U.S. GOVERNMENT PUBLISHING OFFICE

33–614 WASHINGTON : 2019

THE INTERNAL REVENUE SERVICE’S RECORD 

RETENTION POLICIES: IMPROVING COMPLIANCE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JULY 25, 2017 

Serial No. 115–OS06 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

TOM RICE, South Carolina 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

MIKE BISHOP, Michigan 

RICHARD E. NEAL, Massachusetts 

SANDER M. LEVIN, Michigan 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

SUZAN DELBENE, Washington 

JUDY CHU, California 

DAVID STEWART, Staff Director 

BRANDON CASEY, Minority Chief Counsel 

SUBCOMMITTEE ON OVERSIGHT 

VERN BUCHANAN, Florida, Chairman 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

MIKE BISHOP, Michigan 

PAT MEEHAN, Pennsylvania 

GEORGE HOLDING, North Carolina 

JOHN LEWIS, Georgia 

JOSEPH CROWLEY, New York 

SUZAN DELBENE, Washington 

EARL BLUMENAUER, Oregon 

iii 

C O N T E N T S 

Page 

Advisory of July 25, 2017 announcing the hearing ............................................... 2 

WITNESSES 

Mr. Gregory Kutz, Assistant Inspector General for Audit, Management Services and Exempt Organizations, TIGTA ............................................................ 5 

Mr. Jeffrey Tribiano, Deputy Commissioner for Operations Support, IRS ......... 17 

Mr. Edward Killen, Director of Privacy, Governmental Liaison, and Disclosure, IRS ............................................................................................................... 17 

(1) 

THE INTERNAL REVENUE SERVICE’S RECORD 

RETENTION POLICIES: IMPROVING COMPLIANCE 

TUESDAY, JULY 25, 2017 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON OVERSIGHT, Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m. in Room 

1100, Longworth House Office Building, Hon. Vern Buchanan 

[Chairman of the Subcommittee] presiding. 

[The Advisory announcing the hearing follows:] 

2 


Insert 33614A.001
3 

f 

Chairman BUCHANAN. The Subcommittee will come to order. 

Welcome to the Ways and Means Oversight Subcommittee hearing 

on the IRS Record Retention Policies: Improving compliance. Last 

year the IRS processed 244 million tax returns. Among them are 

individuals, small businesses like my own, who must retain their 

tax records in case the IRS ever wants to review them. 

The IRS must also identify and retain records for defined lengths 

of time in accordance with the Federal requirements. These records 

may later be needed to respond to requests from Congress, private 

citizens, or those bringing suit against the IRS. All of these parties 

have a right to ask the IRS to produce complete records, and the 

IRS has a responsibility to provide those records. 

However, TIGTA found that IRS policies do not comply totally 

with all the Federal requirements, which ensure that all records 

are readily retrievable and usable. Specifically, the production of 

IRS emails currently relies on the IRS’s ability to search thousands 

of employee hard drives; or, alternatively, each employee’s ability 

and willingness to print and file important emails. Neither system 

is sustainable nor reliable enough to satisfy the voluminous records 

requests received by the IRS. 

The IRS has also changed its record retention policy three times 

since 2013, creating confusion across the agency. Additionally, the 


Insert 33614A.002
4 

IRS has failed to setup a basic email system capable of automatically archiving employee emails. 

These issues ultimately reduce transparency, open the agency to 

exposure to civil lawsuits, and inhibit Congressional oversight of 

the IRS. They also create a double standard whereby the IRS is not 

required to maintain basic records in the same way that the average American citizen must. 

No individual or small business could do the same and not be 

subject to punitive actions by the IRS. Furthermore, this issue has 

been raised repeatedly by Congress to the IRS for years without a 

permanent solution. 

So here we are today to discuss TIGTA’s most recent findings 

and the IRS’s progress in addressing these concerns. I believe 

Members on both sides of the aisle want to ensure IRS has the authority and the resources it needs to administer the Code. However, in return we need to see stronger efforts by the IRS to ensure 

that records are properly retained and easily retrievable. We would 

also like to see the IRS work to improve how it procures and implements its IT system. 

To that end, I look forward to hearing from the witnesses today, 

and now I yield to the distinguished Ranking Member, Mr. Lewis, 

for the purposes of an opening statement. 

Mr. LEWIS. Good morning. Thank you, Mr. Chairman. Thank 

you for holding this hearing. I also would like to thank our witnesses for being here today. 

As the broader Ways and Means Committee discusses tax reform, our Subcommittee will play a very important role in improving the Internal Revenue Service. 

Today’s hearing will examine IRS policies to store, archive, and 

produce records, including electronic mail. We will also review the 

IRS’s ability to respond to legal, Freedom of Information Act or 

third party requests, including those from Members of Congress. 

In 2015, the agency received over 10,000 FOIA requests and 

closed over 99 percent within an average of 23 business days. The 

few requests that took longer than 20 business days generally involved privacy or other legal issues that prevented a timely response. 

We all agree that Federal agencies must process and reply to any 

request for relevant electronic and other records in a timely manner. For any agency, including the IRS, information technology is 

key to meeting this standard. This is one of the many reasons that 

Congress must ensure that the agency’s IT systems are not only 

fully funded but also fully staffed. 

Since 2010, Congress cut this agency’s budget by almost $1 billion. That is a lot of money. That is a big cut. In the last 5 years 

the agency’s IT budget was cut by $71 million, and the IRS lost 

nearly 290 IT employees. Many of you heard me say it many times 

and on different occasions that you cannot get blood from a turnip. 

Early this month, the Treasury Inspector General for Tax Administration released a report on the IRS’s electronic records retention policy and IT systems. The TIGTA report made five recommendations, and the IRS agreed with every single recommendation and suggestion. As we move forward, we must remember these 

5 

lessons learned, and we must be mindful of the IRS IT system 

needs. 

Mr. Chairman, together we will begin a good, inclusive process, 

and I hope that we can continue our strong bipartisan work to improve the IRS. Again, I thank you, Mr. Chairman, for holding this 

hearing, and I look forward to the testimony of our witnesses. 

