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50–038 2009

ECONOMIC STIMULUS PAYMENTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 19, 2008 

Serial No. 110–88 

Printed for the use of the Committee on Ways and Means 

( 

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COMMITTEE ON WAYS AND MEANS 

CHARLES B. RANGEL, New York, Chairman 

FORTNEY PETE STARK, California 

SER M. LEVIN, Michigan 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

CHRIS VAN HOLLEN, Maryland 

KENDRICK MEEK, Florida 

ALLYSON Y. SCHWARTZ, Pennsylvania 

ARTUR DAVIS, Alabama 

JIM MCCRERY, Louisiana 

WALLY HERGER, California 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

JERRY WELLER, Illinois 

KENNY HULSHOF, Missouri 

RON LEWIS, Kentucky 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

DEVIN NUNES, California 

PAT TIBERI, Ohio 

JON PORTER, Nevada 

JANICE MAYS, Chief Counsel Staff Director 

JON TRAUB, Minority Staff Director 

SUBCOMMITTEE ON OVERSIGHT 

JOHN LEWIS, Georgia, Chairman 

JOHN S. TANNER, Tennessee 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

JIM RAMSTAD, Minnesota 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

DEVIN NUNES, California 

PAT TIBERI, Ohio 

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

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

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

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

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

is further refined. 

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C O N T E N T S 

Page 

Advisory of June 10, 2008, announcing the hearing ............................................. 2 

WITNESSES 

Nina E. Olson, National Taxpayer Advocate, Internal Revenue Service ............ 7 

Hon. Douglas H. Shulman, Commissioner of the Internal Revenue Service ...... 50 

Linda McMahon, Social Security Administration Deputy Commissioner for 

Operations ............................................................................................................ 62 

SUBMISSIONS FOR THE RECORD 

AARP, statement ..................................................................................................... 80 

Morrison Affairs Public Group, statement ............................................................ 89 

National Council on Aging, Statement .................................................................. 91 

Paul Donnelly, Statement ....................................................................................... 92 

Santa Barbara Bank & Trust, Statement ............................................................. 93 

Hon. J. Russell George, Statement ........................................................................ 96 

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ECONOMIC STIMULUS PAYMENTS 

THURSDAY, JUNE 19, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON OVERSIGHT

Washington, DC. 

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

room 1100, Longworth House Office Building, Hon. John Lewis 

[Chairman of the Subcommittee on Oversight] presiding. 

[The advisory announcing the hearing follows:] 

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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON OVERSIGHT 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–5522 

June 10, 2008 

OV–9 

Lewis and McNulty Announce a Joint Hearing on 

Economic Stimulus Payments 

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

and Social Security Subcommittee Chairman Michael R. McNulty (D–NY) today announced that the Subcommittees will hold a joint hearing on the status of the economic stimulus payments. The hearing will take place on Thursday, June 19, 

2008, at 10:00 a.m., in the main Committee hearing room, 1100 Longworth 

House Office Building. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

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

BACKGROUND: 

On February 7, 2008, the Congress passed the ‘‘Economic Stimulus Act of 2008,’’ 

which was signed into law by the President on February 13, 2008 (P.L. 110–185). 

This law provides lower-income and middle-income working families, and certain 

seniors and disabled veterans, with an economic stimulus payment (commonly referred to as a ‘‘rebate check’’). 

The rebate check generally is equal to the lesser of a taxpayer’s net income tax 

liability or $600 ($1,200 in the case of married couples filing a joint return). In the 

case of taxpayers with qualifying income (defined as earned income, Social Security 

benefits, disabled veteran benefits, and benefits for widows of disabled veterans) of 

at least $3,000 and taxpayers with positive income tax liability, the rebate check 

will not be less than $300 ($600 in the case of married couples filing a joint return). 

The amount of the rebate check is increased by $300 for each child under the age 

of 17. The rebate check phases out for high-income taxpayers. 

To receive a rebate check this year, eligible taxpayers must file an income tax return for the 2007 tax year by October 15, 2008. There are special filing requirements for taxpayers who normally are not required to file an income tax return 

(‘‘ESP filers’’). The Internal Revenue Service (‘‘IRS’’) estimates that 130 million economic stimulus payments will be sent to eligible taxpayers, including ESP filers. For 

returns filed by April 15th, economic stimulus payments that were direct deposited 

have been completed, and, by July 11th, the remaining checks are scheduled to be 

mailed. Through June 5, 2008, about 67 million economic stimulus payments have 

been made. 

To administer the rebate checks, the IRS and the Social Security Administration 

(‘‘SSA’’) received an additional appropriation of $50.7 million and $31 million, respectively, to ensure that the rebate checks are fully and properly paid. These funds 

have been used, in part, to educate, assist, and locate taxpayers eligible for the rebate checks. 

While the IRS and SSA reach out to taxpayers and beneficiaries to increase public 

awareness, they also must protect taxpayers from identity thieves who use fraudulent schemes and tax scams involving the rebate checks to obtain personal and financial information and claim someone else’s rebate check. The Federal Trade Comrfrederick on PROD1PC65 with HEARING

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mission and the Internet Crime Complaint Center (‘‘IC3’’) report an increasing number of identity theft complaints referencing the economic stimulus payments. The 

IRS has issued warnings to taxpayers about rebate check scams and expects these 

scams to continue. 

‘‘Time is running out for millions of elderly and working Americans to 

file tax returns and receive a rebate check this year,’’ said Oversight Subcommittee Chairman Lewis. ‘‘Some problems have developed with the rebate 

checks, and it is preventing relief from getting to people who are struggling to keep up with rising costs. We must work quickly to address these 

problems and help ensure that the rebate checks reach everyone who is eligible.’’ 

Social Security Subcommittee Chairman McNulty said, ‘‘Economic stimulus rebates must be delivered quickly and accurately to achieve their purpose of 

stimulating the economy. Earlier this year, Congress asked the Social Security Administration to help reach seniors and other beneficiaries who do 

not usually file tax forms so they could receive a check if eligible. We provided SSA with additional resources to perform this duty and this hearing 

presents an opportunity to determine whether SSA’s and IRS’s efforts were 

successful.’’ 

FOCUS OF THE HEARING: 

The Subcommittees will review the status of the economic stimulus payments. 

They will examine the number of returns received and processed, the number of rebate checks issued (direct deposit and paper), the amount of the rebate checks 

issued, the overall payment schedule of rebate checks, and outreach activities conducted by the IRS and the SSA to locate individuals eligible for the rebate checks. 

Further, the Subcommittees will examine problems experienced by individuals eligible for rebate checks and what can be done to address these problems. 

The Subcommittees also will examine the identity theft schemes developed to date 

and review actions taken in response. Finally, the Subcommittees will ask the agencies to examine how to protect Social Security beneficiaries and other individuals 

from identity theft schemes using rebate checks as a lure. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit comments for 

the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov/, select ‘‘110th Congress’’ from the menu entitled, ‘‘Committee Hearings’’ (http://waysandmeans.house.gov/Hearings.asp?congress=18). Select the hearing for which you would like to submit, and 

click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Follow 

the online instructions, completing all informational forms and clicking ‘‘submit’’ on 

the final page. Attach your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by close of business Thursday, July 3, 2008. Finally, please note that due to the change in House mail policy, 

the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

Buildings. For questions, or if you encounter technical problems, please call (202) 

225–1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

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

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

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

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

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

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

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

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and 

summiteers are advised that the Committee relies on electronic submissions for printing the official hearing record. 

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

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

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

by the Committee. 

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

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

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

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

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

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

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

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

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

f 

Chairman LEWIS. Good morning, good morning. The hearing is 

now called to order. Today the Ways and Means Subcommittees on 

Oversight and Social Security will review the status of the rebate 

checks. 

People are suffering. I am really not sure how people are getting 

by. We are trying to get money into the hands of people who need 

it the most. But during that, we have placed a huge strain on the 

resources of the IRS. We have not been successful at reaching all 

of the people who are entitled to this tax rebate. 

As Chairman of the Subcommittee on Oversight, I know that it 

has been hard for the Internal Revenue Service to take on the rebate checks during the tax filing season. There are almost 20 million additional taxpayers. Calls to the IRS have doubled this filing 

season, with over 10 million calls in 1 week, and 70 million calls 

to date. The Service has mailed over 200 million notices to taxpayers on the rebate checks, alone. 

I am concerned that the strain on its workers, its budget, collection, and taxpayer services will be felt for the next filing season. 

The Administration needs to tell the Congress what resources the 

IRS needs. In addition to the burden on the IRS, we know that millions of elderly and working people have not yet filed for a rebate 

check. People suffering under the pressure of rising food and gas 

prices, we know people need this relief, and they need it now. 

Clearly, millions of people do not know that they are eligible. We 

look forward to learning how—the Agency’s plan to reach these 

people. We want to know, learn how the Congress, the Administration, and the public, and the private sector can work together to 

put billions of dollars in the pockets of Americans who need it 

most. 

Now I am pleased to recognize the distinguished Ranking Member of the Subcommittee on Oversight, my dear friend Mr. 

Ramstad, for his opening statement. 

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Mr. RAMSTAD. Thank you, Mr. Chairman, and you are a dear 

friend. I appreciate your yielding, and I thank both you and Chairman McNulty for holding this hearing today. 

The Economic Stimulus Act that we passed in February is an example of how both parties and Congress and the White House can 

work together in a bipartisan, pragmatic, and common-sense way 

when urgent action is needed. There is already some evidence that 

the stimulus has helped the economy. Although the checks didn’t 

go out until the end of April, retail spending has already increased 

significantly; more than 76 million payments, totaling $64 trillion 

have already been sent, with more to come. 

However, none of this—I think that’s $64 billion, it should read; 

sorry, I still love my staff—most people probably don’t fully realize 

the unanticipated additional workload that this created for the 

IRS. I think all of us owe the Service a debt of gratitude. 

Certainly, the Service faced many challenges, other than getting 

the stimulus checks out. During this previous—this recently completed—filing season, there was the late passage of the AMT patch 

that required, I know, reprogramming the systems and printing 

new forms. I know a lot of IRS employees, and I know a lot of them 

worked overtime to minimize the disruption that late enactment of 

the AMT caused. So, blame Congress, not the IRS, for that one. 

But once the filing season started, the IRS began processing the 

2007 returns, we asked the IRS, really, to perform double duty to 

expedite our stimulus plan. I think the Service responded very, 

very well. 

Also, I know the—part of the staff was diverted from reading the 

newspapers, from collections enforcement. There will be a price to 

pay in terms of foregone revenue, I guess, to the tune of $565 million, according to IRS estimates. I am looking forward to hearing 

more of that today from the testimony. 

So, I hope we can learn in this hearing if the Service has sufficient resources for taxpayer services, because obviously that’s important. I am glad to see Ms. Olson here, the taxpayer advocate 

who does such a great job on behalf of taxpayers. 

We want taxpayers to have the best service possible, but we don’t 

want to sacrifice other primary IRS responsibilities, as well. So, I 

also hope this hearing will shed light on what can be done to prevent scam artists from preying on taxpayers, especially the elderly. 

I am very concerned about that. We have seen ruses from scam artists that have victimized many, many people, again, especially elderly, surrounding previous stimulus payments. I hope that’s 

avoided as much as possible this time around. 

So, I look forward to the testimony today, Mr. Chairman, about 

the administration of stimulus payments. It’s a very massive job, 

it’s a very important job, and it’s good to know the IRS has many 

dedicated public servants that were able to perform under pressure. 

So, thank you again, Mr. Chairman, for holding this hearing. I 

yield back. 

Chairman LEWIS. Thank you, Mr. Ramstad. Now I am pleased 

to recognize the Chairman of the Subcommittee on Social Security, 

Mr. McNulty, for his opening statement. 

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Mr. MCNULTY. Thank you, Chairman LEWIS. Thank you for 

your 22 years of outstanding service in the U.S. Congress, and for 

your decades of leadership in the civil rights movement, having put 

your life on the line on numerous occasions to provide civil rights 

and equal rights for all Americans. 

I am grateful to you for organizing today’s joint hearing on the 

implementation of the Economic Stimulus Act of 2008. The impetus 

for this legislation was the downturn in the economy, which continues to lag. In order to work, the stimulus had to be delivered 

quickly. 

Of course, some things are much easier said than done. But I 

have been impressed by the rapid response of the agencies tasked 

with the job of getting payments out as quickly and as effectively 

as possible. A mere 55 working days passed between the time that 

the President signed the legislation and the first stimulus payment 

was delivered. This was during the busy tax filing season. 

The Social Security Administration assisted by providing information to IRS, so it could reach out to Social Security and Veterans 

Administration beneficiaries who did not normally need to file, but 

would have to do so in order to qualify for their payment. These 

individuals received detailed materials from the IRS on the steps 

they needed to take in order to receive the stimulus payment. 

These processes are much more complicated than they appear on 

the surface, and the agencies have much to be proud of in the work 

they have done so far. 

Inevitably, the stimulus program caused individuals to contact 

IRS and SSA with questions, and to seek help with filing the proper paperwork. IRS received the bulk of the inquiries. SSA also saw 

an increase in contacts. 

In accord with congressional intent, and the Agency’s primary 

role as the administrator of the Social Security system, SSA directed these individuals to the IRS for more information. The private sector and non-governmental organizations are also doing 

their part to help, as businesses, senior citizens groups, and others 

have assisted with publicity and tax filing for the stimulus. 

Today, I hope to learn more about how successful these efforts 

have been. I understand that there may be a significant number 

of seniors and veterans who are eligible for a stimulus payment, 

but have yet to file the necessary tax returns in order to receive 

it. There are some concerns about whether there has been a sufficient outreach to this population, and I expect to gain a better understanding of how this might be done. 

I would hope and expect that any proposals for additional outreach would not draw SSA staff away from their principal duties 

administering Social Security, or generate new workloads for the 

Agency. Commissioner Astrue and I spoke last Friday, and I know 

he shares these concerns. 

As we consider the options, I will advise my colleagues that we 

should remain ever mindful that SSA is already struggling to meet 

its current workloads, given a decade of under-funding, and an unprecedented backlog of unprocessed disability claims, and an impending spike of retirement claims from the baby boom generation. 

I expect that timely payment of Social Security benefits for seniors, 

people with disabilities, and survivors also would be of great benrfrederick on PROD1PC65 with HEARING

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efit to the economy. I look forward to the testimony, and once 

again, thank the Chairman and the Ranking Members. 

Chairman LEWIS. Thank you, Mr. McNulty for your statement. 

You didn’t have to say it, but thank you. 

Now I am pleased to recognize the Ranking Member of the Subcommittee on Social Security, Mr. Johnson, for his opening statement. 

Mr. JOHNSON. Thank you, Mr. Chairman. Chairmen Lewis and 

McNulty both, I want to thank you for holding this hearing today. 

McNulty has spoken very eloquently about the shortfalls in the Social Security Administration, and how we keep putting extra loads 

on them all the time without funding. 

But in order to give a needed boost to our National economy, the 

Congress passed, the President signed into law legislation estimated to provide more than 100 billion to 130 million people—and 

that number is right, by the way. 

