

And so, I look forward to your responses. Does the gentleman 

—— 

Mr. CONNOLLY. I would just add to my friend from Maryland, I 

could not agree more that those are legitimate lines of inquiry, but 

they have to be balanced with what has happened to your budget 

so that you can make those investments. Has it gone up or down? 

Has Congress shown a commitment to try to modernize your IT 

systems so that we do not have this kind of problem? Presumably 

we could find common ground. That is non-partisan agreement. 

Chairman CHAFFETZ. It is in my set of questions and why we are 

having this hearing today. 

Mr. CONNOLLY. Except that it is not. 

Mr. CUMMINGS. Reclaiming my time, Mr. Chairman, I yield back. 

Chairman CHAFFETZ. I just have to say, and I will give you equal 

time here. For the gentleman to suggest those are not my questions 

and to impugn the motive of any member is totally inappropriate. 

Mr. CONNOLLY. I would simply say I did not impugn anybody’s 

motive. I characterized this hearing and this process, and if the 

gentleman wishes to take exception to that or offense by that —— 

Chairman CHAFFETZ. Oh, I take deep exception to it. 

Mr. CONNOLLY. Well, I regret —— 

Chairman CHAFFETZ. It is bipartisan. We get equal time, and 

there is a legitimate reason to understand why they go to the Department of Justice, represent that they do not have the documents. We ask for them, and then they miraculously say, oh, yes, 

I guess we do have them. 

Mr. CONNOLLY. I think that the chairman can certainly appreciate questioning the process and the 23rd hearing on the IRS 

without necessarily personalizing it. The chairman knows I do respect him, and I certainly made no attempt to try to personalize 

it. But would I characterize this process negatively? Yes. I have 

made no secret of that, and I do not apologize for it, and I do not 

retract it. 


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And it is not impugning you or any other individual to call into 

question that process. That is my right as a member of this committee, and I will not be silenced by deliberating trying to personalize it so that the critique somehow is diluted. The critique stands. 

You do not have to agree with it, Mr. Chairman. 

Chairman CHAFFETZ. I do not. 

Mr. CONNOLLY. But I stand by it. 

Chairman CHAFFETZ. Let us move on. Let us move on. 

Mr. CONNOLLY. Fine, let us move on. 

Chairman CHAFFETZ. I am pleased to welcome Mr. Terry 

Milholland, chief technology officer at the Internal Revenue Service, Mr. Jeff Tribiano, deputy commissioner of Operations at the Internal Revenue Service, and Mr. Ed Killen, Director of Privacy, 

Government Liaison, and Disclosure at the Internal Revenue Service. I appreciate you all being here today. 

If you will, please rise and raise your right hands. 

[Witnesses rise.] 

Chairman CHAFFETZ. Do you solemnly swear or affirm that the 

testimony you are about to give will be the truth, the whole truth, 

and nothing but the truth, so help you God? 

[Chorus of ayes.] 

Chairman CHAFFETZ. Thank you. You may be seated. Let the 

record reflect that the witnesses all answered in the affirmative. 

In order to allow time for discussion, we would appreciate it if 

you would limit your oral presentation to 5 minutes. Your entire 

written statement will be made part of the record. Mr. Milholland, 

you are now recognized for 5 minutes. 

WITNESS STATEMENTS 

STATEMENT OF TERENCE MILHOLLAND 

Mr. MILHOLLAND. Chairman Chaffetz, Ranking Member Cummings, members of the committee, my name is Terence Milholland. 

I am the IRS chief technology officer and chief information officer. 

I appreciate the opportunity to testify today. 

In my role at the IRS, I’m responsible for all aspects of the systems and data that operate our tax infrastructure. We have a 

7,000-person information technology organization that maintains 

500-plus systems and data, and supports the processing of 200 million tax returns annually. 

Before joining the IRS 7 years ago, I spent 3 decades in the private sector and held a number of information technology leadership 

positions. My experiences included as executive vice president and 

chief technology officer of Visa International. I was also the chief 

information officer and chief technology officer for Electronic Data 

Systems Corporation, and before that the chief information officer 

for the Boeing Company. 

It is an honor for me to serve the public as the IRS CTO, and 

to support the tax system by helping the Service modernize its IT 

systems. 

This concludes my opening statement, and I’d be happy to take 

your questions. 

[Prepared statement of Mr. Milholland follows:] 


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Chairman CHAFFETZ. I thank the gentleman. Mr. Tribiano, you 

are now recognized for 5 minutes. 

STATEMENT OF JEFF TRIBIANO 

Mr. TRIBIANO. Chairman Chaffetz, Ranking Member Cummings, 

and members of this committee, my name is Jeff Tribiano, and I 

am the deputy commissioner for Operations Support for the IRS. 

I appreciate this opportunity to testify today. 

In my position at the IRS, I oversee internal operations, which 

includes information technology, human capital, finance, privacy, 

procurement, planning, facilities, and security. Prior to joining the 

IRS in June of 2015, I served as the associate administrator and 

chief operating officer of the Department of Agriculture’s Food Nutrition and Consumer Services. And prior to joining the Federal 

government in 2010, I held a number of key leadership positions 

with Fortune 500 companies. In addition, for more than 22 years 

I have served and continue to serve our country as a captain in the 

United States Navy Reserves, to include three mobilizations and 

deployments to the Middle East. 

My experiences in the public sector, private sector, and military 

have given me a deep understanding of the importance of public 

service. I’m especially proud to be part of the leadership team at 

the IRS and to work for an agency with such an important mission. 

In my 8 months at the Agency, I have found this team to be an 

amazing organization filled with dedicated and talented people, 

and I’m privileged to work alongside of them. 

Turning to the subject of today’s hearing, the IRS has been working for more than a year to modernize our records retentions practices in regard to emails and other electronic records. We are implementing the National Archives and Records Administration’s 

Capstone approach to managing email, and are working towards 

full implementation by the end of Calendar Year 2016. At that 

point, our systems will permanently preserve the email records of 

all employees in electronic format. 

Our ultimate goal is to end the reliance on computer hard drives 

of individual employees as an archive records store, and instead 

use network databases to preserve all records that are electronically generated by the workforce. As we make these improvements 

for the long term, we recognize we need additional interim measures to ensure we are doing everything possible to retain official 

records until a more comprehensive solution is in place. 

This need became apparent when an issue arose in connection 

with the Service’s collection and production of documents related to 

a Freedom of Information Act case captioned Microsoft v. the IRS. 

In January of this year, the IRS advised the Court that we had discovered an issue regarding the computer hard drive of Samuel 

Maruca, a former IRS employee who we identified in a litigation 

hold effort undertaken in December of 2014 in connection with the 

case. 

Shortly after Mr. Maruca left the Service on August 1st, 2014, 

his hard drive was designated for erasure so it could be securely 

reused or scrapped in line with the standard IRS procedures. Because Mr. Maruca’s hard drive was designated for erasure before 

the issuance of the litigation hold, the hold did not prevent the eraVerDate Sep 11 2014 11:20 Dec 16, 2016 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 F:\22591.TXT APRIL

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sure of this hard drive, which occurred in late 2014 or in early 

2015. 

However, we do believe the erasure of Mr. Maruca’s hard drive 

will have minimal effect on our ability to complete document production in this instance. We know that Mr. Maruca’s hard drive 

was copied on July 16th, 2014 in connection with the document collection being undertaken for a separate litigation. We have, therefore, determined that the data stored on his computer hard drive 

up to July 16th, 2014 has been preserved. We also have emails copied on Mr. Maruca’s network account in July of 2014, and if necessary, we also can access our backup tapes or disaster recovery 

tapes in order to produce documents. 

Even so, we recognize the situation will reflect a shortcoming in 

our document controls. Therefore, pending further review of the 

IRS’ litigation hold procedures, the Commissioner has ordered a 

halt to the erasure and recycling of employees’ devices, including 

computer hard drives and mobile devices, for all departing employees. We’ll now copy material off the hard drive of every employee 

who leaves the Agency, and store that information in a digital format in addition to retaining the physical hard drive. 

We are also broadening our litigation hold procedures to ensure 

that hold instructions are provided not only to the pertinent employees, but also to the employee’s supervisor. We’ll also update our 

procedures for processing employees who leave the Service to ensure that appropriate personnel are advised of pending litigation 

holds and document collection efforts involving the records of custody for departing employees. 

In closing, I want to assure the committee that the IRS is committed to building on these efforts and to make further improvements, and continue focusing on serving the Nation’s taxpayer. 

This concludes my statement, and I’ll be happy to answer any 

questions. 

Chairman CHAFFETZ. Thank you. Mr. Killen, you are now recognized for 5 minutes. 

STATEMENT OF EDWARD KILLEN 

Mr. KILLEN. Chairman Chaffetz, Ranking Member Cummings, 

and members of the committee, my name is Edward Killen, and I 

am the director of Privacy, Governmental Liaison, and Disclosure 

at the IRS. I appreciate the opportunity to testify today. 

In my role at the IRS, I represent the Agency’s interests in multiple aspects, including records management, information protection, disclosure, data sharing, and combatting identity theft. My office manages relationships with Federal, State, and local agencies 

by facilitation and oversight of various data sharing programs and 

initiatives. We also work to ensure the protection of Federal tax information in the custody of our data exchange partners. 

The bottom line for my office is that we’re working every day to 

protect taxpayers, safeguard their personal data, and promote both 

privacy and transparency principles, including the appropriate 

availability of Agency records. 

I’ve spent my career in public service, beginning as a presidential 

management fellow with an appointment to the Social Security Administration. In 2003, I joined the IRS as a policy analyst in our 


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Wage and Investment Division. Since then, I’ve had the opportunity to carry out a wide range of assignments in different areas 

at the Service, including leadership positions as the director of 

Governmental Liaison, Disclosure, and Safeguards, and senior advisor to the deputy commissioner of Operations Support. I have 

also engaged in numerous and diverse detail assignments across 

the IRS, including stints within our Chief Counsel’s Office and the 

2008 economic stimulus team. 

I’m proud of the years I’ve spent in public service and grateful 

for the chance to continue to serve the American taxpayer. 

This concludes my statement, and I would be happy to take your 

questions. 

Chairman CHAFFETZ. Thank you. You all seem like decent individuals. The question is, why do we have to keep coming back and 

asking for the same basic information? The IRS advice to individuals in businesses is that they should hold their own personal business and tax information for how long? How long are you supposed 

to hold onto your own personal information? Mr. Tribiano? 

Mr. TRIBIANO. Sir, that is not my area. I am with Operations 

Support, so I —— 

Chairman CHAFFETZ. Mr. Killen, how long? How long does the 

IRS advise you to hold onto your own personal information? 

Mr. KILLEN. Well, I think it would depend on the particular circumstances. But, you know, as a general matter, probably 7 years 

or so is probably —— 

Chairman CHAFFETZ. 7 years. I mean, that is what I have generally heard as well, 7 years. So how long does the IRS hold onto 

its own data and information? Mr. Maruca leaves the employment. 

Why the swift erasure of everything that he has? Why does that 

happen? Mr. Killen? 

Mr. KILLEN. Well, I think in the particular case of Mr. Maruca, 

as the written testimony shows and as I think we will probably 

talk through the day, that was largely a factor of sequencing and 

of particular circumstances. But I think the thing that I would reiterate about that is that essentially we have found the file, the data 

—— 

Chairman CHAFFETZ. Okay, but, yes, you did find the file because we pushed the issue, forced the issue. But on January 15th 

of this year, the Department of Justice on the behalf of the IRS actually filed a notice with the Federal court that they had erased 

Mr. Maruca’s hard drive. 

Here is the fundamental problem. You require us, the people, to 

hold onto their information for 7 years. The IRS erases their information. There is no consequence. Nobody is held accountable. 

There was an internal preservation order, but it was ignored, and 

there is no consequence for that, right? Who issued the internal 

preservation order? 

Mr. TRIBIANO. That came from our legal department. 

Chairman CHAFFETZ. How does that process not hold that information? 

Mr. TRIBIANO. The internal preservation order came, it was actually a litigation hold order, came after Mr. Maruca left the Agency. 

Chairman CHAFFETZ. What originally happened is Microsoft filed 

a Freedom of Information Act request. That was not complied with, 


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so they had to go to court and wait to get a court date, and then 

get to the court to try to say where is this information, and you 

had already erased it in less than a year. I do not understand why 

the IRS asks us to hold information or 7 years, and you do not even 

hold it for 7 months. How does that happen? Why does that happen? 

