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EXAMINING THE SKYROCKETING PROBLEM OF 

IDENTITY THEFT RELATED TAX FRAUD AT THE 

IRS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

AUGUST 2, 2013 

Serial No. 113–71 

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 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS

JOHN L. MICA, Florida, Chairman 

TIM WALBERG, Michigan 

MICHAEL R. TURNER, Ohio 

JUSTIN AMASH, Michigan 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

GERALD E. CONNOLLY, Virginia Ranking 

Minority Member 

JIM COOPER, Tennessee 

Vacany 

(III) 

C O N T E N T S 

Page 

Hearing held on August 2, 2013 ............................................................................. 1 

WITNESSES 

The Hon. Daniel Werfel, Acting Commissioner, Internal Revenue Service 

Oral Statement ................................................................................................. 6 

Written Statement ............................................................................................ 9 

Ms. Nina E. Olson, National Taxpayer Advocate, Internal Revenue Service 

Oral Statement ................................................................................................. 19 

Written Statement ............................................................................................ 21 

Mr. Michael McKenney, Deputy Inspector General for Audit, Treasury Inspector General for Tax Administration 

Oral Statement ................................................................................................. 42 

Written Statement ............................................................................................ 44 

Mr. Douglas MacGinnitie, State Revenue Commissioner, Department of Revenue, State of Georgia 

Oral Statement ................................................................................................. 61 

Written Statement ............................................................................................ 64 

APPENDIX 

Opening Statement by Chairman Mica ................................................................. 98 

Opening Statement by Rep. Connolly .................................................................... 100 

Letter to the Hon. J. Russell George, Submitted by Mr. Cummings .................. 102 

Letter to Chairman Issa and Mr. Jordan, Submitted by Mr. Cummings ........... 108 

Statement by the President on May 15, 2013, Submitted by Mr. Mica .............. 115 

May 3, 2013 e-mail from the Deputy Inspector General for Investigations, 

Dept. of Treasury, Submitted by Mr. Mica ........................................................ 116 

Questions for the Record, Submitted by Mr. Mica, with Responses ................... 117 

(1) 

EXAMINING THE SKYROCKETING PROBLEM 

OF IDENTITY THEFT RELATED TAX FRAUD 

AT THE IRS 

Friday, August 2, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 9:01 a.m., in Room 

2247, Rayburn House Office Building, Hon. John Mica [chairman 

of the subcommittee] presiding. 

Present: Representatives Mica, Issa, Meadows, Turner, Connolly, 

and Cummings. 

Also Present: Representative Jordan. 

Staff Present: Ali Ahmad, Communications Advisor; Alexia 

Ardolina, Assistant Clerk; Molly Boyl, Senior Counsel and Parliamentarian; Lawrence J. Brady, Staff Director; David Brewer, Senior Counsel; Steve Castor, General Counsel; Drew Colliatie, Professional Staff Member; Adam P. Fromm, Director of Member Services 

and Committee Operations; Tyler Grimm, Senior Professional Staff 

Member; Frederick Hill, Director of Communications and Senior 

Policy Advisor; Justin LoFranco, Digital Director; Mark D. Marin, 

Director of Oversight; Tegan Millspaw, Professional Staff Member; 

Kristin L. Nelson, Senior Counsel; Ashok M. Pinto, Chief Counsel, 

Investigations; Laura L. Rush, Deputy Chief Clerk; Scott Schmidt, 

Deputy Director of Digital Strategy; Sarah Vance, Assistant Clerk; 

Meghan Berroya, Minority Counsel; Jaron Bourke, Minority Director of Administration; Claire Coleman, Minority Counsel; Susanne 

Sachsman Grooms, Minority Deputy Staff Director/Chief Counsel; 

Jennifer Hoffman, Minority Communications Director; Adam 

Koshkin, Minority Research Assistant; Dave Rapallo, Minority 

Staff Director; Safiya Simmons, Minority Press Secretary; and 

Cecelia Thomas, Minority Counsel. 

Mr. MICA. Good morning. I’d like to welcome everyone and call 

to order this hearing of the Government Operations Subcommittee 

of the Government Oversight and Reform Committee of the House 

of Representatives. The subject of today’s hearing is ‘‘Examining 

the Skyrocketing Problem of Identity Theft Related to Tax Fraud 

at the Internal Revenue Service.’’ 

The order of business today will be, we will begin with opening 

statements from members, and then we’ll hear from our witnesses. 

We have four witnesses today, and I’ll introduce them later. And 

I would remind members it looks like we’re going to have votes 

2 

commencing about 9:15, which gives us to about 9:30. So we will 

again try to get through this and maybe most of our witnesses. We 

will then recess and return probably for questions at that point. 

So with that, Chairman Issa and myself, we usually start these 

hearings by saying that just generally that we have a responsibility 

to investigate problems with our Federal Government. For lack of 

a better term, some of those problems, we call them scandals or 

wasteful spending or conduct by Federal agencies or employees. 

And this is not an opportunity, say, to pick on IRS, but an opportunity to follow up actually on this matter. We have had some four 

hearings. I was given a list of hearings, and they date back—I don’t 

know, Mr. Connolly, did you participate in some of those before? 

Mr. CONNOLLY. Yes, sir. 

Mr. MICA. So this is not a new scandal or problem, it’s something 

that we’ve seen as an issue for some time. Unfortunately, too, you 

will hear in just a second, as I cite some of the issues at hand, it 

isn’t resolved and it hasn’t gotten any better. 

Unfortunately, we’ve heard lately a lot about phony scandals, 

and the IRS and some of the things that we’ve had to deal with 

are not phony scandals. Even leaders in the administration have 

conceded that in the past, particularly in regard to some of the targeting by IRS brought to our attention by the inspector general and 

other Members of Congress. We also, as you may recall, just briefly 

looked at the conferences in a previous hearing of wasteful spending on IRS conferences. And I think they were spending about $45 

million in 1 year. After we began some of the revelations with GSA 

and others, we discovered in that hearing again wasteful spending 

that exceeded what we saw and everyone was appalled at with 

GSA. And that review of that matter has resulted in going from 

$45 million to about $5 million. Considerable saving for the taxpayers. 

And then I think all of us were stunned when we heard about 

the—and I don’t know of a better term than scandal—with the IRS 

improperly awarding contracts to Strong Castle. I’m sure the members who were here that heard Tammy Duckworth, one of our war 

heroes, question the witness who had scammed the system and 

also IRS getting a $0.5 billion worth of contract potential under 

false pretenses with his veteran’s disability. 

So again, we have, I think, an important responsibility to look 

at these matters. Unfortunately, IRS has had a number of problems, and this one that we’re looking at today continues. The incidence of identity theft related to tax fraud—now listen to this—and 

some of this data is very interesting—it’s grown from 456,000 cases 

in 2009 to an estimated 1.9 million cases in 2013. That’s a 416 percent increase. The Treasury Inspector General for Tax Administration estimates that IRS could issue—in fact, this problem could balloon in the coming years to $21 billion in fraudulent returns over 

the next 5 years. Some of the estimates are in 2011 as much as 

a whopping $5 billion went out the door being paid in potentially 

fraudulent returns. 

In fact, this has become such a lucrative business for criminals 

that criminals, in fact, are leaving the drug dealing trade and, 

we’re told, and now getting into applying and also asking for these 

fraudulent returns from IRS. So it’s being said that tax fraud is acVerDate Aug 31 2005 11:05 Feb 04, 2014 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\86438.TXT APRIL
3 

tually taking work away from drug dealers because it’s easier and 

safer to scam the IRS than it is to sell drugs. 

Sad part about this for the average person, when they do file 

these fraudulent return claims, is that it takes more than a year 

in most instances to try to get their identity problems resolved, 

sometimes to try to get their credit restored, and very often to actually just get their lives back together. They are left in limbo, and 

it doesn’t appear that IRS has a means of actually changing what’s 

going on. They’ve made some attempts, but obviously, if you just 

look at the increases, the dramatic increases, whatever action IRS 

appears to be taking is not working. We’ve gone, again, from 

456,000 to almost 2 million cases. So they’ve failed to curtail this 

rip-off of the public. 

In reviewing this matter, I found that some States have been 

able to institute some fairly simple matters. And we may ask about 

what, again, they are doing that has worked and hasn’t worked. 

But Georgia has taken some action. Some of the State revenue departments have taken action—we’ll hear more good about that 

hopefully—that has successfully stopped people from illegally accessing taxpayer cash. 

The IRS has complained of a lack of resources and said it will need another $22 million to examine all cases of potential fraud. 

I’ve heard the numbers of 90,000 to 100,000 IRS employees. Maybe, 

Mr. Werfel, you can tell me how many you have. But we do know 

from our review some 21 units of IRS are engaged now in tackling 

this problem. And, again, it’s gotten worse, not better. 

So, again, this subcommittee has held four previous hearings on 

this subject in the 112th Congress. My colleague, the ranking member, I think participated in some of those. I know he is as interested in getting to the bottom of this as I am and also correcting 

it, because it is a very serious situation. So with those opening 

comments, I’ll yield now to the ranking member, the gentleman 

from Virginia, Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman. And I want to thank 

you for holding this hearing. There have been a lot of hearings 

about IRS on various and sundry matters, but this is one that 

touches almost every taxpayer potentially. And I really want to 

thank you for holding this hearing. And as you indicated in the 

previous Congress, with former Chairman Platts and Ranking 

Member Ed Towns, we had a series of hearings on this subject, and 

I attended every one of them. 

You know, as you indicated, I think, according to the IRS Taxpayer Advocate, identity theft jumped 650 percent between 2008 

and 2012. And as you indicated, there were almost 1.9 million incidents of identity theft and fraudulent refunds. 

Maybe the unintended good news is it’s cutting down on drug 

dealing, as you indicated. But, you know, this is unbelievably disruptive to constituents. And if I recall, and Mr. Werfel will correct 

my memory if wrong, but at the last hearing this subcommittee 

had under Chairman Platts, I think the statistic was there were 

only four prosecutions or convictions for this identity theft. Now, 

when you have 1.9 million identity thefts going on, that is an epidemic. And the number of prosecutions and convictions, not acceptable. 

4 

It’s profoundly disruptive to our constituents. In my own district, 

a gentleman and wife filed their 2010 tax returns electronically in 

April of 2011. They fell victim to tax-related identity thieves. Their 

tax filing was rejected because someone else had used their Social 

Security number and received a refund before they had filed their 

legitimate return. My constituent tried for 2 years to resolve the 

theft of this tax refund. He spoke with six different individuals at 

IRS between April and August of 2011 and was given six different 

timelines for the issue to be resolved, ranging from 6 to 8 weeks 

to a year. Further, the IRS provided conflicting information about 

forms to fill out, where to send the forms, and whether he should 

follow up with the IRS or wait for the IRS to contact them. 

In November of 2011, they received their refund and thought the 

issue was resolved. In May of 2012, two of my constituents tried 

to refinance their home and were rejected by the mortgage company because the company was using fraudulent IRS documents. 

When my constituent called the IRS, they stated, everything looks 

fine here, we can’t explain it, and if there’s a problem, we can’t 

really do anything about it. 

After many ill-fated pursuits at clearing up the situation, the 

gentleman eventually give up in frustration, his problem left unresolved in refinancing his home. Obviously, that’s unacceptable. 

To be fair, the IRS recognizes this fact and is implementing reforms to enhance its efforts to combat identity theft by adopting a 

three-pronged approach. The first prong is prevention, which 

means stopping this type of tax fraud from being successful in the 

first place. Clearly, given 1.9 million incidents, much more work 

needs to be done in this area. We seem to be losing the battle. 

The second prong is providing taxpayer services for those who 

have been the victims of identity theft. This is a significant focus 

for the IRS, but, again, it appears the agency is falling short. I can 

just tell you based on constituent work in my office, satisfaction is 

not a prevalent theme among constituents. For example, an audit 

by TIGTA sampled 17 different identity theft cases and found that 

the average time it took for those cases to be resolved was 414 

days. Unacceptable. 

The third prong of IRS’s approach is catching and convicting the 

criminals who committed these crimes. This is a critically important step, and one in which we are failing. If we can step up enforcement, obviously, it deters tax-related identity theft and protects our constituents. I’m interested, Mr. Chairman, in learning 

more about the IRS’s efforts on this three-pronged approach, including examining success stories, as well as challenges still to be 

faced. 

I would also like to be hear more about how customer service is 

being improved to prevent the bureaucratic nightmare that constituents, as well as millions of other Americans face every year. 

This year, as with every year, taxpayers face a number of issues 

and obstacles as they try to file their returns. I look forward to 

working with the IRS to implement corrective actions that will 

strengthen taxpayer assistance and issues during what can be a 

very difficult time for many citizens. I hope today we have a productive discussion about how we’re going to achieve this goal in 

light of this massive problem. 

5 

Thank you, Mr. Chairman. 

Mr. MICA. Thank the gentleman. 

Mr. MICA. Yield to the vice chairman, Mr. Meadows, gentleman 

from North Carolina. 

Mr. MEADOWS. Thank you, Mr. Chairman. And thank you for 

calling this hearing. 

Thank each one you for being here as we look forward to your 

testimony and we deal with this. 