It’s important that the Congress know whether this massive undertaking by the Internal Revenue Service will help—with help 

from the Social Security Administration is being done right. Congress gave the agencies almost $300 million to cover the cost 

of processing the rebate checks. We need to know whether this 

money was spent wisely or not. Included in the cost of administering the stimulus program was education and outreach to those 

eligible, including those receiving Social Security benefits. 

I look forward to hearing the testimony today by the Social Security Administration, as they discuss their work with the IRS in targeting and reaching these beneficiaries. All signs suggest that the 

IRS and Social Security have performed very well in carrying out 

this massive and difficult task, while under immense pressure. 

Both agencies and their staffs are to be commended for their professionalism and dedication to getting the job done right. 

Letting Americans keep more of their own money is always a 

good thing. During tight economic times and high gas prices, it’s 

even more important. I thank the witnesses for their upcoming testimony, and I thank you again, Chairman Lewis and Chairman 

McNulty, for holding this important hearing. 

Chairman LEWIS. Thank you very much, Mr. Johnson, for your 

statement. Now we will hear from witnesses. I ask that you limit 

your testimony to 5 minutes. Without objection, your entire statement will be included in the record. 

It is now my pleasure to introduce the national taxpayer advocate, Nina Olson. 

STATEMENT OF NINA E. OLSON, NATIONAL TAXPAYER 

ADVOCATE, INTERNAL REVENUE SERVICE 

Ms. OLSON. Thank you, Mr. Chairman, Ranking Members, and 

distinguished Members of the Subcommittees. Thank you for inviting me to testify today regarding the status of economic stimulus 

payments. I would like to make five main points from my perspective as the national taxpayer advocate, the statutory voice for taxpayers and taxpayer rights. 

First, I would like to acknowledge the extraordinary job the IRS 

has done in delivering these stimulus payments. The Economic 

Stimulus Act was signed into law on February 13th, 4 weeks after 

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the filing season began, and while the IRS was still grappling with 

programming changes occasioned by numerous tax law changes enacted in December. 

The delivery of stimulus payments was a massive undertaking, 

in some ways akin to running a second filing season. The IRS has 

managed both to deliver a successful filing season, and to develop 

and implement plans to make stimulus payments to an estimated 

130 million taxpayers in a remarkably short period of time. 

Second, in light of its limited resources, the IRS was not able to 

staff its telephone lines adequately, and had to make certain tradeoffs. The IRS has received 135 million telephone calls so far this 

year, more than twice the number of calls it received at this point 

in 2007. Not surprisingly, the level of service on the toll free lines 

overall has dropped from 80.6 percent in 2007 to 62.8 percent this 

year, and to 42.9 percent during the recent week ending June 7th. 

The level of service on the telephone line dedicated to answering 

questions about stimulus payments has been even lower; 47.7 percent this year and 30.4 percent during the week ending June 7th. 

Only 1 out of every 10 callers to the stimulus line has spoken to 

a live human being. The IRS, understandably, transferred some 

employees from its accounts management and automated collection 

system functions to help in answering the onslaught of telephone 

calls. But, as a result, the inventory of individual taxpayer correspondence relating to account adjustments has more than doubled. 

These declines in the level of service are not mere statistics. 

They have a real negative impact on taxpayers, increasing their 

compliance burden. For example, a taxpayer who cannot get 

through to the IRS to negotiate an installment agreement may instead find his paycheck levied unnecessarily. A taxpayer whose 

audit document submissions are not properly processed may end up 

petitioning the tax court at significantly greater taxpayer and government expense. 

Third, a few glitches in taxpayer frustrations have arisen. One 

glitch was the Social Security numbers of approximately 1,500 taxpayers were inadvertently disclosed when the IRS routed stimulus 

payments to the wrong bank accounts. 

Although not caused by IRS error, one source of frustration was 

that more than 20 million taxpayers who purchased refund anticipation loans, or refund anticipation checks, found that they were 

ineligible to receive their stimulus payments quickly via direct deposit, and instead were required to wait up to two-and-a-half 

months longer to receive paper checks. 

Local taxpayer advocates report taxpayer frustration in their not 

being able to obtain expedited stimulus payments, or overrides of 

tax offsets in economic hardship situations. 

Fourth, the IRS and taxpayer advocate service are conducting 

considerable outreach to senior citizens and other taxpayers without a 2006 tax filing requirement to encourage them to file forms 

1040A to claim their stimulus payments. But there are significant 

barriers that will result in substantially less than full participation 

by this target population. 

In addition to the fundamental complexity of the program, challenges include: the fact that some of these individuals may view filrfrederick on PROD1PC65 with HEARING

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1The views expressed herein are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate is appointed by the Secretary of the Treasury and reports to the Commissioner of Internal Revenue. However, the National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget. Congressional testimony requested 

from the National Taxpayer Advocate is not submitted to the IRS, the Treasury Department, 

or the Office of Management and Budget for prior approval. However, we have provided courtesy 

copies of this statement to both the IRS and the Treasury Department in advance of this hearing. 2 Economic Stimulus Act, Pub. L. No. 110–185 (2008). 

3 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Enterprise Snapshot 

(week ending June 7, 2008). 

ing a return as requiring too much effort for $300; that this population may lack Internet access of skills; or it may lack the mobility 

necessary to obtain assistance in applying for the ESP. Members 

of this population may be incapacitated, and under the care of 

guardians, conservators, nursing homes, and hospitals. Individuals 

who have not had contact with the IRS for years may be unwilling 

to open that conversation again. 

Fifth, there are several long-term lessons that can be learned 

from this experience. The complexity of the ESP eligibility and 

computation rules has created taxpayer confusion, and caused unnecessary work for the IRS. If Congress decides to enact another 

ESP, it should consider how to simplify the eligibility rules so that 

they lend themselves to easy communication. Such simplification 

may mean that some individuals receive more or less than they 

might under the current ESP, but that tradeoff in clarity will be 

well worth it. 

Another lesson is that when an initiative targets a population 

that does not otherwise have contact with the IRS, it may be better 

to utilize another Federal agency for payment delivery. Why not 

find a way to let SSA and the VA make stimulus payments to 

beneficiaries without a tax filing requirement, instead of requiring 

these individuals to file ESP-only returns, and having the IRS send 

them paper checks. 

Alternatively, the IRS and other Federal agencies could determine eligibility based on available information, and the IRS could 

utilize no-fee debit cards for delivery of stimulus payments. Thank 

you, Mr. Chairman. 

[The prepared statement of Ms. Olson follows:] 

Statement of Nina E. Olson, National Taxpayer Advocate, Internal Revenue 

Service 

Chairmen Lewis and McNulty, Ranking Members Ramstad and Johnson, and distinguished Members of the Subcommittees: 

Thank you for inviting me to testify today regarding the status of economic stimulus payments authorized by the Economic Stimulus Act of 2008.1

In my testimony, I will make five main points: 

1. While the IRS was a logical agency to administer the bulk of the stimulus program, the timing of the statutory directive in February to begin to develop and 

implement the program essentially required the IRS to run two filing seasons 

simultaneously. In light of its limited resources, I believe the IRS on balance 

has done an outstanding job of administering both the 2008 filing season and 

the Economic Stimulus Act.2

2. In light of its limited resources, the IRS was not able to staff its telephone 

lines adequately and had to make certain tradeoffs. IRS-wide, the level of service (LOS) on the toll-free telephone lines has dropped from 80.6 percent in 2007 

to 62.8 percent year to date (YTD) and to 42.9 percent during the week ending 

June 7.3 The LOS on the telephone line dedicated to answering questions about 

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4 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

Rebate Hotline (Economic Stimulus Payments) 866–234–2942 (week ending June 7, 2008). 5 As of June 7, the IRS had received 27.7 million ‘‘dialed number attempts’’ on its toll-free 

telephone lines concerning economic stimulus payments. IRS Response to TAS Information Request (June 16, 2008). The number of ‘‘dialed number attempts’’ that resulted in a conversation 

with a live assister was 2.9 million. Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: Rebate Hotline (Economic Stimulus Payments) 866–234–2942 

(week ending June 7, 2008). About 16.8 million additional callers were assisted through automation. In general, the IRS Joint Operations Center tracks the IRS’s performance on its toll-free 

lines based on ‘‘net [call] attempts’’ rather than ‘‘dialed number attempts.’’ While ‘‘net attempts’’ 

understates the number of calls placed to the IRS, this testimony elsewhere cites ‘‘net attempts’’ 

because that data point is more accessible and can be used to identify trends. 6See, e.g., The White House, Fact Sheet: Bipartisan Growth Package Will Help Protect Our 

Nation’s Economic Health (Feb. 13, 2008). 7 IRC § 6428(g)(3). 

stimulus payments has been even lower—47.7 percent YTD and 30.4 percent 

during the week ending June 7,4 and only one out of every ten callers to the 

stimulus line has spoken with a customer service representative.5 The IRS understandably transferred some employees from its Accounts Management and 

Automated Collection System functions to help in answering the onslaught of 

telephone calls. As a result, however, the inventory of individual taxpayer correspondence relating to account adjustments has more than doubled, creating 

potentially significant burdens for affected taxpayers. The need to assign IRS 

personnel to work on the stimulus program has caused core work to be placed 

on the back burner in other areas as well. 

3. A few glitches and taxpayer frustrations have arisen in the course of the IRS’s 

administration of the economic stimulus payment (ESP) program. One glitch 

was that the Social Security numbers of approximately 1,500 taxpayers were 

inadvertently disclosed when the IRS routed stimulus payments to the wrong 

bank accounts. Although not caused by IRS error, one source of frustration was 

that more than 20 million taxpayers who purchased refund anticipation loans 

(RALs) or refund anticipation checks (RACs) found that they were ineligible to 

receive their stimulus payments quickly via direct deposit and instead were required to wait up to 2–1/2 months longer to receive paper checks. 

4. The IRS is conducting considerable outreach to senior citizens and other taxpayers without a tax filing requirement to encourage them to file Forms 1040A 

to claim their stimulus payments, but there are significant barriers that will 

result in substantially less than full participation by this target population. 

5. There are several long-term lessons the IRS can learn from this undertaking 

that may improve its effectiveness in the future. In particular, the IRS should 

explore the development of a cadre of information technology and operations 

analysts dedicated to initiatives such as this, so that resources are not continually diverted from IRS core functions or improvement projects when special 

needs arise, as they often do. 

I will address these issues from my perspective as the National Taxpayer Advocate, the statutory voice for taxpayers and taxpayer rights. I understand that the 

Treasury Inspector General for Tax Administration and the Government Accountability Office are conducting operational reviews of the ESP administration, and 

they will provide an assessment at a later date. 

I. The IRS on Balance Has Done an Outstanding Job of Administering the Economic 

Stimulus Act. 

Congress passed the Economic Stimulus Act in February in light of deep concerns 

about the health of the U.S. economy. The goal of the legislation was to stimulate 

the economy by placing an estimated $152 billion into the hands of consumers and 

businesses.6 Technically, the legislation provides individual taxpayers with a credit 

against their 2008 tax liabilities, and taxpayers ordinarily would claim the credit 

when they file their 2008 tax returns during the 2009 filing season. Because Congress wanted to provide economic stimulus more quickly, however, it directed the 

IRS to make payments as an advance against the credit ‘‘as rapidly as possible.’’ 7

The IRS, which already was overextended trying to cope with an unusually challenging filing season, has managed both to deliver a successful filing season and to 

develop and implement plans to make stimulus payments to an estimated 130 million taxpayers in a remarkably short period of time. Because eligibility for a stimulus payment was dependent on a taxpayer’s 2007 income tax return filed during 

the 2008 filing season, the IRS could not reasonably process stimulus payments 

until after the regular April 15 filing deadline. On April 28—less than two weeks 

after the regular filing deadline—the IRS began transmitting stimulus payments, 

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8See Kelly Evans, Stimulus Checks Aid Retail Sales, Wall Street Journal, June 13, 2008, at 

A3 (noting that an unexpectedly sharp increase in retail sales during May suggests that ‘‘consumers spent a chunk of their government economic-stimulus checks’’ and quoting one economist 

as saying that the stimulus payments would act like a ‘‘shot of caffeine’’); Michael M. Grynbaum, 

Retail Sales Rise Above Forecasts, N.Y. Times, June 13, 2008, at C1 (quoting an economist as 

saying: ‘‘The sharp improvement in May was clearly driven by receipt of the first wave of tax 

rebate payments. These payments will continue to be a positive factor for the consumer in the 

next couple of months.’’); Martin Crutsinger, Retail Sales Rise Unexpectedly in May, Washington 

Post, June 13, 2008, at D4 (noting that the increase in retail sales ‘‘signaled that Americans 

are spending their rebate payments’’). 9The programming challenges have been continuing. For example, the Economic Stimulus Act 

provides that no credit will be allowed if any person listed on a tax return (i.e., the taxpayer, 

spouse, or any qualifying child) does not have a valid Social Security Number. IRC § 6428(h). 

The IRS had to do programming to implement that restriction. On June 17, however, the President signed into law H.R. 6081, the Heroes Earnings Assistance and Relief Tax (HEART) Act, 

which allows members of the military to receive stimulus payments even where the member’s 

spouse does not have an SSN. The IRS is having to do additional work to identify these taxpayers and ensure that they receive stimulus payments. 10 Rev. Proc. 2008–21, 2008–12 I.R.B. 657. 11See Economic Stimulus Payments Information Center at www.irs.gov. 12 IRS Economic Stimulus Activity Report (June 17, 2008). 13See IRS Notice 1377. 14See IRS Package 1040A–3. 15 IRS Economic Stimulus Activity Report (June 17, 2008). 

and by May, the stimulus payments were widely credited with increasing consumer 

spending.8

The delivery of stimulus payments was a massive undertaking—in some ways 

akin to running a second filing season. Among other things: 

• The IRS quickly developed programming code so that it could use the information reported on 2007 tax returns to determine which taxpayers were eligible 

for stimulus payments and how much they were entitled to receive.9

• The IRS developed a way to issue stimulus payments to taxpayers with no taxable income who filed their returns electronically. The Economic Stimulus Act 

provided that individuals with at least $3,000 of ‘‘qualifying income,’’ notably 

Social Security benefits, would be eligible for stimulus payments even if they 

had no taxable income. However, the Act required all individuals to file tax returns to receive stimulus payments. Returns filed by individuals who have no 

tax-filing requirement and are seeking solely to claim their stimulus payments 

are referred to as ‘‘ESP-only’’ returns. 

In planning to process ESP-only returns, the IRS discovered a significant systems 

limitation. Returns filed electronically must include at least $1.00 of adjusted gross 

income (AGI) to be processed, but many Social Security recipients have no AGI. As 

a workaround, the IRS determined that it could process a return if a taxpayer lists 

$1.00 of AGI, but if a taxpayer with no AGI were to list AGI of $1.00, the taxpayer 

technically would be furnishing inaccurate information; taxpayers are required to 

sign a tax return under penalties of perjury and declare that, to the best of their 

knowledge and belief, all information on the return is ‘‘true, correct, and complete.’’ 