Mr. TRIBIANO. Well, Mr. Chairman, it was a timing issue. Again, 

Mr. Maruca left the Agency on August 1st. 

Chairman CHAFFETZ. But if we have to hold our information for 

7 years, how come the IRS does not have to hold its information 

for 7 years? 

Mr. TRIBIANO. The information from Mr. Maruca’s system is 

backed up with our backup tapes. It is just harder to get into that 

system, and Mr. Milholland can walk through that. It is the hard 

drive that is easier to access, and that —— 

Chairman CHAFFETZ. Right now today, how long does the IRS 

preserve its own internal documents? How long? 

Mr. TRIBIANO. It depends on the documents. Mr. Killen can walk 

you through that. 

Mr. KILLEN. That is true. You know, there are various records, 

disposition schedules for different types of records, both across the 

Federal government as a general matter, but certainly within IRS, 

so it is largely fact dependent. But —— 

Chairman CHAFFETZ. Give me a range. What is the shortest 

amount of time, what is the longest amount of time. 

Mr. KILLEN. Oh, it can really vary. 

Chairman CHAFFETZ. You have a $1.7 billion dispute, and you 

have the person who is working on the issue, they leave employment for whatever reason. I am sure it was a legitimate reason. 

But why is all that information suddenly erased, and how do you 

go in front of a judge and say we no longer have that information? 

How does that happen? 

Mr. KILLEN. Well, I mean, so certainly we —— 

Chairman CHAFFETZ. Because neither—sorry—neither of those 

things were true, right? Neither of those things were true. You actually did have the information, but you represented to the Department of Justice that you did not have it. But it was erased even 

though there was an internal preservation order. 

Mr. TRIBIANO. At the time that the Department of Justice was 

notified, we thought that there was information saved. When we 

went back to take a look at it and to go through the records, we 

found that we did back it up for another litigation hold up through 

July 16th of 2014. Mr. Maruca left the Agency on August 1st. 

Chairman CHAFFETZ. Can you help detail for us, and you are not 

going to be able to get through it verbally now. My time has expired. I have two things that I would love to understand. How do 

preservation orders internally work, and why are they not adhered 

to because we had that happen in the Lois Lerner case. We have 

that happening in the Microsoft case. How does that happen? And 

then the second thing is I would like to know what documents you 

do and do not retain and for how long? And I fundamentally do not 

understand why it is not the same for the IRS as it is for the American people. 


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Could you between the three of you get back to the committee 

on those two topics? Is that fair? 

Mr. TRIBIANO. Yes, sir. 

Chairman CHAFFETZ. Let the record reflect all three of them 

thought it was fair. All right. 

Chairman CHAFFETZ. My time has expired. I will now recognize 

the gentleman from Virginia, Mr. Connolly, for 5 minutes. 

Mr. CONNOLLY. And let the record show this member has felt the 

chairman has always conducted himself fairly. We do not always 

agree, but I think he has always been fair. 

I want to talk a little bit about investments and capacity. Mr. 

Tribiano, is it true that the Agency’s inflation-adjusted budget has 

been cut by 17 percent since 2010? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. Is it further true that by Fiscal Year 2015 we 

whittled down your funding and your budget to the lowest level in 

5 years? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. Is it also true that, in effect, when you count inflation, that means that your budget has the buying power of the 

budget of 1998? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. That is a long time ago. The reduction has been about $1.2 billion? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. And in Fiscal Year 2015 alone, the budget was cut another $346 million from the previous year funding. Is that 

correct?? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. Well, let me see. Because of these cuts, as I understand it, the workforce has been cut by 17,000 since 2010. Is 

that correct?? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. Two-thirds of your top managers have left in the 

last 5 years. Is that correct?? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. 40 percent of your workforce, by the way, on top 

of that is eligible to retire by 2019 largely because of the baby 

boom generation. Is that correct? 

Mr. TRIBIANO. Yes, sir. 

Mr. CONNOLLY. Well, do these cuts and reductions have an impact on productivity, customer service? 

Mr. TRIBIANO. Yes, sir, it has a direct impact. 

Mr. CONNOLLY. Does it impact your audit capability? 

Mr. TRIBIANO. It impacts our audit capability and our revenue 

collection of capability as well. 

Mr. CONNOLLY. Well, Mr. Milholland, do these cuts have any impact at all on the IT budget? 

Mr. MILHOLLAND. Yes, sir. 

Mr. CONNOLLY. How so? Do you want to elaborate a little? 

Mr. MILHOLLAND. It affects people, processes, and technology. 

For example, in the people area, we know that we have 67 people 

who are the single points of failure, so to speak, for particular systems. If they left, we would not have any knowledge to deal with 


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an issue in that particular system they support. That is how thin 

we have become is that we now can identify the places where we 

are truly thin, so we have to deal with risk mitigations for those 

particular systems. 

Mr. CONNOLLY. So Mr. Koskinen was quoted last week as saying 

we have got systems that go back to the Kennedy Administration. 

What was he talking about? 

Mr. MILHOLLAND. What he was referring to are systems like the 

individual master file or the business master file, where these systems were literally designed and architected in the 1960s and 

rolled out in the 1970s. Those systems are where literally your tax 

returns, the master file record of your tax returns, are kept. We 

have been —— 

Mr. CONNOLLY. Let me interrupt you one second there. So my 

tax returns might be kept on a system that goes back to the 1960s 

and 1970s? 

Mr. MILHOLLAND. That was architected in the 1960s and 1970s. 

That is correct, sir. 

Mr. CONNOLLY. What could go wrong with that? 

Mr. MILHOLLAND. Well, that is one of the many issues that we 

deal with is the sustainability of those long-lasting legacy systems 

so that every year we can have a smooth filing season. 

Mr. CONNOLLY. So when we talk sometimes about retrieving information, archiving information, being able to produce documents 

or evidence with respect to a court case, we are relying in many 

cases on technology to be our friend that goes back 40, almost 50 

years. 

Mr. MILHOLLAND. Obviously depending on the case, so to speak, 

if individual taxpayer data is being accessed, that architecture is 

that old. The access mechanisms might be more current. 

Mr. CONNOLLY. Right. 

Mr. MILHOLLAND. But the fundamental underlying structure is 

reliant upon systems that were built in that era. 

Mr. CONNOLLY. Okay. You come from private sector? 

Mr. MILHOLLAND. Yes, sir. 

Mr. CONNOLLY. You are now the CTO for a public sector entity. 

Real quickly in the time I have got left, what would you do and 

what would it cost to do what you do to modernize and upgrade the 

IRS so it is functioning as a modern technology-oriented entity in 

2016? 

Mr. MILHOLLAND. Yes, sir. I will try to be very brief. We built 

a technology roadmap. We did that a few years ago and have been 

executing against it for the future state; that is, to bring the IRS 

so it looks like a digital company in the financial area; that is, comparable to the way a large financial institution would operate. That 

means that we have to upgrade a number of the underlying processes which are based in these, as I say, the 1960s architecture, 

bring them into a 21st century architecture, and implement the 

technology that allows that. 

We have standardized on modern programming languages, for 

example. All new developments since I have arrived, they are in 

Java, for example, rather than the more ancient languages like assembly language, or COBOL, or these, I will just say, simply legacy 

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ating system, in our case, Linux, for example, a very modern operating system environment that is very common across all of private 

enterprise. 

And we have been slowly and steadily migrating new systems of 

what we have had to invest in to support things like FATCA, the 

Affordable Care Act, the Revenue Return Program, our fraud detection system, all are built, I will say, the right way so that we can 

slowly remove ourselves from dependencies on these older systems. 

And then the last comment I would make, we have plans to get 

off, so to speak, of that dependency. The Congress has supported 

us in our business systems modernization program in a program 

called CADE 2, Customer Account Data Engine. The second transition state of that is underway in which we are converting off of 

that master file system into a modern relational database program, 

at the same removing the financial material weakness of the older 

individual master file systems. 

Let me stop there because I could certainly go on and on and on. 

Chairman CHAFFETZ. I thank the gentleman. I would simply ask 

that the digital roadmap that you are talking about, if you could 

provide this committee that copy of this roadmap, I think we would 

both like to look at it. When you can provide that to this committee? 

Mr. MILHOLLAND. As soon as our release mechanism allows us. 

Soon if I can get away with that. 

Mr. CONNOLLY. Mr. Chairman, if we could also to that request 

the cost. What would it cost? 

Chairman CHAFFETZ. Yes, that would be great because —— 

Mr. CONNOLLY. Thank you. 

Chairman CHAFFETZ.—the IRS has had over the last 5 years 

more than $11 billion in just IT expenditures. It is a significant 

amount of money. We would appreciate you sharing that plan with 

us. 

Mr. MILHOLLAND. Mr. Chairman, could I add one other thing? 

Chairman CHAFFETZ. Sure. 

Mr. MILHOLLAND. The roadmap does not stand by itself. It goes 

along with a business plan which we call a future state vision, in 

which all of the businesses as outlined, how do they want to actually operate in the next 3 to 5 years, and then that roadmap supports that plan. So you would actually need to understand both. 

Chairman CHAFFETZ. If you could provide both, that would be appreciated. 

Mr. MILHOLLAND. All right. 

Chairman CHAFFETZ. Fair enough? And I appreciate it. 

Chairman CHAFFETZ. I thank the gentleman for his questions, 

and I am surprised after 23 hearings you still have questions. 

Mr. CONNOLLY. It was a struggle, Mr. Chairman. 

Chairman CHAFFETZ. Yes. Yeah, you still have questions, and so 

do we. We will now recognize the gentleman from Ohio, Mr. Jordan, for 5 minutes. 

Mr. JORDAN. Thank you, Mr. Chairman. Mr. Milholland, in May 

of 2013, the country learns that the IRS has been targeting conservative groups. Congressional investigations are announced. The 

President has a big press conference. The Attorney General announces that there is a criminal investigation that will be folVerDate Sep 11 2014 11:20 Dec 16, 2016 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 F:\22591.TXT APRIL

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lowing. As the chief information officer, did you take any action to 

preserve information data and documents? 

Mr. MILHOLLAND. Yes, sir. 

Mr. JORDAN. And what action was that? 

Mr. MILHOLLAND. We issued a directive to my staffs down 

through every level of management and individuals to hold onto 

every piece of information. 

Mr. JORDAN. Was your order clear? 

Mr. MILHOLLAND. I certainly thought it was clear. 

Mr. JORDAN. I am going to read from it. ‘‘Do not reuse, or refresh, 

or wipe information from any personal computer that is being reclaimed, returned, refreshed, updated from any employee or contractor of the IRS. Effective immediately, the email retention policy 

for backups is to be indefinite rather than 6 months.’’ Pretty clear, 

right? 

Mr. MILHOLLAND. Yes, sir. 

Mr. JORDAN. You go on in that email to say this, ‘‘In other words, 

retain everything.’’ Now, ‘‘everything’’ is a pretty big universe, so 

I do not know how you could be more clear. So the chairman has 

asked this a couple times. How in the world did the IRS end up 

destroying, with that clear directive, end up destroying 422 backup 

tapes that were extremely relevant to the investigation? 

Mr. MILHOLLAND. As you are undoubtedly aware having that 

email, TIGTA did their report out. They looked at every step of the 

process along the way of how did we end up doing that. In fact, 

I think I was quoted in there when they interviewed me as I was 

literally blown away by the fact that it had happened because, 

again, I thought the instructions were remarkably clear. 

Mr. JORDAN. So I think they are clear, too, if I could just interrupt, Mr. Milholland. So I think they were pretty clear, too. So did 

you do anything else? Did you just send this email out or this directive out that says keep everything and then that was it? Is that 

all you did? 

Mr. MILHOLLAND. Within IT, the information technology organization, we discussed it with staff and with the executive team that 

we needed to do this. We were also in the midst of consolidating 

all the email servers that were sitting around the country into our 

two primary data —— 

Mr. JORDAN. Let me interrupt again. I only got 5 minutes here. 

Were there other preservation orders that came to the Internal 

Revenue Service, other orders to preserve documents, not just the 

one you sent out internally, but were there others that come in 

from the outside? 

Mr. MILHOLLAND. I really do not know. You would have to ask 

the chief counsel about that. 

Mr. JORDAN. Yeah, well, there were two, right? There was one 

from the Justice Department and one from TIGTA that said, hey, 

they want to just reinforce and preserve documents. So did you 

take any action relevant to those other orders to preserve all information? 