And I yield back. 

Chairman BUCHANAN. Without objection, other Members’ opening statements will be made part of the record. 

Today’s witness panel includes three experts, Gregory Kutz, Assistant Inspector General for Audit for Management Services and 

Exempt Organizations at TIGTA; Jeffrey Tribiano, Deputy Commissioner for Operations Support at the IRS; and Edward Killen, 

Director of Privacy, Government Liaison, and Disclosure at the 

IRS. 

The Subcommittees have received your written statements, and 

they will all be made part of the formal hearing record. You have 

five minutes to deliver your remarks. We will begin with you Mr. 

Kutz. You can begin when you are ready. 

STATEMENT OF GREGORY KUTZ, ASSISTANT INSPECTOR GENERAL FOR AUDIT, MANAGEMENT SERVICES AND EXEMPT 

ORGANIZATIONS, TIGTA 

Mr. KUTZ. Mr. Chairman, Ranking Member Lewis, and members of the Subcommittee, thank you for the opportunity to discuss 

electronic records management. 

Today’s testimony highlights the results of our recently issued report on this matter. My testimony has two parts. First I will discuss our findings, and second, I will discuss our recommendations. 

First, the IRS is required by Federal law to retain and produce 

records when requested through appropriate means. However, the 

IRS has had challenges responding to several high-profile requests 

from the Congress, the public, and the courts. The loss or destruction of information resulting from this as a result of inadequate 

systems and processes along with human error. 

Some key findings from our report include the current email system does not meet Federal requirements for storing and managing 

email messages. We reported last year that the IRS’s previous attempt to implement a new email system was unsuccessful at a cost 

of at least $12 million. Electronics records storage policies have 

changed repeatedly since May of 2013. The policy has changed 

from wipe and reuse information technology, to save everything, to 

wipe and reuse equipment for all but two parts of the IRS, to the 

current policy of refrain from wiping the data from any hard drive. 

It is not surprising that this has resulted in some confusion. 

Storage of tens of thousands of laptops and hard drives at dozens 

of locations across the country is not a sustainable recordkeeping 

solution. And the interim policy for IRS executives to archive their 

emails was not implemented effectively. 

Although many challenges remain, progress was made in several 

areas during our audit. For example, IRS has developed a new policy prohibiting the use of instant messaging for official business, 

and requiring any instant messages that are a Federal record to be 

retained. And improved policy for preserving records for separated 

6 

employees. In addition, the IRS’ most recent attempt to implement 

a new email system is planned to be completed by the end of this 

fiscal year. We also found that IRS closed over 70 percent of Freedom of Information Act requests within 20 business days as required. 

Moving on to my second point, as you mentioned, we made five 

recommendations to the IRS to enhance its electronic records management. These recommendations include: implementation of enterprise email solutions that enable the IRS to effectively organize 

and retain emails; develop an accurate list of executives and ensure 

that their emails are archived; enhance processes related to retention of records for separated employees; and, ensure that FOIA policy is followed by all employees responding to requests. 

As Ranking Member Lewis mentioned, the IRS agreed with all 

five of our recommendations and is taking action. TIGTA will continue to monitor the progress of the IRS in enhancing its electronic 

records management. 

In conclusion, given that the IRS expects taxpayers to retain 

records for years in support of their tax returns, IRS’s ability to do 

the same is essential to maintaining public trust. 

Mr. Chairman and Ranking Member Lewis, that ends my statement, and I look forward to all of your questions. 

[[The prepared statement of Mr. Kutz follows:] 

7 


Insert 33614A.003
8 


Insert 33614A.004
9 


Insert 33614A.005
10 


Insert 33614A.006
11 


Insert 33614A.007
12 


Insert 33614A.008
13 


Insert 33614A.009
14 


Insert 33614A.010
15 


Insert 33614A.011
16 

f 


Insert 33614A.012
17 

Chairman BUCHANAN. Thank you. 

Mr. Tribiano, you are recognized. 

STATEMENT OF JEFFREY TRIBIANO, DEPUTY COMMISSIONER 

FOR OPERATIONS SUPPORT, IRS; ACCOMPANIED BY EDWARD KILLEN, DIRECTOR OF PRIVACY, GOVERNMENTAL LIAISON, AND DISCLOSURE, IRS 

Mr. TRIBIANO. Good morning, Chairman Buchanan, Ranking 

Member Lewis, and members of the Subcommittee. My name is 

Jeff Tribiano, and I am the Deputy Commissioner for Operations 

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

In my position at the IRS I oversee internal operations, which includes information technology, human capital, finance, and privacy, 

Procurement, Planning, facilities, security, enterprise risk, and the 

office of equity, diversity and inclusion. 

Joining me today from the IRS at the witness table is Mr. Edward Killen, the IRS Chief Privacy Officer. 

Over the years the IRS has worked closely with the National Archives and Records Administration, NARA, to improve our processes and protocols in regard to retention of Federal records to 

make sure they are appropriate and work properly. 

We recently have made several significant investments in and 

important progress on a number of fronts to improve our records 

management practices for email and to update our existing records 

management policies, procedures, and practices. Our work continues in this area. 

In particular, we are well on our way to completing the implementation of an enterprise-wide solution for the preservation of 

electronic records of the agency. This will bring us into compliance 

with the Office of Management and Budget directive requiring all 

Federal agencies to have email in an electronically accessible format. 

More broadly, we are also taking a number of other actions to 

improve records management. These include the following: 

We have updated policy and procedure guidance on electronic 

messaging usage and preservation. This includes guidance on the 

preservations of instant messages. 

We have enhanced our clearance procedures for employees who 

leave the IRS, so we can identify and preserve Federal records on 

separating employees before the employee departs. 

We are in the process of upgrading our e-Discovery capability to 

a modern, cloud-based set of tools. This will allow more quickly and 

efficiently for us to meet our discovery obligations in relation to litigation or governmental investigations. 