You know, over the course of this year it cannot be denied that 

the IRS has been plagued with a wide range of scandals. And while 

many of these issues have been highlighted, an ongoing problem, 

which seems to have flown under the radar, continues to exist here 

at the IRS, is this issue of tax fraud and identity theft and how 

it relates. 

And I didn’t realize how big the problem was until I talked to 

a few stakeholders. And as I started talking to them and as they 

started identifying the issue, I was dumbfounded by the amount of 

tax fraud that exists and really the potential for it to even be exacerbated with the new subsidy that we’ve got coming in with ACA 

and the Obamacare. If you have got a subsidy issue, and we’re 

looking at really self-identifying who qualifies, it even presents a 

greater challenge. You know, identity theft, tax fraud has increased 

exponentially over the past 5 years to the tune of 650 percent. And 

when we start to look at that, TIGTA, who will testify here today, 

estimates that there could be as much as $21 billion—that’s billion 

with a ‘‘B’’—in fraudulent tax returns over the next 5 years if the 

problem is not addressed. And they say that that estimate is conservative. 

As I talked yesterday to a stakeholder, he shared a couple of different stories, without sharing the details, of just massive tax returns that comes in and taking advantage of the tax system that 

we have, and yet thousands of returns filed on the same day with, 

truly, with Social Security numbers that are legitimate and then 

we see this, but that is one area. And we’re having to police that 

in the private sector. So we need to really look at a solution where 

the IRS steps up and identifies this, corrects the problem, or we’ll 

be sitting here 12 months from now with an even bigger problem 

that is greater than $21 billion. 

So I thank each of you for being here. I thank the chairman for 

calling this important hearing. And I am looking forward to your 

testimony. 

Mr. MICA. Any other members have opening statements? 

Mr. Cummings? 

Mr. CUMMINGS. I’ll be very brief because I know we’re going to 

have votes in a minute. I just want to make sure that we are aiming towards the problem. You know, we’ve had motion, commotion, 

emotion, and no results. And the problem just gets worse. 

And so I’m looking forward to the testimony. But I’m also looking 

forward to solutions. You know, arguing here and arguing there 

and not helping taxpayers avoid being victims and not addressing 

the issue of those who will take advantage of a system that may 

have some holes in it, and those who spend day in and day out trying to figure out how to maneuver to extract something that don’t 

belong to them, those are the issues that we have to address. If we 

6 

can send a man to the moon, we ought to be able to resolve these 

issues. 

And with that, Mr. Chairman, I yield back. 

Mr. MICA. Thank the gentleman. 

Mr. MICA. Mr. Jordan. 

Mr. JORDAN. I’m fine, thank you, sir. 

Mr. MICA. Okay. Then we have time to probably get one or two 

of our witnesses in. Let me introduce them. Again, we have the 

Honorable Daniel Werfel, Acting Commissioner of the IRS. We 

have Ms. Nina Olson, the National Taxpayer Advocate at the Taxpayer Advocate Service. Mr. Michael McKenney is the Acting Deputy Inspector General for Audit at the Treasury Inspector General 

for Tax Administration. And Mr. Douglas MacGinnitie is the State 

Revenue Commissioner of Georgia. 

And we welcome all of you. 

As is customary, we swear in our witnesses. So if you’ll stand, 

raise your right hand. 

Do you solemnly swear or affirm that the testimony you’re about 

to present to this committee and subcommittee of Congress is the 

whole truth and nothing but the truth? 

The witnesses all answered in the affirmative. We’ll let the 

record reflect that. 

Yes? 

Mr. CONNOLLY. I’m sorry, Mr. Chairman. Could I just inquire, is 

it the intention of the chair to hear Mr. Werfel first and then break 

for the—— 

Mr. MICA. I think we could do that. We can fit him in nicely. We 

still have 11 minutes, so we could give him at least 6. 

Mr. CONNOLLY. And I’m informed we have nine votes, Mr. Chairman. 

Mr. MICA. And so we will recess for the appropriate time and 

break and then come back, and we will hear the rest of the witnesses. 

And also members will have 7 days to submit opening statements 

or extraneous material for the record. Without objection, so ordered. 

Mr. MICA. Welcome back, Mr. Werfel. I asked you earlier how 

much longer you’d be there. Till your successor, I guess, was just 

named today. But thank you for coming. And you are recognized. 

And again welcome. 

STATEMENT OF DANNY WERFEL 

Mr. WERFEL. Chairman Mica, Ranking Member Connolly, and 

members of the subcommittee, thank you for the opportunity to appear before you today to update you on the actions we are taking 

at the IRS to combat refund fraud and help victims of identity 

theft. 

Refund fraud caused by identity theft is one of the biggest challenges facing the IRS today, and the harm it inflicts on innocent 

taxpayers is a problem that we take very seriously. The IRS has 

a comprehensive identity theft strategy focusing on preventing refund fraud, investigating these crimes, and assisting taxpayers victimized by identity theft. 

7 

The agency’s work on identity theft and refund fraud touches 

nearly every part of the organization. The IRS expanded these efforts for the 2013 filing season to better protect taxpayers and help 

victims. More than 3,000 IRS employees are currently working on 

identity theft, more than double the number at the start of the previous filing season. 

Our ability to detect fraud and stop false returns before issuing 

a refund continues to grow. We have expanded the number and 

quality of our identity theft screening filters and already this year 

we have suspended or rejected more than 4.6 million suspicious returns, which approaches the total of 5 million for all of 2012. 

Our criminal investigations have increased as well. We have 

opened roughly 1,100 identity theft investigations so far in fiscal 

year 2013, which is already more than all of 2012. 

We are also improving our efforts to assist taxpayers who are victims of identity theft. Last year, we made a number of programming and procedural enhancements that enable us to move faster 

to identify accounts with a high potential for identity theft. Cases 

generated as a result are reassigned for review more quickly than 

in the past. So far this year we have closed more than 565,000 

cases. That is more than three times the number of identity theft 

cases resolved at the same time last year. 

Other procedural enhancements are helping us reduce delays in 

releasing funds to a legitimate filer in cases where duplicate returns are filed. As a result, taxpayers who became victims this fiscal year are receiving their refunds and having their problems resolved in less than 120 days, far more quickly than in previous 

years. While this is an improvement, we are continuing to find 

ways to shorten this time and to ease the burden on these victims. 

But barriers to further progress on identity theft do exist. One 

is the sheer volume and complexity of these crimes. Another is the 

need to further upgrade our technology in order to implement improvements, such as more sophisticated filters and better taxpayer 

authentication procedures. 

Yet another barrier to further progress is our difficult budget environment. The work we are already doing on refund fraud and 

identity theft involves a difficult balance of resources and staffing 

at a time when our budget has been reduced by $1 billion since fiscal year 2010. This includes a reduction of $618 million this year 

alone as a result of sequestration. The IRS has responded to these 

budget reductions by becoming more efficient and cost conscious. 

One result of our efforts to reduce costs is that full-time staffing 

at the IRS has declined by more than 8 percent since fiscal year 

2010, or about 8,000 positions. 

Against this backdrop, our need for additional resources to fight 

refund fraud caused by identity theft has forced very critical performance tradeoffs. The progress that the IRS has made against 

identity theft would not have been possible without directing resources away from other enforcement activities and our service programs. The administration’s fiscal year 2014 budget request provides for an increase in funding that will let us continue to make 

progress against identity theft are also allowing us to continue our 

enforcement activities and maintain reasonable levels of customer 

service. 

8 

Conversely, without this additional funding, we would face difficult choices. And the situation would become even more serious 

if we were to incur additional budget cuts. We would no longer be 

able to sustain our current level of effort on identity theft without 

significantly weakening other programs. 

Chairman Mica, Ranking Member Connolly, members of the subcommittee, this concludes my statement. I’d be happy to take your 

questions. 

[Prepared statement of Mr. Werfel follows:] 

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Mr. MICA. What we’re going to do, since we have 5 minutes before the vote, is we will recess at this time and then there will be 

at least 45 minutes of voting. We have nine votes. That brings us 

up to at least 10:15. So I would expect everyone to be back here 

by then and we will start immediately I hope 10 minutes after the 

beginning of the last vote on the floor for members’ purposes. So 

with that, the subcommittee stands in recess. 

[Recess.] 

Mr. MICA. I’d like to call the Subcommittee on Government Operations back to order after our recess. 

The subcommittee has heard from IRS Acting Commissioner 

Daniel Werfel as our first witnesses. We have three remaining witnesses. We will go ahead and begin their testimony. And again welcome to our panel this morning Ms. Nina Olson. And she is the National Taxpayer Advocate at the National Taxpayer Advocate Service. 

So welcome, and you are recognized. 

STATEMENT OF NINA E. OLSON 

Ms. OLSON. Thank you, Chairman Mica, and thank you for inviting me to testify today about tax-related identity theft. Since 2004, 

I have identified this issue as one of taxpayers’ most serious problems in nearly every annual report I have submitted to Congress, 

and I have testified at numerous hearings on this subject, including 

seven since the start of 2012. 

To its credit, the IRS has recognized identity theft as a major 

challenge and has devoted significant resources to addressing it. 

However, while the IRS has improved its ability to detect fraudulent returns, our analysis indicates that it has not made comparable strides in providing assistance to identity theft victims. 

In my testimony and my reports to Congress, I have described 

the devastating impact of tax-related identity theft on its victims. 

Yet despite some recent improvements to cycle time, it often takes 

6 months to a year or longer before the IRS fully resolves identity 

theft cases and issues refunds to the legitimate taxpayers. Thus 

victim assistance overall continues to be inadequate. 

Let me offer three ways of looking at victim assistance. First, my 

organization, the Taxpayer Advocate Service, or TAS, assists taxpayers whose cases have not been handled properly through normal IRS channels or who are experiencing financial hardships. In 

fiscal year 2011, we received 34,000 cases, by far the largest number of cases on any single issue and 11 percent of our inventory. 

By fiscal year 2012, we received 55,000 identity theft cases, which 

constituted 25 percent of our inventory. For the first 9 months of 

fiscal year 2013, our identity theft cases are 32 percent higher than 

last year, suggesting our case receipts in that issue may exceed 

70,000 this year. 

TAS’ case inventory is a pretty good barometer of IRS problems, 

so these increases suggest that at least in some respects victim assistance may actually be getting worse. 

Second, the IRS processes for identifying and stopping returns 

filed by identity thieves ensnare some legitimate returns. For example, during this filing season, more than 150,000 returns filed 

by legitimate taxpayers were flagged and deemed unpostable. This 

20 

means they aren’t processed and refunds aren’t issued until someone in the IRS looks at them and acts upon them. 

Some returns were stopped because the original identity protection personal identification number, or IP PIN, was not entered on 

the return. The IP PIN is the number the IRS gives taxpayers 

when it determines they are victims so their returns can go 

through without stopping. When a taxpayer loses his IP PIN, the 

IRS will issue a replacement IP PIN, but confoundingly, the IRS 

also automatically stops all returns with these replacement IP 

PINs; that is, it deems them unpostable. 

Of the over 100,000 returns that were stopped because they did 

not have an IP PIN, more than 90 percent of those, over 93,000, 

were submitted by legitimate taxpayers, yet they had to wait an 

average of 6 additional weeks for the IRS to process their returns, 

and some are still waiting. In fact, as of yesterday, there are over 

21,000 of these returns over 61 days old on average waiting to be 

processed. 

Third, while I am pleased that one IRS unit has reduced its processing time this year, that function’s processing time is only part 

of the lifecycle of many identity theft cases. In my written statement, I describe the progress of a hypothetical case that is representative of many of TAS cases in that it requires the sequential 

involvement of multiple IRS units. Similarly, in 2012, TIGTA analyzed the files of 17 identity theft victims and found that the IRS 

had opened 58 cases to resolve the accounts of those victims, an average of nearly three and a half cases per victim. That aligns with 

what we have observed and explains why I regularly hear from 

practitioners and taxpayers that identity theft cases often take a 

year or longer to resolve. 

Lastly, I note that the IRS now has more than 3,000 employees 

working identity theft cases, more than double the number from 

the previous year. Given the IRS’ broad responsibilities and shrinking resources, that level of staffing is not sustainable. To make and 

sustain progress in addressing identity theft, the IRS must improve 

its core processes. 

In my written statement, I make six recommendations. The most 

important is to reorganize victim assistance so that a centralized 

unit controls all identity theft cases and each case is assigned to 

an employee who manages the case from start to finish and serves 

as a single point of contact for the taxpayer. The IRS may say that 

this approach will itself require more resources. But as the head 

of an organization that operates in exactly that manner, I believe 

that it is more efficient to assign each case to an employee than 

to require a taxpayer to navigate multiple functions, working cases 

with significant rework and time lags occurring along the way. 

I thank the subcommittee for its continued interest in this matter. 

Mr. MICA. Thank you for your testimony. 

[Prepared statement of Ms. Olson follows:] 

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Mr. MICA. Our next witness is Michael McKenney, and he is the 

Acting Deputy Inspector General for Audit at the Treasury Inspector General for Tax Administration. 

Welcome, Mr. McKenney, and you are recognized. 

STATEMENT OF MICHAEL E. MCKENNEY 

Mr. MCKENNEY. Chairman Mica, Ranking Member Connolly, and 

members of the subcommittee, thank you for the invitation to testify on the important subject of identity theft and its impact on taxpayers and tax administration. The Treasury Inspector General for 

Tax Administration, or TIGTA, has provided extensive coverage of 

tax fraud-related identity theft by conducting both audits and investigations. My comments today will focus on the results of our 

prior audit work and two audits that are ongoing. 