To resolve this conundrum, the Department of the Treasury and the IRS quickly 

issued guidance advising that taxpayers could list $1.00 of AGI without violating 

the penalties of perjury statement for the purpose of claiming stimulus payments.10

• The IRS posted extensive information on its website, including straightforward 

Frequently Asked Questions (FAQs) and sub-pages tailored for five populations—Social Security recipients, Veterans Affairs recipients, Railroad Retirement recipients, low-wage workers, and military combat personnel.11 As of June 

11, individuals had made 55.6 million visits to the ESP portion of the IRS 

website and viewed 91.0 million pages (excluding use of the stimulus calculator 

described below).12

• The IRS mailed notices to more than 130 million taxpayers who filed 2006 tax 

returns to remind them that they would have to file 2007 returns to claim their 

stimulus payments.13

• The IRS mailed information packages to 20.5 million recipients of Social Security or Veterans benefits who did not file 2006 tax returns to provide them with 

information on how to claim their stimulus payments.14

• The IRS developed a stimulus calculator for its website so that taxpayers could 

quickly determine whether they qualify for a stimulus payment and, if so, estimate the amount. As of June 11, individuals had made 23.8 million visits to 

the website and viewed 150.6 million pages.15

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16 Not all members of the Free File Alliance offered this service. To date, approximately 7.7 

million ESP-only returns have been filed, and only 708,169 have been e-filed. Thus, about nine 

out of ten taxpayers filing ESP-only returns filed on paper. IRS Economic Stimulus Activity Report (June 17, 2008). 17 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

Rebate Hotline (Economic Stimulus Payments) 866–234–2942 (week ending June 7, 2008). 18 Id. 19 IRS Economic Stimulus Activity Report (June 6, 2008). 20 IRS Wage & Investment Division, IRS puts its best face forward on Super Saturday, Insider 

(available at http://win.web.irs.gov/articles/2008/Super_Saturday.htm (last visited June 8, 2008)). 21Department of the Treasury News Release, Week 7 Wrap-Up: Treasury Sent 9.526 Million 

Stimulus Payments This Week (June 13, 2008). 22 IRS Response to TAS Information Request (June 12, 2008). 23 Economic Stimulus Act, Pub. L. No. 110–185, § 101(e)(1)(A)(ii)(2008). Through June 5, the IRS had obligated $138.2 million ($121.7 million in Operations Support and $16.5 million in 

Taxpayer Services), but this total does not include labor charges from the preceding 2-4 weeks. 

IRS Response to TAS Information Request (June 123, 2008). The IRS anticipates it may require 

additional resources due to higher than expected call volumes. Id. 24 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

Rebate Hotline (Economic Stimulus Payments) 866–234–2942 (week ending June 7, 2008); IRS 

Economic Stimulus Activity Report (June 17, 2008). 

• The IRS worked with the Free File Alliance to ensure that taxpayers who did 

not have a tax filing requirement but wanted to file ESP-only returns through 

e-file could do so without charge.16

• The IRS transferred personnel from other functions to help answer the barrage 

of telephone calls it received. As of June 7, the IRS had received 26.7 million 

‘‘net call attempts’’ related to stimulus payments.17 Many calls could be addressed by automated responses and many calls did not get through, but assisters spoke with about 2.9 million taxpayers directly to respond to stimulus questions.18

• The IRS developed outreach initiatives and is continuing to reach out to senior 

citizens and other taxpayers without a filing requirement to encourage them to 

file ESP-only returns. As of June 14, 7.7 million such returns had been received.19

• The IRS organized a major ‘‘Super Saturday’’ event on March 29 to assist taxpayers in preparing ESP-only returns. IRS employees and IRS partners staffed 

some 700 walk-in sites, and IRS employees staffed the toll-free telephone line.20

By the end of last week, the IRS had paid out about $63.9 billion to 76.5 million 

households.21 The IRS projects that it will have paid out a total of $99 billion by 

the end of 2008 and somewhat more during the 2009 filing season.22

Overall, this is an extraordinary success story. While the administration of the 

program has not been free from tradeoffs and occasional hitches, some of which I 

will discuss below, it is a testament to the IRS’s leadership and its talented and 

dedicated employees that it has been able to deliver the filing season and the stimulus program so effectively with so little time to prepare. 

II. The IRS Has Had to Make Certain Tradeoffs to Administer the Program. 

In passing the Economic Stimulus Act, Congress gave the IRS a supplemental appropriation of $202.1 million to administer the issuance of stimulus payments.23

While the funding is certainly helpful, the IRS’s principal challenge was the lack 

of time to plan. In addition to all the programming and outreach the IRS has had 

to do, the IRS also has received more than 26 million telephone calls and 316,000 

visits to its walk-in sites relating solely to stimulus payments.24

Even with supplemental funding, there was not enough time for the IRS to hire, 

train, and deploy additional employees to answer the phones or staff the walk-in 

sites. The IRS therefore faced some difficult decisions. On the one hand, if it did 

not reassign employees from other functions to assist in answering the large spike 

in telephone calls, the LOS on the toll-free telephone lines would have declined by 

even more than it has. On the other hand, if the IRS did reassign employees from 

other functions, the core work those employees ordinarily perform would suffer. Inevitably, there was both a decline in the level of taxpayer service the IRS provides, 

particularly on its toll-free telephone lines, and a modest reduction in its enforcement activities. 

A. The IRS Has Been Unable to Keep Up with the Large Volume of Telephone Calls 

and Correspondence It Has Received. 

The IRS has received 94.4 million enterprise-wide ‘‘net call attempts’’ YTD 

(through June7, 2008) as compared with 51.6 million ‘‘net call attempts’’ for the 

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25 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Enterprise Snapshot 

(week ending June 7, 2008). As noted in a prior footnote, the term ‘‘net call attempts’’ reflects 

official data that the IRS posts on its Joint Operations Center website to track the activity on 

its toll-free lines, but it is a term of art that generally understates the number of calls that 

taxpayers place in an attempt to reach the IRS. The IRS separately tracks ‘‘dialed number attempts,’’ a measure that reflects the number of times taxpayers have dialed the toll-free number 

and provides a more accurate measurement of what taxpayers experience. The IRS reports that 

it has received 135 million dialed number attempts in 2008 YTD (through June 7). IRS Response to TAS Information Request (June 16, 2008). On May 9, the peak day so far this year, 

the IRS received 4.7 million dialed number attempts. 26 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Enterprise Snapshot 

(week ending June 7, 2008). 27 Id. The customer service representative (CSR) LOS measures the relative success rate of 

taxpayers that call for toll-free services seeking assistance from CSRs. Generally speaking, the 

CSR LOS is calculated by dividing the number of calls answered by CSRs by the total call attempts of callers attempting to reach the CSR queue. (Essentially, CSR LOS measures the percentage of customers who want to reach a CSR and who are successful.) Total call attempts is 

the sum of calls answered, calls abandoned by the caller, and calls that receive a busy signal. 

For more detail, see CAS Data Dictionary—FY 2008, at http://joc.enterprise.irs.gov/new/josh/reports/wits/2008/FY%202008%20PAC%202C%20Data%20Dictionary.doc. 28 Id. 29 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

Rebate Hotline (Economic Stimulus Payments) 866–234–2942 (week ending June 7, 2008). 30 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Enterprise Snapshot 

(weeks ending May 10, 2008 and May 17, 2008). 31 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

Rebate Hotline (Economic Stimulus Payments) 866–234–2942 (week ending May 17, 2008). 32This chart is compiled from IRS Joint Operations Center data. Data for 2008 is YTD 

through June 7, 2008or for the week ending June 7, 2008. Data for 2007 is YTD through June 

9, 2007or for the week ending June 9, 2007. Some unassisted calls result when taxpayers hang 

up for a variety of reasons. Therefore, it is not the case that the unassisted percentage is entirely attributable to IRS limitations. 

same period in2007.25 That reflects an enormous 83 percent increase. In percentage 

terms, the largest increases have occurred since the regular April 15 filing deadline. 

In the week ending June7, for example, the IRS received 6.2 million call attempts 

compared with 1.6 million call attempts during the comparable week in2007—an increase of 279 percent.26

Despite the reassignment of employees from other functions and despite the IRS’s 

decision to extend the employment of temporary staff hired for the filing season, the 

IRS has been unable to keep up with the volume of calls. The enterprise-wide level 

of service (LOS) in 2008 stands at 62.8 percent YTD (through June 7) as compared 

with 80.6 percent in 2007 for the comparable period.27 In the week ending June 7, 

the LOS stood at 42.9 percent—down from 76.8 percent in the comparable week last 

year.28 Focusing solely on the 3.0 million calls to the Economic Stimulus Hotline 

during this recent week, the LOS was 30.4 percent.29

During some weeks, the volume of calls has been overwhelming. In mid May, the 

IRS enterprise-wide received particularly high call volumes—9.5 million calls during 

the week ending May 10 (LOS = 34.3 percent) and 11.2 million calls during the 

week ending May17 (LOS= 34.8 percent).30 During the week of May 17, 6.6 million 

of the calls the IRS received related to stimulus rebates, and the LOS on that line 

fell to 26.3 percent.31

As described in footnote 27, the LOS generally measures the treatment of taxpayers that seek to speak with a customer service representative (CSR). However, 

the following chart shows the disposition of all taxpayer calls, including total number of calls received, the number and percentage of calls answered by a CSR, the 

number and percentage of calls answered by automation, and the percentage of calls 

not answered: 32

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33 Internal Revenue Service, Joint Operations Center, Customer Account Services Accounts 

Management Paper Inventory Reports: Weekly Enterprise Adjustments Inventory (weeks ending 

June 7, 2008 and June 9, 2007). 34 Id. 35There are 2,872 full-time equivalent employees (FTE) in the ACS function (1,545 in the 

Wage & Investment Division and 1,327 in the Small Business/Self-Employed Division). Through 

May, the IRS had shifted 116 FTE to answer ESP telephone calls and projects that it will shift 

another 80.1 FTE in June and July. IRS Response to TAS Information Request (June 13, 2008). 36 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

W&I ACS 800–829–7650 (week ending June 7, 2008). 37 Internal Revenue Service, Joint Operations Center, Snapshot Reports: Product Line Detail: 

SB/SE ACS 800–829–3903 (week ending June 7, 2008). 38 IRS Response to TAS Information Request (June 13, 2008). 

Dialed Number 

Attempts 

Assister 

Answered 

Assister 

Answered 

Percentage 

Automation 

Assisted 

Automation 

Assisted 

Percentage 

Unassisted 

Percentage 

Enterprise 2008 YTD 134,656,185 28,829,133 21.4% 29,598,595 22.0% 56.6% 

Enterprise 2007 YTD 62,479,800 24,677,171 39.5% 13,379,589 21.4% 39.1% 

ESP Hotline YTD 27,731,306 2,866,113 10.3% 16,798,968 60.6% 29.1% 

Enterprise 2008 Weekly 8,657,146 1,193,032 13.8 % 2,099,177 24.2% 62.0% 

Enterprise 2007 Weekly 2,442,566 898,378 36.8% 187,597 7.7% 55.5% 

ESP Hotline Weekly 3,304,474 205,572 6.2% 1,770,631 53.6% 40.2% 

As this chart indicates, the percentage of calls that the IRS successfully addressed 

has fallen from 60.9 percent in 2007 to 43.4 percent in 2008 and the percentage of 

taxpayers assisted by a CSR has declined from 39.5 percent to 21.4 percent. These 

reductions are significant. 

To assist with these call volumes, the IRS is relying on some employees from its 

Account Management and Automated Collection System (ACS) functions. 

In Accounts Management, customer service representatives (CSRs) who work on 

account adjustments (including taxpayer correspondence, amended returns, responses to math error notices, and injured spouse claims) often shift between paper 

correspondence and assisting with the phones as needed. As the IRS has been forced 

to shift employees to help in answering the phones, the productivity of Accounts 

Management in processing taxpayer correspondence relating to adjustments has declined. As of June 7, 2008, the inventory of adjustments correspondence involving 

individual taxpayers stood at 647,674, as compared with 320,239 on the corresponding date in 2007—an increase of 102 percent.33 Of greater concern, the number of ‘‘uncontrolled’’ items of such correspondence stood at 22,156, as compared 

with 10,483 last year—an increase of 111 percent.34

ACS is the IRS’s automated collection system, and taxpayers who receive collection notices often seek to call the IRS to resolve problems before enforced collection 

action is taken. For that reason, it is critical that these taxpayers have an opportunity to get through to an IRS collection employee. 

The need to staff the stimulus lines has led to a decline in the LOS on the ACS 

telephone lines.35 The declines have been relatively modest YTD but have become 

more pronounced recently as stimulus calls have remained at high levels. The LOS 

on the ACS lines maintained by the Wage & Investment Division stands at 75.3 percent YTD and 60.9 percent for the week ending June 7 (as compared with 78.7 percent and 88.5 percent for the same periods in 2007).36 The LOS on the ACS lines 

maintained by the Small Business/Self-Employed Division stands at 75.6 percent 

YTD and 71.6 percent for the week ending June 7 (as compared with 81.8 percent 

and 86.1 percent for the same periods in 2007).37

The IRS projects that it will receive an additional 6.6 million stimulus-related 

calls from June through September.38 Because the IRS received 3.0 million calls 

during the first week of June alone, that projection may need to be reevaluated. 

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39 Id. According to IRS data, ACS collections are 35.0 percent lower in May 2008 as compared 

with May 2007. IRS Collection Activity Reports 5000–1 and 5000–2. 40 IRS Data Book: 2007, Table 1. 41 IRS Fiscal Year 2007 Enforcement and Services Results (accompanying chart) (available on 

the IRS website). 42 IRS Response to TAS Information Request (June 13, 2008). 

B. The Reduction in Level of Service on the Phones and Delays in Processing Correspondence Can Harm Taxpayers and Potentially Erode Compliance 

While I understand that the overriding goal of the stimulus legislation was to put 

money into the hands of U.S. households as quickly as possible and the IRS was 

a logical agency to administer the program, I am concerned by the sharp reduction 

in the IRS’s ability to answer calls from taxpayers and timely process taxpayer correspondence. 

The declines in the level of service on both the Accounts Management and the 

ACS telephone lines and the increasing inventories of unaddressed correspondence 

and other submissions are not mere statistics. These declines have real, negative 

impact on taxpayers, increasing their compliance burden. For example, a taxpayer 

who cannot get through to the IRS to negotiate an installment agreement may instead find his paycheck levied—unnecessarily. A taxpayer who is under audit and 

submits documentation may receive a statutory notice of deficiency because the IRS 

did not process the correspondence or amended returns timely. Thus, the taxpayer 

will incur additional expense and burden by having to file a petition with the United 

States Tax Court or request an audit reconsideration. 

From a broader policy perspective, maintaining a high level of taxpayer service 

is crucial to tax administration. First, it is a basic obligation of the government. If 

we are requiring taxpayers to pay a large percentage of their incomes to the government, the least we can do is make it as easy as possible for taxpayers to comply. 

When taxpayers cannot get through to the IRS, they get frustrated, and the experience leaves them with a negative impression of their government. Moreover, when 

a taxpayer is facing enforcement action and either believes the action is unwarranted or wishes to talk with an IRS employee to try to work out a payment arrangement, it is absolutely critical that the taxpayer be able to reach an employee. 

Second, the inability of the IRS to respond adequately to taxpayers creates disillusionment and may, in the long term, reduce compliance by angry and frustrated taxpayers. 

In this instance, the congressional objective of providing immediate economic 

stimulus likely outweighed the consequences I have described. But it is important 

to keep in mind that there have, in fact, been trade-offs, and some things will fall 

through the cracks if the IRS is simultaneously asked to run a filing season and 

administer a stimulus program of this magnitude on short notice. 