In the area of training, we recently released the first annual 

Records Mandatory Briefing for all IRS employees and managers. 

This course is designed to heighten an understanding of records retention responsibilities. 

And regarding the Freedom of Information Act, we are upgrading 

the software used for the day-to-day management of FOIA operations. Although the IRS already responds to more than 75 percent 

of FOIA requests within 20 days, this new system will facilitate automation and improve our effectiveness and efficiency in this area. 

18 

Taken together, we believe these efforts to improve electronic 

records management are an important step forward. They are not 

only bringing the IRS into compliance with NARA standards and 

the OMB records management directive, but will also greatly enhance our ability to timely respond to Congress, the courts, and 

FOIA requests. 

We also appreciate the Treasury Inspector General for Tax Administration’s recent review on our records retention policies and 

procedures. We agree with all five recommendations in the report, 

and we believe they are helpful in our efforts to improve in this 

area. We have already made significant progress toward completing 

action on the recommendations and have implemented two of them. 

We are on track to complete all of them by the end of this year. 

That concludes my opening statement, and I am happy to answer 

any questions. 

[The prepared statement of Messrs. Tribiano and Killen follows:] 

19 


Insert 33614A.013
20 


Insert 33614A.014
21 


Insert 33614A.015
22 


Insert 33614A.016
23 

f 


Insert 33614A.017
24 

Chairman BUCHANAN. Thank you, and thank you for your excellent testimony. We will now proceed to the question and answer 

session. And in keeping with my past precedent, I’d like to hold my 

questions until the end. 

I now recognize the gentleman from Arizona, Mr. Schweikert. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. I have a handful 

of things here, and I want to first wrap my head around a couple 

of things I was seeing in the notes here. 

Was there an attempt at an enterprise solution that, shall we 

say, failed? 

Mr. TRIBIANO. Yes, sir. 

Mr. SCHWEIKERT. Why did it fail? 

Mr. TRIBIANO. Back in 2015 we identified and procured a hybrid cloud-based solution to implement the NARA requirements. 

There was a procurement protest on the procurement that we 

issued. GAO upheld the procurement protest so all work on the 

program had to stop. We had to go to our plan B, which was an 

on-premise based solution for the implementation, and that caused 

a delay in the project. 

Mr. SCHWEIKERT. Okay. So you were doing an enterprise 

cloud-based automated capture backup system? 

Mr. TRIBIANO. We were. 

Mr. SCHWEIKERT. That is what had won, and then there was 

a procurement protest that stopped you from adoption? 

Mr. TRIBIANO. There was a procurement protest, yes, sir, and 

GAO upheld the protest, which means we all—— 

Mr. SCHWEIKERT. So you didn’t rebid it? 

Mr. TRIBIANO. We went out to a different solution and rebid 

the second solution, yes, sir. 

Mr. SCHWEIKERT. And the second solution was in-house retention. 

Mr. TRIBIANO. It was an on-premise solution. 

Mr. SCHWEIKERT. And now you are doing—— 

Mr. TRIBIANO. An on-premise solution. 

Mr. SCHWEIKERT. On-premise solution that will be fully automated—I mean, I am seeing a number in here of what was it 

33,000 hard drives if I were to count everything that is floating 

around out there, it is going to be able to automatically back up 

and capture. 

Mr. TRIBIANO. All of our electronic emails will be backed up 

and captured on the on-premise solution, yes, sir. 

Mr. SCHWEIKERT. And direct messaging systems? 

Mr. TRIBIANO. The instant messaging system, yes, sir. But 

there is a piece of that. I mean, instant messaging according to our 

policy, and Ed, Mr. Killen can explain this in more detail, but it 

is not supposed to be used for a formalized record. If it is, then that 

has to be copied into the system and stored. 

Mr. SCHWEIKERT. But if it is used someone has to make that 

decision to save it? 

Mr. KILLEN. Yes, Congressman, that is correct. 

Mr. SCHWEIKERT. So you and I are working on something, and 

we decide we are going to use the direct messaging system. Is that 

how you refer to your system instead of instant? 

Mr. KILLEN. Instant yes. 

25 

Mr. SCHWEIKERT. I have to actually as the employee make a 

decision, oh, I need to hit the button for this one to be retained? 

Mr. KILLEN. That is correct. We refer to that as our office communicator system, and the employee would have to if a record is 

created, and we have been very clear in IRS about disseminating 

this guidance, but if a record is created the employee does have the 

affirmative obligation to save that record. 

Mr. SCHWEIKERT. Wouldn’t it be more elegant just to do a constant capture model? 

Mr. KILLEN. I think part of the context around instant messaging is that we found that it is a tool that is effective for collaborative dialogue, as our employees are working various issues. So I 

think part of the challenge is that most of the information associated with those instant messages would really essentially be transitory. They would not be authoritative records. 

Mr. SCHWEIKERT. So you are basically asking an employee to 

say this is appropriate for retention, this isn’t. I see a human factor 

that creates a level of fragility. And, look, I know we all have certain concerns of privacy and those things, but it is still a government document even if it is transitory. I am just surprised you 

haven’t designed an automatic capture, which is, you know, in today’s price of storage, just capture everything and just, you know, 

build search tools that are more robust that may be easier in your 

life, but this is your area of expertise. 

I have been asked just because—and I only know a tiny bit of 

it, so you are going to have to educate me here. Talk to me about 

the Security Summit with some of our, shall we say, folks in the 

private sector and what we are learning from their technology and 

what we can learn to adopt? 

Mr. KILLEN. I appreciate that question. The security summit 

has been a great success story within IRS. As you know, one of our 

challenges has been addressing identity theft and working to protect taxpayers from that crime. And so, a couple of years ago the 

IRS commissioner decided that this would really be an opportunity 

for a public-private sector partnership to work together with the 

State Departments of Revenue and also with the private sector tax 

return preparer community in order to defend ourselves holistically 

against this threat, and we really refer to it as ‘‘the tax ecosystem.’’ 