The IRS has made identity theft a priority and has made some 

progress over the past year. However, significant improvements are 

still needed. As of June 30th of this year, the IRS reported that 

during the 2013 filing season it stopped the issuance of $4.2 billion 

in potentially fraudulent tax refunds associated with 860,000 tax 

returns that involve identity theft. For the 2013 filing season, the 

IRS increased the number of identity theft filters to 80 from the 

11 it used in 2012. This enabled the IRS to identify almost twice 

as many identity theft tax returns as the prior year. 

In our follow-up audit report that will be issued next month, we 

determined that for tax year 2011 returns, which are filed in 2012, 

there were approximately 1.1 million undetected tax returns with 

characteristics of identity theft. The associated fraudulent tax refunds totaled approximately $3.6 billion, which is a 30 percent decrease from the $5.2 billion of undetected fraud we found for tax 

year 2010. 

Even with its expanded filters, it will remain a challenge for the 

IRS to detect these fraudulent returns unless it has access to thirdparty income and withholding information before the tax returns 

are processed. In this regard, the IRS is currently working with 

three States to determine how partial-year information may be 

used to identify fraudulent tax returns before the refund is paid. 

Another challenging aspect to this problem is the use of direct 

deposit for the fraudulent tax refunds. Most of the tax year 2011 

returns we identified with indicators of identity theft involved the 

use of direct deposit to obtain tax refunds. These totaled approximately $3.5 billion. In some cases, many fraudulent refunds are deposited to the same bank account. For example, one such bank account received 446 direct deposits, totaling over $591,000. 

TIGTA recommended that the limited limit the number of tax refunds sent to the same direct deposit account. We also recommended that the IRS work with Federal agencies and banking 

institutions to ensure tax refunds are deposited only to an account 

in the taxpayer’s name. 

The IRS developed new filters for the 2013 filing season which 

are designed to identify and stop tax returns with similar direct deposit characteristics. As of May 30th of this year, the IRS indicated 

that it had identified over 154,000 such tax returns and prevented 

approximately $470 million in tax refunds with the use of these filters. In addition, as of the end of June, over 18,200 refunds were 

43 

returned from financial institutions, totaling more than $60 million. 

The IRS still faces challenges in providing assistance to identity 

theft victims. In a current audit which reviewed cases worked in 

2012, we found taxpayers have continued to face lengthy delays in 

the resolution of their identity theft cases. In addition, tax accounts 

were not always correctly resolved, which resulted in delayed or incorrect refunds. 

One practice that is designed to protect taxpayers from being victimized again the following year is the issuance of identity protection personal identification numbers. The IRS issued almost three 

times as many of these numbers to taxpayers in 2013 as it did in 

2012. 

The IRS is continuing to take actions this year to improve its 

ability to expedite assistance to victims and prevent fraud. We will 

continue our work in this area to evaluate the IRS’ progress. Chairman Mica, Ranking Member Connolly, and members of the subcommittee, thank you for the opportunity to share my views. 

Mr. MICA. Thank you for your testimony. 

[Prepared statement of Mr. McKenney follows:] 

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Mr. MICA. And we’ll turn to our last witness in this panel, Mr. 

Douglas MacGinnitie. And he is the State Revenue Commissioner 

at the Georgia State Department of Revenue. 

Welcome, and you are recognized. 

STATEMENT OF DOUGLAS MACGINNITIE 

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

Connolly, and members of the subcommittee. I am the Commissioner of the Georgia Department of Revenue. And I’d like to thank 

you all for having me here today. 

First, I think it’s always helpful to start a little bit with the big 

picture. Georgia is the ninth-largest State in the Union. We have 

approximately 9.8 million residents. And in 2012, we had about 5 

million taxpayers; 4.25 million individuals and about 750,000 companies. In Georgia, the Department of Revenue collects about $20 billion 

in taxes each year, which is about 98, 99 percent of all State revenue. So we’re the tax collector in the State. And the vast majority 

of our revenue is individual income tax and sales tax, which comprise about 85 percent of all State revenue. 

Last year we processed 4.25 million individual returns. And of those, just about 3 million were refund requests, totaling about $2 

billion. So like all taxing authorities, we’re just a big data processor, right? We bring in $20 billion a year, but then we have to 

keep and manage all that information related to the $20 billion. 

Turning to the fraud issue, several years ago, long before my 

time at the Department, folks at the Department started to recognize that there was a problem with fraud and started trying to 

fight it. In 2005 a group was formed within the agency called the 

Office of Special Investigations—it always has to sound official and 

catchy—to fight the fraud. We started out by putting some pretty 

simple rules in place, I gather much like the IRS in their filters, 

to process those returns. So, as an example, if too many refunds 

were going to the same bank account or the same address, we 

would start flagging those returns. There might be a good reason 

that that many were going to one address or one bank account, but 

there might not be, and we wanted to take a closer look. 

Well, as we evolved and as the criminals evolved, we began to 

realize that the vast majority of the fraud involved identity theft. 

Some of the fraud was the actual taxpayer making fraudulent 

claims on their own tax return, but more often someone was using 

a legitimate taxpayer’s information in filing a fraudulent came in 

their name. 

We also realized that our ability to look at a return and tell that 

the filer was not who they said they were was very limited. Just 

looking at a return doesn’t really tell you much. And our ability to 

access all sorts of third-party data was and to a great extent still 

is very limited. Taxing authorities don’t have all that information 

most of the time. 

And personal experience showed it could happen to anybody. In 

2011, after I had started my job, my wife’s identity was stolen. So 

when my wife and I filed our joint return, it was kicked out. Someone had already used her name and Social Security number and 

filed a return. And if that’s not the definition of irony, I don’t know 

62 

what is. But we had to process paperwork both at the IRS and the 

State level. So I understand this both from an administrative perspective, but also as a semi-victim. 

All that said, our rules-based approach made a difference. Last 

year, in 2012, for the 2011 tax year, our program stopped 114,000 

refunds, totaling about $75 million. But as I noted, we still knew 

we had a significant hole around identity theft. And in 2011, we 

were approached by a company call LexisNexis to help fight that 

ID theft. I remember clearly the meeting with LexisNexis, thinking 

not only do they understand what the problem is, but also I think 

they have a program that might fix it. Often we’re called on by consultants who want to sell us something. They can help us identify 

the problem, which we all can see, but much less clear how they’re 

going to fix it. 

So in 2012, we started this program, and it works as follows. 

After all of our systems are done checking a return, we think it’s 

okay, we will send that refund request to LexisNexis with some 

very limited information. LexisNexis will scrub it through their 

databases. And based on the filters that we’ve set up along with 

them, if it seems suspicious, it’ll be flagged. If a return is flagged, 

an email and a letter is send to the taxpayer asking them to go to 

a Web site and answer a few simple questions that only the taxpayer should know, much like if you’ve ever had your credit card 

stolen, same kind of system. If they can answer those questions online, the refund gets put back in the queue and out it goes; nobody 

has to touch it. If they can’t answer it or they refuse to try to answer the questions, we hold that refund in abeyance and eventually 

we reverse it out and treat it as if it was a fraudulent refund. 

In putting together the program, we attempted to balance the 

various goals of processing refunds as quickly as possible, protecting the State’s money, i.e., taxpayer money, and protecting taxpayer identities. We’ve run the program now for two seasons, and 

in the first year there was definitely a learning curve, but this year 

it went pretty smoothly. 

From our perspective and from taxpayers’ perspectives, the results have even excellent. It’s added about 1 to 5 days to the processing of a refund, and in 2012 it stopped over 44,000 refunds, totaling over $23 million. It cost the State about $2.6 million. So 

from a business perspective, the program is a no-brainer. We spent 

$2.5 million, $2.6 million, and we stopped $23 million in fraudulent 

refunds. 

At the same time, the agency avoided all sorts of costs associated 

with having to help taxpayers deal with the mess when somebody’s 

filed a fraudulent refund, much like my wife and I went through. 

So one final thought for you all. Our experience is that the tax 

fraud is a growing and serious problem. Last year, our two programs combined stopped 160,000 fraudulent returns, totaling $99 

million, just shy of $100 million dollars. And if you do the math, 

that means approximately 4 percent of all returns that were filed 

with us and over 5 percent of the refund claims were fraudulent. 

I’ll let you do the extrapolation from that, but it doesn’t take long 

to get to some pretty big numbers when you look at other States 

and obviously at the Federal level. 

63 

So thanks for the opportunity to be here. I’m happy to answer 

any questions that you all might have. 

Mr. MICA. We thank you for your testimony. 

[Prepared statement of Mr. MacGinnitie follows:] 

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Mr. MICA. And each of your witnesses. And we’ll turn immediately to some questions here. 

Again, I’m conducting the first hearing on this. I heard one of our 

witnesses said she had been involved in seven. And I think this 

subcommittee has done four of those. The problem is, though, with 

the rip-off and refunds that are fraudulent, it’s spun totally out of 

control. I mean, we had 456,000 cases in 2009, we heard up in 2011 

we were at 1.1 million; 2013, the estimates today are 1.9 million. 

And some steps have been put into place, but obviously we don’t 

have a handle on this. 

Did you testify, Mr. McKenney, that one account received 446 refunds. 

Mr. MCKENNEY. That’s accurate. Yes. 

Mr. MICA. I mean, that’s astounding that something wouldn’t 

trigger. I just renewed my American Express, and they had a series 

of questions. And then also I found any type of financial activity 

out of the ordinary is immediately triggered, I get a call from their 

security folks. 

Mr. Werfel, can’t we put in place some protections? And you 

heard recommendations or some ideas from Georgia. Where are 

we? 

Mr. WERFEL. Yes, we can, and we should. And with respect to 

the situation where money goes to the same bank account, we have 

now effective in filing season 2013 implemented a filter in our system to catch it. 

Mr. MICA. So the 446 would be triggered in the multiple—— 

Mr. WERFEL. Yes. Now it would be triggered. This is part of our 

evolving learning process. As we learn and understand the 

schemes, we make adjustments. For us, the goal is to get ahead of 

them so we can figure out where the schemes are going before they 

emerge. And that’s part of our challenge at the IRS. 

Mr. MICA. Well, we’ve heard the nightmare that was described— 

actually, the ranking member gave his constituent experiences and 

being jerked around by, I think you said, a half a dozen different 

folks. One of the recommendations from victims assistance was a 

central unit, I guess. We have 21 units or have had, and I think 

you’d probably have to have some enforcement or investigations 

units. But, Mr. Werfel, what about some one stop for the taxpayer 

who is caught in this horrible situation. 

Mr. WERFEL. I think that’s a very important thing. We’re evolving in that direction. We have what’s called the Identity Protection 

Specialization Unit that essentially helps us coordinate when you 

have multiple parts of the IRS involved in a single identity theft 

case to make sure there’s coordination. But as Ms. Olson points out 

in her testimony, the Taxpayer Advocate has specific recommendations about how we can enhance that centralization role and make 

it even more one stop. 

And for us, my commitment is to evaluate Ms. Olson’s recommendation. It’s a question of making sure, can we do that evolution effectively and serve the victim? And can we also do it within our resource constraints. So there’s a combination of things. 

But I think the bottom line is we’re very concerned about the impact this is having on victims. Obviously, the impact it’s having on 

the deficit in Treasury is significant. But the impact it’s having on 

70 

victims is significant, and we’re committed to figuring out what we 

can do to help. 

Mr. MICA. Well, Mr. Werfel, you’ve heard of Willie Sutton, 

haven’t you? The famous bank robber. 

Mr. WERFEL. Yes. 

Mr. MICA. Well, Mr. Connolly, now, I thought you had some 

great testimony there. What was the number you said were prosecuted? 

Mr. CONNOLLY. I—— 

Mr. MICA. I have to question this witness. 

Mr. CONNOLLY. I believe, Mr. Chairman, that at the last hearing 

we had, I want to say, because I asked, I want to say there were 

four convictions. 

Mr. MICA. Four convictions. We’re lucky that Willie Sutton isn’t 

around today, because you could scam the IRS and get away with 

it. Can you tell us where we are on prosecution? 

Mr. WERFEL. Yeah. I don’t have the exact number, but I can tell 

you that in the area of criminal investigation, just like in some of 

the other areas we’ve described, there is significant ramp-up in activity. We had 1,100 investigations under way this year. We have 

convictions—— 

Mr. MICA. How many? 

Mr. WERFEL. I don’t know the exact number. I know that many 

of them were—— 

Mr. MICA. Well, again, the ranking member has said it’s just a 

handful, and that’s disgraceful. 

Mr. WERFEL. I can get you the number. I will say that some—— 

Mr. MICA. People are stealing from the taxpayer and they’re getting away with it. When the staff told me that some of the drug 

dealers are switching out to scamming and ripping off the IRS 

with, again, these illegal payments, that should raise eyebrows because we’re talking about billions. 

Mr. WERFEL. Yeah. I will get you the number of prosecutions. We 

are seeing sentences now at 20-plus years, which we think is a 

good deterrent. We’re getting positive feedback. 

Okay. I just received a note that we have 785 indictments on 

identity fraud. 