C. The IRS Projects That Its Administration of the ESP Program Will Reduce Collections Slightly. 

Because the IRS has reassigned employees from ACS to assist in administering 

the stimulus payments, the IRS estimates that the loss in collection revenue will 

be approximately $565 million.39 In FY 2007, for comparison, IRS net collections totaled $2.4 trillion,40 and IRS enforcement revenue totaled $59.2 billion.41

III. There Have Been Glitches and Taxpayer Frustrations, but They Have Been 

Minor and Relatively Few. 

During the administration of the stimulus program, the IRS has encountered a 

few problems and taxpayers have experienced a few additional sources of frustration 

that are not attributable to IRS errors. 

As discussed above, the largest source of taxpayer frustration has been the difficulty of reaching an IRS telephone assistor on the toll-free lines. I will discuss 

other issues below. 

As an initial matter, I note that the IRS reports it has not detected significant 

problems involving identity theft (e.g., the misuse of another person’s Social Security 

number) with the stimulus program. Particularly because millions of individuals filing ESP-only returns have not filed tax returns for a number of years, there was 

concern that upon filing, some taxpayers would discover that someone else had been 

filing returns using their SSN, causing the IRS to freeze the stimulus payment. In 

response to these concerns, the IRS reports that it established a specialized unit to 

analyze ESP-only returns for the purpose of identifying potential identify theft-related problems. The IRS reports that it has identified only 25 instances of potential 

identity theft to date.42 While this report is encouraging, I remain concerned that 

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43 IRC § 6428(b)(1)(B) (adopting the definition of a ‘‘qualifying child’’ in IRC § 24(c)). 44Statement issued by IRS Office of Media Relations (unpublished). 45 Carol Polsky, IRS: Some Stimulus Checks Misrouted, Newsday, May 15, 2008 at A18. 46 IRS Response to TAS Information Request (June 13, 2008). 47 Id.; see also Diane Freda, Tax Refunds: IRS Investigates Economic Stimulus Payments After 

Statements Mailed to Wrong People, BNA Daily Tax Report (May 16, 2008). 

the IRS does not have a comprehensive means to identify and track all cases of 

identity theft. The Federal Trade Commission (FTC) has reportedly received approximately 150 complaints about identity theft problems relating to stimulus payments, and a quick survey of TAS’s Local Taxpayer Advocates about stimulus-related problems turned up 13 cases. Neither the FTC nor TAS complaints have been 

validated, but they do suggest that the universe of ESP identity theft-related cases 

is likely to be somewhat larger than the current IRS data suggest. I will continue 

to monitor identity theft problems arising in the context of the stimulus program. 

A. In About 350,000 Cases, Taxpayers Have Not Received Additional Stimulus Payments of $300 Per Child to Which They Are Entitled. 

Under the Economic Stimulus Act, a taxpayer is entitled to receive an additional 

payment of $300 for each dependent who is a ‘‘qualifying child.’’ 43 Thus, for example, a couple that has four children and files a joint return may be entitled to a 

total stimulus payment of $2,400 (i.e., $1,200 plus $300 for each of four qualifying 

children). 

On Forms 1040 and 1040A, IRS programming code looks to whether the Child 

Tax Credit checkbox on line 6c, column (4) is checked to determine whether to allow 

the additional $300 credit. On approximately 350,000 returns, this box was not 

checked even though the taxpayer was entitled to an additional payment with respect to one or more children. 

The IRS reports that there were two sources of this problem. First, some taxpayers who prepared their returns on paper did not check the box. Second, two tax 

software products used primarily by tax professionals were not properly programmed to check the box. 

The IRS reports that it will be able to identify returns where a taxpayer had a 

qualifying child but did not check the box and that it will send paper checks to the 

affected taxpayers beginning immediately after the regularly scheduled payment of 

stimulus checks ends in July.44

B. Approximately 1,500 Stimulus Payments Were Transmitted into Wrong Bank Accounts and Personally Identifiable Information Was Compromised. 

On May 15, Newsday reported that some stimulus payments were deposited electronically into the wrong taxpayers’ bank accounts. The article said that one taxpayer reported receiving a deposit of $1,800 bearing another taxpayer’s SSN.45

The IRS has acknowledged that a programming error caused 1,500 stimulus direct deposits to be transmitted to incorrect bank accounts and that Social Security 

numbers were transmitted along with the payments. 

The IRS reports that it quickly corrected the problem and that no additional erroneous deposits have been made. 

According to the IRS, almost all taxpayers who should have received their payments electronically have since been sent checks. The remaining taxpayers will receive their checks within the next few weeks. The banks have returned approximately 250 of the erroneous deposits to date, and the IRS is seeking to recover the 

remaining erroneously transmitted funds. 

The IRS reports that it is also determining whether to provide the taxpayers 

whose SSNs were exposed with a credit monitoring service.46

C. Up to 22,000 Taxpayers May Have Received a Notice Containing Information 

About a Different Taxpayer’s Stimulus Payment. 

The IRS is sending a notice, CP 1378, to all confirmed recipients of stimulus payments to explain how the amount of their stimulus payment has been calculated. 

The IRS reports that in up to about 22,000 cases, the first page of the notice contained information for one taxpayer while the second page carried information for 

a different taxpayer. These notices contained truncated SSNs on the first page, and 

no personally identifiable information on the second page.47

The IRS reports that it has received slightly more than 200 inquiries thus far, 

a relatively low number which could indicate that not all 22,000 notices were mailed 

in error. It reports that it cannot determine the exact number. 

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48 IRS Response to TAS Information Request (June 13, 2008). The IRS provided the following 

additional explanation: 

The error was made during a 15-minute run in which the printer feeder was, at times, pulling 

two pages through. The quality control employee responsible for checking runs at certain intervals did not pull the six samples he should have at the beginning of the new run. The mistake 

was discovered when the machine went down for another reason and a sample was pulled at 

that point. The CEO took immediate and decisive action, and he also made changes to the quality review process. They are now using two quality reviewers instead of one, and quality review 

is taking place at 15-minute intervals instead of 30-minute intervals. 49 Id. 50 IRS Response to TAS Information Request (June 12, 2008). 51 In February, one tax-preparation company notified the IRS that it had failed to include RAL 

indicators on approximately 450,000 electronically filed returns. The company and the bank providing the RALs were able to provide the routing transit numbers (RTNs) used for the RALs. 

The company provided this information early enough so that the IRS was able to include in its 

programming a requirement to convert returns bearing those RTNs to paper checks. The IRS 

reports that the taxpayers whose returns were involved generally did not experience delay in 

receiving their stimulus payments. IRS Response to TAS Information Request (June 13, 2008). 52These problems also demonstrate why the IRS should develop plans to deliver tax refunds 

via Treasury-issued debit cards, as Treasury is doing currently for Social Security payments. 

See Lori Montgomery, Treasury Dept. Rolling Out Social Security Debit Card, Washington Post, 

June 10, 2008, at D3. 

The IRS reports that the problem was attributable to an error by a print vendor 

and was limited to one printer at one site.48 The vendor will issue corrected notices 

with the following explanation of the error: 

Due to an error by the print vendor, your original notice may have included information regarding another taxpayer’s stimulus payment. To ensure you receive the 

originally intended information for you, we are resending this notice. We apologize 

for any inconvenience this may have caused. 

The IRS’s Privacy, Information Protection, and Data Security Advisory Committee 

was notified of a data breach with respect to the taxpayers affected by the CP 1378 

print problem. The committee agreed unanimously that the level of risk of identity 

theft posed by the erroneous mailing did not rise to the level requiring data loss 

notification and the invocation of credit monitoring and other services. The committee reached a consensus that the corrected notice with the apology statement 

quoted above is sufficient notice to these taxpayers about the incident.49

D. More Than 20 Million Taxpayers Who Purchased RALs or RACs Must Wait Up 

to 2–1/2 Months Longer Than Other Taxpayers to Receive Their Stimulus Payments. 

As of June 10, the IRS reports that 9.9 million taxpayers have purchased refund 

anticipation loans and 10.5 million taxpayers have purchased refund anticipation 

checks in2008.50 When a taxpayer purchases either of these products, a temporary 

bank account is created in the taxpayer’s name and the taxpayer’s refund is paid 

into that account, but the taxpayer does not control the account. 

In general, the IRS is issuing stimulus payments electronically if bank account 

routing information appears on the taxpayer’s 2007 tax return Because RAL and 

RAC accounts are temporary and not controlled by the taxpayer, however, stimulus 

payments deposited into those accounts would not reach the taxpayer. Fortunately, 

the IRS receives an electronic indicator when a RAL or RAC is associated with a 

return, and the IRS was able to program its systems to send paper checks to all 

taxpayers whose 2007 returns were accompanied by one of the indicators.51

These taxpayers are receiving their stimulus payments according to the schedule 

established for the issuance of paper checks—with some coming as late as mid 

July—instead of receiving their stimulus payments electronically in May. Thus, 

more than 20 million taxpayers who purchased RALs and RACs must wait up to 

21⁄2 months longer to receive their stimulus payments than taxpayers who did not 

purchase those products. 

Some taxpayers who purchased RALs or RACs have complained that their preparer or software vendor did not inform them that their stimulus payments would 

be delayed. While these delays are not attributable to IRS error, I understand the 

frustration these taxpayers are experiencing, and I believe this is one reason among 

many why RALs and RACs are not a good choice for most taxpayers.52

E. The IRS Has Deployed a ‘‘Where’s My Stimulus Payment?’’ Application on Its 

Website But Its Usefulness Is Limited and May Be Contributing to More Telephone Calls. 

For several years, the IRS website has provided an automated self-service application known as ‘‘Where’s My Refund?’’ that allows taxpayers to check on the status 

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53 IRS Response to TAS Information Request (June 13, 2008). 54 IRM 21.4.6.5.12.1 (March 19, 2008). 55 If a taxpayer claims a refund on his regular income tax return but the taxpayer also owes 

federal taxes for another tax period or tax type, the refund may be offset against the outstanding tax liability. IRC § 6402(a). However, when the taxpayer can demonstrate that failure 

to receive the refund will cause a hardship, the IRS can implement an ‘‘offset bypass’’ and issue 

a ‘‘manual refund’’ (i.e., override the automated offset process). IRM 21.4.6.5.12.1 (March 19, 

2008). 56The IRS will issue a manual refund or OBR on a stimulus payment when the IRS has 

placed a freeze on the taxpayer’s return, such as when the return is identified by the Questionable Refund Program, in identity theft situations, or when duplicate returns have been filed. 

IRM 21.6.3.6.6.3 (May 14, 2008). 57 Injured Spouse is a process by which a non-debtor spouse informs the IRS, via Form 8379, 

Injured Spouse Allocation, that the portion of a tax refund attributable to the non-debtor spouse 

should not be offset against the debtor spouse’s tax liability. See IRM 21.4.6.5.9 (Oct. 1, 2007). 

payers and reduce the volume of telephone inquiries regarding stimulus payments, 

the IRS developed an application known as ‘‘Where’s My Stimulus Payment?’’ However, the IRS has told us that the data source that populates the application is updated at the time the stimulus payment is processed. As a consequence, the IRS acknowledges that ‘‘Where’s My Stimulus Payment?’’ may not reflect electronic payments until after the funds have been deposited into the taxpayer’s bank account.53

Because of the ease with which taxpayers may access ‘‘Where’s My Stimulus Payment?’’ and the uncertainty many taxpayers inevitably feel when they find no information, it is possible that this application may inadvertently be causing confusion 

and thereby increasing call volumes. The IRS is encouraging taxpayers to use its 

website to obtain information on stimulus payments, but when they try, they often 

cannot get the information they are looking for, and this uncertainty likely drives 

them to use the toll-free telephone lines. The IRS should review this application and 

identify improvements that can eliminate or minimize this downstream impact for 

future initiatives. 

F. Local Taxpayer Advocates Report That Taxpayers Are Encountering Some Difficulties in Obtaining Their Economic Stimulus Payments. 

A recent informal survey of Local Taxpayer Advocates has identified a number of 

issues that have resulted in incorrect, delayed, or unexpectedly reduced economic 

stimulus payments and may lead to increased IRS and Taxpayer Advocate Service 

(TAS) telephone volumes. The most common request for TAS assistance regarding 

ESPs is the taxpayer’s need for an expedited refund. Generally, taxpayers who are 

experiencing a hardship can request a ‘‘manual refund’’ or ‘‘offset bypass refund’’ 

(OBR).54 A manual refund speeds up the process by which a taxpayer receives his 

or her refund. An OBR permits a taxpayer’s refund to bypass any outstanding tax 

liability.55

As both a policy and practical matter, the IRS decided not to allow manual refunds or offset bypasses for ESPs except in certain limited circumstances. 56 Thus, 

when taxpayers experiencing hardships call the IRS or TAS for an expedited stimulus payment or because they have not received their payment when or as expected, 

their hopes are dashed when they learn that their stimulus payment cannot be expedited or will offset a back tax debt. For some taxpayers who received manual 

(hardship) direct deposit refunds for their 2007 returns, the IRS systems may delay 

their ESP longer than projected because of holds on their accounts following the 

manual refund. The IRS’s failure to adequately publicize or explain the offset rule 

leads to taxpayer confusion and frustration as well as increased taxpayer calls. It 

is not clear whether, with additional lead time, the IRS could have identified a way 

to allow for ESP manual refunds or OBRs in hardship situations. 

Local Taxpayer Advocates also reported that the processing of Injured Spouse 

claims has delayed ESPs.57 They note that the disbursement of payments is inconsistent when one spouse on a Married Filing Joint return claims Injured Spouse status. In some instances, although IRS systems showed the ‘‘Injured Spouse’’ indicator 

for that return which should have resulted in a 50–50 split of the ESP (with onehalf offset to the debtor spouse’s IRS debt and one-half issued to the non-debtor 

spouse), the full amount of the ESP was offset and applied to the debtor spouse’s 

IRS debt. In other instances, the full amount of the ESP was issued in two checks 

even though there was an existing IRS debt for the primary spouse. 

TAS identified other instances in which taxpayers have encountered problems obtaining their stimulus payments because the law or systems prevent it: 

• Taxpayers whose 2007 accounts are ‘‘frozen’’ will not receive their stimulus payments according to the published schedule. 

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58See http://www.tax-toolkit.com/Video_Tax_Help.cfm. 59 IRS Wage & Investment Division (Customer Assistance, Relationships and Education), FY 

2008 Economic Stimulus Payments (ESP) Outreach Campaign (April 24, 2008). 60 Id. 

• A taxpayer’s stimulus payment will be delayed when the name and SSN of one 

spouse do not match Social Security records. This situation commonly occurs 

when a spouse has changed his or her name as a result of a change in marital 

status but has not notified the Social Security Administration of that change. 

In normal tax return processing, the IRS can correct its records by looking at 

its own data and process the return. Under the ESP initiative, however, these 

taxpayers have no recourse other than claiming a credit on a 2008 return with 

a valid name and SSN match. • Taxpayers who receive supplemental security income (SSI) and have no adjusted gross income are not eligible to receive stimulus payments, yet due to 

confusion, some have filed ESP-only returns and are now wondering why they 

have not received their payments. 