Mr. MILHOLLAND. I do not recall seeing those orders, so —— 

Mr. JORDAN. When the legal staff got the order from the Justice 

Department to preserve all the information, they did not say, hey, 

you better make sure we do not destroy anything. They did not 


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communicate it to you, and then you did not communicate another 

email like the one we were just talking about. 

Mr. MILHOLLAND. I am totally unfamiliar with the order that you 

are discussing. We always have a practice generally when a request comes in that counsel needs us to hold onto items, they send 

an email around to the responsible individuals —— 

Mr. JORDAN. Okay. 

Mr. MILHOLLAND.—and tell them to literally—sorry. Go ahead. 

Mr. JORDAN. What about the subpoenas? This committee sent 

two subpoenas. Did that warrant or did that trigger you taking any 

further action than this one email that you sent? 

Mr. MILHOLLAND. No, sir. 

Mr. JORDAN. So the two subpoenas and the other two preservation orders, the IRS chief information technology officer, that did 

not trigger you to do anything else. You sent this one email that 

I think is pretty clear, but that is all you did. 

Mr. MILHOLLAND. As I tried to express earlier, Congressman, we 

discussed the request to hold on to all of those items that were in 

that email throughout our staffs so the executive team, the management team, would understand how serious this was. And, therefore, to protect —— 

Mr. JORDAN. So there is —— 

Mr. MILHOLLAND.—basically the retention of information. 

Mr. JORDAN. I got it, yeah. 

Mr. MILHOLLAND. So it was reinforced constantly to do so. 

Mr. JORDAN. So then why was it not? So there are two key questions. There are two questions, and I have got 30 seconds here. 

Two questions. One, when you say ‘‘keep everything’’ and then 422 

tapes, 24,000 emails are destroyed, I want to know how that happened and why that happened. Second, this is the question I get 

all the time from folks back home. Who is held responsible? So 

there is an order given from the chief technology officer to keep everything, and it is not kept. In fact, it is destroyed. Who was disciplined? Who was held accountable? That is what we would like 

to know. 

Mr. MILHOLLAND. I will answer the second question first. I held 

myself accountable as it was reported in the TIGTA report that it 

starts at the top. I was at the top, and, therefore, myself and my 

management chain were held to be accountable. That was part of 

our performance plans and such and was discussed appropriately 

when we discovered this particular incident when it happened. 

Mr. JORDAN. Let me just ask one other question. Did you get a 

raise the last few years? Have you had a raise in your salary? 

Mr. MILHOLLAND. Because I am in the senior critical, I got an adjustment because of this senior critical pay. 

Mr. JORDAN. Did your pay go up? 

Mr. MILHOLLAND. Yes, it did. 

Mr. JORDAN. The last 2 years? 

Mr. MILHOLLAND. I think only once in the last 2 years. 

Mr. JORDAN. Who is your direct boss? Who do you report to? 

When I look at your chain of command, it looks to me like you report to Mr. Tribiano. 

Mr. MILHOLLAND. Mr. Tribiano. 


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Mr. JORDAN. And, Mr. Tribiano, your office is a direct report to 

the commissioner of the IRS. Is that right? 

Mr. TRIBIANO. Yes, sir. 

Mr. JORDAN. All right. So what happened there? You find out 

this guy does an order, and that is as clear as it gets, retain everything. It is not followed. Tapes are destroyed, 24,000 emails. That 

information comes to you. What did you tell Mr. Koskinen? 

Mr. TRIBIANO. Well, sir, I was not part of the IRS during that 

time. 

Mr. JORDAN. What did your office tell Mr. Koskinen? 

Mr. TRIBIANO. I do not know what my office told Mr. Koskinen. 

Mr. JORDAN. You come to the hearing, you know we are talking 

about record retention, and you do not know what happened? 

Mr. TRIBIANO. I did not say that, sir. I said I was not responsible, 

and I was not there. 

Chairman CHAFFETZ. The gentleman’s time has expired. 

Mr. JORDAN. Thank you, Mr. Chairman. 

Chairman CHAFFETZ. We will now recognize the gentlewoman 

from the District of Columbia, Ms. Norton, for 5 minutes. 

Ms. NORTON. Thank you, Mr. Chairman. I understand that we 

are here talking about what we loosely call data preservation and 

security, but we are doing so for the IRS, where the data that we 

most want to keep to ourselves is to be found. I have often wondered how the IRS is able to attract the advance technical professional employees to do what needs to be done. You know, it is easy 

enough for us to tell you what you should do. 

So I am interested in exploring what we can do to make it possible for you to do what you are supposed to do. Now, what intrigued me was this notion of critical pay authority that allows the 

IRS—other agencies have it, too—to hire people who it would be 

very difficult to attract to the public service otherwise. Do I understand, Mr. Milholland, that you are a critical pay employee? 

Mr. MILHOLLAND. Yes, ma’am. 

Ms. NORTON. Is it fair to say that in order to come to the IRS, 

you took a pay cut? 

Mr. MILHOLLAND. Yes, ma’am. 

Ms. NORTON. Would that have been a significant pay cut? 

Mr. MILHOLLAND. Yes, ma’am. 

Ms. NORTON. So when we look at how important this data is, I 

wanted to see how many people were in this position. I understand 

that you are authorized in these critical positions, that the IRS is 

authorized only for 168, only for 40 at one time. I am quite amazed 

at that. And even they can only serve 4 terms. You would be lucky 

to keep them for 4 years. You would be lucky to keep them for 4 

years when you consider how critical these people are. We do H– 

B1 visas that are so critical in our own country. 

Is my information correct that here are only 19, Mr. Milholland, 

of these critical technical people at the IRS at this point? 

Mr. MILHOLLAND. I can answer for the number in information 

technology. There are 11. I believe Mr. Tribiano can cover the rest. 

Mr. TRIBIANO. Yes, ma’am, we have 14. And I would just like to 

note, ma’am, that we do not have that authority anymore. That authority expired. 


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Ms. NORTON. Well, that was going to be my next question. I understand that this number, since they can only stay 4 years, that 

that number is depleted every time you get to the end of the 4-year 

term. And that critical person, even if they have not already left 

to go to some high tech company, has to go then. 

Mr. TRIBIANO. Yes, ma’am. 

Ms. NORTON. And you have had no authority for at least 2 years 

—— 

Mr. TRIBIANO. Yes, ma’am. 

Ms. NORTON.—to hire people. That is why you are down to 19. 

Mr. TRIBIANO. 14 in total. 

Ms. NORTON. 14 for you, Mr. Tribiano, and —— 

Mr. TRIBIANO. No, 14 in total for the Agency, ma’am. 

Ms. NORTON. Oh, for the entire Agency out of 168 that are authorized. 

Mr. TRIBIANO. Yes, ma’am. We lose one this year, and then the 

remaining 13 next year. 

Ms. NORTON. This is malfeasance it seems to me, but it is on our 

part. I do not know how we could have gotten without at least authorizing. I do not know if there is enough funds even if authorized, 

but if you were able to even attract such people, you deserve our 

congratulations. But if we can continue to reprimand you for things 

you do not do in data collection while we do not recognize our responsibility to authorize you to have what I regard as a very small 

number of technical professionals on board, then there is a disparity here that I think the government has to take account of. 

Chairman CHAFFETZ. Would the gentlewoman yield? 

Ms. NORTON. Yes, sir. 

Chairman CHAFFETZ. My understanding of this process is that 

the Office of Management and Budget has the opportunity to offer 

800 people within the Federal government critical pay authority in 

consultation with the Office of Personnel Management. Of the 800 

available slots for critical pay authority, they are only using 4. Not 

400, 4 of the 800 that are already —— 

Ms. NORTON. Where is this, in this Agency? 

Chairman CHAFFETZ. Well, throughout government. So if the IRS 

commissioner needs critical pay authority, for instance, for IT specialists, which I would probably actually agree with, there is already a process and authorization in place where OMB with OPM 

goes and gets that authorization. 

Ms. NORTON. Well, I understand they do not even have to go 

through OPM. Is this authority authority that you think the Agency needs? 

Mr. TRIBIANO. Yes, ma’am. Streamlined critical pay is very important to us, and if we are able —— 

Ms. NORTON. But do you think you have the authority? The 

chairman thinks you already have the authority. 

Mr. TRIBIANO. Not under what we had before, which is streamlined critical pay. What the chairman is referring to, I believe, is, 

if I understood right, is an OMB, I mean, an OPM process that exists for critical IT. 

Ms. NORTON. But the people we are talking about do not have 

to go through that process, do they? 


AKING-6430 with DISTILLER
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Mr. TRIBIANO. Streamlined critical pay, no, ma’am. We would recruit directly from the private sector into the top IT positions. 

Chairman CHAFFETZ. If the gentlewoman would yield, if the IRS 

has a case, the mechanism that Congress previous to me had set 

up is that they make the case to the Office of Personnel Management or through the OMB. In concurrence, they can grant that all 

within the executive branch without having to come to Congress. 

Ms. NORTON. But it expired 2 years ago. 

Chairman CHAFFETZ. No. Well, I will work with the gentlewoman 

to help clarify this, but I do believe it is currently available. The 

gentlewoman’s time has expired, but I will work with the gentlewoman on this topic. 

Ms. NORTON. I wish you would because the testimony has been 

pretty direct here that it has expired, and our own research shows 

it has expired. 

Chairman CHAFFETZ. Okay. Well, again, we will be happy to 

work with you. We now recognize the gentleman from Michigan, 

Mr. Walberg, for 5 minutes. 

Mr. WALBERG. Thank you, Mr. Chairman. And just in reference 

to statements made earlier by a member of our committee concerning several senior-level administrators leaving under the guise 

of the challenges of doing the job here, remember some of those left 

under a rather dark cloud pleading the 5th under potential impeachment, et cetera. So we do not need to forget that also. 

Mr. Milholland, you mentioned that when finding out that your 

direct orders for preservation were disregarded, you were blown 

away. Coming from your experience in the private sector, extensive 

experience and background in the private sector, I would assume 

that orders like that would not have been disregarded clearly without significant consequence. So I do want to go back to a question 

made by a colleague of mine, Mr. Jordan, and just get a more direct answer. Do you know of anyone who was reprimanded for not 

following the preservation notice? Reprimanded or worse. 

Mr. MILHOLLAND. The way we handled the situation was waiting 

until the TIGTA report was in where basically, as I say, the TIGTA 

concluded there was no criminal wrongdoing, which was peace of 

mind. Someone did not deliberately set out to do this. And then, 

in reading through their report, what conclusion do you come to? 

As I say, management—me—took accountability for our management chain’s failure to see that the instruction was followed. That 

then was dealt with through performance reviews and feedback to 

people for their whole entire performance through the appropriate 

chain and such. We did not penalize or punish anyone on the floor 

because they thought they were doing what they were supposed to 

do. They had received instructions. They were following a process, 

and —— 

Mr. WALBERG. But the leadership team, any one reprimanded? 

Mr. MILHOLLAND. In the sense of in their performance review 

feedback, yes. 

Mr. WALBERG. But no other consequences beyond that. 

Mr. MILHOLLAND. No other consequences, no, sir. 

Mr. WALBERG. I doubt that in the private sector it would have 

been as simple as that. Let me move on. Let me move on. The taxpayer advocate recently released a report on the IRS future state 


AKING-6430 with DISTILLER
26 

plan that stated the IRS’s intent to move all taxpayer filing and 

help systems to an online platform. 

In the last 9 months, the IRS has experienced at least two electronic data breaches surrounding taxpayer P–2s. This includes the 

May 2015 breach that exposed more than 100,000 taxpayers’ sensitive information. The taxpayer advocate also found that roughly 

1 in 5 taxpayers who were victims of taxpayer identity theft had 

their IRS files closed. Despite unresolved issues remaining, taxpayers, in other words, still had to wait an average of 6 months before the negative impact of taxpayer identity theft was addressed. 

Mr. Tribiano, in light of these breaches, why does IRS feel that 

now is the best time to roll out a more expansive and pervasive online tax system? 

Mr. TRIBIANO. Well, sir, if I can just add one thing to that. We 

are not abandoning and going everything to digital or to online. We 

still have to take care of the taxpayers that still want to file paper 

returns and go that route. But the customers in this case, the taxpayers, have advocated for us, or for the IRS, to operate more as 

a large multinational type of bank to be able to do things online. 