I just wanted to point out that I was on the phone recently with 

the field directors in Tampa Bay and Miami for the IRS, in terms 

of our work down there. They feel they’ve really turned a corner 

with local police and local law enforcement, getting positive feedback from local law enforcement about how the IRS efforts are 

stepping up in this area. So we have a lot of work to do. I think 

the point is, is that things are trending better in terms of our activity in this area. 

Mr. MICA. Well, finally, can you tell me, again, I’ve heard 90,000 

to 100,000 employees, what’s the current number of employees with 

IRS? 

Mr. WERFEL. We have roughly 85,000 full-time employees. And 

then when you add in part-time employees, it gets to about 95,000. 

And that’s, by the way, that’s an 8 percent reduction from where 

we were in 2010. 

Mr. MICA. Now, again, but a lot of people who are involved in 

this use the cost-effective means. We heard from Georgia, and a 

71 

limited number of personnel, a lot of electronic monitoring that the 

private industry is doing. And somewhere we’re doing it in a very 

expensive, ineffective fashion. 

Let me yield to Mr. Connolly now. 

Mr. CONNOLLY. Mr. Chairman, I see the chairman of the full 

committee is here. 

Mr. ISSA. I’m just—— 

Mr. CONNOLLY. All right. Because I’d be more than happy to 

yield to the chairman. 

Mr. MICA. I was going to get to him immediately after you. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Welcome to our panel. 

I’m glad to hear, Mr. Werfel, that the number of investigations, 

criminal investigations, and the number of prosecutions has gone 

up. I do think we need to know the number of convictions. 

Mr. WERFEL. Yes. 

Mr. CONNOLLY. Because my recollection, honestly, was last time 

we met in the last Congress was it was in the single digits, which 

was a shocking statistic, given the magnitude of the problem. 

Mr. WERFEL. Okay, so we have 301 sentences to date in 2013. 

So, again, the numbers are increasing. And I don’t know that that’s 

the right number. 

Mr. CONNOLLY. Right. 

Mr. WERFEL. The trend is improving. 

Mr. CONNOLLY. But I think all of us could agree, and this isn’t 

only the responsibility of IRS, nor do I mean to imply that, but the 

idea that there are almost 1.9 million cases of identity theft, which 

then involve the kinds of problems Mr. McGuiness—I mean Mister, 

I’m sorry—— 

Mr. MACGINNITIE. MacGinnitie. 

Mr. CONNOLLY. MacGinnitie. So it’s Irish. 

Mr. MACGINNITIE. A little bit. 

Mr. CONNOLLY. All right. And his wife experienced, you know, 

1.9 million, even the convictions of only 300 and something people 

is not earth-shattering and not reassuring to the consumer, to the, 

you know, the taxpayer. 

So are you getting cooperation from U.S. attorney’s offices on 

this? Are they taking this more seriously? 

Mr. WERFEL. Yes, as an emerging risk for the IRS and for the 

broader tax community and tax system, there’s a lot going on. You 

know, obviously, technologies are changing, we’re training our employees differently, and we’re forging new partnerships with U.S. 

attorneys, local law enforcement, States. All of this is happening, 

it needs to happen quickly and effectively, because as the chairman 

pointed out, this is a problem, and that you point out, this is a 

problem that’s growing exponentially. 

Mr. CONNOLLY. Right. 

Mr. WERFEL. And I think what the IRS is doing is showing that 

we are moving quickly to deal with this emerging risk, but it’s 

growing very quickly. And so we need some very sophisticated solutions here. 

Mr. CONNOLLY. Yeah, because here’s the message. The chairman 

referenced Willie Sutton. If Willie Sutton were in the game today, 

he’d probably focus on the IRS rather than a bank, because the 

72 

chances of your being caught, tried, and convicted are minuscule. 

I mean, if you’re looking at probabilities, it’s a good place to go for 

a penalty-free crime. And that is of great concern I think to this 

subcommittee. 

And of course one of the things I want to give you, you mentioned in your testimony, Mr. Werfel, that some of this has to do 

with resources. A billion dollars of cuts in the budget of IRS does 

circumscribe the IRS’ ability to full-throated respond to this exponential threat. 

Mr. WERFEL. Yes, there’s many examples of that. I mean, what 

we are worried about is, as our resources decline, can we keep up 

with the level of service that we need to provide to taxpayers and 

appropriate enforcement activities. And, you know, on the positive 

side, as our resources go down, we become more efficient. And I can 

point to a lot of different areas, and I think the chairman mentioned in our conference spending we had a significant decline. And 

right now we’re at very low levels of travel and training and conference spending as part of our efforts to become more efficient. 

But there’s only so much efficiencies we can drive before the 

budget cuts start to impact our ability to tackle huge issues like 

identity theft. And, you know, at the appropriate setting we can sit 

down and walk through the President’s 2014 budget request and 

how we plan to deploy resources in a way to get to at identity theft. 

Mr. CONNOLLY. I want to get at two other issues in my limited 

time. 

Mr. McKenney, you talked about direct deposit. So here’s something presumably to try to make more efficient and more immediate the tax refund to the taxpayer. But unwittingly it also makes 

more efficient and in some ways easier for, you know, the bad guys 

to interrupt that flow and redirect it somewhere else. What can we 

do about that? And should taxpayers now insist that they want a 

check and not have it directly deposited? 

Mr. MCKENNEY. One of the things we recommended that they do 

and work with Treasury on is to validate that the account that 

they deposit this refund into is an account in the taxpayer’s name. 

And the IRS has started a pilot in that regard—or Treasury has— 

and that’s starting to show a benefit. So the more they can authenticate things before they deposit into an account, the better off 

they’ll be. 

Mr. CONNOLLY. Well, but they do have the option of asking for 

it in a check form. Is that correct? 

Mr. MCKENNEY. Yes, that’s true. 

Mr. CONNOLLY. And do we find that the incidence of identity 

theft is much higher with direct deposit than it is with, say, old 

fashioned—— 

Mr. MCKENNEY. Yes, most of it’s direct deposit now. So it’s so 

quick for a person to take that and have it put to a prepaid debit 

card or whatever they can accomplish there, whatever they’re trying to do much faster. 

Mr. CONNOLLY. Mr. Chairman,my time has expired. And I will 

withhold my last question until—unless—— 

Mr. MICA. Thank you. No, that electronic thing doesn’t work, 

though, because they sent my refund, but my wife got it and there 

was nothing I could do about it. 

73 

Pleased to welcome and recognize the chair of the full committee, 

Mr. Issa. 

Mr. ISSA. Thank you, Mr. Chairman. I’ll talk to Pat about joint 

account and the benefits thereof, I guess. 

Mr. Werfel, this is an important hearing, and I want you to continue working on it. Obviously, the IRS is behind, clearly, behind 

the thieves. They’re getting better at it. I think Mr. Connolly 

brought the right point, which is, why rob a bank when you can 

rob Medicare, Medicaid, and the IRS. It’s so much easier to rob the 

Federal Government through fraud and identity theft, candidly, 

than it is to walk in with a gun into a bank. 

However, I have some frustrations I’m bringing to you today. As 

you know, a number of months ago the President made it clear 

that the behavior that occurred in an isolated basis in Cincinnati 

was unacceptable, and he charged that we’d get to the bottom of 

it. Well, we’ve gotten to the fact that it’s not isolated to Cincinnati, 

as was said. It’s not isolated to Washington. It goes to your Chief 

Counsel’s office. 

And as we go to do our discovery, that’s where the rub is. You 

promised us full cooperation. And yet the Office of Chief Counsel 

apparently has 70 attorneys, they’re delivering four documents a 

day per attorney to us, and they look like this. And in minute print 

it says 6103. 

Now, if a lawyer is working on a document, four pages a day per 

lawyer, are you going to tell me that this is, in fact, minimal redaction as required by law? 

Mr. WERFEL. Well, there’s a couple of statements that I’d like to 

make if I could. 

Mr. ISSA. No, I’d just like your answers, please. 

Mr. WERFEL. The lawyers take very seriously their legal responsibilities to redact information under the law, to redact information 

that is specific to an individual taxpayer. And all such information, 

bottom line, Mr. Chairman, is all such information, whether redacted or unredacted, is delivered to this Congress. It is delivered—— 

Mr. ISSA. You have delivered less than 1 percent—excuse me for 

standing, but I kind of have to get over your stack—you have delivered less than 1 percent of the documents, actually, to the Ways 

and Means Committee. You are not delivering to the Ways and 

Means Committee. 

Mr. WERFEL. I disagree with that conclusion. 

Mr. ISSA. I’m afraid that’s what Chairman Camp put out, and he 

put it out in writing. 

Mr. WERFEL. And I disagree with that conclusion, and if I’m allowed to explain, I can provide specific facts that would support my 

disagreement with that conclusion. 

Mr. ISSA. Here is my question to you. We produced, I believe, 63 

search terms. You added some search terms. I’m not disagreeing 

with your adding progressive and looking for progressive. That’s 

fine. I want more, not less. 

You came up with this, it added up to a total of about 80 search 

terms, and then unilaterally your people, the Office of Chief Counsel, reduced that down to a dozen. They are not searching on the 

terms we’ve asked for. 

74 

Our request is for all information related to this. When you 

eliminate search terms unilaterally, you’re obstructing us by limiting the scope of discovery. Do you understand that, Mr. Werfel? 

Mr. WERFEL. I do, but I disagree with the premise of your question and the facts that you’re offering. 

Mr. ISSA. Did you, in fact, did your people limit the search terms 

below the search terms that are delivered actually in your response 

letter today if you have looked at it? 

Mr. WERFEL. We are prioritizing searches in order to get you 

more documents more quickly, and that is having an impact. In 

fact, this week alone the amount of document production that we 

have been able to produce has increased dramatically. That doesn’t 

mean that we’ve eliminated search terms permanently. It means 

that we’re making modifications in order to make sure that we are 

zeroing in on—— 

Mr. ISSA. That is not your call, Mr. Werfel. 

Now, let’s go into a little quick detail. What’s interesting about 

this page, I understand why you’ve removed taxpayer specific. But 

this is also—this information is being delivered without headers. If 

the names were there, I still wouldn’t know what those numbers 

are. Somebody deliberately printed out information, or actually created digital, in which they stripped out the meaningful data so you 

know actually what these columns are. Even Mr. Connolly would 

say this doesn’t look like a spreadsheet he has normally had because spreadsheets say what’s on top of it. 

Additionally, we asked you for information. We set the priority, 

if you are going to slow roll us, and you are slow rolling us. 

Mr. WERFEL. That is not true. 

Mr. ISSA. Mr. Werfel, you frustrated this committee. You promised to do things and you’re not. The Office of Chief Counsel, as far 

as we know, have made the decisions to limit search terms. Is that 

correct, or did you? 

Mr. WERFEL. I’m working together with the Office of Chief Counsel. We are not limiting the search terms in a permanent way. We 

are prioritizing to get the most relevant documents. If I can make 

a point—if I can make a point—— 

Mr. ISSA. Please. I’d ask unanimous consent for an additional 4 

minutes to explore this. 

Mr. CONNOLLY. Mr. Chairman, I will gladly give that unanimous 

consent, provided that the Democratic side of the aisle be allowed 

to respond, given the fact that we are now off topic with respect 

to this hearing. I respect the wish and the prerogative of the chairman to use this opportunity to query Mr. Werfel on a different 

matter, and I respect that, but I’d like an equal opportunity to respond. 

Mr. MICA. I would grant the full committee chair that time, and 

we will grant additional time to the minority. 

Mr. CONNOLLY. I thank the chair for his graciousness. 

Mr. ISSA. Thank you. 

Mr. Werfel, let’s go through the numbers. 

Mr. WERFEL. I thought I was about to—— 

Mr. ISSA. No, no, I have only been granted additional time. 

Mr. WERFEL. Okay. 

75 

Mr. ISSA. Since the Democrats seem to be carrying your water, 

I think I’ll just use my—— 

Mr. WERFEL. I think they’re just important facts for me to get 

out and hopefully I can get them out. 

Mr. ISSA. Yes, they’re important facts to get out and you’re obstructing them. So now—— 

Mr. WERFEL. I am not. That is not true—— 

Mr. ISSA. So now—— 

Mr. WERFEL. —and not supported. 

Mr. ISSA. Mr. Werfel, apparently you were put in by the administration to run cover until somebody new would come in. 

Mr. WERFEL. Again, that is not true. 

Mr. ISSA. It is now my time, and I’m going to explain to you what 

this committee has found. 

Mr. Werfel, in 2 months, out of 64 million pages, you have delivered 12,100, and this is over 2,500 of them. They are completely 

useless. Your interpretation of 6103 is so broad that you are delivering no meaningful information. 

More importantly, we have prioritized a number of discovery. 

Lois Lerner, a woman who did not properly, but did attempt to 

take the Fifth before our committee, we have asked for all correspondence. It has not been forthcoming. We have asked for correspondence with the White House. 

Mr. Werfel, let’s understand something. Correspondence with the 

White House, by definition, had darn well better not include 6103, 

so redaction is not appropriate. We are not covered by the Privacy 

Act. Therefore, even if it includes names of individuals like Sheldon 

Adelson and how you’re going to target him or something, even if 

it included that, quite frankly, it would not be 6103. It would be 

communications with the outside. 