Many Local Taxpayer Advocates noted that the influx of calls to TAS offices was 

in part the result of IRS and other publicity focusing on the maximum amount of 

the stimulus payment and the schedule of payments, without highlighting the exceptions to the schedule or the different levels of payments. One exception in particular caused confusion—taxpayers who filed on April 15 would not have payments 

issued according to the published schedule. The IRS did not make sufficiently clear 

that returns had to be processed by April 15 for taxpayers to receive payments according to the schedule. 

IV. ESP Outreach Poses Many Challenges to the IRS and Its Stakeholders. 

The Economic Stimulus Act payments are based on a simple premise—get money 

out to taxpayers and certain other individuals quickly to stimulate the economy. The 

details of the eligibility for payment, application for payment, and method of payment delivery, however, are anything but simple. These complexities make it extremely difficult for the IRS and its stakeholders to craft a clear, comprehensible, 

and succinct communications campaign. Indeed, when I taped a video message early 

in the filing season presenting information that I believed taxpayers needed to know 

about ESPs, the video (a ‘‘TAScast’’) ran more than seven minutes long.58

An effective outreach and education strategy is especially critical for the estimated 20.5 million individuals who have no tax return filing requirement yet receive Social Security or Veterans Affairs benefits. These individuals must take an 

affirmative step to receive their stimulus payments—i.e., they must file a tax return. Communicating with this population presents a significant challenge, given 

the complications of age and disability. While the IRS, TAS, and our stakeholders 

have taken some effective steps and certainly can do more in this regard, the ESP 

requirements are so complex that no amount of communication by the IRS will 

reach all 20.5 million individuals, and even when the message is delivered, it may 

not be accurately understood. For the reasons outlined in the following discussion, 

it may be that the IRS is not the appropriate agency to deliver payments to special 

populations who otherwise would have no contact with the IRS. 

A. The IRS’s General Communications Strategy Is a Good Starting Point for More 

Specific Outreach Initiatives. 

The IRS began developing an outreach and communications plan as soon as it 

learned of a potential economic stimulus package.59 This plan set out IRS outreach 

in four phases: 

1. 2008 Filing Season Efforts (through April 15): ‘‘Getting the Word Out Far and 

Wide’’; 

2. Post-April 15 Efforts (April 15—June): ‘‘It’s Not Too Late to File for ESP’’; 

3. Community Focused Campaigns (June—August): ‘‘Enriching the Economy’’; 

and 

4. Pre-October 15 Efforts (September—October 15): ‘‘Don’t Let ESP Pass You 

By.’’ 60

In implementing this strategy, the IRS developed press releases, an extensive 

website, FAQs, and sub-pages for targeted populations. It worked through its external partners, such as the National Governors Association, the National Council on 

Aging, the American Association of Retired Persons, and Catholic Charities. The 

IRS developed multi-staged mailings to taxpayers who filed their 2006 returns and 

to taxpayers who received Social Security or Veterans Affairs benefits but did not 

have a 2006 filing requirement. The mailings to Social Security and Veterans Afrfrederick on PROD1PC65 with HEARING

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61 IRS Wage & Investment Division, IRS puts its best face forward on Super Saturday, Insider 

(available at http://win.web.irs.gov/articles/2008/Super_Saturday.htm (last visited June 8, 2008)). 62 IRS Response to TAS Information Request (June 13, 2008). 63 Email from SPEC Senior Communications Analyst to TAS Senior Program Analyst (June 

11, 2008) (email on file with the Taxpayer Advocate Service). 64Taxpayer Advocate Service, FY 2008 Operational Priorities, TAS–13.1–1007–002, Attachment 1 (Nov. 2, 2007), at 20. 65Taxpayer Advocate Service, Economic Stimulus Payments, at http://www.irs.gov/advocate/article/0,,id=179751,00.html. 66The websites include the Tax Literacy Toolkit at http://www.tax-toolkit.com/Welcome.cfm, 

the Electronic Press Kit at http://www.irs-tas.com, and the Advocate Toolkit, which is primarily 

a resource for LTAs, at http://advocatetoolkit.com. 

fairs beneficiaries described the steps individuals should take to receive stimulus 

payments and included a Form 1040A and instructions. 

On March 29, 2008, IRS Taxpayer Assistance Centers (TACs) around the country 

hosted a ‘‘Super Saturday’’ where IRS employees, including TAS employees, helped 

taxpayers otherwise without a tax-filing requirement to complete their ‘‘ESP-only’’ 

returns on Forms1040A. The IRS and its partners ran approximately 700 Super 

Saturday sites nationwide. In addition, IRS Accounts Management and ACS employees staffed toll-free phone lines to answer taxpayers’ ESP-related questions.61

During the filing season, TACs were open for extended hours on several Saturdays. For the post-April 15 phase, the IRS plans to keep the TACs fully operational, 

Monday through Friday from 8:30 AM to 4:30 PM, and to continue to assist customers with ESP applications as well as offer free return preparation assistance to 

individuals and families whose income is $40,000 or less. The IRS states that no 

advance appointment is required for preparation of ESP-only returns.62 Moreover, 

TAS was informed that 67 ‘‘partners’’ (mostly or all VITA sites) in 21 states have 

scheduled ESP tax preparation activities beyond June 16. While these partner activities are helpful, these sites do not have a national scope. For example, there are 

just two sites in the State of New York (Jamaica and Kingston), with none in Manhattan.63

In addition to these national scope activities, IRS Stakeholder Partnerships, Education and Communication (SPEC) and Government Liaison employees have organized many local outreach sessions with stakeholders and congressional offices. TAS 

employees also participated in these activities. 

B. The Taxpayer Advocate Service Has Partnered with Local IRS Personnel and Initiated Grassroots Outreach. 

The Taxpayer Advocate Service’s public information, education, and outreach efforts have also helped to improve public awareness. When President Bush signed 

the Economic Stimulus Act of 2008 into law in February, our Local Taxpayer Advocates (LTAs) were in Washington, DC, delivering the National Taxpayer Advocate’s 

2007 Annual Report to Congress to their congressional offices. We immediately provided the LTAs with ESP talking points that enabled them to address questions 

from congressional staffs. The LTAs continued their outreach in the weeks that followed, supporting congressional offices and the IRS’s Governmental Liaison staff at 

ESP events and working with other IRS functions and local organizations to inform 

taxpayers about stimulus payments. Because all LTAs are required to conduct 40 

grassroots outreach events every year, the foundation for this initiative was already 

in place.64

TAS moved quickly to bring the Low Income Taxpayer Clinics (LITCs) into the 

ESP outreach process. On March 6, TAS hosted a nationwide conference call on ESP 

issues for LITCs, and IRS representatives from the Office of Chief Counsel, Communications and Liaison, and the Wage and Investment Division’s Customer Assistance, Relationships, and Education (CARE) organization participated. This gave approximately 100 LITC participants an opportunity to bring specific questions the 

clinics had encountered in working with taxpayers to the attention of the IRS. 

TAS also collected and provided the IRS with comments from both the LITCs and 

Taxpayer Advocacy Panel members on an early draft of the Form 1040A–3 information package for the ESP-only population. TAS created an Economic Stimulus page 

on its public website 65 and provided an e-mail address to the LITCs to pose questions. As part of this coordinated approach, with the goal of using all the tools at 

hand, I recorded a ‘‘TAScast’’ video message for the ESP-only population. TAS 

placed this video on its three external ‘‘toolkit’’ websites and marketed it through 

YouTube.66 Additionally, we placed an IRS video (in English and Spanish) for Social 

Security and Veterans Affairs benefits’ recipients and an American Sign Language 

video on our Tax Literacy Toolkit. 

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67 IRS Economic Activity Stimulus Report (June 17, 2008). 

Local Taxpayer Advocates have participated in many of the IRS initiatives and 

conducted their own outreach through their grassroots contacts. In Philadelphia, 

TAS participated in several ‘‘Senior Expos’’ sponsored by local and state representatives, providing general and specific information about the ESP program. Detroit 

TAS participated in a webcast with a local television station. In Mississippi, TAS 

provided information to employees of the Jackson Senior Service Division regarding 

the stimulus payments. These employees in turn provided information to the seniorcitizen homes and other senior-citizen groups throughout the city. 

Low Income Taxpayer Clinics also are doing their share of ESP outreach and education. Clinics have conducted outreach presentations at elderly and disabled low 

income housing facilities in New Hampshire, given interviews on local Spanish language television stations in Central California, made presentations to local senior 

centers and English as a second language (ESL) classes in Arkansas, conducted outreach to a foster grandparents association and an independent living service organization in Richmond, Virginia, and participated in many other activities throughout 

the United States in partnership with VITA sites and other nonprofit organizations. 

C. Barriers to Obtaining Participation of Social Security and Veterans Affairs Beneficiaries Present a Challenge to the IRS. 

As noted above, the IRS developed a special 1040A package that it sent to about 

20.5million Social Security and Veterans Affairs beneficiaries who did not file tax 

returns for 2006. To date, approximately 7.7 million of these individuals have filed 

2007 returns.67 The IRS is planning to send another notice to those taxpayers who 

have not yet filed. This second notice will be identical to the first, except that it 

will incorporate some visual improvements, including a larger font size for the notice itself and an easier-to-read font color. The accompanying Form 1040A return 

will not be in a larger font. 

Notwithstanding the efforts of the IRS, TAS, and outside groups to reach this population, there are major challenges to achieving a significant participation rate. In 

addition to the fundamental complexity of the program, challenges include the following: 

• Some senior citizens may view filing a return as requiring too much effort for 

$300. 

• This population may lack Internet access or may be uncomfortable obtaining tax 

information from the Internet. 

• This population may lack the mobility necessary to obtain assistance in applying for the ESP. 

• Members of this population may be incapacitated and under the care of guardians, conservators, or nursing homes and hospitals. 

• The return preparation cost may be too great and they may not know how to 

obtain free return preparation. 

• Individuals who have not had contact with the IRS for years may be unwilling 

to start filing with the IRS, for fear of losing government benefits or because 

of a more generalized fear about contact with a federal enforcement agency. 

• Confusing messages, conflicting information, not enough information, or too 

much information can all discourage participation. 

The following is an email I received from the Director of a Low Income Taxpayer 

Clinic in the Midwest, which illustrates some of the confusion relating to the ESP 

program: 

Communications about the ESP was TERRIBLE. Taxpayers received too much information—much of it incorrect—from too many places. Taxpayers were just confused and overburdened with information—from local and national news programs 

to local and national TV commercials there was information (misinformation) on 

ESP. There is going to be a lot of duplicate filings of the 1040A (ESP) and it is not 

‘‘fraud’’ it is just ‘‘misunderstanding’’ by the individuals filing these returns. We 

have already been asked to participate in many regional news programs to answer 

taxpayers questions about why people have not received their ESP based upon the 

timeline on IRS.gov and why EVERYONE is NOT receiving $600 for themselves and 

$300 for all of their dependents. 

We heard from many Social Security/Disability recipients who filed a tax return 

for 2007 in February, prior to the Social Security Administration mailing, thinking 

they also had to send in the 1040A to receive their ESP. Even though the mailing 

sent to them by the Social Security Administration said at the top that they did not 

have to file if they had already filed a 2007 tax return they either could not or did 

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68 Email from the Director of a Low Income Taxpayer Clinic (email on file with the Taxpayer 

Advocate Service). 69The Department of the Treasury estimates that by converting the 10.5 million people who 

still receive paper Social Security checks once a month to electronic payments, the Federal Government could save up to $42 million a year. Lori Montgomery, Treasury Dept. Rolling Out Social Security Debit Card, Washington Post, June 10, 2008, at D3. 

not read this message or they were just afraid they would not get the ESP unless 

they filed the form they received in the mail. 

The individuals who are having to file for the ESP only are not the most ‘‘sophisticated’’ of taxpayers. Many have not filed a tax return in many years due to their 

age. They just do not understand the process. We had (and are still having) numerous calls from VITA/TCE clients in our area thinking the VITA/TCE preparer made 

a mistake because the VITA/TCE site filed their ESP online or on a ‘‘white form’’ 

while the color of the paper of the form they received in the mail was pink. Many 

of these VITA/TCE clients wanted to know if it was alright that they had copied 

the information from the ‘‘white’’ copy given to them by the VITA/TCE volunteer to 

the pink paper return. When asked if the ‘‘white’’ form had already been filed they 

answered either yes or I don’t know for sure. Even when we told them the ‘‘white’’ 

form that had been filed would work, many told us they were going to go ahead 

and mail the pink form because they wanted to be sure they received their money. 

People still do not understand the $ amount they are receiving and or why. There 

was too much media raising individuals expectation that everyone would receive 

$600 and $300 for their dependents. I have had a local ‘‘diamond’’ outlet’s commercial repeated to me many times as ‘‘proof’’ they were suppose to receive $600 for 

themselves and $300 for their dependents. The common comment is ‘‘It is you and 

the IRS who do not understand the amount I should have received, don’t you listen 

to TV, etc.’’ 68

Given the message saturation and confusion described in the email above, coupled 

with the characteristics of the target population, is it any wonder that the IRS’s 

phone lines have been swamped and that millions of eligible individuals have not 

yet filed? 

V. Some Modest Suggestions for Future Initiatives 

One lesson to be learned from this year’s ESP initiative is that message saturation creates taxpayer confusion and causes unnecessary work for the IRS. Although 

a saturation campaign certainly gets the word out about a program, the owners of 

the campaign quickly lose control of the message. Thus, advertising by diamond 

merchants, department stores, auto dealers, and electronics stores enticing taxpayers to spend stimulus payments on their products reinforce an inaccurate message. Taxpayers come to expect the maximum stimulus payment amount and don’t 

understand the exceptions. This uncertainty and its consequences can even defeat 

the underlying purpose of the stimulus payments. Although taxpayers may spend 

more—either on credit or with savings—in anticipation of their stimulus payments, 

they may end up financially harmed if they do not receive all or part of the payment 

they are expecting and go into debt. The problems with a saturation message campaign are compounded if the design of the program itself is so complex that it takes 

twenty pages of Frequently Asked Questions and a seven minute podcast to explain 

it. If Congress decides to enact another ESP, it should consider how to simplify the 

eligibility rules so that they lend themselves to easy communication. Such simplification may mean that some individuals receive more or less than they might 

under the current ESP, but this trade-off for clarity would be well worth it. 

A second lesson is that when an initiative targets a population that does not otherwise have contact with the IRS, it may be better to utilize another federal agency 

for payment delivery. The 20.5 million Social Security and Veterans Affairs beneficiaries all receive payments from those agencies, and many of those payments are 

directly deposited into bank accounts. Why not find a way to let those agencies 

make stimulus payments to individuals without a tax filing requirement instead of 

requiring them to file ESP-only returns and having the IRS then send them paper 

checks? The Social Security Administration and the Treasury Department recently 

announced the availability of a no-fee debit card on which unbanked Social Security 

recipients may receive their benefits.69 Why not download the value of the stimulus 

payments onto such cards? 