As you can imagine, they would rather deal with us online more 

so than deal with us in person, so we are shifting. 

It is a 3- to 5-year process to go to where we want to go, what 

we call future state. And that is to be able to have interactions 

with the taxpayers electronically the way they are asking for it. 

Mr. WALBERG. How do you propose to protect them, though, online? 

Mr. TRIBIANO. As we build out the technology, we are changing 

and adapting it, and I think Mr. Milholland can walk you through 

some of the things —— 

Mr. WALBERG. Walk me through that, some of the means by 

which you can stop the breaches that could very clearly come that 

has taken place in person, but it could take place extensively online. 

Mr. MILHOLLAND. Yes, sir. We have an initiative we call the 

eAuthentication Authorization and Access Initiative. The first part 

of this is what we are doing to get transcripts back online. If you 

recall, with that original issue from last May and June, we took it 

offline until we could get it right; that is, the underlying authentication. Can we really identify that the individuals coming in are 

who they say they are. That work is underway. We hope to roll 

that application back up some time this spring. 

But we also have done other things that we started changing the 

way that we handle, I will say, the online environment. The particular technologies we, in fact, deployed as a result of the ‘‘Get 

Transcript’’ incident were, in fact, what allowed us to stop this bot 

attack from 2 weeks ago explicitly. The ability to capture and see 

that this attack was ongoing is a direct result of us improving that 

environment. 

A number of other tools and such are built into our cyber investment plan. It is what we are going to use some of the monies that 

are now made available to us from the Congress through an extra 

$290 million. About $100 million of that has been assigned to IT 

specifically for cyber. That is where the investments will be made. 

The President has certainly recognized it in his Fiscal Year 2017 


AKING-6430 with DISTILLER
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budget submission for what he wants to do across the Administration. And then part of those monies will be used to improve aspects 

of the IRS online presence. 

There are a number of specific tools I could talk about here, Congressman. I do not know exactly —— 

Mr. WALBERG. I appreciate this getting on record of what you are 

doing, and that down the road we will not be blown away by mistakes that come, but I want to make sure that this is taken care 

of. That is part of our oversight, and we want to make sure that 

you are doing oversight as well. I yield back. 

Chairman CHAFFETZ. The gentleman’s time has expired. If Mr. 

Milholland can continue to provide the committee with what they 

are doing in that regard, we would appreciate it. 

I will now recognize the gentlewoman from New Jersey, Ms. 

Watson Coleman, for 5 minutes. 

Ms. WATSON COLEMAN. Thank you, Mr. Chairman. Mr. 

Milholland, it has been almost 4 years since the committee 

launched its investigation of the IRS, and to date IRS has produced 

more than 1.3 million pages of documents from 88 custodians in response to over 80 document and information requests. According to 

the information I have, on June the 3rd, 2015, the IRS’ senior privacy official testified before this committee. Is that you, Mr. Killen? 

Is that you? 

Mr. KILLEN. Not at the time. 

Ms. WATSON COLEMAN. Okay, thank you. Well, let me read to 

you what was said. ‘‘More than 250 IRS employees have spent 

more than 160,000 hours working directly on complying with investigations at a cost of $20 million, which also includes the cost of 

adding capacity to our limited information technology systems to 

accommodate the voluminous information requests.’’ And that figure does not include that at least $2 million additional have been 

spent by the inspector general. Mr. Milholland, what sort of capacity has been added to the IRS information technology system in 

order to accommodate this information and this investigation? 

Mr. MILHOLLAND. There is an investment plan to build out the 

entire process of record retention. This ranges from saving all of 

the email and all of its attachments, the archiving of information 

that are on hard drives in turn being saved. And the first elements 

of this, if we are able to complete our project, would start to roll 

out at the end of December, beginning of January. 

Ms. WATSON COLEMAN. Do you have the resources and the personnel to be able to accommodate this effort? 

Mr. MILHOLLAND. At the current moment we do not. We have 

what we need to implement toward the end of this year, but for the 

long-term needs of the record retention initiative, to do everything 

that is being asked in the sense of build a system that can search 

for anything and do it instantly, that has not yet been, I will say, 

completely planned out, nor staffed, nor resourced. 

Ms. WATSON COLEMAN. You have made some improvements because you were able to detect some suspicious behavior most recently in the system. And you do not have any reason to believe 

that that was anything terrorist related or anything of that nature 

or —— 


AKING-6430 with DISTILLER
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Mr. MILHOLLAND. Ma’am, are you referring to the bot attack that 

was 2 weeks ago? 

Ms. WATSON COLEMAN. Mm-hmm. 

Mr. MILHOLLAND. I cannot speak to who it was. There is an investigation going on right now by the investigative side of TIGTA. 

This was done from international sites using malware placed on individual machines and servers that attacked the IRS attempting to 

get these e-file PINs, no other taxpayer data. In fact, the e-file PIN 

is not taxpayer data, so I cannot characterize who they were. They 

were, you know, more than likely criminals, but I cannot really 

say. 

Ms. WATSON COLEMAN. After Mr. Maruca’s file was detected, 

after there was this belief that it did not exist and then you found 

out that you had a backup to it, you all have done something that 

would ensure that this problem does not occur in the future until 

you can take care of it in a more technologically savvy way? You 

have made decisions that no information gets erased until after 

something happens, right? Until after what happens, and when 

would that happen? 

Mr. MILHOLLAND. Is that a question toward me? I just was not 

sure. 

Ms. WATSON COLEMAN. Well, to whomever can answer it. 

Mr. MILHOLLAND. I was not sure if it was to the deputy commissioner. 

Ms. WATSON COLEMAN. Well, if the deputy commissioner is the 

one that should answer it, I am fine with that. Thank you. 

Mr. MILHOLLAND. Okay. 

Mr. TRIBIANO. The answer to that, ma’am, is yes. We put a nondestruct order in for all hard drives and devices for all employees 

of the IRS when they depart the IRS, and we immediately back up 

the hard drive itself electronically so we would have two copies 

until we get to the long-term solution that Mr. Milholland was 

talking about. 

Ms. WATSON COLEMAN. So minimally, would you say that you 

have a future desire to hold this information as long as we are responsible as citizens to hold our information at 7 years, that incredible 7 years that we are talking about, or is there something 

other that you all would be presenting? 

Mr. TRIBIANO. Well, I think that is a question for Mr. Killen. 

Ms. WATSON COLEMAN. Mr. Killen? 

Mr. KILLEN. Thank you for the question. We are working vigorously to ensure that we migrate our records management practices 

from sort of the current state to where we need to get to, you know, 

in the future in order to be compliant with all of the respective 

guidances out there from NARA and from OMB. 

So principally, we have taken, you know, really a multi-pronged 

approach at that. Mr. Milholland and Mr. Tribiano both talked 

about various aspects of that, but I think, you know, first and foremost, again, ensuring that we no longer wipe or —— 

Ms. WATSON COLEMAN. Erase. 

Mr. KILLEN.—sanitize existing hardware, ensuring that we have 

copies that are in place on the machines. But we are, in addition 

to that, we have put a process in place for our senior-most Agency 

officials throughout IRS at the executive level because those are 


AKING-6430 with DISTILLER
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the individuals most likely to create Federal records. And so, we 

have an approach that we have implemented called the Capstone 

approach to ensure that we maintain and appropriately archive 

those records of our senior-most officials. At the same time, we are 

currently in the process of implementing a plan for December 2016 

where all IRS employees’ email accounts will be archived electronically. And that is per directives that we have —— 

Ms. WATSON COLEMAN. Thank you, Mr. Killen. 

Chairman CHAFFETZ. The gentlewoman’s time has expired. How 

convenient. December of 2016, then we will start that process. 

There we go. 

All right. I will now recognize the gentleman from Tennessee, 

Mr. DesJarlais, for 5 minutes. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. Mr. Milholland, did 

the IRS hire a new director of the Office of Personal Responsibility 

in the past year? 

Mr. MILHOLLAND. I actually do not know. 

Mr. DESJARLAIS. Mr. Tribiano? 

Mr. TRIBIANO. We transferred an individual into that office. 

Mr. DESJARLAIS. Who was that? 

Mr. TRIBIANO. That is Mr. Whitlock. 

Mr. DESJARLAIS. Mr. Whitlock. Okay. And that is basically the 

director of the IRS ethics department, correct? 

Mr. TRIBIANO. It could be categorized as that, yes, sir. 

Mr. DESJARLAIS. Okay. Did they review this individual’s history 

with the Department? 

Mr. TRIBIANO. With the Department of Treasury? I am not 

aware, sir. 

Mr. DESJARLAIS. Do you know why the individual’s record would 

not be reviewed prior to hiring someone for this position? 

Mr. TRIBIANO. Why it was not sent to the Department of Treasury? 

Mr. DESJARLAIS. Why they would not review his record before 

hiring someone to oversee the IRS’ ethics department. 

Mr. TRIBIANO. The Executive Resources Board would have reviewed the record before making the recommendation of the movement of that individual into that position. 

Mr. DESJARLAIS. Okay. Mr. Milholland, did that ring any bells? 

Are you aware of Mr. Whitlock? 

Mr. MILHOLLAND. Not at all, sir. 

Mr. DESJARLAIS. No knowledge of him? 

Mr. MILHOLLAND. No, sir. 

Mr. DESJARLAIS. That was not run by you, Mr. Killen? 

Mr. KILLEN. No, sir. 

Mr. DESJARLAIS. No. Okay. So the IRS hires a new director to 

head up their personal ethics program. And, Mr. Tribiano, are you 

aware that he has a history of illegally shredding documents? 

Mr. TRIBIANO. Sir, well, first, let me say I cannot discuss. There 

is an IG investigation. But our internal review that was done in 

2005 found that Mr. Whitlock, there was no intent from that office, 

and that there was no wrongdoing in that process. 

Mr. DESJARLAIS. Okay. I have seen different reports. Mr. 

Milholland, would you be blown away if you learned that you hired 

an ethics director that had illegally shredded documents? 


AKING-6430 with DISTILLER
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Mr. TRIBIANO. Just for the record, this position does not report 

to Mr. Milholland. The position reports to the deputy commissioner 

for Service and Enforcement. 

Mr. DESJARLAIS. Okay. So you have not reviewed the TIGTA 

audit of the OPR that was completed while the individual was destroying taxpayer records, or you have not read the investigation 

record, or the record destruction, or whistleblower retaliation? 

Mr. TRIBIANO. No, sir. What I reviewed was our internal review 

of the process that happened. Again, I cannot discuss the TIGTA 

investigation, and our internal review showed that there was no 

wrongdoing by that individual. That individual did not order the 

destruction that was done by the acting director at that time. 

Mr. DESJARLAIS. Okay. I guess I am just kind of shocked that, 

you know, this is a person that the IRS hired to be the head of 

their Office of Personal Responsibility, and he has got this history, 

and no one on the panel today seems to know anything about him. 

Mr. TRIBIANO. He was transferred, sir. He has been part of the 

IRS. He was in there as the deputy director of that office, was 

transferred to head up another office for us, and then was transferred back in. 

Mr. DESJARLAIS. Is this typical of how the IRS handles new 

hires? 

Mr. TRIBIANO. He was a transfer, sir, not a new hire who has 

been with the IRS —— 

Mr. DESJARLAIS. So when somebody gets in trouble, they transfer 

him around. Is that how it works? 

Mr. TRIBIANO. I am not saying that, sir. 

Mr. DESJARLAIS. Okay. 

Chairman CHAFFETZ. Will the gentleman yield? 

Mr. DESJARLAIS. Yes. 

Chairman CHAFFETZ. Mr. Tribiano, you said there is a new nondestroy policy. When did that come into place? 

Mr. TRIBIANO. That came into place right after we found out that 

we had that gap with Mr. Maruca. 

Chairman CHAFFETZ. That you had destroyed things. So can you 

give me a specific time? 

Mr. TRIBIANO. January, sir. I do not know the exact date, but it 

was in January. 

Chairman CHAFFETZ. So just in the last 30 days? 

Mr. TRIBIANO. Yes, sir. When we realized we had the gap when 

Mr. Maruca before the —— 

Chairman CHAFFETZ. Why did you not put this in a policy when 

Mr. Milholland put this into place into 2013? Did you ever lift that 

non-destruction order, Mr. Milholland? 

Mr. MILHOLLAND. I have never lifted the non-destruct order for 

the tapes, the backup tapes, which we were dealing with at the 

time. 

Chairman CHAFFETZ. The gentleman from Ohio. 