And one of the things that we have found certainly is that where 

there are weaknesses in any one of those links on the chain it actually impacts others. So we decided that it would be great if we 

could all work together to try to share lead information, threat detection sort of information in an effort to protect taxpayers. 

Over the past couple years this has been tremendously successful. We have to remain vigilant, but I am pleased to report that the 

commissioner will be announcing later on today that over the past 

2 years we have seen a reduction in our identity theft inventory of 

over 60 percent, and I think that is in large part attributable to 

those efforts along with others, as well. 

Mr. SCHWEIKERT. Mr. Chairman, if there is a second round I 

would love to do some more exploring of this. Thank you for your 

patience. 

Chairman BUCHANAN. I now recognize the Ranking Member 

from Georgia, Mr. Lewis. 

26 

Mr. LEWIS. Thank you, Mr. Chairman. Mr. Deputy Commissioner, has the IRS received additional funding to implement the 

five recommendations? Did you get more money? 

Mr. TRIBIANO. No, sir. The last increase that we had in this 

area to be able to implement was—and we are really appreciative 

for—is the $290 million that Congress appropriated specifically for 

identity theft, cyber security and customer service at our call centers. 

Mr. LEWIS. How have IRS budget reductions in IT impacted 

your operation? What more could you have done or accomplished 

with more money? 

Mr. TRIBIANO. Well, I appreciate that question. Our infrastructure in the IRS is very unique. It is large. It is complex. If you step 

back and look at all the stuff that happens within that infrastructure, we process over 200 million electronic returns a year within 

the IRS infrastructure. We have two data centers that operate on 

a 24-hour, 7-day-a-week basis. 

We have over 187 million taxpayer accounts on the system. We 

collect and process all the records for $3 trillion in tax revenue. We 

process and release about $400 billion a year in refunds through 

this system. 

If you look at it from all the things that we support, we have one 

of the world’s largest audit and collection firms that we have to 

support with 14,000 revenue agents and revenue officers. We have 

one of the largest law firms that have unique requirements within 

the IRS that we have to support from an IT perspective. We also 

have and operate a large call center that handles about 64 million 

calls a year. That comes out of our IT. 

We also have a large criminal investigation force that has unique 

IT requirements that we have to support. We have also processed, 

received, and digitalized over 80 million paper records that come in 

with tax returns and correspondence within the IT infrastructure. 

So all of that, all of that work, is what we protect every year for 

filing season, and when we have reduced funds we have to then reallocate resources to the areas within that system that we believe 

need it just to maintain filing season. 

And what that does is it causes us to shift funds out of development projects that we are working on or other areas within the system itself to be able to fund the filing season systems. 

And what I would really like to do at some point is bring up my 

CIO and maybe meet with the staffs or any Members of the Committee and go through the complexities of the IT system. 

Now, I will give you a few statistics on why it is important. We 

have over 400 tailored applications in support of our lines of business. We have over 2,000 individual COTS products working across 

work station servers and mainframes. We have over 14,000 physical and virtual servers that run the IRS. We have over 7,700 databases that support the servers in the mainframe environment, and 

we support over 82,000 desktops and laptops throughout the agency. 

So any time that we have to shift funds because we have a lack 

of them to true up our filing season systems it makes the other systems more vulnerable for down time, for longer times of repair. We 

27 

have to shift technical experts around. We have a gapping in some 

of our technical expertise within it. 

So we have to shift physical resources to the systems for filing 

season, which takes them off-line for development and production 

of new systems or upgrades. So it has an impact on our ability to 

operate. 

Mr. LEWIS. Mr. Assistant Inspector General, what is your reaction to what has just been stated? I don’t understand how you can 

continue to function, the agency has been cut by more than $1 billion in the past few years. 

Mr. KUTZ. Certainly in the information technology area they 

have had turnover, they have had a reduction in staff, and they are 

thin in a lot of areas with expertise, and there are a large number 

of people, 40 percent of the people, can retire by 2019, so they do 

have a human capital challenge within information technology. 

The topic of today’s hearing I think is a combination of systems, 

processes, and training of people involved in this. So money is one 

factor, but so is management processes and in human beings that 

are trained, and there are internal controls in place to follow up 

to make sure that in this case records are retained and preserved 

in the way they are supposed to. 

Mr. LEWIS. Thank you very much. Thank you for being here. 

Thank you for your testimony. I yield back. 

Chairman BUCHANAN. Mrs. Walorski you are recognized. 

Mrs. WALORSKI. Thank you, Mr. Chairman. Thanks to our witnesses for being here, as well. The General Services Administration 

offers something called Blanket Purchase Agreements or BPAs, 

that cover a wide range of supplies and services but are generally 

designed to streamline the procurement process by functioning as 

sort of a charge account with trusted suppliers. 

One such service covered under a BPA is what is called cloudbased email as a service, which we touched on a second ago, solutions. It is basically a fancy term for things like email calendar contacts, collaboration services, such as instant messenger, and to aid 

in record retention requirements, archiving, and searchability. 

This particular BPA allows an agency to pick from a range of 

services from 14 different companies. To make it even easier, the 

GSA even breaks down the services into this handy grid to make 

it easy to see what is being offered and by whom, correct? 

Mr. TRIBIANO. Yes, ma’am. 

Mrs. WALORSKI. Okay. However, the TIGTA report on the IRS’s 

failed acquisition of an enterprise email system showed that despite going through the BPA process, the IRS purchased items that 

weren’t on the BPA. They purchased something with a similar 

name as the one on the BPA list, but it was a different product. 

A company successfully challenged the purchase with the GAO, 

and the IRS had to abandon the contacts and start over. 

Taxpayers spent $12 million on software that was never used. 

Mr. Tribiano, can you walk us through how something like this 

happens, and what you are going to do to prevent it from happening again? Because basically what it boils down to is you pick 

from something not on the list, taxpayers get stuck with a $12 million bill, and this isn’t used. 