Third, where there are no better alternatives than for the IRS to deliver such payments, the IRS and other federal agencies could cooperate to determine the exact 

payments to these special populations and the best method for delivering them. The 

ESP could be designed so that the IRS, the Social Security Administration, and the 

Department of Veterans Affairs work together to identify which beneficiaries do not 

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70 It is our understanding that this approach was adopted with the current ESP program in 

Puerto Rico and Guam. 71See National Taxpayer Advocate 2007 Annual Report to Congress 156–161 (Most Serious 

Problem: Taxpayer Service and Behavioral Research) and vol. 2, at 158-167 (Research Report: 

Normative and Cognitive Aspects of Tax Compliance: Literature Review and Recommendations 

for the IRS Regarding Individual Taxpayers). 

have a filing requirement but have at least $3,000 in benefits. Why force these individuals to file a tax return? Why not authorize the agencies to determine eligibility 

based on available information? 70 Moreover, once the IRS determines eligibility and 

the amount of payment, the IRS itself should develop the ability to utilize no-fee 

debit cards to deliver stimulus payments (and all tax refunds). 

Fourth, I note that one of the circumstances that made the ESP initiative so challenging was the short timeframe the IRS had from the time the bill was enacted 

until the time the first ESP was scheduled to go out to taxpayers. The IRS found 

itself scrambling to work out the logistics, such as developing an outreach strategy 

and materials, anticipating taxpayer questions, and strategizing about the best way 

to get answers to these questions to the public. Although the ESP program may 

seem like a one-time occurrence, the IRS often faces unanticipated events, including 

natural disasters, that affect taxpayers and their ability to comply with their tax 

obligations, thereby requiring special rules, procedures, and outreach. Instead of 

scrambling to address the unexpected, the IRS should be able to plan for it. 

There are several concrete steps the IRS can take to prepare for the next unanticipated event, whether it is a congressionally mandated program or a Presidentially 

declared disaster. Although the IRS has an internal Disaster Readiness Group, I 

recommend that its mission be expanded and that the IRS create a larger and more 

diverse emergency readiness group of external partners from which it can solicit 

feedback on its outreach efforts. The emergency readiness group should be active 

and available all year, ready to provide guidance on the most effective way to communicate with taxpayers, especially groups such as the Limited English Proficiency 

population, the elderly, and people with disabilities. The group should include representatives from tax professionals associations, state governments, LITCs, the Taxpayer Advocacy Panel, the National Disability Institute and other SPEC stakeholders. 

Fifth, for the IRS to implement emergency programs, it must maintain a workforce at sufficient levels to accommodate these demands without compromising its 

service levels or throwing its modernization efforts off course. Therefore, Congress 

should provide the IRS with funding to maintain a cadre of employees—whether 

they be seasonal or permanent—to address these situations and programmers who 

can work on these projects so that the IRS does not fall behind on its core business 

systems improvements. The internal cadre should conduct reviews after each unanticipated event to incorporate lessons learned and improvements into its standard 

operating procedures. Moreover, where glitches such as those with manual or offset 

bypass refunds or injured spouse are identified, the cadre can work on solutions in 

the downtime between events. 

Finally, the communications challenges posed by the ESP initiative have made 

the need for a cognitive learning lab even more compelling.71 In-depth research on 

how taxpayers learn and respond to communications would provide the IRS with 

important tools to enable it to educate taxpayers and increase responsiveness more 

effectively. The IRS could use the information gained from the cognitive lab to better tailor outreach strategies for unexpected events to meet the diverse needs of the 

tax population. We do not need to wait for a disaster or an unexpected initiative 

to learn about our diverse taxpayer base, nor should we. The IRS needs to go beyond mere demographics and begin to develop a more comprehensive understanding 

of its taxpayers now. 

f 

Chairman LEWIS. Thank you, Ms. Olson, for your statement. At 

this time, I will open the first panel for question. I ask that each 

Member follow the 5-minute rule. 

Ms. OLSON. I am submitting, for the record, two letters to the 

Subcommittee from the Federal Trade Commission and the FBI. 

These letters state that almost 300 identity theft complaints have 

been filed, related to the rebate checks. 

[Letter from the Federal Trade Commission follows:] 

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[WAITING FOR RESPONSE FROM COMMITTEE] 

[Letter from the FBI follows:] 

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f 

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Chairman LEWIS. Have you seen any identity theft problems related to the rebate checks, or is there a form at IRS for taxpayers 

to report identity theft? 

Ms. OLSON. To date, the IRS has reported to us that they have 

only identified 25 cases dealing with identity theft and the economic stimulus payment itself. 

However, an informal survey in my own offices, just asking my 

local taxpayer advocates, they said that they had 13 such cases. So, 

either we have half of all IRS cases, or there are many more cases 

out there. We usually get 1 percent of problems that the IRS sees, 

as a whole. 

There is no form, presently, for taxpayers to report themselves 

an identity theft victim. I am concerned how the IRS is counting 

these cases of identity theft, because as of this point they have not 

yet implemented the marker on accounts where the IRS can know 

that there is an identity theft situation with respect to a taxpayer. 

Chairman LEWIS. Ms. Olson, what is the estimate cost to date 

of the rebate check? 

Ms. OLSON. I honestly do not know that number. Perhaps GAO 

could better answer that. 

Chairman LEWIS. Is Mr. White, from GAO, here today? If so, 

please come forward. 

Mr. White, could you tell Members of the Committee, what is the 

cost today of the rebate checks? How much of this is foregone revenue from shifting employees? 

Mr. WHITE. Yes, Mr. Chairman. There are three components to 

the cost of the rebate program that we have identified. The first 

is sup0plemental appropriations. IRS got a supplemental appropriation of $202 million; Social Security got a supplemental of $31 

million; and Treasury’s financial management service got a supplemental of $64 million. So, there is a total of $297 million in 

supplementals. 

The largest element of cost is the foregone revenue that Ms. 

Olson just described. IRS estimates that the foregone revenue from 

shifting collections staff from doing collections work to answering 

stimulus-related telephone calls to be up to $565 million. So, that 

brings the total dollar cost—the supplementals plus that foregone 

collections revenue—to $862 million. 

Then, there is a third component to the cost, and that is the burden on taxpayers of getting answers to questions about the stimulus program. Taxpayers are having to wait longer on the phones 

to get through, to get answers to those questions, and we can’t 

quantify that in dollars, but that’s a very real cost to taxpayers, as 

well. 

Chairman LEWIS. Now, for the two of you, do you expect the call 

volume to remain high through the next filing season? 

Ms. OLSON. The IRS estimates, just through the end—until October 15th, of them getting only about another 6 million calls, 

which I find a rather low-ball number. I think we may get six million calls in July. I do think, because there will be confusion from 

people who need to claim some more of the payment on their 2008 

returns, that we will continue to get calls. 

We may see confusion of people who received their credit, claiming the credit again on their 2008 returns, because my underrfrederick on PROD1PC65 with HEARING

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standing is there will be a line on those returns. So, I look forward 

to lots more confusion ahead. 

Chairman LEWIS. Mr. White? 

Mr. WHITE. Yes. Tax—individuals who are not taxpayers, who 

did not have a tax filing requirement, have until October 15th to 

file this year in order to claim the stimulus. So, for that reason, 

there may be more calls. 

Chairman LEWIS. Thank you. Now I turn to Ranking Member 

Ramstad for his questions. 

Mr. RAMSTAD. Thank you, Mr. Chairman. Thank you, Ms. 

Olson, for your testimony and for your articulate advocacy on behalf of taxpayers. 

Also, as a Member of this panel which has oversight jurisdiction 

regarding the IRS, I appreciate hearing your summary statement 

that the IRS, on balance, has done an outstanding job of administering both the 2008 filing season and the Economic Stimulus 

Act. It’s always refreshing to hear when an agency of the Federal 

Government does a good job. 

I just have two follow-up questions—that is, follow-up questions 

to those asked by the distinguished Chairman—the first one regarding the diversion of collections staff. 

In your opinion, would it have been possible—hindsight is always 

20/20, and I think we sometimes even learn from it, or at least we 

should—do you think it would have been possible for the Service 

to hire additional temporary workers to handle phone inquiries 

about the stimulus checks? Was that not done because of lack of 

funding, lack of time, or perhaps a combination thereof? 

Ms. OLSON. I think it is a combination thereof. The IRS did hold 

over its temporary workers that it had for its filing season, that it 

normally hires in the filing season, to deal with the stimulus payments, since they were, we thought, going to—the busy season was 

going to be after the filing season. 

Perhaps what really took us by surprise was the number of calls 

coming in during the filing season, and the mailings were an attempt to try to say, ‘‘Don’t call.’’ But people called anyway. 

I think it’s hard for us, in the middle of a new initiative, to staff 

up, train, go through background checks. That’s just a virtual impossibility. One thing I’ve thought is that if we’re going to continue 

to get these programs given to us, that we may need to really think 

about creating just a cadre, whether they’re seasonal workers, 

they’re on-call workers, to deal with disasters, programs that Congress gives to us, all of those things—and I’m not equating disasters with programs Congress gives us. 

Mr. RAMSTAD. That was my next question. 

[Laughter.] 

Mr. RAMSTAD. Well, thank you, Ms. Olson. My final question, 

I share the concern I’m sure everybody does, with the Chairman 

about identity theft. Are there any additional steps that you believe 

could be taken to prevent scam artists from using the stimulus 

payments as a way to steal the identities of taxpayers? 

Ms. OLSON. I think that the outreach on that really needs to be 

local, and I think the IRS has done well with this, and we just need 

to do more of it. 

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When we work through trusted partners in the communities, you 

know, come to this non-profit, come to the walk-in site, come to our 

Super Saturday, where you have trusted people there, then you 

minimize the risk of identity theft from scam artists, because people have an alternative place to go. 

It’s when we’re trying to deliver it on a national level, you know, 

file your own return, and we don’t have a local presence, then it 

provides an opportunity for these scam artists, through lots of different ways, to move into that local presence, and victimize folks, 

and particularly the elderly population. We really would have problems there. So, going through their partners is absolutely vital. 

Mr. RAMSTAD. Well, I certainly appreciate your view. Those caveats, I think, are very, very important, and, as you say, especially 

to avoid our senior citizens from being victimized, who are disproportionately victimized by these—well, I won’t use the word in 

a public hearing, but those scam artists. Thank you again, Ms. 

Olson. I yield back. 

Chairman LEWIS. Now I turn to Chairman McNulty for his 

questions. 

Mr. MCNULTY. Thank you, Mr. Chairman. I don’t really have 

a question. I have an observation I want to make, and it relates 

to something you said at the end of your testimony. 

But, first of all, I want to thank you on your tremendous good 

work on behalf of taxpayers all across the country. I am generally 

in an attitude of gratitude today to all of the agencies involved, because I think our government workers have done an extraordinary 

job under very difficult circumstances in a very compact timeframe. 

So, I thank you all. 

You made a suggestion toward the end of your testimony about 

possibly having the SSA send out these checks. I just want to tell 

you very directly I think that’s a terrible idea. I have spoken in the 

last few days to both of the commissioners are IRS and SSA, and 

they do not believe that is either necessary or in the best interest 

of the process. From—and I agree with them, wholeheartedly. 

You may or may not be aware of the fact that we have worked 

very, very hard in the last couple of years to help SSA deal with 

this tremendous backlog on disability claims, which is the result of 

under-funding for years and years, for which there is plenty of 

blame to go around; I’m not blaming anybody in particular. But 

that’s just the way it is. 

We have—we had a good increase in the budget last year. According to the budget resolution this year, we will have even more. 

We put out a new ALJ list, we are in the process of hiring more 

than 175 new administrative law judges. We are making progress. 

The last thing we need to do at this point in time is impede that 

progress. 

The estimates that have been given to me would be that if we 

were to implement the suggestion that you made at the end of your 

testimony, it would take six to 8 months just to get the proper list 

together in order to get those checks out. That’s the last thing we 

need to do, is further delay this process. So, I just want to put you 

on notice that certainly if I have anything to say about it, that’s 

not going to happen. 

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What should happen—because this, as I said in the beginning, 

this process has been largely successful, and I think we’re kind of 

in the home stretch on this, now, to kind of wrap it up—and I 

think basically what we need is a good dissemination of information and education about what we need to get to the affected population, so that they get their stimulus checks. 

I want you to know we’re going to help you with that, because 

the four people right in the middle here that you’re looking at, 

we’re going to get a communication out to all of our colleagues, 

every single Member of the House, about getting the word out 

about the steps that they need to take all across the country in all 

these individual districts to get the stimulus check to which they’re 

entitled. 

So, as I will when the commissioners appear, I want to thank all 

of you for the tremendous work you have done. The last part of 

your testimony is a bad idea, and is counter-productive, and I just 

want to let you know my feelings on that. 

Ms. OLSON. Well, I hear your feelings. I can also say that, as 

a mother of a disabled son, I have navigated the disability process, 

so have some familiarity with that backlog. My suggestions go to 

that population. What I have tried to think about, in response to 

being asked to think about that, were alternatives, because the IRS 

itself also suffers from this additional workload, as I have outlined 

in my testimony, and taxpayers are harmed by the IRS diverting 

its resources on systems that are making the tax system easier into 

programs such as this. 

So, I have tried to think about ways that would lessen the burden on the IRS without placing so much burden on other agencies. 

One of the thoughts that I had, because they seemed to be able 

to do this in Puerto Rico and Guam, is to use the available information that government agencies have working together, to identify those taxpayers entitled to the $300 payment without making 

them take an affirmative act. I think that does require more involvement on the part of Social Security Administration, working 

with the IRS. 

The other thing that I thought—— 

Mr. MCNULTY. Well, that is a different proposition. 

Ms. OLSON. Right. 

Mr. MCNULTY. SSA is working with IRS to do—— 

Ms. OLSON. Yes. The other thing that I thought would be a positive thing is because SSA, with Treasury’s assistance, now has 

these debit cards, that we could utilize the debit cards to get the 

money faster to SSA recipients. But I also propose that the IRS implement debit cards. My concern was SSA recipients having to wait 

for paper checks. 

So, I just wanted to give you some background to where my comments came from. 

Mr. MCNULTY. Right, and—— 

Ms. OLSON. I hear your concerns. 

Mr. MCNULTY. Right. Well, it’s not just a concern, it’s a reality 

that would actually—when we’re trying to speed up the process, 

that proposal would delay the process. 

I just hope you keep in mind also the comments of Chairman 

Lewis at the beginning: if IRS needs additional resources toward 

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the end of this process, we want to know about that, and we want 

to help with regard to that. I thank you again for your testimony. 

Ms. OLSON. Thank you. 

Chairman LEWIS. Now I turn to Ranking Member Johnson for 

his questions. 

Mr. JOHNSON. Thank you, Mr. Chairman. I’d just like to say 

that I hope the IRS will continue to examine the issue of identity 

theft, and take some more positive steps in that direction. I will 

yield back my time; no further questions. 

Chairman LEWIS. Thank you, Mr. Johnson. 

Mr. JOHNSON. Thank you, Sir. 

Chairman LEWIS. Thank you—— 

Ms. OLSON. May I comment on identity theft a little bit, briefly? 

The IRS—the commissioner has dedicated a lot of resources, 

since he came in, to working on this issue. There are multiple 

teams, and my organization is also involved with this. I think you 

will see some improvements over the next year. It’s just that right 

now we’re not there yet, and we have this program. So, I think 

you’re seeing some problems, because we don’t have the solutions 

in place yet. But we are working on it. 

Mr. JOHNSON. Thank you. 