Mr. JORDAN. The chairman asked my question. When was the 

order rescinded that you wrote in 2013 which says effective immediately, email retention policy for backups is to be indefinite? So if 

it is indefinite, is that still in place? 

Mr. MILHOLLAND. Yes, sir. Email is saved indefinitely. 


AKING-6430 with DISTILLER
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Mr. JORDAN. Well, but the key question is, what about the 

backup tapes. They are saved indefinitely? 

Chairman CHAFFETZ. If the gentleman will yield, it says, ‘‘Do not 

destroy, wipe, or reuse any of the existing backup tapes for email 

or archiving of other information for IRS personal computers.’’ 

Mr. JORDAN. Okay. And our question is, was that rescinded in 

any way. 

Mr. MILHOLLAND. If I understand your question correctly, sir, no. 

What we have, we still back up email and —— 

Mr. JORDAN. Okay. Good. 

Mr. MILHOLLAND. Excuse me. I am sorry. I am interrupting you. 

Mr. JORDAN. No, if it was not rescinded, then why did you have 

to issue a new order that Mr. Tribiano just referenced? 

Mr. TRIBIANO. I believe what Mr. Milholland was saying is that 

—— 

Mr. JORDAN. Is it so that you could have another one that people 

will not follow? I mean, that is our point. If you have one in place, 

obviously it was not followed. You said nothing is being rescinded, 

and Mr. Tribiano said just last month we issued a new order to 

preserve all documents and not destroy anything. Why was that 

necessary? 

Mr. TRIBIANO. The order that Mr. Milholland was referring to, 

the one that he did that was about backup tapes and disaster recovery tapes. What we are talking about is the cleaning of hard 

drives for recycling back into the IRS system for computers or for 

destruction when they go out. And the reason that is in place is 

because some of those hard drives contain 6103 data, so we cannot 

leave them around now for a longer period, so we have to secure 

them. So now with the new order we have to secure those hard 

drives, put them in a secure location, document them, and put 

them away because it has information on them. 

Chairman CHAFFETZ. And the time has expired. We are going to 

recognize Ms. Kelly here. But that is not what Mr. Milholland’s 

memo of May 22nd, 2013. It says, ‘‘Do not destroy, wipe, reuse any 

of the existing backup tapes or email or archiving of other information from IRS computers. Further, do not reuse, or refresh, or wipe 

information from any personal computer that is being reclaimed, 

returned, refreshed, updated from any employer or contractor of 

the IRS.’’ I mean, it could be not be more explicit. 

Mr. MILHOLLAND. Again, Chairman, if I may, that was referring 

to our backup tapes of the email systems and all the information 

—— 

Chairman CHAFFETZ. You can dance around this all the time. 

You had a preservation order in place. You had a do not destroy, 

and you continued to destroy them. You have represented to the 

Department of Justice, and to the courts, and to the United States 

Congress that you are not doing this. This issue has never been 

fixed, and that is why we continue to have these hearings. 

We have gone way past your time. We will recognize the gentlewoman from Illinois, Ms. Kelly, for 5 minutes. 

Ms. KELLY. Thank you, Mr. Chairman. Mr. Killen, I wanted to 

talk about what the IRS is doing to ensure that document and 

preservation measures are being implemented so that we do not 

end up here again, which no one wants. It seems strange that we 


AKING-6430 with DISTILLER
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are having a full committee hearing because of one employee’s hard 

drive, especially since all but 2 weeks of his emails were preserved. 

What is the current IRS policy with respect to document preservation for departing employees, and how long are their emails kept? 

Mr. KILLEN. Thank you for the question. As I stated a little earlier, we have essentially a multi-pronged strategy and approach 

that we are taking with respect to email. First and foremost, we 

have implemented the Capstone approach, which is an approach 

that has been developed by National Archives that is focused on 

your role within the organization, because you want to ensure that 

the senior-most officials in an organization who are most likely to 

create records, that those records are preserved. 

And so, about a year ago we implemented that process across 

IRS to ensure that our senior executives all across IRS, that we 

had the appropriate electronic preservation of those emails. And so, 

that has been in place for the last year, and that was really one 

of the significant early pieces of the strategy. 

Ms. KELLY. And how long are they kept? 

Mr. KILLEN. They will be kept, there are ranges. But for our 

most senior executives, they will be kept permanently. For sort of 

our second tier of executives on down, they will be kept for 15 

years. And that is very consistent with a role-based approach because you want to ensure that you have the preservation of 

records, you know, in the most appropriate fashion. 

So the second piece of that strategy related to email is that by 

the end of this calendar year, by December 2016, consistent with 

the directives that we have received from OMB that applies across 

the government, not just to IRS employees, we will ensure that all 

of our employee email is available in an electronically accessible 

environment. And then we are also taking a variety of other steps 

to shore up our other processes and procedures with regards to 

records retention for separating employees and for, you know, an 

entire gamut of issues that we are working towards. So we are 

making significant progress. 

Ms. KELLY. Okay. What is the IRS doing right now to ensure 

that an instance such the Maruca case does not occur again? 

Mr. KILLEN. Thank you for that question. So, again, as part of 

sort of the multi-pronged strategy that we have, because, you 

know, the key issue with Mr. Maruca is he separated from the 

Service. 

Ms. KELLY. Right. 

Mr. KILLEN. And so, we have a process in place now where if an 

employee separates from the Service, we are ensuring that we do 

not wipe the machine. In addition, we are making the copies of the 

machine. So really, you know, our whole approach around records 

management and retention is first and foremost ensuring that we 

follow the relevant guidance and directives that are out there. But 

then secondly, trying to, you know, build in multiple layers of redundancy so that we do what we can to reduce, you know, the likelihood of the human element where people make mistakes as well. 

Ms. KELLY. So would you look at this as your longer-term solution, or do you have other long-term solutions as it relates to hard 

drive inventory management? 


AKING-6430 with DISTILLER
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Mr. KILLEN. There is a very long-term solution because, you 

know, you can imagine the volume of records, and particularly as 

just in all walks of life, as we move more towards a digital environment. And so, you know, our first focus and emphasis is on email. 

We have paper records, as you might imagine, that we do a pretty 

good job of maintaining, but we have improvement opportunities 

there as well. But longer term, you know, there is guidance that 

talks about by 2019 the Federal government should be able to migrate to a place where all records are stored in that, you know, accessible electronic medium. Our focus is initially on email, but that 

will extend to, you know, all of the various avenues of record creation towards that 2019 directive. 

Ms. KELLY. And once you get there, this will allow you to answer 

inquiries from Congress faster or FOIA requests? Do you feel like 

you will be faster at that? 

Mr. KILLEN. It will certainly help. It will certainly help because, 

you know, the first thing is that the documents have to be available certainly. But when you get beyond the actual availability of 

the documents, and when you talk in terms of document production, you also need to have the ability to search. And ideally you 

would want to have the ability to do key word searches because 

those are things that allow you to have, you know, very efficient 

document production. 

So my answer to your question is that having the documentation 

retained is a necessary predecessor first step, but there is also the 

need to have the ability to do, you know, adequate search, find, and 

redaction capability. And that will be a separate effort, but it certainly is one that we have our eye on as well. 

Ms. KELLY. I am out of time. Thanks. 

Chairman CHAFFETZ. I thank the gentlewoman. I will now recognize the distinguished and always dapper gentleman from South 

Carolina, Mr. Gowdy, for 5 minutes. 

Mr. GOWDY. Chairman Chaffetz, I appreciate your leadership on 

this issue as I do Chairman Jordan’s. And for that reason, I would 

like to yield to the gentleman from Ohio, Mr. Jordan. 

Mr. JORDAN. I thank the gentleman. Mr. Milholland, who told 

you to issue the May 22nd, 2013 order, or I think ‘‘directive’’ is 

what you called it. 

Mr. MILHOLLAND. The email we talked about earlier, sir? 

Mr. JORDAN. Preserve all documents. In other words, retain everything. That email. 

Mr. MILHOLLAND. That was a request that came from Chief 

Counsel’s Office, and the way to do it was to send an email out as 

quick as we could to the people involved dealing with the backup 

tapes and such. 

Mr. JORDAN. And when you did that, did you like have just a 

couple people you were sending it to, or was it like send to everyone, send all? 

Mr. MILHOLLAND. Principally directed to the operations team 

who deal with the backup tape processes and such, but the IT 

staffs all knew about it. 

Mr. JORDAN. And the chart that I see, you got five agencies or 

five groupings that answer to Mr. Tribiano. Were the heads of all 


AKING-6430 with DISTILLER
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five of those groupings sent your email plus all your staff, or just 

within your area? 

Mr. MILHOLLAND. It was just within IT. 

Mr. JORDAN. Okay. Okay. I just want to be clear. And do you 

know if the commissioner at the time, Commissioner Werfel, knew 

about your directive to preserve all documents? 

Mr. MILHOLLAND. I am pretty sure he did because this was one 

of the subjects we were talking about, how we were going to protect 

—— Mr. JORDAN. Okay. And then when Mr. Koskinen came on board, 

do you know if he knew about the directive that was in place and, 

as you have testified today, still in place? Did Mr. Koskinen know 

about that, and does he know that it is still in place today? 

Mr. MILHOLLAND. I cannot testify to that, but can I add one correction to my earlier statement? 

Mr. JORDAN. Sure. 

Mr. MILHOLLAND. Okay. As I tried to say earlier—I may not have 

been very clear—that was intended to cover backup tapes for email 

and anything to do with anyone’s information that dealt with attachments, calendars, and such. At the same time, we also were 

not allowing hard drives to go anywhere. We, in fact, locked up all 

of the TEGE employees’ hard drives in a cabinet, so to speak, so 

they would not go anywhere and such. 

During the Windows 7 implementation 2 years ago and such, basically because of budgetary problems, we went and asked, hey, if 

we copy all the hard drives we have been saving, can we now reuse 

them so that we can implement Windows 7. And we got permission 

to do that, so in that sense those non-TEGE hard drives were reused. So in that sense, they were rescinded. I hope that is clear. 

Mr. JORDAN. I mean, it is not, a lot of the stuff you said there. 

But nowhere in there did you talk about still how the backup 

tapes, which you said your order applied to, were actually ultimately destroyed. So that did not cover what he just described, at 

least I did not think so. 

Mr. MILHOLLAND. No, sir. I responded earlier describing how 

that happened through employee mistakes. 

Mr. JORDAN. Okay. Well, we obviously know there were mistakes 

because you gave an order, and it was not followed, and tapes were 

destroyed, and information and data that is important to the investigation was lost. I am going to go back to the question I asked you 

in the first round. I want to be clear. So you received a bonus this 

year and last year? 

Mr. MILHOLLAND. No, sir. 

Mr. JORDAN. You said your pay went up. So it was not a bonus? 

Mr. MILHOLLAND. I am capped salary wise. I do not receive a 

bonus. 

Mr. JORDAN. How about this management team you referred to 

when I asked, you know, how this could happen that tapes were 

destroyed in light of your order, in light of your directive? Anyone 

on your management team, did they receive a bonus this past 2 

years? 

Mr. MILHOLLAND. Yes, sir. 

Mr. JORDAN. They did? 

Mr. MILHOLLAND. Yes, sir. 


AKING-6430 with DISTILLER
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Mr. JORDAN. And do you okay that, or does that go up through 

Mr. Tribiano and then up to the commissioner? 

Mr. MILHOLLAND. It certainly comes through me. I believe it goes 

to a committee Mr. Tribiano sits on called the Executive Review 

Board. 

Mr. JORDAN. Mr. Tribiano? 

Mr. TRIBIANO. Yes, sir. It starts at the division head area, so Mr. 

Milholland would gather up performance awards, not bonuses, and 

they would make those recommendations coming forward. I would 

get them. Either I agree or disagree. 

Mr. JORDAN. Performance awards. If you get a performance 

award, that results in additional pay? 

Mr. TRIBIANO. It results in a performance awards, so, yes, sir, 

your pay. Not your pay salary pay, but your cash. 

Mr. JORDAN. You get more money. 

Mr. TRIBIANO. Yes, sir, but it is not on a continuous basis. It is 

a one-time performance award. 

Mr. JORDAN. Mr. Milholland said he takes responsibility for the 

fact he was blown away when this happened after his directive. His 

pay is topped out. He cannot go any higher. And the people on his 

management team who were responsible for the directive not being 

carried and for the backup tapes being destroyed all got performance pay increases. Is that accurate? 