Additionally, your people have unilaterally chosen to redact, according to them, private information. Mr. Werfel, you don’t have 

the right to have private communication on government time and 

government equipment. If Lois Lerner or others had private communications, they are not subject to 6103, because if there’s 6103 

in there, we expect them to be immediately referred for criminal 

prosecution. You can’t have private conversations and release 6103. 

That, of course, would be wrong. 

So as we go through this discovery and find far excess redacting, 

no question at all, slow rolling discovery, limiting search terms, you 

may call it prioritizing, but you are not prioritizing as we need 

them. It is my expectation that we should have already received 

communications to and from the White House. We should have already received communication between anyone who was conducting 

non-6103 business. We should have already received Lois Lerner’s 

entire packet. 

These are not my expectations. These are the American people’s 

expectations. Your speed of delivery is such that you will be long 

gone, the President will be long gone, Lois Lerner will have retired 

before we would receive a sufficient amount of information to be 

meaningful. 

You’re leaving me no choice. I’ve asked you for information. 

You’re not forthcoming. Your own Chief Counsel’s office appears to 

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76 

vestigation. The communications to and from those lawyers clearly 

mean that the Office of Chief Counsel, a political appointed office, 

has been compromised. You’re leaving me no choice, I will be preparing and sending a subpoena for these documents to the Secretary of the Treasury, who will be remaining on, and our expectation is that the Treasury Department will take over the delivery of 

documents in a timely fashion, use such attorneys as they may see 

fit that they believe are not compromised. And I would ask you to 

immediately instruct the Chief Counsel that they, the Chief Counsel’s office, may not any longer be part of the decision making, only 

attorneys who are not part of our investigation. 

And quite frankly, I’m deeply disappointed. It was my expectation with our past relationship and your past work that you would 

come in not just wanting to be a caretaker, but actually get to the 

bottom of this. But as Cincinnati turned to Washington, Washington turned to political appointee offices, and the President 

began calling this scandal phony, and Secretary Lew began calling 

this scandal phony, what I can’t understand is how you can think 

the American people would accept this as phony. 

This is a real investigation. We need real discovery. If these documents need to be redacted, then by definition you have no reason 

to deliver them. If you can only deliver me blank pages, completely 

blank pages, deliver them to the other committee. 

But I’ll tell you one thing, as these pages, which are almost impossible to figure out where they came from, are gone through by 

the Ways and Means Committee, you’d better hope, you’d better 

really hope that we don’t find something there that clearly should 

not have been redacted, which we expect we will. 

Moreover, I’m sad to see you go because I thought you could do 

something. I’m sad to have to issue a subpoena because that’s not 

what I thought we were going to have. We did not enter this investigation thinking that this was some grand conspiracy. We entered 

this thinking this was something fundamentally wrong. My Democratic friends are convinced that progressives were targeted, even 

though your own Inspector General has said he found no evidence 

of it, while he did find evidence of other groups, generally called 

Tea Party groups, having been targeted. 

We don’t want to find only one side. We want to find anyone 

that’s targeted, and we want to hold people responsible. Today Lois 

Lerner is being given full pay and not held accountable. Our job 

is to find out everyone that should be held accountable and make 

sure the American people can trust this will not happen again, because I believe if we’re thwarted in this investigation this will become a pattern of behavior, whether by the chief executive of the 

United States or simply by individuals who have power within bureaucracies such as the IRS, the EPA, OSHA, and the like. 

Mr. Chairman, I now owe 6 minutes to the Democratic member, 

and I understand. I yield back. 

Mr. MICA. Duly noted. And I recognize at this point the ranking 

member of the full committee. 

Mr. CUMMINGS. I counted 7. 

Mr. MICA. Well, I’ll make that determination. 

Mr. CUMMINGS. I’m just looking at the clock. 

77 

Mr. MICA. We started at 4. You weren’t here, sir. I will make the 

determination. 

Mr. CUMMINGS. Thank you for recognizing me, Mr. Chairman. 

Mr. MICA. You are recognized for 5 minutes, and then I will consult with the ranking member to see how we distribute the balance 

of the time, I promise. Thank you. 

Mr. CUMMINGS. Mr. Werfel, first of all, I want to thank you for 

your service. I listened to what just was said to you, and I again 

thank you for your service. Earlier this week Chairman Issa accused you of obstructing the committee’s investigation because you 

were not producing documents fast enough, in his opinion. You 

have produced to Congress tens of thousands of documents. We 

have interviewed 18 IRS witnesses. And today is the third time you 

have testified personally before our committee in the last 2 months. 

In addition, Mr. Werfel, there’s a law, Section 6103 of the Internal Revenue Code, that prohibits you from revealing information to 

our committee that identifies specific taxpayer information. Is that 

right? 

Mr. WERFEL. Yes, that is correct. 

Mr. CUMMINGS. And you need to review all the documents you 

are producing to our committee to first make sure they comply with 

the law. Is that correct? 

Mr. WERFEL. Yes. 

Mr. CUMMINGS. I’m not concerned with your compliance, Mr. 

Werfel, because I have seen it. My concern is the actions of the IG 

was blocking you from providing information about progressive 

groups to this committee. 

Mr. Werfel, 2 weeks ago, on July 17th, you testified that some 

non-Tea Party groups received treatment similar to Tea Party applicants and the IRS denied at least one category of applicants 

after a 3-year review. Is that right? 

Mr. WERFEL. That’s correct. 

Mr. CUMMINGS. In this instance, your career experts reviewed 

these documents and told you this information was okay to share 

with the committee, that it did not reveal specific taxpayer information and did not violate Section 6103. But just as you were 

about to produce the documents, this information to the committee 

and the information to the committee, the IG personally intervened 

and claimed that it might reveal specific taxpayer information. Is 

that right? 

Mr. WERFEL. That’s correct. The IG reached out to me and expressed concerns about our pending delivery of the information. 

Mr. CUMMINGS. So you were about to hand us documents, the 

same kind of documents Mr. Issa just asked about, but then the 

IG says no. Is that right? 

Mr. WERFEL. The IG raised serious concerns. 

Mr. CUMMINGS. When we asked the IG about this, he confirmed 

that his effort to block your disclosure to the committee was unprecedented. We don’t hear those complaints coming from over the 

other side now. When we pressed him on this, he said he was still 

in: ‘‘ongoing discussions’’ with the office, and that he would resolve 

this issue with you: ‘‘sooner rather than later.’’ The problem is we 

have not heard a single word from the IG since then. 

78 

Can you give us an update? Has he withdrawn his objection? Are 

your discussions still: ‘‘ongoing’’? 

Mr. WERFEL. They are. I have spoken to him recently about it. 

He reasserted his concern and indicated that he was still not convinced that the information was not taxpayer—— 

Mr. CUMMINGS. The information about the progressive groups? 

Mr. WERFEL. In this case, yes. 

Mr. CUMMINGS. Do your career experts at IRS still believe it 

would be appropriate to provide this information to the committee? 

Mr. WERFEL. Yes, they do. 

Mr. CUMMINGS. I’m deeply disappointed that the IG continues to 

block the production of information about progressive groups to the 

committee. Representative Connolly and I sent a letter to the IG 

yesterday asking him for an explanation. 

Mr. Chairman, I ask that our letter be included in the record. 

Mr. MICA. Without objection, so ordered. 

Mr. CUMMINGS. As I have said throughout this investigation, our 

job is to ensure that all applications for tax-exempt status are 

treated fairly, regardless of whether they are conservative, progressive, or in between. If we do not receive a satisfactory response 

from the IG by next week, I would ask that you go ahead, Mr. 

Werfel, and produce these documents. 

You know, the chairman just said, he just told you, he wants the 

documents. So let’s get him the documents, even over the objection 

of the IG. We will follow up and let you know if we hear from him, 

but look forward to hearing from us. 

Mr. WERFEL. Thank you. And if I can just make a point, you 

know, I’m not exactly familiar with the exact procedures of the 

committee in the hearing, but I would like an opportunity to respond to each of Chairman Issa’s allegations and questions. A lot 

of them warrant corrections of fact and clarification. I wish he was 

here for me to respond to him directly, but at some point during 

the course of the events today I would appreciate the opportunity 

to respond. 

Mr. CUMMINGS. May I use the other 5 minutes? 

Mr. MICA. If you would like. You have 6 minutes. 

Mr. CUMMINGS. Thank you. Thank you, Mr. Chairman. 

One of the things that I remind my committee members is that 

when people come in here, they come here, these are public servants, they are giving their best, and their family, everybody is 

watching them on C–SPAN, employees, accusations are made, and 

they never have an opportunity to respond. And it really, really 

bothers me. And so I want you to respond, if you may. Try to leave 

me a few more minutes, because I need to ask you a few more 

questions. Do the best you can. 

Mr. WERFEL. First of all, the notion that we’re impeding or obstructing is completely false. In fact, the opposite is true. We are 

involved in a thorough, comprehensive effort to fully cooperate with 

all the congressional committees that are asking questions, asking 

for witnesses, asking for documents, and there’s substantial facts 

in evidence that demonstrate our full cooperation. 

And keep in mind, I have been in seat for 9 weeks, and this process is moving forward, and we are getting better and more effective 

at producing this discovery on a day-to-day basis. I have more than 

79 

100 employees working on the document request that Chairman 

Issa raised a concern about. This includes 70 attorneys working 

full-time to review documents. We are producing documents on a 

weekly rolling basis. This committee, as of today, will have over 

16,000 pages of documents that have been delivered. But to Congress as a whole, as of today, there will be 70,000 pages of documents delivered. 

Now, what’s important about the redaction process here, and 

what’s very important to make sure that the public and the American people understand is that all of these documents are being 

produced to Congress. We operate within legal constraints in terms 

of what we can deliver to who and to when. We have to protect taxpayer information, and there are rules enacted by this Congress 

that require that certain documents can only go to the tax communities while other documents can come to—— 

Mr. CUMMINGS. And if you violate 6103 what happens, what’s the 

penalty? 

Mr. WERFEL. It’s criminal. It’s a criminal violation. 

Mr. CUMMINGS. Jail time. 

Mr. WERFEL. Exactly. 

Mr. CUMMINGS. All right. Go ahead. 

Mr. CONNOLLY. Would the gentleman yield? 

Mr. CUMMINGS. Of course. 

Mr. CONNOLLY. Mr. Cummings, the very same chairman who just 

railed against Mr. Werfel in his 9-weeks tenure, did he not say on 

June 18th in defense of the Inspector General, Mr. George, that in 

erring on the side of caution, that was the right policy—— 

Mr. CUMMINGS. He certainly did. 

Mr. CONNOLLY. —as to 6103? And therefore, the withholding of 

documents was justified. 

Mr. CUMMINGS. That’s right. 

Mr. CONNOLLY. Is it also true, Mr. Cummings, that the list of 

search terms submitted to Mr. Werfel and IRS by the majority on 

this committee includes 81 items? 

Mr. CUMMINGS. That’s right. 

Mr. CONNOLLY. And is one of the terms ‘‘audit,’’ the word 

‘‘audit’’? 

Mr. CUMMINGS. That’s right. 

Mr. CONNOLLY. Might that generate, I don’t know, a lot of paper 

at IRS, Mr. Cummings? 

Mr. CUMMINGS. Yes. 

Mr. CONNOLLY. Thank you, Mr. Cummings. 

Mr. WERFEL. And I’m going to get to that point, but let me quickly go through some of the statistics and facts to make sure that 

there is an understanding of the amount of discovery that’s coming 

across from the IRS to these committees. 

Mr. CUMMINGS. And intertwined in that, your testimony earlier, 

that you are losing, I think you said, 8,000 employees, 8,000. 

Mr. WERFEL. Yeah. We take this very seriously, and out of Chief 

Counsel’s office of 1,600 lawyers, we have 100 lawyers working on 

this; 100 people, 70 full-time. I said there was now 70,000 pages 

of documents as of today, by the end of the day today, that will be 

delivered to Congress. These have very relevant information on 

them that were specifically requested by the committee. There was 

80 

a prioritization. You asked for the BOLO spreadsheets; we got you 

them. You asked for the emails associated with the BOLO spreadsheets; we got you them. You asked for training materials, emails 

that were self-selected by witnesses appearing for interviews. All of 

those were delivered. 

We’ve responded to 41 different letters from members of the committee. Including today’s hearing, IRS officials, including myself, 

have appeared in 15 hearings since the IG report was issued. We 

have made 19 employees available for a total of 29 interviews. Supporting all of this is thousands and thousands of work hours as we 

work to be cooperative. 

And I think the trend here, which is important, is that the document production in particular, because that’s of concern, is increasing. In fact in this week alone we are having increases, and the 

reason is, is because over the last few weeks we have made important changes to that process. I have added more people. We’re making technology enhancements. 

But perhaps most important, to get to one of Chairman Issa’s 

most critical concerns, which I think really warrants clarification, 

what happens is when we get 82 search terms it produces a large 

amount of documents, a majority of which are nonresponsive. And 

what happens is you have to look through every document. We 

have a responsibility to look at every page. And if you produce an 

enormous amount of documents to look through, it takes longer 

and longer to find those responsive documents and give them to 

you. Roughly 75 percent of all the documents that were being 

pulled based on the 80-plus search terms were nonresponsive, yet 

staff time was being eaten up going through each document. 