28 

So what safeguards are in place from that experience to say, oh, 

my gosh, we made a mistake, we are never going to do this again. 

Because in my district to all the Hoosiers in the state of Indiana, 

$12 million is a lot of money, especially for something not used sitting on a shelf. So what safeguards are in place now that weren’t 

before? 

Mr. TRIBIANO. Yes, ma’am. At that time that that was done it 

was my understanding there was an assessment done on that blanket purchase agreement, and that the products that we were going 

to purchase off the blanket purchase agreement was allowed within 

the range of products that were being offered. It was only when the 

protest happened, I think—— 

Mrs. WALORSKI. The lawsuit? When the GAO came back and 

basically said you purchased something that is not on this list? 

Mr. TRIBIANO. I don’t remember—or read the language that 

GAO said. I know that GAO came back to us and said we are upholding the protest that was filed by a vendor. And then when that 

happened we turned to what our plan B would be, which would be 

the on-premise solution, and we went out then and contracted for 

that. 

So the safeguards that are in place is we have a mechanism now 

within our procurement office that has a policy and process in place 

that has a secondary view of any schedule that we go to on blanket 

purchase agreements that allows us to have that secondary sign 

off. 

Mrs. WALORSKI. And have they caught anything? This new 

group, have they been able to catch those same kinds of actions? 

Have they been like the watch guard to make sure this doesn’t 

happen again? Has that been successful? 

Mr. TRIBIANO. I think it has been successful. I have not seen 

anything or when I talk with the chief procurement officer I 

haven’t seen anything that would stand out as a large item that 

went through or was stopped. I am being briefed that it is a successful process, and that a process that happened like that in the 

past should not happen again within the IRS. 

Mrs. WALORSKI. I appreciate it. And then, Mr. Kutz, do you believe these actions are sufficient, these safeguards, that they will 

be the net that catches this kind of cross confusion, and especially 

to the tune of $12 million just with one action alone? 

Mr. KUTZ. Yeah. I mean, we and GAO, concluded that the blanket purchase agreement, the cloud solution, was outside the scope 

of the blanket purchase agreement. We, and GAO, both believe 

that at this time. But we will see. I mean, they are supposed to 

have their new email solution done by the end of this fiscal year 

and whether they are there, we are going to be doing work to follow up on that and determine whether it is implemented effectively. 

Mrs. WALORSKI. I appreciate that. 

Thank you, Mr. Chairman. I yield back. 

Chairman BUCHANAN. Ms. DelBene, you are recognized. 

Ms. DELBENE. Thank you, Mr. Chair, and thanks to all of you 

for being with us this morning. 

Mr. Kutz, in your testimony you state that there are many security measures in place for documents that are pictured in the phoVerDate Sep 11 2014 00:20 Feb 14, 2019 Jkt 033614 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 I:\WAYS\IN\33614\33614.XXX 33614
29 

tographs that are attached to the end of your report, and that the 

vast majority of the items in the photographs are generated from 

the replacement of aged equipment. 

I wondered if you could talk to us about the reasons why an electronic storage option wasn’t used? So if you are phasing out old 

equipment really the question is, why not store documents in the 

cloud or in some other electronic format that could be searched and 

secured? 

Mr. KUTZ. Well, their email solution does not automatically archive as everyone has talked about at the beginning here. So they 

have been saving, and I mentioned they were changing the policies 

in my opening statement. Well, the policy that has resulted in the 

old technology and hard drives and other things being at all these 

locations is that they are saving it now because there are potentially Federal records on this information. 

And so I think we have an issue here of we are all talking about 

going forward. Once IRS has processes to go forward, then we have 

to deal with the going backward, and they have tens of thousands 

of these devices at 50 something locations across the country that 

they are going to have to deal with at some point. Some of them 

they may be able to find records in, the other ones the actual hard 

drive may not be matched to the person. 

So I think when we talk today about the solutions, there is the 

going forward solution, and then Congress is going to have to work 

with IRS as to what to do with the issues going backward, all these 

devices being stored around the country that potentially have Federal records that shouldn’t necessarily be destroyed. 

Ms. DELBENE. And right now they would be kind of just kept 

in some printed form? 

Mr. KUTZ. Well, it is growing. They are still keeping more and 

more items. Now with the email solution going forward, that 

should help to some extent, but right now the policy is backup 

tapes are being kept, hard drives are being kept, et cetera, indefinitely. 

And, again, I think if we can fix the problems going forward, 

then the question is what do we do looking backward to eventually 

destroy this information because it is a storage problem. 

There are large rooms filled with old equipment and hard drives 

and old laptop shells that are going to be there indefinitely until 

a solution is determined. 

Ms. DELBENE. And old systems that people may not know how 

to access well over time? 

Mr. KUTZ. Well, that is a separate issue, the old technology with 

respect to—they have hardware aged, and then they also have systems that they are trying to upgrade and modernize. 

Ms. DELBENE. Okay. I also wondered if any of you could elaborate a bit on the role that HR and IT play in retaining electronic 

records. There is a lot of talk about, employees printing records out 

and keeping them, but how are decisions made to ensure that important information is backed up on a hard drive, and what are you 

doing to make sure it is not just maintained on a hard drive because that is also—if there is a crash or anything you lose all of 

that information, so what is being done there? 

30 

Mr. KILLEN. Thank you for the question. One of the opportunities that we have as we are moving forward with our new email 

solution is indeed to move away from that historical reliance on 

hard drives and on people saving things on their local machines because that is not an optimal way to preserve and archive records. 

You have limitations in the way you can search and produce documents when needed. 

And so I think the good news is that the process that we are currently implementing to move to our new email system will address 

a significant aspect of that challenge because the emails, and that 

is predominantly in most of these sort of instances where authoritative records would lie, the email record will be in the server. 

There are requirements around what constitutes an appropriate 

electronic recordkeeping system. That will ensure that we are actively able to search, produce records as appropriate. As we move 

away—and one of the benefits of this is that we will no longer need 

the utilization of the hard drives because it has been previously a 

storage issue, which is why people were—— 

Ms. DELBENE. You are talking about email. What about other 

documents? Aren’t there documents outside of email that you also 

would want to make sure are backed up? 