Chairman LEWIS. Thank you. Now I recognize Mr. Doggett for 

his questioning. 

Mr. DOGGETT. Thank you very much, Mr. Chairman, and thank 

you for the testimony you both offered. 

Ms. OLSON. you indicated that less than 100 percent of the people who are entitled to receive this stimulus payment will receive 

it. What is the best estimate of how many people will not get the 

stimulus that they’re entitled to? 

Ms. OLSON. Oh, I think that is—I don’t know that I have that 

best estimate. We do—we have identified 20.5 million taxpayers, or 

individuals, that didn’t file 2006 returns. Some of those—we’ve gotten in about seven million of those folks, and the question is maybe 

some of those other taxpayers, they’re joint returns so we may really get more than seven million—you know, these are seven million 

returns. 

It’s hard to know how many others are out there that don’t— 

have too low income. They’re not on Social Security rolls, they’re 

not on Veterans rolls. It’s a very difficult number to estimate. 

Mr. DOGGETT. Do you know if there are internal estimates 

within the IRS, or whether—— 

Ms. OLSON. Well, it’s the—— 

Mr. DOGGETT [continuing]. GAO has done anything on it of—— 

Ms. OLSON. It’s—the 25 million is what people are working off 

of, with a recognition that there are other pockets of taxpayers that 

we just can’t quantify. 

Mr. DOGGETT. Do you have any insight on that, Mr. White? 

Mr. WHITE. We don’t have a separate estimate of our own. I 

agree with Ms. Olson. IRS initially estimated something over 20 

million. They’re not sure whether it’s going to be that many or not. 

The problem here is the difficulty of trying to estimate the number 

in that group. 

Mr. DOGGETT. While I clearly am very concerned that all those 

who are entitled to this stimulus payment get it, I note, as Mr. 

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Johnson pointed out, that we have spent $300 million to ensure 

that it gets done right. 

I am also concerned about whether any of these payments are 

sent out to people that are not entitled to receive them. Are either 

of you involved on that end of it, to be sure that the stimulus payments only go to those who are entitled to receive them? 

Ms. OLSON. Well, I think that the—actually, the way that the 

legislation has been written is pretty tight, as—— 

Mr. DOGGETT. Well, let me tell you where it apparently wasn’t 

tight enough. 

Ms. OLSON. Yes, Sir. 

Mr. DOGGETT. Yesterday I received a notice dated June 16th 

that my mother would receive her payment next week. My mother 

died last September. Within a week of her death, because her payments are direct-deposited into her account, I notified Social Security, to be sure that we wouldn’t have any payment to which we 

were not entitled. 

Do you have any estimates? I extend this question—I may not 

be able to stay for all their testimony—to the next panel, as well. 

Do you have any estimate of how many dead people are receiving 

stimulus payments? 

Ms. OLSON. Sir, I don’t. There is a question on the website that 

I will go back and look at that talks about decedents, and who is 

entitled to that payment in the course of the decedent, because it 

would be—the payment is based on their 2007 filing. So she filed, 

or her—you know, her estate filed—— 

Mr. DOGGETT. Her estate filed—— 

Ms. OLSON [continuing]. A return for her. Perhaps under the 

law, she is entitled to it, and I would have to check—— 

Mr. DOGGETT. Well, I would like to know about that, too. 

Ms. OLSON. Yes. 

Mr. DOGGETT. If, as a part of the stimulus—in her case, she 

does not have a surviving spouse—whether this payment goes to 

estates of people this year or not, and what efforts—it surprises me 

that there has not been any update, if there has not, of the database to reflect that. Do you know—— 

Ms. OLSON. I will check on that. 

Mr. DOGGETT. Do you know, Mr. White, if under this payments 

can be made to the estate if there is no surviving spouse of someone who died last year? 

Mr. WHITE. I am not sure, off the top of my head. I—given the 

short period of time that IRS has had to implement the program, 

I don’t think yet there are good estimates of non-compliance problems. We are monitoring this as part of our filing season work for 

the Subcommittee on Oversight, and we will be reporting later this 

year. 

Mr. DOGGETT. Well, it’s been right at 9 months since I notified 

Social Security of this. You would certainly expect that they would 

have updated the database to show the correct information. 

Fortunately, they have not been sending, to my knowledge, any 

direct deposit of her Social Security check. You would expect that 

they would have it all—all the database—corrected in 9 months, 

wouldn’t you? 

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Mr. WHITE. We are—this is something we are monitoring, and 

we will pursue as part of our ongoing work for the Subcommittee. 

Mr. DOGGETT. Thank you very much. 

Chairman LEWIS. Thank you. Now Mr. Brady is recognized for 

his questions. 

Mr. BRADY. First, let me thank Chairman Lewis and Chairman 

McNulty, Mr. Ramstad, and Mr. Johnson for hosting this hearing. 

I think it’s important to do this. 

Our caseworkers, for whatever it’s worth, our caseworkers back 

in Texas have experienced few complaints about the help line. In 

fact, we’ve gotten calls back from those we’ve referred, where they 

have been satisfied with the results. I don’t know if that will continue, but that’s our experience back home. 

The question today deals with the technical aspects of delivery. 

But I think the bigger question on the stimulus checks is, is it 

working. Are these checks stimulating our economy across this 

country, as was hoped? I think the answer is no, or certainly not 

as much as it could. There is reason for that. 

In the past year, rising fuel prices have, I believe, neutralized 

the impact of the stimulus checks. Just in the past year, the average family in America is now paying $536.50 more for fuel than 

they were a year ago. It is hard to have—with $300 to $600 stimulus checks, it’s clear that these checks are being drained down our 

gas tanks. The impact is being neutralized, because families are 

not buying a new computer, or a washer and dryer or a TV set 

when they can’t afford gas for their family van. 

It’s frustrating that this Congress has failed to act to lower fuel 

prices in America. We have, unfortunately, found time in the past 

few weeks to pass legislation through the House to protect exotic 

cats and dogs in foreign countries. We found time to celebrate the 

International Year of Sanitation. This week we found time to prevent monkeys from crossing state lines. But we have not found 

time to take the actions to lower fuel prices for American workers. 

That cost of $536 more is even higher if you live in a rural community, which much of America does. It just seems to me both Republicans and Democrats together have to find a way to unlock our 

resources here in America to produce more American-made energy, 

to take more responsibility for the daily energy needs. Because 

being dependent on foreign countries for nearly two-thirds now of 

our daily energy needs is costing us at the pump, and it’s robbing 

the impact of these stimulus checks. 

Ms. Olson, I won’t ask you that question, the impact. 

Ms. OLSON. Thank you. 

Mr. BRADY. I will say, though, you have raised a separate issue 

from that, which I feel we ought to be exploring. That’s the issue 

of debit cards. Seems to me we need a—as much as we can—more 

of a 21st century response to challenges, short-term challenges, like 

this. 

Can you comment on how those would occur, and who would be 

eligible to get them? 

Ms. OLSON. Well, I do think I have to say the IRS is exploring 

the idea of delivering regular refunds on debit cards as Social Security has started to use debit cards for those individuals who don’t 

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have bank accounts. There are savings to the government in that 

regard, so that you don’t have to issue paper checks. 

A debit card has an account number and a routing number, just 

the same way as a bank account does. I think my understanding 

is, with Social Security, that Treasury has entered into a contract 

with one entity to deliver these cards. It’s no fee to the individual 

receiving the card. It can be done in any number of ways: people 

going into banks and picking up a card, or being assigned a card 

themselves. 

So, I think that, you know, the—that would just—for those individuals who are unbanked, or even in the area where we’re sending 

out paper checks, the delivery of dollars is so much faster if we’re 

delivering it electronically. 

Mr. BRADY. Yes. 

Ms. OLSON. The debit cards are just really, to me, as you said, 

a 21st century solution. 

Mr. BRADY. Those debit cards, since people are struggling so 

much with high fuel prices, you know, if they weren’t able to afford 

something they needed, but instead had to buy higher gas, would 

they be eligible to use it at the gas pump? 

Ms. OLSON. Absolutely. The Social Security cards are used anywhere that essentially a credit card is taken. So, at food stores, at 

gas tanks, at ATMs, et cetera. 

Mr. BRADY. All right. Thank you, Chairman. Yield back. 

Ms. OLSON. Mr. Chairman, may I answer Congressman 

Doggett’s question? I found—— 

Chairman LEWIS. Yes, you may, Ms. Olson. 

Ms. OLSON. Thank you. There is a FAQ on the IRS website that 

says, ‘‘If an individual dies, what happens to his or her direct deposit, or stimulus check?’’ The answer is, ‘‘Stimulus payments will 

be issued in the name of the individual eligible for a payment on 

a filed 2007 income tax return, or to the account designated by the 

individual on that return. This includes situations where a person 

dies after filing a return, or where the final 2007 income tax return 

was filed by a personal representative or surviving spouse.’’ 

‘‘Any issues or concerns involving a decedent’s filed return, or the 

related stimulus payment, should be addressed by the legal representative of the decedent’s estate.’’ So—— 

Chairman LEWIS. Now I turn to Mr. Pascrell for his questions. 

Mr. PASCRELL. Thank you, Mr. Chairman. Mr. Chairman, with 

all due respect to my good friend from Texas, the last thing that 

these Members need is another lecture on drilling. But I am sure 

that will not be the last one. 

You know, if you’re respectful of the Members, if you’re respectful of the Members, then you bring to folks’ attention the high cost 

of everything, not just gasoline. 

Second of all, this is not germane to the topic, not at all. 

Mr. BRADY. Will the gentleman yield? 

Mr. PASCRELL. Sure. 

Mr. BRADY. One, Bill, I think you’re wonderful, and I appreciate 

your leadership, but I do think fuel prices are germane to this discussion on stimulus checks. Not only are fuel prices up, but food 

prices, because we have not dealt with this fuel issue. That is driving a good amount of food prices, cost increases, as well. 

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So, while it is important to folks on the technical side, I think 

most of America is struggling, and needs some help that way. That 

is the only reason I point this out, because I think that’s the bigger 

picture we ought to be looking at. I yield back, I apologize. 

Mr. PASCRELL. Yes, thank you, Mr. Brady. The gas prices 

didn’t just go up the last 6 months or the last year. Gas prices have 

been going up since 2001. You know they’ve increased 270 percent. 

Mr. BRADY. Yes, 170 of that—— 

Mr. PASCRELL. It didn’t just happen, and—— 

Mr. BRADY [continuing]. In the past year. 

Mr. PASCRELL. So, to create the impression, which is in your 

talking points—not you, but your party’s talking points—that this 

is going to be we’re going to be saddled with this, has nothing to 

do with the questions we should be asking Ms. Olson. I don’t think 

so. Maybe—am I out of order? Tell me. But I don’t think it has anything to do with the price of tomatoes. 

I am concerned about this number: 3,776,147 people over the age 

of 65 remain to file for the checks under SSA and VA. In New Jersey, it’s 108,803, 69 percent. I would like to know, Ms. Olson, what 

are you doing about it? 

Ms. OLSON. Well, the IRS is mailing to those individuals that 

we’ve been able to identify, through the help with Social Security 

and Veterans Administration, a second mailing, asking them to 

come in and file, and providing to them the return that they need 

to fill out in order to get this payment. 

The IRS is continuing, through its walk-in sites, to—located 

throughout the United States—to prepare these ESP-only returns 

for free for taxpayers, if they can come in. They are continuing to 

work with their non-profit partners to have initiatives that go out, 

as are my employees. 

I think that there are—as I outlined in my testimony—some natural barriers to getting some of these folks who have not had any 

trafficking with the IRS for several years to want to file a return 

again, which led to my recommendation for future efforts, that we 

try to come up with a way where we can automatically get this 

money to them, without them having to file a return. Because I 

think, with some of this population, that’s too difficult. 

Mr. PASCRELL. I mean, no other demographic group is even 

close to this group. You would agree to that, right? 

Ms. OLSON. Oh, when we—— 

Mr. PASCRELL. I mean, the next group is like 13 percent. 

Ms. OLSON. When we know, particularly with the—since we’re 

basing the information on who has filed a return the previous year, 

we have a lot of information on those populations, and we’re basing 

it off of their 2007 return. 

Mr. PASCRELL. Well, what can we learn from the Treasury Department’s inability to communicate to EITC recipients, for instance—if I could draw a parallel here—and you know the millions 

and millions and billions of dollars that are unclaimed with those 

who are the working poor, which we are dedicated to, I’m sure both 

sides of this aisle. Have we learned anything from their shortcomings? 

Ms. OLSON. Well, the IRS actually does a very good job—I’ve 

spent my life around the earned income tax credit. What is interrfrederick on PROD1PC65 with HEARING

36 

esting in those numbers is that we have a very high participation 

rate among families with children. 

Where we have a very low participation rate is the EITC that 

goes to the non—you know, the worker that doesn’t have a child, 

which, to some extent, is in this other population for the Social Security—I mean the economic stimulus payment: low-income workers that maybe don’t have enough income to file an income tax return. 

Mr. PASCRELL. Right. 

Ms. OLSON. I think they’re both very difficult populations to get 

to. They don’t necessarily have Internet access. If they have access, 

they don’t necessarily have Internet literacy to do the kinds of 

things that you might need to do to file a return. 

Again, as I said earlier, I think that the IRS sometimes is not 

really the best—the entity to communicate that. I mean, after all, 

we are an enforcement agency, on top of everything else. So, that’s 

why we have to really work with our partners, whether it’s the 

states and state agencies, or congressional offices, or non-profits in 

the community that, for other reasons, are reaching out to these 

populations. 

Mr. PASCRELL. If we’re passing legislation, Mr. Chairman, to 

help those who need this most, and for those who are older, like 

myself, and those who become incommunicable, this is a very difficult situation which I don’t see any—I’m not in a comfort state 

right now—— 

Ms. OLSON. Right. 

Mr. PASCRELL [continuing]. To know that we’re getting to this 

public, and yet this is a lot of money we’re talking about here. 

Ms. OLSON. Right, right. 

Mr. PASCRELL. To people who greatly need it. We have not— 

you know, we’re state of the art—improved the state of the art to 

get to these people. I think that this is a very, very difficult—I 

would like to know, from the IRS, what they’re going to do to address the most glaring problem here: 69 percent in New Jersey, 67 

percent across America. The next demographic group is 13 percent, 

and that’s over 50, or 55, if I’m not mistaken. 

So, I don’t know what you’re going to do, but I would like to sure 

as heck know about that, and I’m sure everybody on this panel 

would like to know. Thank you, Mr. Chairman. 

Chairman LEWIS. Mr. Pascrell, I want to thank you for drawing 

attention to the number of people in New Jersey who have not 

filed. 

I noticed in the State of Georgia more than 167,000 have not 

filed. I want to thank you for bringing it to our attention. 

Now I recognize Mr. Tiberi for questioning. 

Mr. TIBERI. Thank you, Mr. Chairman. Thank you to you and 

to the other Chairman and to the Ranking Members for holding 

this hearing today. 

I agree with what Mr. Ramstad said, that 95, 96, 99 percent of 

what you are doing and what the IRS is doing is great. 

Let me tell you about something that I think is not so great, and 

get your thoughts on it. In your testimony, you acknowledge that 

the IRS did not make sufficiently clear that returns had to be procrfrederick on PROD1PC65 with HEARING

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essed by April 15th to be followed through to the schedule that’s 

been posted, in terms of when people are going to get refunds. 