Mr. TRIBIANO. I have to ask Mr. Milholland if he put them forward in that fashion. 

Mr. MILHOLLAND. Not all the managers and executives who report to me got pay increases or bonuses. I do not recall explicitly 

in the chain that led down to where this incident occurred what the 

actuals were. 

Mr. JORDAN. But many of them did. 

Chairman CHAFFETZ. Will the gentleman —— 

Mr. MILHOLLAND. Probably, but I really do not know, sir. 

Mr. JORDAN. I would be happy yield back. 

Chairman CHAFFETZ. The gentleman’s time has expired. Will you 

provide that to this committee, Mr. Milholland? 

Mr. MILHOLLAND. If I am allowed to legally. I do not know if I 

am allowed to release personal information. 

Chairman CHAFFETZ. Well, when the United States Congress 

asks you, you have legal authority to provide that information to 

Congress. There is nothing classified about people’s compensation 

and bonuses. Would you agree? 

Mr. MILHOLLAND. Not to me, sir, but I am not a lawyer, so. 

Chairman CHAFFETZ. Well, there are some positive qualities. I 

appreciate that. That is a real plus in your column. I get it. I am 

asking you all to provide this information to this committee. 

Mr. MILHOLLAND. Yes, sir. 

Chairman CHAFFETZ. Thank you. 

Chairman CHAFFETZ. I will now recognize the gentlewoman from 

New York, Ms. Maloney, for 5 minutes. 

Ms. MALONEY. I thank the gentleman for yielding. And I would 

like to talk about another outage that was treated differently than 

one recently at the IRS, and that was one that many New Yorkers 

were concerned about. It concerned the New York Stock Exchange 

on July 9th of 2015, and a number of my constituents work there 


AKING-6430 with DISTILLER
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and suffered an outage that completely suspended all of financial 

trading for roughly 4 hours. And this committee sent letters to the 

SEC and to the Stock Exchange trying to understand the circumstances surrounding the outage. And they briefed our staff in 

July, and they told us that a software problem—it was basically a 

glitch—caused them to go offline in order to respond and to solve 

the problem. 

Now, the Department of Homeland Security in response to questioning by this committee reported that there was no suspicious activity, and the FBI saw absolutely no reason for any type of enforcement action. And since the committee received those briefings, 

we saw no reason to hold a public hearing or to hold an investigation since everybody involved said that it was merely a glitch. 

Yet we are going after the IRS today for a similar temporary and 

subsequently resolved website outage. And I just feel that there is 

a little bit of an unequal treatment, and I think we should not have 

unequal treatment. I mean, I will not suggest that the New York 

Stock Exchange should come in for a hearing. I am suggesting that 

we should not be having a hearing on a technical outage for any 

organization, and the IRS seems to be getting a little unequal 

treatment on this. 

And I would like to elaborate, Mr. Milholland, to ask you about 

an incident earlier this month when portions of the IRS website 

were shut down for roughly 30 hours. And I understand that some 

members of Congress thought, and questioned, and rightfully so, I 

think, in the world we live in that it was a cyberattack. But the 

IRS briefed our staff earlier this week, and they told us that this 

was definitely not a cyberattack. They told us, in fact, that it was 

just a mechanical hardware failure similar to what happened at 

the Stock Exchange, a glitch, a hardware failure. 

Now, is my description of what happened to the IRS somewhat 

correct? 

Mr. MILHOLLAND. Yes, ma’am. 

Ms. MALONEY. So this was not a failure of an IRS information 

system, but just the failure of a singular piece of mechanical equipment, correct? 

Mr. MILHOLLAND. That is correct, ma’am. 

Ms. MALONEY. And can you describe what sort of hardware we 

are talking about? 

Mr. MILHOLLAND. Yes, ma’am. Our Enterprise server is the primary engine for processing tax returns. It is made up of various 

components, including a storage subsystem, which has voltage regulators in it. Now, while the root cause analysis is still underway, 

it was those voltage regulators that failed. They are mechanical 

components that are under somewhat high stress conditions when 

the computer is operating. And over time, one of the modules that 

held the voltage regulators literally said I’m failing, called for an 

alert to the mechanic—that is, the technician—to come and fix it. 

During the process of attempting to fix the mechanical device, 

the redundant voltage regulator module also failed. Then it took 

time to restore the equipment to its natural state, bring the system 

back up so tax returns could be processed. Total outage time was 

roughly about 30 hours. 


AKING-6430 with DISTILLER
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No software was involved. No micro code. This was with absolute 

certainty not a cyberattack. It was a failure of mechanical device. 

What we are most interested is the root cause analysis as to why 

did the two fail relatively close together. That work is going on. I 

expect to have the root cause analysis, you know, within a week. 

I have a draft root cause analysis now, but it is not done. We have 

working questions with the supplier on this. But no question that 

this was a mechanical failure. 

Ms. MALONEY. So mechanical failure, such as what the IRS experienced, is not unique to the IRS. It happens to many organizations. In fact, there was a highly publicized mechanical failure with 

the New York Stock Exchange which was similar. They went offline for a while to repair it. So I feel that there is a little bit of 

an unfair or unequal treatment, and maybe a little bit of a major 

focus on the IRS and questioning of the IRS for a long time that 

is not the same treatment that other organizations that handle a 

great number of filings experience. So I just wanted to point that 

out. The failures were very similar for the Stock Exchange and the 

IRS of mechanical equipment failure. 

In any event, my time has expired, and thank you for your testimony today. 

Chairman CHAFFETZ. Thank the gentlewoman. We will now recognize the gentleman from North Carolina, Mr. Walker, for 5 minutes. 

Mr. WALKER. Thank you, Mr. Chairman. Thank you, Panel. I appreciate you being here today. 

I want to go back to something that I heard a little bit earlier. 

First of all, I want to talk about something that Commissioner 

Koskinen has said repeatedly. His quote says, ‘‘I believe that the 

underfunding of the Agency is the most critical challenge facing the 

IRS today.’’ He has made this comment pretty much in several different speeches whether it is the Tax Policy Conference or other 

places where he is pretty adamant that that is a major issue. 

But something said earlier by one of my colleagues, I want to go 

back talking about the systems that you said that were dating back 

to John F. Kennedy time, I believe was the comment. It was not 

so much the application as it was the system. Would you repeat a 

little bit earlier and go into that for me just a minute? 

Mr. MILHOLLAND. Certainly. What they built back in the 1960s 

for implementation in the 1970s was a system designed based 

around the technology that was available to them then. 

Mr. WALKER. Sure. 

Mr. MILHOLLAND. That design still exists. Even though we are 

running the application now with much more modern underpinning—that is, this Enterprise server that we just discussed with 

the congresswoman —— 

Mr. WALKER. Sure. 

Mr. MILHOLLAND.—the actual design of the application is still 

built upon that 1960s approach. 

Mr. WALKER. And I appreciate you clearing that up, but that is 

not what Commissioner Koskinen said. What he said in his ploy to 

try to get more funding, more than the $11 billion already, he said, 

‘‘We have many applications that were running when John F. Kennedy was president.’’ Is that an untruthful statement? 


AKING-6430 with DISTILLER
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Mr. MILHOLLAND. No, I think that is true. The application, individual master file, and the business master file, and a number of 

those other clearly legacy applications, while some of the platforms 

they run on have changed and the code has been updated numerous times due to legislation, the programming language is still the 

one that we had then. 

Mr. WALKER. Well, he seems to be disagreeing with you on the 

code as well because he said, ‘‘The code has been out of date so 

long, it has the unintended effect to keep hackers from hacking in.’’ 

So is that just something he is not technologically current with 

that? I mean, are you running code from John F. Kennedy because 

it seems 50-something years ago we are still running those kinds 

of systems, and we are still operating with that code? Is that correct? 

Mr. MILHOLLAND. There are elements of the code that exist back 

that far, but the —— 

Mr. WALKER. COBOL? FORTRAN? What are we talking about 

here? 

Mr. MILHOLLAND. COBOL, yes. COBOL programming language 

code. Assembly language code is the principle engine. While we 

have modified it numerous times with particularly legislation, the 

fact of the matter is that system was designed and built in the 

1960s to start running in the 1970s. And so, you know, I believe 

that the commissioner is correct. 

Mr. WALKER. Okay. Let me transition while I have got some time 

left. I am going to go back to Form 3210 that was filled out authorizing the destruction of Mr. Maruca’s hard drive. If so, if that was 

ordered, who authorized the destruction of that hard drive? 

Mr. MILHOLLAND. What would have happened would be that—I 

must say ‘‘presumed happened’’—was whoever was checking out 

Mr. Maruca from the IRS would have called the IT organization, 

filled out a request to say take his IT assets and follow the normal 

disposition procedures. 

Mr. WALKER. Did you assume that would have happened? Why 

was Mr. Maruca’s hard drive not covered by the litigation hold the 

IRS put in place? Why did that not cover that? 

Mr. MILHOLLAND. At the time, I mean, he had left before that 

particular litigation hold was put into place. 

Mr. WALKER. Well, did he take his stuff with him? Did he take 

the information with him? 

Mr. MILHOLLAND. It had already been entered into the process 

of disposition. 

Mr. WALKER. Well, so what happens when he leaves? When an 

employee leaves, do their records get destroyed like this? I mean, 

what happened? Who made the decision? Who authorized that, to 

destroy what he was working on? 

Mr. MILHOLLAND. I am sorry. I really am not understanding your 

question. 

Mr. WALKER. His hard drive, okay? 

Mr. MILHOLLAND. Pardon me? 

Mr. WALKER. Mr. Maruca’s hard drive. 

Mr. MILHOLLAND. Yes, sir. 

Mr. WALKER. Who destroyed it? Who authorized it? 


AKING-6430 with DISTILLER
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Mr. MILHOLLAND. That would have followed the normal IT process of dispositioning of old equipment. And in that sense, the authorization is the IRS process. 

Mr. WALKER. Is there a timeline for how long an employee leaves 

that hard drives are destroyed? Is there a standard on it? 

Mr. MILHOLLAND. No, there is not. It follows —— 

Mr. WALKER. So it is up to discretion. 

Mr. MILHOLLAND. There is a lot discretion. There are a number 

of steps that are followed as to where it goes. Because we have had 

shortfalls in our staffing, oftentimes machines can sit around before they are disposed of. They may oftentimes even get so stacked 

up until someone gets to it. 

Mr. WALKER. But his did not get stacked up. Mr. Chairman, my 

time has expired. 

Chairman CHAFFETZ. I thank the gentleman. I recognize the gentleman from Alabama, Mr. Palmer, for 5 minutes. 

Mr. PALMER. Mr. Chairman, I only have one question. According 

to a September 2015 inspector general report, the IRS spent $139 

million in 4 years on upgrading its workstations from the outdated 

Microsoft XP to Windows 7, but you still missed the Microsoft April 

2014 end of life deadline. I think you understand that using a supported version of Windows is critical to securing data. Yet according to a TIGTA report from September 28th, 2015, you have got approximately 1,300 workstations that you either cannot locate or you 

confirmed are running an old operating system. 

My question is, where are you on locating those workstations and 

getting them updated? 

Mr. MILHOLLAND. I think there are a number of questions in 

your statement, sir, and I will try answering each one. 

Mr. PALMER. Well, just answer the one where you are on the status of locating those workstations and updating the software. 

Mr. MILHOLLAND. We got support from Microsoft to go beyond 

the original expiration of XP so we were not taking a risk with 

those particular workstations. Second, we took them off the network so they would be isolated, and would not, therefore, be possible to hack into them through, I will say, anyone having access 

to the network. Where we are with the actual remaining numbers, 

if I recall correctly, we are complete. I would have to double check 

that, sir, if I can get back to you. 

Mr. PALMER. Could you inform the committee where you are on 

that, and I would like to have that answer in 7 days. Can we do 

that? 

Mr. MILHOLLAND. Sure. 

Mr. PALMER. Mr. Chairman, I will yield the balance of my time 

to the chair. 

Chairman CHAFFETZ. I thank the gentleman. Mr. Milholland and 

Mr. Tribiano, it is May 2013. TIGTA issues its audit, and you issue 

an internal preservation order that is extensive. It is capped with 

‘‘in other words, retain everything to do with email or information 

that may have been stored locally on a personal computer.’’ It is 

pretty broad, but also very definitive. Did you ever rescind that 

order? That is a yes or no question. Did you ever reverse that 

order? 