Mr. KILLEN. Yes, ma’am. That is a fair question, as well. And 

so it really is a combination of tools that will move us into a better 

direction. It is the policies associated with informing people that 

you should not be storing Federal records on your hard drives because there is limited access to that. 

So we are moving to collaborative sites, sharepoint sites, where 

records should be and can be held but we will not have the storage 

limitations and so that people have a place to put those records. 

The email solution we think will address a large segment of it 

because think about it from a practical standpoint, a record is of 

limited utility if you are the only one who has access to it. 

Most records that are created are actually being shared or disseminated somewhere, so we think the email solution will help 

some of that. For the remaining issues that we have, we are formulating a plan to address that to make sure that we have no gaps 

when we are done with this process because we do want to get it 

right. 

Ms. DELBENE. Thank you. I yield back. 

Chairman BUCHANAN. Mr. Holding, you are recognized. 

Mr. HOLDING. Thank you, Mr. Chairman. 

Mr. Killen, how many executives are at the IRS? 

Mr. TRIBIANO. We have 251 SES executives. We have around 

seven senior leaders. And we still have two members that will be 

expiring shortly on the streamline critical pay. 

Mr. HOLDING. So these are the individuals that I guess for lack 

of a term of art are the critical decision makers within the IRS, 

would that be kind of how you describe executives to the IRS? 

Mr. TRIBIANO. Yes, sir. 

Mr. HOLDING. And I think as we pointed out, TIGTA reported 

there has been an independent verification that confirmed the 

email accounts of these executives are actually configured to auto 

archive emails, so that was a finding. 

31 

And, you know, you are testifying today that changes have been 

made, so are you able to say today that the emails from those number of executives are being auto archived today, and if not, what 

steps are you taking to ensure that they are being auto archived? 

Mr. KILLEN. What I am able to say today, sir, is that we are 

actively implementing the solution that should address that. And 

when I say that we are actively implementing it, I mean that we 

are currently in flight in migrating all of our IRS employees into 

the new email environment where all of their emails will be saved 

and archived appropriately. 

Chairman BUCHANAN. Excuse me, Mr. Killen, is your mike on? 

Mr. KILLEN. The light is on, yes. 

So we are actively migrating to that new email environment, and 

when I say, ‘‘active,’’ meaning that we have literally moved over already tens of thousands of IRS employees into the new environment. 

We think that for the most part all of our executives have migrated over. That is important because the root cause of the finding 

where some of our executive emails were not configured properly 

was a part of an interim solution that we put in place as a stopgap measure on the path to our permanent solution which we are 

executing again. 

So the important thing about that is that was a manual process. 

It depended upon people to configure their email inboxes—— 

Mr. HOLDING. So the new platform that you were migrating to 

will not be a manual process, it will be an auto archive? You won’t 

be able to switch it on or switch it off? 

Mr. KILLEN. Correct, sir. It will be automatic and systemic. 

Mr. HOLDING. Which one of you would be able to address the 

question of what forms of predictive statistical analysis is the IRS 

using to combat fraud, abuse, and so forth? 

Mr. TRIBIANO. I cannot speak to that, nor can Mr. Killen. 

Mr. HOLDING. Most financial institutions when they are looking 

for fraud or money laundering, compromised accounts, they use 

forms of predictive statistical analysis that they run all their data 

through, and that is the reason why you get the call from your 

bank that says did you just charge this on your credit card? It sets 

off red flags, and one would assume that the IRS uses something 

similar to what financial institutions would use to find that? 

Mr. KUTZ. I would say that they do. I think they have a lot of 

filters in place to prevent refunds from going out improperly. And 

so that would be similar, I think, to what you are talking about 

where credit card companies see indicators in the data that lead 

them to call you or to cancel your transactions to prevent you from 

making a transaction. But they do try to filter up front before refunds are issued looking for fraud indicators. 

So if that is what you are talking about, they have quite a bit 

of that, over 100 of those types of filters. 

Mr. TRIBIANO. Thank you, and if that was where that question—— 

Mr. HOLDING. That is some of it, but predictive statistical analysis is something a little bit different, as well. You know, it is an 

analysis of all the data that you have. 

32 

Are you aware of any software that the IRS buys from outside 

vendors that provides, you know, these services, and can you relate 

as to whether it has been effective for the IRS? Do you use it if 

you do buy it? 

Mr. TRIBIANO. We do purchase outside software to help with 

some of our analysis work, and when we talk about return filing, 

we have a robust system of filters to stop anti-fraud. 

We also have a team of researchers within the IRS that do research and apply analytics and statistics that can predict and show 

patterns that are happening. I just can’t speak to what they are 

using and how they actually do that work. It falls underneath another group that I am just not—— 

Mr. HOLDING. Thank you. Mr. Chairman, I yield back. 

Chairman BUCHANAN. Mr. Curbelo, you are recognized. 

Mr. CURBELO. Mr. Chairman, thank you very much for this 

hearing. 

This hearing focuses on an issue that I think many of our constituents are concerned about, which is government competence. 

And last week we had, I think, a similar hearing on Medicare 

fraud. I get a lot of questions back home from Floridians who wonder why if credit card companies can be so effective at preventing 

fraud, why the government seems to be more focused on chasing 

fraud. 

Well, here we are exploring a similar issue, whether the government can be competent, can be trusted, whether we can help restore the trust and confidence in our government and in our institutions. 

One of the issues that the report we are discussing raises is the 

inability of PGLD to compel business units to respond to requests 

for records and to document their search efforts. 

Mr. Killen, is that still the case today? 

Mr. KILLEN. We are working aggressively to improve our Freedom of Information Act request process. I would note that on the 

whole I think we do a good job of that, and we have 80 percent 

timeliness in responding to the FOIA requests that we receive. 