So what we did is we tried to help the process along, not by permanently saying we’re not going to search these search terms, but 

by saying, if we can take the search terms and ensure that we have 

a higher response rate in some of this information, then we’re 

going to get the information that this committee and other committees want quicker. 

So no unilateral decision has been made to alter the search 

terms in perpetuity, not at all. That’s not true. What has happened 

is we have made an adjustment to the search term in order to increase the number of documents you get sooner rather than later. 

The fact that I’m able to deliver thousands of pages of documents 

today is because we have made these improvements. It doesn’t 

mean that we’re not fully committed to getting all these documents. 

Mr. CUMMINGS. Before my time runs out, you’re trying to obey 

the law, is that what you are telling us? 

Mr. WERFEL. I’m trying to obey the law. 

Mr. CUMMINGS. That we made, that this Congress made. 

Mr. WERFEL. Yes. 

Mr. CUMMINGS. And finally, I want to just enter in the record the 

letter of August 2nd, 2013, to Chairman Issa, Mr. Chairman, from 

Mr. Werfel. I would like to have that entered into the record. 

Mr. MICA. Without objection, so ordered. 

Mr. MICA. That concludes the time of the gentleman. And I will 

recognize then Mr. Jordan. 

And Mr. Jordan, you have 25 seconds in addition to the 5 minutes. 

81 

Mr. JORDAN. That’s fine. Thank you, Mr. Chairman. 

Mr. Werfel, you know, 81 search terms, 12 search terms, 2,500 

pages of redacted, you know, blank page, whatever. And you have 

got reasons and you gave your explanation, that’s fine. But it’s 

been almost 3 months since Lois Lerner had a planted question 

asked where she told the world that this was going on. And we 

have been asking ever since that happened for Lois Lerner’s 

emails, and you guys won’t give them to us. Now, that’s not redacted. That’s not 61. We just want the correspondence from the 

person at the center of the storm and you guys don’t give it to us. 

It seems to me that’s a couple hours. You got 1,600 lawyers. Why 

can’t you give us her emails. 

Mr. WERFEL. I don’t know that that’s the case. In fact—— 

Mr. JORDAN. Our staff told me we have not—— 

Mr. WERFEL. —we’ve provided all of the emails. 

Mr. JORDAN. Our staff told me we have not gotten emails from 

Lois Lerner. 

Mr. WERFEL. We should clarify that. In fact, I received a letter 

recently which attached an email from Lois Lerner that we produced. I mean, so we are producing these emails. In fact, when you 

make a specific request to us—— 

Mr. JORDAN. We want the emails from anyone at the IRS correspondence with the White House. Why can’t we get that? 

Mr. WERFEL. We’ve looked at those, too, and we’ve searched, and 

in some ways, in some searches, we came up with zero. There were 

no emails between that individual and the White House. But this 

is the point I’m trying to make. If you have a particular request, 

give it to us. We will move it higher in the priority list and we’ll 

get you the documents. 

Mr. JORDAN. Well, then why are we not getting this? 

Mr. WERFEL. I don’t know. 

Mr. JORDAN. William Wilkins, we’re not getting his emails. 

Mr. WERFEL. That’s also not true. Two things about William Wilkins, if I could. One, I think today or this week we are producing, 

because you made a specific request, and as part of our cooperation, if you want to put something in the front of the line, please, 

put something in the front of the line because that is going to help 

us. It’s about prioritization. 

The other thing about Bill Wilkins is we’ve offered Bill Wilkins 

to be interviewed by this committee. Last week we made that offer. 

It’s a standing offer. At this time, your staff has not taken us up 

on this offer. 

Mr. JORDAN. Oh, we will at some point. Trust me. 

Mr. WERFEL. I hope do you, because this is not about obstruction. 

This is about offering as much information as we can. And the fact 

is, is that I know you have a lot of questions about Bill Wilkins, 

we want to get you those answers. We have offered him to be interviewed by your staff. You haven’t taken us up on that. 

Mr. JORDAN. So I just a want to be clear then. Every single email 

of Lois Lerner’s that we have asked for, you have sent to us? 

Mr. WERFEL. No. But we’ve provided hundreds of her emails. 

But, again, this is a process. 

Mr. JORDAN. No, no, no, no, no, no. It’s pretty simple. You go to 

her computer and you get her emails. 

82 

Mr. WERFEL. It’s not that simple. 

Mr. JORDAN. Well, it shouldn’t take 3 months. 

Mr. WERFEL. Well, the challenge that we have—— 

Mr. JORDAN. Well, here is the point. Just a little bit ago you said 

you did send us all the information. And then I asked you the question, did you send us every single email from Lois Lerner, and you 

said no. So which is it? Did you send them all or did you not send 

them all? 

Mr. WERFEL. We sent many Lois Lerner, but not all of them. 

Mr. JORDAN. So that’s different than you first told me. You got 

to be square with us. 

Mr. WERFEL. I’m being square with you. 

Mr. JORDAN. We want every single email from Lois Lerner. We 

want every single correspondence from Bill Wilkins. And we would 

like any correspondence between the IRS and the White House. 

And you haven’t given it all to us. 

Mr. WERFEL. And here’s my answer if I could, which is—— 

Mr. JORDAN. I’m giving you plenty of time to answer. 

Mr. WERFEL. This is a process, and we are providing information 

on a rolling basis. We are getting it as quickly as we can to you. 

If you have a specific request, we will do our best to put that at 

the top of the priority ladder and get you that. 

Mr. JORDAN. We have a specific request. We want every bit of 

correspondence from Lois Lerner and you won’t give it to us. Here 

is the lady who broke the story with the planted question. Here is 

the lady who took the Fifth. Here is the lady who is at the center 

of this storm. And we want every bit of email from her, and you 

won’t give it to us. 

Mr. WERFEL. I will tell you I’m committed to. 

Mr. JORDAN. And you have had 3 months to do it. 

Mr. WERFEL. I will tell you what we’re committed to. We’re committed to reviewing every one of Lois Lerner’s emails, and providing the response. Some of it has to be redacted for 6103. Some 

of it be reviewed for relevance and—— 

Mr. JORDAN. Why would Lois Lerner have 6103 information in 

her emails? She is the policy person. So she’s got specific taxpayer 

information that she’s sending all over the place? 

Mr. WERFEL. It might be very normal for Lois Lerner to email 

someone inside the IRS who is authorized to have taxpayer information. 

Mr. JORDAN. Well, let me ask you to do this for us. 

Mr. WERFEL. A lot of her emails—— 

Mr. JORDAN. When you go back to the office today—— 

Mr. WERFEL. Yes. 

Mr. JORDAN. —can you tell those 70 lawyers, amongst the 1,600 

you have at the IRS, can you tell them to focus on one thing: Every 

single bit of correspondence Lois Lerner has sent to anyone on the 

planet, we want that information given to this committee so we can 

get to the bottom of the story. Can you do that? 

Mr. WERFEL. I will go back and I will ask the team to prioritize 

that over other document requests that we’ve received, because 

you’ve asked, and that’s part of the partnership. 

Mr. JORDAN. If the President wants to work hand in hand with 

Congress and you guys want to get to the bottom of this story, why 

83 

wasn’t that done back in May when this story broke? Here is the 

lady who has taken the Fifth, who broke the story with the planted 

question, who tried to blame it on two rogue agents, which you 

know isn’t true. Here is the lady at the center of this storm. Why 

wasn’t that done the very first day you came on the job where you 

said, you know what, here is the lady at the center of this whole 

thing, let’s get every bit of correspondence and let’s get that to the 

committee. 

If the President really wants to work hand in hand with Congress to get to the truth, I would have expected that would be the 

very first action you would take, Mr. Werfel, and here we are 3 

months later and you are telling us in this committee, we have 

only sent you some of Lois Lerner’s emails. Why wasn’t that done 

day one? 

Mr. WERFEL. I think the process—— 

Mr. JORDAN. Don’t you think the American people would have 

liked to have that information from day one? 

Mr. WERFEL. Yeah, I know. A couple of other responses. First, 

Lois Lerner’s emails are on the top of our list and we are working 

through it. But we’re also producing—— 

Mr. JORDAN. That’s not good enough. That’s not. We want them 

and we wanted them in May and you still haven’t got them to us. 

Here it’s August. 

Mr. WERFEL. And as I’ve demonstrated, we’ve produced a lot of 

information to you that’s highly relevant to your investigation. 

Mr. CUMMINGS. Mr. Chairman? Mr. Chairman? 

Mr. MICA. Okay, wait a second. Okay. So we got 10 seconds. Go 

ahead. 

Mr. CUMMINGS. Mr. Chairman, may I have 10 seconds just to—— 

Mr. MICA. The gentleman is recognized. 

Mr. CUMMINGS. The gentleman just said that we hadn’t received 

documents with regard to William Wilkins. We have received, I 

know we haven’t received all of them, but I have got them right 

here. If the gentleman would like to have them, I will give them 

to him. 

Mr. MICA. The gentleman yields back. 

Okay, I think we’ve got even time now. And I think Mr. Turner, 

the gentleman from Ohio, is to be recognized. 

Mr. TURNER. First off, let me join my colleagues, Mr. Jordan, of 

course the chairman, being outraged to the fact that the IRS in the 

beginning didn’t tell the truth on this. We’re not dealing with the 

IRS coming forward and saying this is what has happened, either 

to the American public or to this committee. The IRS came forward 

first with a fiction that this was something that was done by rogue 

agents down in IRS in Cincinnati. Now we are learning, of course, 

that it’s not. Now they are not being forthcoming with information. 

And it’s just astounding to have both members of this investigative 

responsibilities of this committee and certainly yourself, Mr. 

Werfel, defend not giving us, the American public, information. But 

the chairman has said, luckily, you know, we’re not dependent 

upon your good graces to get this information. The chairman is 

issuing subpoenas. And we certainly have the full ability to use the 

Federal Government’s authorities to compel your answers since you 

have not chosen to. And I look forward to the fact that that is comVerDate Aug 31 2005 11:05 Feb 04, 2014 Jkt 000000 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 C:\DOCS\86438.TXT APRIL
84 

ing. I think it is hysterical that you keep saying we are doing this 

on a rolling basis because the only thing that’s rolling is that you’re 

rolling the American people and you’re rolling this committee and 

it is going to stop. 

Now, getting us back on topic. The issue of identity theft is certainly a very important one, and it’s one that of course the IRS and 

its processes can have an effect upon where people have 

vulnerabilities. Commissioner MacGinnitie—did I pronounce that 

correctly—I appreciate your testimony. You mentioned LexisNexis. 

They’re actually in my community, and I appreciate you working 

directly with them. I think it’s important for us to look to industry 

and the ways in which some of the data processing, data mining 

efforts can be used to be able to detect issues of identity theft. 

Now, Mr. Werfel, the financial industry and commercial tax software manufacturers have made recommendations to the IRS to improve its detection and prevention of identity theft. Additionally, 

the IRS has started two task forces to address fraud in tax preparation and bank settlement products. One positive step is the IRS’ 

issuance of guidance that allows tax preparers to run algorithms 

that identify fraudulent returns and report that fraud to the IRS. 

The American Coalition for Taxpayer Rights has also worked with 

the IRS to ensure members of ACTR can send real-time reports of 

fraud to the IRS. 

Mr. Werfel, the financial industry has important expertise and 

has taken steps to combat identity theft. How is the IRS working 

with the tax software companies on the issues of this problem? 

Also, we are aware that the State of Georgia has utilized the private sector to help identify potential fraud through third-party information. We understand the IRS has a program to receive information from industry. Could you describe this? And how have you 

worked with companies to help them identify consumer fraud and 

identity theft? 

Mr. WERFEL. Well, we have a very critical partnership with private industry. They often are developing and are at the cutting 

edge of sophisticated solutions to deal with fraud or error. There 

are companies that we have working at the IRS right now that 

help inform on our filters, help inform on trends and schemes that 

we can help capture, help us, provide us information. We also 

benchmark and see what other companies are doing that can face 

similar challenges, whether it’s a credit card company or other 

types of entities in the financial services industry. 

So I think that we have a robust partnership with private companies and experts, and I think if we’re going to tackle this issue 

effectively we’re going to have to stay very close with our corporate 

partners because they are very—— 

Mr. TURNER. Mr. Werfel, one thing I’m interested in specifically 

is the interface between the private sector and the IRS. And obviously, there’s a huge amount of communication that’s going back 

and forth that includes opportunities for discovery of identity theft. 

Not just looking to how industry can be applied to your internal 

bureaucratic operations, but how also, through that collaboration, 

identity theft might be more easily identified. 

Mr. WERFEL. Yeah, I completely agree. There is a lot of dimensions to this problem, and very often technology is going to be a 

85 

solution that helps us stay ahead of it. I mean, what we have been 

describing in this hearing is a problem that’s emerging quicker 

than the solutions are to tackle it. Technology is the key. 

Mr. TURNER. Mr. Werfel, now turning back to the IRS scandal, 

I want to say this. You know, when you first came on and sat in 

front of these committees and gave everybody and the American 

public your statement that you were going to get to the bottom of 

this, you don’t get to just decide that. You have to actually prove 

it. And the fact that you’re not standing in front of the committees 

and readily disclosing the information that would establish both 

what happened, that you’re stopping it and correcting it, is a tremendous amount of arrogance. And I certainly hope that you will 

become forthcoming. 