AKING-6430 with DISTILLER
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Mr. MILHOLLAND. I changed the order with, as I tried to explain 

earlier with a TEGE situation where we had to start using some 

of the hard drives that we were saving —— 

Chairman CHAFFETZ. Can you provide that —— 

Mr. MILHOLLAND.—in order to implement Windows —— 

Chairman CHAFFETZ. Can you provide that to this committee? 

Mr. MILHOLLAND. Provide which list, sir? 

Chairman CHAFFETZ. When you rescinded that, send that to this 

committee. Fair enough? 

Mr. MILHOLLAND. I will, yes. 

Chairman CHAFFETZ. Thank you. 

Mr. MILHOLLAND. Yes, sir. 

Chairman CHAFFETZ. Mr. Tribiano, did the IRS ever change that 

or rescind the order that Mr. Milholland put out to preserve? 

Mr. TRIBIANO. Not to my knowledge, sir. 

Chairman CHAFFETZ. After the issuance of that audit, did the 

IRS put any new procedures or policies in place regarding the preservation of emails, hard drives, or anything to do with people’s 

interaction with the computers? 

Mr. TRIBIANO. That was during the time period where we initially started the Capstone Project, sir. 

Chairman CHAFFETZ. Okay. You started a project, but was there 

any change to the internal functionality of the preservation of computers, hardware, emails, that sort of thing? What changed? 

Mr. TRIBIANO. Sir, I was not there. I would have to go back and 

look at —— 

Chairman CHAFFETZ. Mr. Killen, what changed? 

Mr. KILLEN. So, following those events, again, in late calendar 

year 2014, early calendar 2015, we implemented the Capstone approach for our senior-most Agency officials. And so, that —— 

Chairman CHAFFETZ. All government records. You do not have to 

be a senior-most official at the IRS to generate a record that needs 

to be in compliance with the Federal Records Act or to be in compliance with FOIA. I want to know after TIGTA had issued their 

report in May of 2013, what did the IRS do internally to preserve 

and protect the records that they should have been protecting in 

the first place? 

Mr. KILLEN. Well, Mr. Chairman, I think that does represent a 

fairly substantive change, and —— 

Chairman CHAFFETZ. What does? 

Mr. KILLEN. Well, first of all, implementing the Capstone approach, you know. We had significant consultation with the National Archives —— 

Chairman CHAFFETZ. Do you feel it was fully implemented? 

Mr. KILLEN. The Capstone process that we initiated with our 

senior officials, yes, that has been fully implemented. 

Chairman CHAFFETZ. If the policy is in place, why was Mr. 

Maruca’s information destroyed? 

Mr. KILLEN. Fair question. It is an issue of timing because we 

implemented the Capstone approach in actually late December 

2014. Mr. Maruca had already left the Service by that point. 

Chairman CHAFFETZ. So it takes you more than a year and a half 

to implement a new policy. How hard is it to just save a hard 


AKING-6430 with DISTILLER
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drive? I mean, how hard is that? How expensive is that? How much 

does a hard drive cost, do you know? 

Mr. KILLEN. I will defer to Mr. Milholland on that. 

Chairman CHAFFETZ. How much is a hard drive? You want two 

gigs. 

Mr. MILHOLLAND. $100 to $250, depending on the —— 

Chairman CHAFFETZ. Yeah, we are talking about a hundred 

bucks here. You got a $1.7 billion issue with Microsoft, and you all 

went out and destroyed something that is maybe a hundred bucks. 

Mr. Tribiano, you had to issue a new policy in 2016, correct? 

Mr. TRIBIANO. A new policy was issued in 2016. 

Chairman CHAFFETZ. What does that policy do? 

Mr. TRIBIANO. We will not destroy any hard drives or mobile devices for any departing IRS employees, and we will copy the hard 

drives digitally to a server. 

Chairman CHAFFETZ. Congress has been investigating the IRS 

since 2011, and you are just now getting the memo to start preserving things in 2016? Why does it take almost 5 years to get the 

message that you should not be destroying things? Why does it 

take so long? 

Mr. TRIBIANO. Well, sir, I mean, we have a records retention policy —— 

Chairman CHAFFETZ. Yeah, but you did not follow it. You did not 

follow it. Mr. Maruca’s stuff was destroyed, and it should not have 

been. And you are misstating the facts, by the way, because there 

was another case that they actually copied Mr. Maruca’s, and then 

they happened to find that. I mean, I find it totally unbelievable. 

It truly is an unbelievable set of circumstances. 24 to 48 hours 

after this committee issues a bulletin that we are going to have a 

hearing, and then suddenly you find the information? 

And the Department of Justice had gone to the courts and said 

this stuff had been inadvertently destroyed, but then you actually 

did find it. Do you see why we have zero confidence in the record 

retention policy and the ability to execute on it? 

Mr. TRIBIANO. Well, sir, you said that I misled you, and if that 

is the case, that was not the intent, so I just want to clarify that. 

We did find those records, and we found it because of another litigation hold. I thought I made that clear in my opening statement. 

It was not because there was some other thing. It was pure coincidental that we had another litigation, and we —— 

Chairman CHAFFETZ. And coincidental and 24 hours after I issue 

a notice that you are going to have to come appear here, suddenly 

you do find them. That is what is unbelievable. You had gone to 

the courts via the Department of Justice and put it on the record 

that you did not have them. That was not true, was it? 

Mr. TRIBIANO. At that time that, that was true, yes, sir. 

Chairman CHAFFETZ. It was not true. 

Mr. TRIBIANO. Well, in hindsight it is not, but at the time that 

we went to them and said we might have an issue, it was true. 

When it was found that we did copy it for another litigation hold, 

we corrected it. We found that there was another litigation hold. 

Chairman CHAFFETZ. Okay. The gentlemen’s time has expired. I 

now recognize myself or recognize Mr. Carter for 5 minutes. 


AKING-6430 with DISTILLER
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Mr. CARTER. Thank you, Mr. Chairman. Mr. Milholland, help me 

out here. I am just trying to educate myself. What is the timeline 

between when an employee leaves the IRS and when their hard 

drive is erased? 

Mr. MILHOLLAND. Yeah, that timeline can vary from immediate 

to 6 months. 

Mr. CARTER. What determines that? What determines the variation? 

Mr. MILHOLLAND. Where the person is when they leave. For example, if you are in —— 

Mr. CARTER. I mean, what hallway they are in? 

Mr. MILHOLLAND. What office they are in. For example, the 

equipment, if it is picked up by IT, has to be shipped to another 

location. But if you are in the D.C. area, for example, it might happen very quickly and such. We typically send these devices to a 

particular data center for the degaussing once we separate the 

hard drive from the rest of the PC. 

Mr. CARTER. Okay. When was Mr. Maruca’s hard drive erased? 

What day? 

Mr. MILHOLLAND. The deputy commissioner can answer the details, but —— 

Mr. CARTER. Okay. 

Mr. TRIBIANO. Well, we do not know the date, and I think that 

is what the problem is. We know we sent it or consolidated it on 

August 5th. We picked it up from the manager. We consolidated it 

with other hard drives and other laptops, and we sent it to our 

Memphis facility. It arrived in —— 

Mr. CARTER. Now, where was Mr. Maruca because you said, Mr. 

Milholland, that it depended on what office he was in. Which office 

was Mr. Maruca in? 

Mr. TRIBIANO. Go ahead. 

Mr. MILHOLLAND. He was in D.C. as I —— 

Mr. CARTER. He was in D.C. So you just said if he is in D.C., it 

ought to be pretty quick. 

Mr. MILHOLLAND. It could be depending, again, on the process 

being followed and the staff that we have to do that work. If there 

was an intent that we say, hey, we could reuse this device very 

quickly, then at that point we would separate the hard drive from 

the rest of the platform and put a new hard drive in. 

Mr. CARTER. But in the case of Mr. Maruca, you do not know 

what day it was destroyed? 

Mr. TRIBIANO. No, sir. It was sent down to the Memphis facility, 

and it was stored down there with other laptops and other computers that were marked for disposal. 

Mr. CARTER. Okay. So where it was sent down to, do they have 

a record of it? Can you call them and find out? I mean, surely they 

keep a record to tell you, okay, we destroyed this hard drive this 

day, this one this day. 

Mr. MILHOLLAND. No, sir. What we keep a record of is the asset. 

Once we separate the hard drive from the rest of the computer, the 

rest of the computer is sent off for salvage by an outside contractor. 

Mr. CARTER. I am not worried about the rest of the computer. 

Mr. MILHOLLAND. Yeah, you are saying —— 


AKING-6430 with DISTILLER
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Mr. CARTER. I am worried about what gets erased. It would just 

occur to me or it would appear to me that you would have a day 

on there, somebody would keep a day that said that this is the day 

it was erased. 

Mr. MILHOLLAND. Not necessarily, sir, because we do not view it 

as a major asset at that point. Its disposition, we have flagged for 

destruction. It is sent into the system. Okay, this —— 

Mr. CARTER. Do you ever consider it to be an asset, an important 

asset? 

Mr. MILHOLLAND. Once it is flagged for disposition to be destroyed, no. 

Mr. CARTER. Okay. And this is even after we have had the experience with Ms. Lerner and with her hard drive being destroyed 

and being wiped out. Even after that we still do not have in place 

when exactly we destroyed it. We still do not know. So you are telling me that is a matter of policy? 

Mr. MILHOLLAND. It is a matter of the workload and the resources we have to do that task. 

Mr. CARTER. The workload and the resources. 

Mr. MILHOLLAND. Yes, sir. 

Mr. CARTER. So everything is determined by the workload and 

the resources, not by its importance. 

Mr. MILHOLLAND. Well, the importance is that we had already 

decided that this particular drive could be, in fact, be destroyed. At 

that point it is deemed worthless, so it is stacked up with other 

hard drives. 

Mr. CARTER. I just find it to be a very poor excuse about resources. I mean, it would seem to me like that you would have 

been really on your toes, especially in light of what has happened 

in the past. It would seem to me that you would want to absolutely 

know when a hard drive was destroyed or wiped out. I mean, you 

see where I am going here. 

I am just getting the impression from where I am sitting, it looks 

like the IRS is just taking the attitude, hey, we are above the law 

here. I mean, that is what it looks like to me, and I can imagine 

what it looks to a regular citizen who is being audited by the IRS. 

It is really confounding to me that we do not keep better records 

than this. It would appear to me the IRS, in light of everything 

that has happened in the way of hard drives being wiped out, that 

your policy would be better and that you would be keeping better 

records. So you can understand why the general public thinks, 

well, they think they are above the law here. 

I am just flabbergasted by this. Mr. Chairman, I do not know 

what to say except that I hope that you will take it as a lesson and 

understand that, you know, there are people out there who are 

being audited by the IRS who feel like they are being targeted, feel 

like they are being treated unfairly, and feel like the IRS thinks 

they are above the law. And in instances like this, you can understand why they feel that way. This is unacceptable. 

Mr. Chairman, I yield back. 

Chairman CHAFFETZ. I thank the gentleman. Myself and Mr. Jordan have just a couple of other questions, and we are going to wrap 

up the hearing. And members are advised we have votes on the 

floor soon. 


AKING-6430 with DISTILLER
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Since when has the IRS preserved all of its internal emails? 

When did they start to do that? 

Mr. KILLEN. So our internal email, again, there are nuances to 

it. So —— 

Chairman CHAFFETZ. You are either saving them all or not. Do 

you save all the emails? 

Mr. KILLEN. All our internal emails—all—are not being saved, 

but we have the plan in place in order to get there. All of our 

emails for our senior-most officials are saved. We have actually had 

substantial interaction with NARA, so I do want to get this point 

across that NARA —— 

Chairman CHAFFETZ. Hold on. I want to get to this point. You 

still to this day do not preserve all of the IRS emails internally. 

You do not save those. 

Mr. MILHOLLAND. May I answer that question, Mr. Chairman? 

Chairman CHAFFETZ. Yeah. 

Mr. MILHOLLAND. The answer is we save them on our backup 

tapes and have since that original email that Representative Jordan was referring to. 

Chairman CHAFFETZ. Then why did Mr. Killen just tell me that 

we do not do that? 

Mr. MILHOLLAND. I think he was referring to all the —— 

Chairman CHAFFETZ. No, no. He can tell you what he is referring 

to. 

Mr. MILHOLLAND. I am sorry, sir. 

Chairman CHAFFETZ. Mr. Killen, you just told me that they do 

not preserve all the emails. 