But one of the important aspects of FOIA is that you do rely on 

the custodian who has the record in order to be able to produce 

those records. 

So what we are doing is that we are revising our communication 

mechanisms. We are revising our search memorandums to make it 

very clear what the responsibility of the custodian is in performing 

an adequate search for those records. We are revising our training. 

We are revising our internal quality review process to ensure that 

we have a quality process to ensure the efficacy of the search. 

So we are taking a variety of tools. We are making new investments and additional tools to help us locate responsive documents. 

And so, this is really an area where we have been intensely focused 

because document retention and production are intrinsically linked. 

You have to have both working in concert in order to be successful. 

We have got certainly work to do, and we are committed to refining 

that and making improvements where needed, so we appreciate the 

perspective of the IG in identifying areas that we can improve 

upon, and we embrace that. 

33 

And so this is an area that we are focused on, and we feel like 

on the whole we do a good job, but we certainly have opportunities 

for improvement, and so we are focused on that. 

Mr. CURBELO. So you are confident that at the end of this process that you are undertaking, you will be able to effectively compel 

the agency to conduct these searches and to document them? 

Mr. KILLEN. I am. I am certainly confident that at the end of 

this process we will have two things. First of all, we will be in a 

materially better place than we have been historically. 

And secondly, I am confident that we should be able to improve 

the process that we currently have, and that is what we are focused on. And I do think that we will be in a better place. 

When you look at some of the things that really routinely cause 

us challenges and complications, and Mr. Lewis spoke to it, it really is those very complicated requests we get. Complicated by virtue 

of the fact that the responsive documents could be hundreds or 

thousands or tens of thousands in some instances, of pages. 

And so the additional investments in our new recordkeeping system, in our new FOIA and e-Discovery tool, should put us in a better place. It is an area where we will have to remain vigilant because it is complicated and nuanced, but we are squarely focused 

on making improvements because we realize that taxpayers have 

a right to request information of their government, and we are 

committed to being able to provide that information. 

Mr. CURBELO. Thank you. Thank you, Mr. Killen. 

Mr. Tribiano, in the time, what is the agency doing to cooperate 

with these efforts to make sure that we can get the desired result? 

Mr. TRIBIANO. Well, two of the things that Ed mentioned were 

the actual training that is happening right now and the ability of 

our new e-FOIA, e-Discovery systems. So once we get our new 

email electronic records system in place where we can search 

emails and have the ability to search all the email records quickly, 

the other piece of that is having the tools to be able to go out from 

the e-Discovery perspective and from a FOIA perspective to get 

through the documents to be able to redact whatever needs to be 

redacted and produce the documents to go forward. 

So we are putting in place the policies that wrap around that to 

make sure that the information is flowing forward and that we are 

able to access all the records and get them through the process and 

if it is a FOIA request, getting to whoever requested it. If it is a 

legal aspect, getting them to our attorneys to go out. 

Mr. CURBELO. Thank you, Mr. Chairman. I yield back. 

Chairman BUCHANAN. Mr. Kutz, let me ask you, there are a 

lot of good findings and recommendations in the report from everything that you have presented today. What are the top one or two 

steps that the IRS has yet to complete that are critical to beginning 

the IRS in terms of compliance? 

Mr. KUTZ. I would say the electronic, the new email system that 

they are supposed to have implemented. Apparently they are starting to roll it out now. Having that done as quickly as possible takes 

some of the human element out of it. 

We talked about it that IRS relies on printing paper or saving 

to a hard drive or something, if you take that out of it, you are 

going to have a higher level of compliance. 

34 

And I think then once we get to the point as I mentioned earlier 

going forward, something has to be done about going backward and 

the tens of thousands of devices across the country and all of the 

storage of that and what you are going to do to deal with that because that is a major problem, and it is something that I think— 

it is costly for them to keep it like it is now. 

So some solution to that, perhaps working with Congress on that 

is going to be critical. 

Chairman BUCHANAN. In terms of working with Congress, do 

you have any suggestions or things that we could do to be more 

helpful? 

Mr. KUTZ. Well, today is a great example. I think your oversight 

of this on a bipartisan basis is very important and holding IRS accountable for the dollars they get, the promises they have made, 

and making sure that they follow through on the actions that they 

say they are going to take. 

So certainly with respect to the email system, follow up to see 

that they get it done at the end of the fiscal year, whatever their 

plan is. 

And then we are going to do work in the future AND we will report back to you and IRS on the actual implementation of that 

email system. That is something we have planned for fiscal 2018, 

and we are very hopeful that they will be successful, but we will 

do the trust but verify with you. 

Chairman BUCHANAN. Mr. Tribiano, you touched emails questions which have been brought up. This concept of the future state 

initiative, where are you in terms of that process as it relates to 

emails? 

Mr. TRIBIANO. Thank you, Mr. Chairman. We are on schedule 

to have the new email on-premise solution that backs up electronically all the emails from all the IRS employees, taking the human 

element out of it. We are scheduled to have that completed by the 

end of September. We have an end of probably another 30 days 

after that for some work that has to happen in order to take the 

old email system off-line and have everything over there. 

But what we are going to do beyond that before our partners at 

TIGTA come in and take a look at what we are doing is we are 

going to have two independent verifications and validations done. 

First we are going to go out while we are in flight in the month 

of October and ask MITR, a Federally funded research and development team, to come in and take a look at where we are and 

make sure we met the requirements. 

And then we are going to ask NARA to come over and take a 

look at it and make sure we met all the NARA requirements, so 

we can be confident that everything is backed up, everything is 

moved over, everything is where it is supposed to be. And then I 

know our partners at TIGTA will come in after that and take a 

look and offer their opinions and suggestions about anything else 

we can do to improve that. 

Now, that is just the future state of where we are going with the 

emails. You know, one of the issues, and my colleague brought it 

up, is all the hard drives that we currently have stored, and what 

are we going to do with those? Well, I tell you, the majority of 

35 

those hard drives were refreshers, meaning we purchased a new 

laptop. 