Mr. WERFEL. It’s not true. It’s just simply not true. We are providing the information. We are doing it—— 

Mr. TURNER. I yield back. 

Mr. WERFEL. We are doing it in a robust and legally appropriate 

way. But any indication that we are standing in the way of discovery is just not true. 

Mr. MICA. Thank the gentleman. 

Recognize now the gentleman from North Carolina, Mr. Meadows. 

Mr. MEADOWS. Thank you, Mr. Chairman. 

Thank you, each one of you, for being here. 

Mr. Werfel, and Mr. McKenney, if I could direct your attention. 

As we look at tax preparation and the industry and addressing this 

issue of tax fraud, you know, what are the recommendations that 

have been made that have not been addressed or that we’re failing 

to address with regards to the IG, with areas—because we’re seeing that it’s growing. According to Mr. Werfel’s testimony, it says 

that it’s growing. So what have we not addressed? 

Mr. MCKENNEY. At least from our perspective, the main concerns 

the IRS needs to be in a position to be able to do is authenticate 

kind of in three areas. One, as the tax return comes in the door, 

make sure they authenticate that it’s from the right taxpayer. 

When they validate the income and withholding, they need to run 

that against income and withholding to verify that. And then on 

the end of where they deposit into a bank account, that also needs 

to be authenticated so that they deposit to a bank account that’s 

in the name of the taxpayer. So those are the three areas where 

we believe it needs improvement. 

Mr. MEADOWS. So, Mr. Werfel, why do you think we have not 

been more successful in addressing that? Is this a lack of working 

with the tax preparers? 

Mr. WERFEL. I think, you know, we want to achieve more than 

we can given time and resources. The schemes emerge, the identity 

theft problem grows quicker than we want. 

I’ll give you an example. You know, one of the things that the 

IG has pointed out is that we can do more to use the standard authentication procedures that are using credit cards. Like if you are 

authenticating yourself, they might ask for your mother’s maiden 

name or something that potentially the identity thief might not 

know about you. They might, but they might not. It improves the 

chance. So we’ve developed this program we call our out-of-wallet 

86 

program, where we are implementing those very types of procedures, but we are finding that it takes resources. The more people—— 

Mr. MEADOWS. So this all gets down to money, is that what 

you’re—— 

Mr. WERFEL. No, no, I’m just giving you an example. 

Mr. MEADOWS. Okay. 

Mr. WERFEL. It’s a combination of knowing about the solution 

and having the resources to effectively implement it and make sure 

that it is going to have the most positive return on investment. So 

there’s a lot of factors at play. 

Mr. MEADOWS. All right. So let me go with this, because we’ve 

got an issue. You’ve said that this is increasing, this problem is increasing, and yet what we have is we have—and I’ve talked to 

some of the groups that are actually working to try to solve this 

in the private sector. And so if it’s increasing, and they are making 

recommendations on how to fix it, the private groups that you work 

with, where is the problem? Is it that they are making ineffective 

recommendations or we’re just not implementing it at the IRS? 

Who’s at fault? 

Mr. WERFEL. I don’t know if I want to say it’s a fault. It’s an inherent reality that the problem grows quicker than our solutions 

can track it. 

Mr. MEADOWS. So if it’s growing bigger, and they’re identifying, 

because I’ve talked to some of the stakeholders, and they have a 

lot of recommendations, and they would indicate that you all are 

not acting on a lot of their recommendations. Would you agree with 

that? Or are they just not telling me the truth. 

Mr. WERFEL. I’d want to take some time before I would concur 

with that. I mean, I think we are looking at—— 

Mr. MEADOWS. Are you aware of any times where they’ve made 

good recommendations that you have not implemented at the IRS? 

In preparation for this hearing, did you see, my gosh, we should 

have done that? 

Mr. WERFEL. I didn’t see any, so let me go back and talk to the 

team about whether there are any such situations, and I can make 

you aware of them. 

Mr. MEADOWS. Okay. Let me go on a little bit further. In recent 

years, we have seen and you talked about instances of hundreds of 

direct deposits going to banks—— 

Mr. WERFEL. Yes. 

Mr. MEADOWS. —and going to the same bank account. What 

steps are we taking? I mean, that seems like that would be a very 

easy programming issue to deal with in working with financial institutions, and yet I have heard of one that had 400. I have heard 

of another that had 1,000 going to the same bank account, you 

know. 

Mr. WERFEL. Yeah. 

Mr. MEADOWS. How can you not address this? 

Mr. WERFEL. We are absolutely addressing it. And as I mentioned earlier—— 

Mr. MEADOWS. You mean you are going to be addressing it? 

Mr. WERFEL. No, we are, effective with filing season 2013, we 

have put in place new filters to help us identify redundant bank 

87 

accounts. And as Mr. McKenney testified earlier, he gave some of 

the facts of what an impact that’s having. So I would have liked 

to have caught that before. This is one of those things where a 

scheme emerges, and we can hit it as soon as it emerges, or we can 

be out in front and—— 

Mr. MEADOWS. I would encourage you to work closer with those 

stakeholders to do this. I have a few other questions here, but I’m 

running out of time, so let me finish with this one. Do you not see 

a problem with Obamacare coming in and with the subsidies that 

are about to be asked for under just, you know, in terms of just 

saying, well, I qualify, do you not see schemes that could come out 

of that that would make this pale in comparison? 

Mr. WERFEL. We’re certainly focusing on potential risk of fraud 

in the—— 

Mr. MEADOWS. Yes or no? Do you see the potential for great 

schemes? 

Mr. WERFEL. I see it. But there is one point I want to make 

about the Affordable Care Act which is important, is when people 

get tax credits under the Affordable Care Act to help subsidize 

their premiums, they don’t get the money. The money goes to the 

insurance company. So if I’m an identity thief or someone who is 

looking to defraud the government, I’m going to prioritize a place 

where I’m actually going to get cash—— 

Mr. MEADOWS. So what you’re saying is we should just get rid 

of where we pay people when they haven’t paid any taxes, that 

would get rid of all of this, all the tax credits that we give to people 

when they haven’t paid taxes? 

Mr. WERFEL. No, what I’m suggesting is, is that because the Affordable Care Act is structured such as if you get the economic benefit, you don’t get the money, it goes directly to the insurance company, that that is a disincentive for identity thieves and other 

fraudsters to come in and try to defraud that program, because 

there is never a point in the process where they are going to get 

cash in hand when they’re doing that type of premium tax credit 

application. 

That doesn’t mean that in the entire lifecycle of the Affordable 

Care Act we aren’t concerned about certain vulnerabilities that 

we’re working on. I’m just suggesting that that’s a critical part of 

IRS’ role, and there you have something in place that’s going to 

disincentivize tax frauds from leveraging. 

Mr. MEADOWS. Well, I thank the chairman for his indulgence. 

Mr. MICA. Well, they haven’t called a vote yet. They are going 

to call a couple of vote in a few minutes. So I guess with agreement 

with the ranking member, we’ll just divide remaining time, 6 minutes a side. 

And, Mr. Connolly, you can divide your 6 minutes. I’ll recognize 

you at this time. 

Mr. CONNOLLY. I thank you, Mr. Chairman, and I thank you for 

being fair in allocating time. 

Let me just say, speaking for myself, Mr. Werfel, I apologize for 

the treatment you have gotten here today. One can stand up on a 

pile of paper, and that act could be construed, I’m sure it was not 

intended, to be an intimidating act. One can use those histrionics 

to hide the fact that, in fact, if anybody has blocked the issuance 

88 

of documents that counter a narrative, it’s the Inspector General, 

Mr. George, who is not here today. 

Mr. George testified under oath in response to questioning to me 

that the 202 unidentified entities he was looking at, he could not— 

there was no way of ascertaining whether progressive groups could 

be included in their number. And yet, subsequently, I believe on 

the 18th, under oath again, in response to questioning from Mr. 

Cartwright of this committee, he said he had indeed been apprised 

that there were BOLOs for progressive titles as well before the 

22nd hearing. And in my view, that is at best, most charitably, an 

elusive answer under oath. 

We now have the Inspector General blocking documents being 

made available to this committee in an abundance of caution with 

respect to 6103, according to your own testimony. And it’s been described as an unprecedented intervention by an IG on the eve of 

producing documents. I don’t hear any outrage about that. That’s 

just perfectly fine. It’s the General Counsel who’s the problem. 

I say it’s the Inspector General who’s the problem. I say the Inspector General has not provided objective and independent analysis before this committee. I say he has compromised his integrity 

and his credibility as a witness in this trumped-up so-called scandal. 

The fact of the matter is, based on everything we know, the IRS 

messed up in Cincinnati. They created so-called Be On the Look 

Out, BOLO’s, to try to screen an avalanche of tax-exemptions applications, some of which were clearly triggered by the Citizens 

United decision by the Supreme Court. And overwhelmed, they 

tried to create a filter. They did it badly. They were cautioned not 

to do it and they persisted. Wrong. And my colleagues on the other 

side of the aisle are right, as are we on our side, to criticize the 

IRS. 

You came in, in the midst of that, to help try to clean up that 

and get to the bottom of it, and I congratulate you in trying to do 

so. And I have no evidence in front of me that you have done anything to obstruct or block. And I will say it is unfortunate that we 

could not go forward on this committee on a bipartisan basis and 

understand that both progressive and conservative groups apparently were targeted, and that’s wrong. It’s wrong if it’s conservative. It’s wrong if it’s progressive. It’s wrong if it’s both. 

But the idea that there is some underlying scandal here that is 

political and goes all the way to the top was indeed the narrative 

before any facts were even known. And it was wrong. 

So I’m not surprised at the drive-by shooting nature of some of 

what’s taken place here. And I regret it, because I do not think it’s 

worthy of this committee. I think we could have and should have 

had a bipartisan analysis of what went wrong. But that narrative 

just won’t plow. 

And, Mr. Cummings, I’d be glad to yield to you the balance of 

my time. 

Mr. CUMMINGS. Thank you very much. Thank the gentleman for 

yielding. 

Going back to the letter of August 2nd, 2013, Mr. Werfel, that 

I introduced a few minutes ago, and it states—because I need to 

this be—I need the folks to hear this—and it states that as of today 

89 

you have provided more than 16,000 pages of documents to the 

committee and more than 70,000 pages of documents to those committees that are authorized to receive taxpayer-specific information. Is that correct? 

Mr. WERFEL. Yes. 

Mr. CUMMINGS. Given the importance of protecting the confidentiality of taxpayer information, can you explain what additional 

steps are required before the IRS can produce responsive documents to our committee and what you have done to assure this 

process is expedited? 

Mr. WERFEL. Yeah. So under the law we are required to make 

sure that no information that’s specific to a taxpayer can be disclosed to anyone that’s not authorized to receive it. And under the 

law, the tax committees, in particular Chairman Camp, Chairman 

Baucus, and their designees, under the law are the only entities 

that can receive that type of information in Congress. 

And if I could offer an example—— 

Mr. CUMMINGS. Quickly, because I want to address something 

Mr. Jordan said. Go ahead. 

Mr. WERFEL. Just the one example I want to give, it’s easy to 

pick up a document with a bunch of black on it and say you’ve redacted everything, this is unacceptable. But the reality is, some of 

the documents requested by the committees are taxpayer case files. 

They say, I’m going to pick taxpayer X. I want their file. I want 

their application for tax-exempt status. I want everything associated with it. So we grab a file and give it to them and it might 

be a bunch of pages, but because it’s a taxpayer file, the entire file 

is protected under 6103 and it would be a crime for us to disclose 

that to any unauthorized sources. 

So we can have someone, you know, kind of indicating, look at 

all these pages that are completely blacked out. But what I want 

to make sure is we get the facts out. The facts are, those documents are coming to the Congress. We are working furiously to get 

them up here. But just the fact that they’re blacked out is not in 

any way an obstruction. It’s a legal responsibility that we have. 

And if there are concerns about the way in which we are redacting, 

I’ve said it before, we should talk to Chairman Camp, we should 

talk to Chairman Baucus. They have authorities to provide that information as well to other Members of Congress. 

There’s a checks and balances program here in place to make 

sure that the right discovery receives to the right hands. And I just 

want to make sure that we are leveraging those checks and balances and understanding the facts. 

Mr. CUMMINGS. Again, thank you for your service. I see my time 

has run out. 

Mr. MICA. Thank the gentleman. 

Let’s see, we have 6–1/2 minutes left now. I’ll yield 4 minutes to 

Mr. Meadows, and I think he is going to yield some of that time 

to Mr. Jordan. 

Mr. MEADOWS. For each one of you that have come here today, 

I thank you. We have a number of questions that we will give to 

you. We ask that you respond in terms of for those particular information. 

90 

Mr. MEADOWS. Mr. Werfel, I want to give you a chance to change 

what you just responded to with Ranking Member Cummings. You 

said that we have 16,000 documents at this particular time in 

Oversight, and that’s—— 

Mr. WERFEL. Let me clarify that. 

Mr. MEADOWS. Because we have 12,000. 

Mr. WERFEL. Right. Today, as of today, we are scheduled to 

produce by the end of the day today, you know, it’s on schedule, 

I hope—that’s my goal, that by the end of the business day today 

we have additional pages of documents that will put you at about 

16,500 pages for the total. 