Mr. KILLEN. I think there is a distinction between what we have 

preserved on the network and what we have preserved via backup 

and disaster recovery process. And I think that is the distinction 

that Mr. Milholland was going to make. 

With respect to, because I do want to be clear about this point. 

The directive that we are under is that all email should be in an 

electronically accessible format by the end of calendar year 2016. 

That is the plan that we have implemented. That is the plan that 

we are on a trajectory to meet. But in the interim, and, again, this 

has all been a process that we have worked with NARA on. In the 

interim, our senior-most Agency officials’ emails are being preserved, and that is sort of, I talked about this multi-pronged approach that we have implemented. That is —— 

Chairman CHAFFETZ. Is there anything, Mr. Milholland, that you 

would disagree with that he just said? 

Mr. MILHOLLAND. No, sir. We are going to be NARA compliant. 

Chairman CHAFFETZ. Here is the problem, okay? Here is the 

problem with the testimony. This is testimony from John Koskinen 

of June 23rd, 2014, and here is what he says: ‘‘I would note, however, since the investigations into the application process for 

501(c)(4) organizations began in May of last year, the IRS’’—here 

it is—‘‘the IRS has saved backup tapes for all emails on the IRS’ 

servers, which includes tapes for the 6 months preceding May of 

2013.’’ And you are telling me that is not true, and that is why we 

keep coming after the IRS, and that is why we are not going to let 

go of this. 

I recognize the gentleman from Ohio. 


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Mr. MILHOLLAND. Sir, could I make one statement, please? 

Chairman CHAFFETZ. The gentleman from Ohio. 

Mr. JORDAN. If I could, Mr. Chairman, this will be my third time, 

and the right fine gentleman from North Carolina has not went. I 

just have two questions anyway, Mr. Chairman. 

Mr. MEADOWS. I will yield to the gentleman from Ohio for two 

questions, and then take up the balance. How about that? 

Mr. JORDAN. Okay. So, Mr. Milholland, on March 4th when you 

discovered the tapes are destroyed, March 4th, 2014, the backup 

tapes are destroyed. You testified in the TIGTA investigation that 

you were blown away by the fact that your directive was not followed. What did you do then? And I guess specifically what I am 

asking is, did you have any conversations with your direct report, 

Mr. Tribiano’s office, or the person who runs Mr. Tribiano’s office, 

and/or Mr. Koskinen? 

Mr. MILHOLLAND. At that particular time, the TIGTA investigation was still going on, so I was not allowed to talk about the conversation I had with TIGTA until after the report was released. 

Mr. JORDAN. Okay. So when you learned that the tapes had been 

destroyed, your directive was not followed, you had no conversation 

with the commissioner? 

Mr. MILHOLLAND. No. 

Mr. JORDAN. Subsequent to when it became public, have you had 

conversations with the commissioner? 

Mr. MILHOLLAND. Yes, sir. 

Mr. JORDAN. About this specific issue. 

Mr. MILHOLLAND. The general conversation around backup tapes, 

yes, sir, and that is what I was trying to correct earlier. We have 

retained backup tapes for indefinitely since that email was issued. 

Those are off of the exchange system, which is the primary email 

system of the Enterprise. 

Mr. JORDAN. I get that, but I am asking more specific. Did you 

have a conversation with Mr. Koskinen and say, look, I gave a directive. It was not followed. 422 backup tapes were destroyed. We 

no longer have those records at all. Did you have that conversation 

with Mr. Koskinen? 

Mr. MILHOLLAND. No, I did not specifically. 

Mr. JORDAN. Okay. One final one here. In your opening statement, this is Mr. Maruca’s situation. His hard drive was designated for erasure before the issuance of the litigation hold. Is 

that right? 

Mr. TRIBIANO. Yes, sir. 

Mr. JORDAN. Okay. Yet you said later that his data was, in fact, 

though, backed up because you had another litigation hold. 

Mr. TRIBIANO. Yes, sir. 

Mr. JORDAN. So why didn’t the previous litigation hold prevent 

you from destroying the hard drive? 

Mr. TRIBIANO. Because the data was backed up, and it was sent 

to the digital. What happens is when the attorneys request the information, it goes into their—I might be calling it the wrong 

thing—their e-Discovery system where they can access the data 

and do whatever they need to do for discovery purposes. 


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Mr. JORDAN. And just to be clear, a litigation hold does not trigger preservation of hard drives. That only triggers it goes to a 

backup? 

Mr. TRIBIANO. No, sir. It preserves the records for use in the litigation. 

Mr. JORDAN. And the best record would be the hard drive, not 

the backup. But under this situation, you did not do that. 

Mr. TRIBIANO. The records are what was on the hard drive and 

backed up at that point in time. 

Chairman CHAFFETZ. Will the gentleman yield? 

Mr. JORDAN. Sure. 

Chairman CHAFFETZ. Then why did the Department of Justice on 

behalf of the IRS go to the court and say these records had been 

destroyed? 

Mr. TRIBIANO. Because at that time that we notified the Department of Justice, we did not know that we had the backup of that 

hard drive for that other litigation. So we told the Department of 

Justice that we did not have the hard drive. 

Chairman CHAFFETZ. And you have no records of what you destroy and when you destroy it, correct? 

Mr. TRIBIANO. That is correct. What we know is that on 10/27, 

it was received in Memphis, and between that period and the period of April 16th, I believe, when the shell of the computer was 

delivered to the third party vendor, it was during that time period. 

Chairman CHAFFETZ. How convenient. You have no records of 

what is destroyed and when, and yet you require every American 

to keep all their records. That is what so fundamentally wrong and 

screwed up with the IRS. That is just wrong. And there a lot of 

good people that work at the IRS, but you know what? You go after 

Americans, but you do not take care of business at the IRS. It is 

just wrong. It is just wrong. And it causes mess. We are talking about a $1.7 billion case, and 

you guys cannot keep track of what you destroy and when you destroy it. How hard is it to put a log in there, ‘‘destroyed this one 

at this time?’’ How long does that take? I mean, you can go to Best 

Buy and buy something off the shelf for like 50 bucks. I just do not 

understand that. Do you have an answer for that? 

Mr. TRIBIANO. I do not think it would be that difficult, sir. 

Chairman CHAFFETZ. Then why is it not done? 

Mr. TRIBIANO. I can turn that over to the Mr. Milholland who 

runs the IT shop and runs those procedures, and ask what that 

would mean from a staffing perspective and from a documentation 

perspective. But I think what Mr. Milholland alluded to was that 

it is an asset, and it is kept into the assets, and it is kept into the 

system up to the point where it is marked for disposal. And at that 

point it stops. 

Chairman CHAFFETZ. I yield back to the gentleman from North 

Carolina. 

Mr. MEADOWS. Thank you, Mr. Chairman. Mr. Milholland, let me 

tell you the issue that most Americans have with this. Storage is 

cheap. I mean, we have gotten to a point where even storage of millions of records is really cheap. We have gotten to a situation 

where it would have been so much easier when the first hearing 

happened, not 24 hearings later, but the first hearing, to say, you 


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know what? Gosh, we are going to have this problem. We had better preserve everything. What precluded you from doing that, from 

preserving everything at that point? When Lois Lerner first came 

in here and took the 5th, what stopped you from saying let us just 

preserve everything? 

Mr. MILHOLLAND. I cannot recall the subject ever coming up, sir. 

Mr. MEADOWS. Now, you cannot recall the subject coming up. It 

was in the headlines, I mean, almost every major newspaper, and 

the subject did not come up about keeping it? And yet your testimony today says that you are NARA compliant. Would you care to 

revise your statement, because I do not believe that you are NARA 

compliant at this point. Having the National Archives underneath 

my subcommittee, I would probably beg to differ with that. So 

would you like to revise your —— 

Mr. MILHOLLAND. I would ask that Mr. Killen to respond to 

whether or not we are NARA compliant since that is his area of 

expertise. 

Mr. MEADOWS. All right. So are you NARA compliant? 

Mr. KILLEN. We are generally NARA compliant. 

Mr. MEADOWS. No, there is a ‘‘yes’’ or ‘‘no.’’ ‘‘Generally’’ is if I am 

speeding and I generally go below the speed limit I do not get a 

ticket. But only those couple of times that I go beyond the speed 

limit I actually do get a speed limit ticket. Tell me, are you compliant or not? 

Mr. KILLEN. Well, I have to speak to the wording of the report, 

I mean, because we have had NARA reviews. And so, certainly we 

have opportunities for improvement, and —— 

Mr. MEADOWS. Then you are not NARA compliant. 

Mr. KILLEN. But on the whole, NARA has opined that we are 

generally —— 

Mr. MEADOWS. You are making progress I think is what they are 

saying. 

Mr. KILLEN. We are certainly making progress, and we have opportunities —— 

Mr. MEADOWS. But today you are not NARA compliant, which 

means that all communication would be preserved, would it not? 

Mr. KILLEN. We certainly have work to do. 

Mr. MEADOWS. Okay. So if you have work to do, then you can revise your statement that you are NARA compliant because obviously you are not. 

Mr. MILHOLLAND. In that sense, you are correct, sir. 

Mr. MEADOWS. All right. So let me go a little bit further, and I 

am going to piggyback on what the chairman talked about. Mr. 

Killen, why is it taking so long? I mean, why is this taking so long 

for us to get it right? Why December of 2016? 

Mr. KILLEN. Well, I think that the 2016 date is predicated on the 

OMB directive. That does not extend to just IRS. 

Mr. MEADOWS. So it is OMB’s fault. 

Mr. KILLEN. No, no, it is not an issue of fault. It is an issue of 

what is the origin of the December 2016 date. And the origin of 

that December 2016 date is the OMB directive that says that all 

Federal agencies should have email in an electronically accessible 

format. 


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Mr. MEADOWS. So it would not have anything to do with the 

change of Administration. 

Mr. KILLEN. I could not speak on that. I do not —— 

Mr. MEADOWS. Well, do you not find it curious that December 

2016 and Administration change would happen within 20 days of 

that date? 

Mr. KILLEN. I really cannot speak on that. 

Mr. MEADOWS. Okay. All right. So let me go on a little bit further 

because part of this whole hearing process has been other types of 

communications. And you all have been very careful to say ‘‘email 

communications,’’ but there are a number of other electronic communications that go on the system and go back and forth. Is that 

correct, Mr. Milholland? 

Mr. MILHOLLAND. Are you referring to instant messaging, sir? 

Mr. MEADOWS. Yeah. I mean, do you not have substantial communications among some senior-level people at the IRS that happens outside of email? 

Mr. MILHOLLAND. Yes, sir. There are obviously phones. There are —— Mr. MEADOWS. Okay. How about on text messages or instant 

messaging? 

Mr. MILHOLLAND. Actually I do not actually —— 

Mr. MEADOWS. You do not. Does anybody there use instant messaging? 

Mr. TRIBIANO. I do not, sir. It is on our system. 

Mr. MEADOWS. Yeah. You know, our gray hair probably throws 

this away, but I will go to the end. Mr. Killen, I am sure you do, 

do you not? 

Mr. KILLEN. I certainly do. 

Mr. MEADOWS. I figured you would, so it may be a general thing. 

But, Mr. Killen, do you use that instant messaging to do anything 

more than ‘‘is it time to go to lunch or a coffee break?’’ I mean, do 

you conduct business on instant messaging? 

Mr. KILLEN. Generally speaking, I do try to be careful about 

what I —— 

Mr. MEADOWS. Has there ever been a case where you have used 

instant messaging for business? 

Mr. KILLEN. I am sure there probably has been. 

Mr. MEADOWS. Yeah. And so, here is the issue, Mr. Milholland, 

and I am going to finish with this. Storage has become cheap. 

Backup tapes are becoming a thing of the past. I remember backup 

tapes, and I do not understand why with the amount of money that 

we are spending that we are still using backup tapes, unless they 

are just such legacy programs that we have to use the backup 

tapes for storage. 

We are committed to providing the resources. What we have not 

seen is the commitment to really get serious about preserving everything like Commissioner Koskinen has said he would do. And 

until we see that, we are going to take issue. Does that make 

sense? 

Mr. MILHOLLAND. I understand you, sir. 

Mr. MEADOWS. All right. I will yield back. 

Chairman CHAFFETZ. I thank the gentleman. The committee 

stands adjourned. 


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[Whereupon, at 3:18 p.m. the committee was adjourned.] 


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