So we copied everything off of one hard drive onto the new hard 

drive, which is now with an IRS employee. But we didn’t destroy 

the old hard drive because we are nervous about doing anything 

that is going to remove any piece of digital information, until we 

are sure that we have the new solution in place. Then we will go 

through a systematic process to remove the hard drives and laptops 

that were just refreshers in the process. Get our disaster recovery 

tapes back into the cycle of copying over, which is what they are 

supposed to be doing. 

Chairman BUCHANAN. Let me touch on one point. You thought 

you were going to have it in place by the end of September? We 

are almost in August. In two months? This is a future initiative? 

It seems like a lot of work in two months. 

Mr. TRIBIANO. Well, we have been working on it, sir, since we 

initiated the secondary to plan B procurement for the on-premise 

solution. We did that in September of last year, and we started the 

implementation process and testing of it in January. Our first migration, the first people that started moving over started happening in March. 

So we were working through it systematically to be able to make 

sure that we worked out the kinks on how employees would be 

moved over. We have been in flight in that process and we have 

a committed team of professionals working on it. We will have it 

done by the end of September of this year. 

Chairman BUCHANAN. Well, great. That is nice, because I 

know they talked about September—to actually hit the target 

around here is pretty tough, but good for you guys. Mr. Schweikert, 

do you have another question? 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. I was hoping 

just because I have the talent here to go just a couple side questions that I have always been somewhat curious about. 

You are a taxpayer. Your records burn up, something horrible 

happens, like my house right now with the monsoon leaking 

through my house. So I turn to the IRS and say, hey, could I get 

copies of my last seven years of records? Tell me the process. 

Mr. TRIBIANO. Sir, I am not exactly familiar with how that 

would happen. There is a process that taxpayers can go through in 

order to receive information and get past records. There is information out there on how to get transcripts in other forms. 

Mr. SCHWEIKERT. So where I am going with this is many of 

us have great interest in highly secure methodologies where I can 

actually use this to be able to access everything from my college 

transcripts to my IRS records to my vaccination records, those 

things, and look, you are all very smart, you have all probably been 

tracking, you know, the double path systems in regards to a distributive ledger. 

My understanding is even just with a number of servers you 

have throughout the IRS community, you could actually build your 

own node network. And then build a world where, you know, NIST, 

as you may know about 10 days ago published an encryption agreement or document saying I could carry my medical records on this, 

and here are the types of encryption they would believe would be 

36 

safe and uniform and could be commonly adopted across platforms. 

The ability to have a biometric and a password. 

Could you imagine a world where myself as a taxpayer, could log 

in with my thumbprint, my passcode, see my quarterly payments, 

see my IRS records, see my documentation, see how they relate to 

all my filings, and would that also change just even the paperwork 

load you have when I am getting a loan, and I have to document 

because I am an independent contractor, so I have to have the IRS 

document my last couple years’ worth of income? 

What type of visioning is going on at the agency to understand 

this world of technology that is out there that could make all of our 

lives much more efficient, much more elegant? Where are you going 

with it? 

Mr. TRIBIANO. That is a great question, and I know you guys 

have been in discussions with the IRS about the IRS future state 

about where we believe the IRS should go. It is very similar to 

what you described. 

It is offering the ability for taxpayers to proactively interact with 

the IRS digitally, if that is their choice of medium. We still have 

to offer walk-in centers, call centers and so forth for those that 

want to communicate in different means, but the majority of the 

public in the research we did says they want to be able to communicate and work with the IRS digitally like they would with a 

bank. 

Mr. SCHWEIKERT. Well, you are already doing the project, and 

this ties into the discussion with the Security Summit. If I use one 

of the package softwares on the TurboTax, the TaxCut, whatever 

it may be, I can log in and see all my filings I have done through 

them going back several years, correct? 

So in some ways we already know it is being done on the private 

side of the ledger. It would be an interesting elegance that from the 

Security Summit and then the concepts that if we are truly almost 

to a national standard for encryption using a distributive ledger, 

and the fact that you have servers all up and down the chain, you 

could actually become one of the great node networks and control 

it. 

Mr. TRIBIANO. Yes, sir. Everything that you described is always 

doable. The concern I would bring up from my side of the house, 

not from the service and enforcement side, from my side, is that 

infrastructure. 

As we transition to whatever that future state looks like, however we are going to interact with the taxpayers, however we are 

going to do that work, I have to still deliver a successful filing season. That is what we talk about with the things that could be done 

to help us. It is to true up our current state of systems and protect 

the current filing season as we do the development towards that 

future. 

Mr. SCHWEIKERT. And, Mr. Chairman and Ranking Member, 

where this thought moves through my mind if we are truly going 

to deliver a tax reform that is much more elegant and simple also 

at the same time delivering a methodology where American taxpayers have a more elegant way to use their base technology to see 

their relationship, see their filing, see their history, it is sort of a 

37 

unified theory of simplicity and technology, and with that I yield 

back, Mr. Chairman. 

Chairman BUCHANAN. Thank you. And let me just close on one 

other thought because obviously all of you have been in this space 

for a long time. 

Our goal is as a Committee on a bipartisan basis to try to 

produce an IRS reform bill by tax filing day next year. Maybe it 

is ambitious, but that is our goal. So we would like to get your best 

thoughts and ideas as we move toward that. 

It has been 20 years. We want to try to be helpful in terms of 

the agency being more productive and effective long-term. So that 

is the idea of a lot of these hearings, and we are going to be doing 

more of them. Any thoughts or ideas you have on that? I like the 

idea we talked about the Future State because my mind says being 

in business for a long time I am very big on planning and kind of 

thinking about where we need to be in the next 10 or 20 years or 

five or 10 years down the road. 

Okay. I would like to thank our witnesses for appearing before 

us today. Please be advised Members have two weeks to submit 

written questions to be answered later in writing. Those questions 

and your answers will be made part of the formal hearing record. 

With that the Subcommittee stands adjourned. 

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

Æ