Mr. MEADOWS. Will those be any more meaningful than what we 

have already gotten? 

Mr. WERFEL. They are responsive to the documents that you 

have asked for. 

Mr. MEADOWS. Will they be any more meaningful? You’re an educated individual. Will they be any more meaningful? 

Mr. WERFEL. I don’t know how to respond to that because they’re 

the documents that you requested. We are trying to provide you responsive documents, so they will be meaningful in some way if they 

are responsive. I don’t know how—— 

Mr. MEADOWS. Well, you’re sending a very clear message. It’s 

just not one, I don’t think, that—— 

Mr. WERFEL. I will say, if I can respond, you said any more 

meaningful than the documents that we provided. We provided you 

BOLO lists. We provided you emails associated with BOLO lists. 

We provided you training materials. We furnished for you 19 witnesses that have been interviewed 29 different times by committees. That’s meaningful information. I think it’s very meaningful 

information. So the notion that we’re providing you information 

that’s not meaningful I don’t think is correct, and I want to clarify 

the record on that. 

Mr. MEADOWS. Well, I’ll yield to the gentleman Mr. Issa. 

Mr. ISSA. Thank you. I didn’t plan on coming back, but I just 

want to go through a couple of things. 

Mr. WERFEL. Please. 

Mr. ISSA. According to you, nothing on this page is anything but 

100 percent taxpayer-specific information, taxpayer identity information. Identity. 

Mr. WERFEL. It may be. And as I was just explaining, I think you 

missed it, right before you came in, if I could explain—— 

Mr. ISSA. No, no, look, I’ve gone through the 6103 and I’m going 

to get to my point very quickly, because Mr. Cummings made a 

point, and it’s a good one. Except he made a point trying to disparage a long-serving government servant, the IG. 

The IG has been consistent, as far as I can tell, in a highly, highly limited release under 6103. In other words, the ranking member 

is upset because he’s not getting progressive groups that under 

oath the IG said were not targeted in his evaluation looking at the 

information. The amazing thing is, you didn’t defend him, and I’m 

shocked. I’m shocked that you would not at least say that the Office of the Inspector General, which includes key lieutenants, one 

of whom was the Democratic deputy staff director here, that they 

are above politics, they are above partisanship, that they have a 

91 

level of consistency. Instead, you let him imply that he was basically trying to thwart an investigation on progressives. Will 

you—— 

Mr. WERFEL. That was not my intent. 

Mr. ISSA. Will you make it clear today—— 

Mr. WERFEL. I will. 

Mr. ISSA. —that as far as you know he has been consistent in 

what he has said; that his office, although it includes people that 

at certain times worked for Republicans or Democrats, that it is 

considered to be nonpartisan, and their actions to this day, to the 

best of your knowledge, have been above question? 

Mr. WERFEL. I will respond in this way: I have a deep respect 

for Russell George and his office. I have had a longstanding relationship with him and other members of the IG community. In my 

short tenure here, there have been moments along the way where 

we have disagreed. We have disagreed on the nature of whether 

something is 6103 protected. We have disagreed on the nature of 

some of the facts and data associated with the 501(c)(4) backlog, et 

cetera. 

But to your point, I have no basis to challenge his integrity in 

any way, shape, or form. I think he is an individual of great integrity, and I’m glad you asked the question. 

Mr. ISSA. Well, then, his integrity was challenged by the ranking 

member. 

Mr. CUMMINGS. That’s not true. 

Mr. ISSA. Well, I’m afraid—— 

Mr. CUMMINGS. There you go again. 

Mr. ISSA. —that the record will speak for itself. 

Mr. Chairman, I haven’t done my second round. The ranking 

member has. Could I have my 5 minutes. 

Mr. MICA. Well, okay, we had divided time up. We have 2–1/2 

minutes left on our side. 

Mr. ISSA. If I could have that I will be brief. Thank you. 

Mr. MICA. The gentleman is recognized. 

Mr. ISSA. I’m asking you today as we send a subpoena—I have 

signed it now. 

Mr. WERFEL. Okay. 

Mr. ISSA. —to Secretary Lew—who, by the way, I’m hoping he 

can get above his statements on a phony scandal about this and 

realize this scandal is real. Real Americans were really victims. 

Now, those victims, I’d love you to sit down, look at the law, and 

make the appropriate decision, which is withholding details on people who were victimized is not the intent of 6103 and that the clear 

intent can be recognized. When you hand—oh, people are smiling 

and smug behind you. I just wish the camera could see there. Sort 

of, oh, well, we’re going to get past that. 

The fact is, Chairman Camp is looking at a lot of this information. Today you’ve talked about how fast you’re delivering things. 

All you had to do was hand his people basically the keys to the 

search, and they could have looked online over your shoulder. They 

have complete right to 6103. You don’t have any redacting capability. They have the right to everything you see, they can see. And 

still he’s received a fraction of the documents. You continue to essentially slow roll. He is getting documents in the order that you 

92 

choose to give them, and that’s wrong. That’s just plain wrong. So 

we can—— 

Mr. WERFEL. That’s not true. 

Mr. ISSA. No, no, it’s my limited remaining time. I was with 

Chairman Camp earlier today. I’ve looked at his releases. I’m up 

to date. He is frustrated and said so in a letter to you with the 

speed of the release, with the fact that you don’t have a reason to 

do anything other than comply and turn over. 

The fact is the American people need answers and people who 

have been victimized need it. So I’m joining with the ranking member in one sense, not that you invent out of thin air and help support this progressives were victimized, when in fact we have a 

sworn statement that they weren’t, but that you make available 

every possible piece under a uniform interpretation of 6103. And if 

you want to go to the level that Mr. Cummings wants on what 

6103 is, great. Be consistent, lower it to lowest level, and more importantly, go back and soul search with that legion of attorneys 

and say, how in the world can we keep victims a secret? And that’s 

what you are doing today. You are keeping victims a secret standing behind this. 

I do not believe that this is minimum redaction under 6103. I 

don’t think you believe it either. And as you go off into your private 

life, I want you to think about the legacy of whether you helped 

victims or hindered this investigation. 

I thank the chairman and yield back. 

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

Mr. MICA. Okay. We could probably get 2 minutes in a side. 

Mr. Cummings, 2 minutes. 

Mr. CUMMINGS. Let me be very clear. With regard to the IG, 

there were things that were left out of his report that he admitted—that he admitted. There was disagreement, Mr. Werfel, with 

regard to documents, 6103, and what came under 6103. And clearly 

you had, based on the testimony that we had in the last hearing, 

you had career folk whose job it was to determine what was or was 

not 6103 to say that these documents could be released. Is that 

right? 

Mr. WERFEL. That’s correct. 

Mr. CUMMINGS. And there was disagreement. The mere fact that 

one disagrees with someone does not mean you question their integrity. I disagree with my wife a lot, but I love her to life and I 

trust her. But what we have said is that we want the truth, the 

whole truth, and nothing but the truth, so help me God. That’s 

what we want. Whether it’s progressives, whether it’s liberals, 

whether it’s conservative, anything in between, we simply want the 

whole truth. 

And so, you know, on the one hand they say in one hearing, oh, 

we’ve got to be real careful with 6103. Then in the next hearing 

they said, dammit, we don’t like the way you’re dealing with 6103. 

Give us everything as fast as you can. 

Seventy lawyers—70 lawyers—working full-time going through 

documents. Let me tell you something. On the one hand, if you release information about taxpayers they’d be all over you. I’m just 

saying, I mean, you’re damned if you do and you’re damned if you 

don’t. And I think the best thing to do is to obey the law, period. 

93 

And, Mr. McKenney, you have got recommendations. Mr. Werfel 

talked about 8,000 employees, losing 8,000 employees, sequestration. How does that affect your recommendations, the loss of employees? 

Mr. MCKENNEY. As it relates to identity theft? 

Mr. CUMMINGS. Yeah. 

Mr. MCKENNEY. Well, obviously, when they have a problem they 

have to deal with they have to draw from their existing employee 

base, which affects their other operations. That’s the concern, and 

it would be a concern of ours also. 

Mr. MICA. Okay. Let’s see, you have 2–1/2 minutes. Mr. Jordan, 

you are recognized. 

Mr. JORDAN. Thank you, Mr. Chairman. I would just say this: 

They did release 6103 information, the Inspector General said so 

four different times, and one of those cases was referred to the Justice Department for prosecution, and this Justice Department won’t 

prosecute. So they did exactly what—I want all the information. So 

we have the IRS releasing 6103 information, but they can’t give us 

Lois Lerner’s emails. I don’t care, you said 70,000 pieces, you know, 

you can make it a million pieces of information, but if you don’t 

give us her emails, what does it mean? 

I want the emails. Here is an example. We got some limited 

emails regarding Mr. Wilkins. Here is an email from Janine Cook, 

who I think works in the Chief Counsel’s office, an email she sent 

to Mr. Wilkins. And she says, ‘‘Bill, thought you might be interested in this’’—it deals with the Tax Code, Citizens United—she 

says, ‘‘Bill, thought you might be interested in this in light of your 

earlier email.’’ So we get that email, but we don’t get the earlier 

email. We want all the emails. 

I mean, this is a great example of, you know, you keep saying, 

well, we are sending you some. Mr. Werfel, we want them all. And 

let me ask you this: Why have you limited the search? Why have 

you limited the search to May 10th, 2013? There are still all kinds 

of cases pending. People still haven’t got a resolution to their taxexempt status. Why are you limited to that day? 

Mr. WERFEL. I can answer all those questions. First, let me just 

point out that this process moves forward. It’s not like it’s over 

today. There is a cooperation that can exist. And if you have particular documents that you’re not seeing coming through in the 

midst of all these tens of thousands of pages, you bring it to our 

attention—— 

Mr. JORDAN. You told me earlier, Mr. Werfel, that you have not 

sent us all Lois Lerner’s emails. 

Mr. WERFEL. We have not. We’re reviewing them. And I can explain to you the subject of that review. As they’re ready they come 

over. But they’re being reviewed for responsiveness. 

Mr. JORDAN. All right. 

Mr. WERFEL. And as an example, we might get an email that we 

pull down that’s an email exchange between a worker and their 

spouse about an upcoming medical appointment that they might 

have, or day care arrangements. And we’re not going to send that 

over, it’s nonresponsive. And if we did send that over, you’d say 

you’re loading these documents with things that are, you know, not 

helpful to our review. 

94 

So these are just, I think, standard procedures that a government agency would go through to make sure that we’re giving 

you—— 

Mr. JORDAN. Well, you can’t have it both ways. You can’t brag 

about 70,000 pieces of information and documents you’ve sent over 

and then say, oh, but we don’t want to send you too much, we want 

to just—we want to have—— 

Mr. WERFEL. We want to be responsive. That’s the key. So if you 

have a particular email—— 

Mr. JORDAN. I’ll tell you what. I’ll tell you what. We’ll take all 

Lois Lerner’s emails, we’ll take all Bill Wilkins’ emails, and we’ll 

take all the emails from IRS staff to the White House. We’ll take 

all those, and we’ll be the judge if you’re being—if you’re sending 

us too much information. 

Mr. WERFEL. I’m going to review them for responsiveness, because that’s a standard procedure that’s done. But let me make one 

point. You picked up a piece of paper that we’ve provided to you, 

discovery, and you’ve said, this is interesting, I have an additional 

question based on this email. That’s great. Tell us that, and we’ll 

look for the very document that you’re asking for, because this is 

a cooperative process. 

Mr. JORDAN. We will do that. 

Mr. WERFEL. This is cooperation. This is not impedement, this is 

cooperation. And that’s my commitment. 

Mr. MICA. I thank the gentleman, both the witnesses and members of the panel for participating today. As we conclude, just let 

me say that we started out, of course, on the issue of identity fraud 

and the way IRS is dealing with it and the revelations that the IRS 

is being used somewhat as a piggy bank for fraudulent tax returns 

right now. 

As I said when we started, we are trying to look at some of the 

problems within IRS, and we’ve looked at the conference spending, 

we’ve looked at the contracts in another hearing, and today the 

fraudulent returns. We’ll continue that. We want to correct the situation. And we do have these scandals to deal with. 

We diverted a bit to the, I guess, the frustration by members on 

our side. And when you have, you know, thousands of pages, you 

did in fact provide the pages, and then the President and others 

orchestrating the phony scandal title to these investigations. 

Just in closing, I’ll put in the record the statement of the President in May when this became public about the scandal. ‘‘I’ve reviewed the Treasury Department watchdog report. The misconduct 

that it uncovered is inexcusable. It’s inexcusable. And Americans 

are right to be angry about it, and I’m angry about it and will not 

tolerate this kind of behavior by any agency, but especially IRS.’’ 

These are the words of the President. And then he directed Secretary Lew of Treasury to follow up with the IG to see who is responsible. We’re trying to find out who’s responsible, too, and we’ll 

do that, and continue to do that. 

So I thank you for being with us and participating as members 

of the panel. There being no further business before the Subcommittee on Government Operations, we’ll leave the record open 

a total of at least 7 days for additional questions may be submitted 

to the witnesses. 

95 

Mr. MICA. Again, thank you for participating, and this hearing 

is adjourned. 

[Whereupon, at 12:10 p.m., the subcommittee was adjourned.] 

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