We have had probably between 50 and 60 individuals contact our 

local office, wondering what happened to their return. They’re 

mostly seniors, they’re mostly people who filed to get a paper refund, not an electronic transfer refund. Most of them we find out 

have filed close to or on April 15th. We didn’t know, they didn’t 

know, that they would be impacted by the date that they filed. So, 

there has been a lack of communication. 

Most of them have been resolved with going to the website and 

getting the new date. Not all of them have. In fact, Congressman 

La Tourette, also from Ohio, his office was told last week by an IRS 

official that, in fact, some of these people may not even get a rebate 

check because they may have filed wrong, which is a bizarre statement, in and of itself. 

One taxpayer I talked to Monday night, who was supposed to get 

a refund or a check on May 12th has been told—hasn’t got any answers from the IRS, has been told by your office in Ohio, ‘‘Keep 

checking back with us on a weekly basis.’’ 

So, his question to me was, ‘‘Who do I call when I can’t get help 

with the advocate’s office, and I can’t get help with the IRS?’’ That 

person happens to be my dad, who is pretty frustrated right now. 

He is not the only one. So, what do we tell our constituents who 

aren’t getting any answers, who filed properly, and filed within the 

designated time that we all in Congress said you need to file b. 

Ms. OLSON. You have really highlighted a number of the issues 

that I have also tried to highlight in my testimony, the first being 

it’s very difficult when you’re trying to get a broad message out. 

‘‘We are going to get this payment to you. It is up to $600, $1,200, 

whatever,’’ and then there are all these exceptions to the rules. 

‘‘File by April 15th,’’ you know, but then we don’t say, ‘‘But you actually have to do it before, so we can process it by April 15th, so 

we can be on this schedule.’’ Those are hard messages to get out. 

I have been told that the website only can give information about 

the status of your payment if it is 2 weeks, within 2 weeks it’s 

going to be issued. So, if you didn’t file in order to be processed by 

April 15th, you’re down there in the processing line, and your information may not be on the website. The website will say, ‘‘No information at this time.’’ 

Mr. TIBERI. That’s right. 

Ms. OLSON. When you call my employees, they are frustrated 

because they have no ability, unlike regular refund checks, to do 

a—cut a manual check, process your father’s or any other taxpayer’s account that has some kind of hardship need out of cycle, 

and get the payment to you. That is something we are not able to 

do with these economic stimulus payments, which is very frustrating for my employees, and obviously, for the taxpayers. 

So, all they can do is keep checking, themselves, the systems 

weekly to see when has your father’s—or any taxpayer’s—check 

posted to go out. We do not have the tools to expedite those payments. 

Mr. TIBERI. Do you have suggestions on how maybe the IRS can 

be helpful? 

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Ms. OLSON. They are bound in the same way that we are. You 

know, I think that if the IRS had had more time, they could have 

programmed and, you know, maybe enabled us to be able to do 

manual checks, so that we could have overridden some systems. If 

we had had more time, we may have been able to program a better 

website that could give more information further on down the line, 

as far as estimates of what payments can come. 

But I think if you called any number at the IRS, if the payment 

isn’t scheduled, everyone is going to give you the same answer. 

Mr. TIBERI. Have you heard what Mr. La Tourette’s office was 

told by an IRS employee? 

Ms. OLSON. No. Do I want to? 

Mr. TIBERI. That if you filed incorrectly, that you may not get 

a stimulus check? 

Ms. OLSON. Oh. That surprises me. Again, that would be the 

thing that I would say that taxpayer needs to come to the Taxpayer 

Advocate Service, so that we can track down why—what the information was. 

I do know that we are getting some returns, duplicate returns, 

where a taxpayer—and this goes to the elderly population—which 

we saw this with taxpayers, they went to the VITA site, and they 

filed a 1040 on white paper. Then they got a mailing from us, 

where we had put the 1040 on pink paper, because we wanted 

them to see it, and they thought, well, now they need to send another one in, because they send a white one in first, so now they 

need to send a pink one in. 

If we get two of those returns, it’s going to take some time. But 

we will resolve that issue. But it will delay the payment of the 

check, you know, the payout. 

So, there are a lot of different things that may have happened, 

but that’s where maybe Taxpayer Advocate Service can be helpful, 

in tracking down—— 

Mr. TIBERI. Okay. 

Ms. OLSON [continuing]. What the problem is, and fixing it. 

Mr. TIBERI. Thank you. Thank you, Mr. Chairman. 

Chairman LEWIS. I just want to remind Members that if you 

can, limit the question to 5 minutes so all Members will have an 

opportunity to get their questioning in. Mr. Pomeroy is now recognized. 

Mr. POMEROY. Mr. Chairman, I note you make that admonition 

as I begin to inquire. Is that—— 

Chairman LEWIS. Oh, no, I didn’t mean that. It was not for you, 

Mr. Pomeroy. You know I would never do that to you. 

Mr. POMEROY. A couple of compliments to start the inquiry period. I have been very impressed with the new commissioner, Douglas Shulman, appreciate the IRS provided information about the 

take-up rate, especially with seniors, on the—or the SSA/VA population that has filed. 

I also appreciate, once again, Ms. Olson and her leadership with 

the taxpayer advocacy office. I really do think that you play a very 

constructive role in improving the system, and advocating for taxpayers, just what Congress thought as they created our position. 

Congratulations on good work, once again. 

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I notice that the IRS anticipated 6.8—it anticipated 14.5 million 

ESP-only returns would be filed. Based on our staff’s research as 

of May 31st, 6.8 million ESP-only returns filed. The IRS estimates 

in a letter from the commissioner that there is 5 million seniors in 

the SSA/VA population that have yet to file. 

The break-out by states is really quite something. In North Dakota, it looks like remaining to file is 75 percent of its population 

age 65 and over. The numbers by state, also alarming: Ohio, 

226,000; Wisconsin, 77,000; Michigan, 154,000; Massachusetts, 

151,000. I mean, this goes on and one. 

I, by the way, will add this list to the record. I think it shows 

that we have work to do. I think that the IRS, SSA, Members of 

Congress, allied groups, getting the word out they can still file and 

get this information is extremely important. 

[The information follows:] 

COMMITTEE INSERT 

Mr. POMEROY. I take general issue with my Social Security 

Chairman, relative to whether or not this is any business of SSA. 

I think when you get take-up rates falling so far short of the universe of eligible for stimulus, we need to be pretty open-minded 

about how we can make these systems work better. 

I certainly am one, as a senior Member on the Subcommittee on 

Social Security, open to any suggestions in this regard, including 

a greater role of SSA, provided, of course, it doesn’t detract in any 

way—and I think this is the Chairman’s concern—from their foremost mission. We would have to staff it, we would have to build 

systems that allow them to do it without interruption of the important work they do getting out these Social Security checks and reducing the backlog on disability determinations. 

Okay. On a portion of your testimony that has not been mentioned today involves the very unfortunately interaction with refund anticipation loans and the stimulus check. You know, I think 

refund anticipation loans are pretty much worthless. I would probably vote against them. I certainly have been concerned about our 

free-file alliance partners using relationships with the IRS to market what I think is an extraordinarily poor value to taxpayers. 

But I don’t think anything brings out what poor value this is 

quite as much as the interaction on the early return, and let’s talk 

about that for a minute. 

If I understand your testimony correctly, the way a RAL works 

is a temporary account is established, for the purpose of deposit to 

the account. So, for the almost 10 million taxpayers who purchased 

refund anticipation loans and 10.5 million who purchased refund 

anticipation checks, each of them had these special accounts created, and that was related to their filing. Am I correct so far? 

Ms. OLSON. Yes. 

Mr. POMEROY. Now, this account goes away when they get 

their refund anticipation check. So, it’s not an account the IRS can 

use for an electronic deposit. 

Ms. OLSON. Correct. 

Mr. POMEROY. So, the only way anyone who got a refund anticipation loan gets a stimulus check is by a paper check mailed 

out. 

Ms. OLSON. By a paper check, that’s correct. 

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Mr. POMEROY. So, let me just put this straight. Some of these 

people going to—some taxpayers, like millions, going to tax preparers that are hawking not just tax preparation services, but 

these side products like refund anticipation loans, knew at the time 

they were selling the refund anticipation loan to the taxpayer, that 

it would cause a two to two-and-a-half month delay in their receipt 

of the stimulus check? 

Ms. OLSON. In the—since the law was enacted in February, we 

would have known very quickly that we wouldn’t be able—they 

wouldn’t be getting a direct deposit. 

Mr. POMEROY. That’s right. 

Ms. OLSON. They would be getting a check, yes. 

Mr. POMEROY. Let’s face it, the bulk of the—the bulk of taxpayer business is, let’s say, March 15th to April 15th. 

Ms. OLSON. After the first wave, after the January 15th to February. We would have missed the first wave. 

Mr. POMEROY. Missed the first wave, but this last wave, which 

is substantial—— 

Ms. OLSON. Right. 

Mr. POMEROY. I will try and hurry, Mr. Chairman. The last 

wave, which is very substantial—— 

Ms. OLSON. Yes. 

Mr. POMEROY [continuing]. Comes in to a tax preparer. They 

are so desperately in need of cash, they’re taking a poor value RAL. 

The person selling the RAL knows, you know, ‘‘Okay, we will get 

you money right away on your tax return,’’ and what they fail to 

tell them, I expect, in each and every instance was it would cause 

a two-and-a-half month delay in receipt of the economic stimulus 

check. 

Ms. OLSON. That’s the effect. 

Mr. POMEROY. So, they paid good money to get their refund 

early, or their refund immediately, only to lose two-and-a-half 

months in access to the economic stimulus check. 

In my opinion, tax preparers have a relationship with the taxpayer. That includes a fiduciary responsibility, or something like it, 

in my own mind. Maybe I am being naive about representing the 

best interests of the taxpayer that is entrusting them to prepare 

the return. Not providing information that they’re going to delay 

receipt of the stimulus check by two-and-a-half months when they 

purchase at high value, relative to the refund, these refund anticipation loans in my opinion, it’s very, very shoddy work by this industry, and they include some of the best known tax prepares in 

our country. 

Ten million taxpayers on refund anticipation loans, another ten 

million on refund anticipation checks. That’s 20 million people, or 

20 million filers are going to be delayed in getting their stimulus 

check because it took refund anticipation loans. That is one sorry 

statement on what I think is a very insufficient industry. I yield 

back. 

Chairman LEWIS. The gentlewoman from Pennsylvania is now 

recognized for her questioning. 

Ms. SCHWARTZ. Thank you, Mr. Chairman, and I appreciate 

this. I also want to start out by saying that I think a lot of good 

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work has gone on, and on all of our behalf, to get this information 

out to tax filers, particularly to seniors. 

In my own office—and I personally went to a number of senior 

centers and retirement communities, and I got great cooperation 

from the IRS, they sent someone out with forms. My own experience in doing this is that there were a lot of people who were concerned about—just as you pointed out—about filing a form with the 

IRS they had not had any relationship with for a while. My sense 

was that some of them were ready to do it, and some of them were 

not. That really speaks to a need to do this in a somewhat different 

way. 

To say to people, ‘‘You need to fill out this form. It’s a different 

color, you’ve never done it, you won’t have to pay any income taxes, 

don’t worry about it, the IRS isn’t coming after you’’ is not something that, you know, a lot of Americans would take to, and particularly—and I’m interested—you know, when you see all the 

numbers broken down by 65 and older. 

My question at this point is are they really the 80-year-old and 

older who are not filing this form, that were more concerned about 

it, their skills, their ability to do that? Certainly the discussion 

about use of the computer, just go on the website—I want you to 

know my mother-in-law is a really active 82-year-old, and she is— 

hates a computer. 

Ms. OLSON. Yes. 

Ms. SCHWARTZ. You know, and she hates those automatic dial 

things, too. You know, she wants to talk to a real person. 

But—and even suggesting that they should just come in to an 

IRS center is completely—just not realistic, not at all realistic. 

So, the question I have is what do we do, going forward, how do 

we actually really make it easier. I heard what you were saying 

earlier, about the possibility of some more automatic data transfer. 

Of course, even having seniors over 70 or 80 or 85, maybe even 90 

say, ‘‘Oh, just make it debit card,’’ you know, there are a lot of 

older folks who don’t believe in debit cards. They think that that’s 

kind of the way we’ve gotten into trouble in this country—— 

Ms. OLSON. Right. 

Ms. SCHWARTZ [continuing]. Too many young people living off 

of debit cards, maybe. 

Ms. OLSON. Right. 

Ms. SCHWARTZ. But—and credit cards. So, really, the issue for 

me is how can we streamline this process now? We have spent 

$300 million to get this information out. We still have, in some 

cases in Pennsylvania, 25 percent of the seniors eligible not yet 

having received it. They only have until October 15th to file. 

They’re probably going to be not just that much clearer about it, 

going forward. 

So, I really want you to answer how—— 

Ms. OLSON. Right. 

Ms. SCHWARTZ [continuing]. A little more specifically—— 

Ms. OLSON. Right, right. 

Ms. SCHWARTZ [continuing]. How we can have these agencies 

work more—— 

Ms. OLSON. Right, right. 

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Ms. SCHWARTZ [continuing]. Cooperatively. They’ve been working cooperatively; I’m not looking to say—— 

Ms. OLSON. Right, right. 

Ms. SCHWARTZ [continuing]. What they have done is not acceptable. 

Ms. OLSON. Right. 

Ms. SCHWARTZ. But it seems to me it’s got to be easier to do 

a data transfer between the IRS knowing who has actually filed 

and who hasn’t, who can be reached out to, who can get a letter, 

who can’t, by an exchange of data. Is that happening? 

What other kinds of outreach efforts are going into, very specifically, reaching out to what I would suspect are the really more senior seniors. 

Ms. OLSON. Right. 

Ms. SCHWARTZ. That’s just a suspicion on my part. If that’s not 

correct, I would like to know it, too. But how can we actually reach 

them—— 

Ms. OLSON. Right. 

Ms. SCHWARTZ [continuing]. So that they get the dollars we anticipated they—and get it soon enough. Because the idea of this 

was twofold: to help people who were struggling, economically; and 

two, it was to stimulate the economy. This is next year; that isn’t 

what we meant. We really wanted this to get out in 3 months. 

So, could you speak to those several issues? 

Ms. OLSON. Yes. 

Ms. SCHWARTZ. It would be very helpful. 

Ms. OLSON. The first thing I want to make clear is that I am 

not in any way criticizing the cooperation between the Agency that 

has occurred to date or the IRS’ outreach attempts to date, because 

I think they have done an extraordinary job. I said that in my testimony, and I honestly mean that. 

My comments about the—you know, the data exchange, are really looking at it on a going forward basis. I don’t know whether between now and October 15th, we can take the population that we 

know did not file a return in 2006 or 2007, and our own Social Security’s and VA’s rolls, and then just look and see whether any of 

them got Social Security or VA benefits, you know, up to—you 

know, over $3,000, and then just try to get them a payment somehow, not ask them to file the return. 

Ms. SCHWARTZ. Right. 

Ms. OLSON. I think that would require a legislative change. I 

was mainly making that point on the basis of going forward and 

writing different legislation, if we were to do this again. 

Now, that might mean if we can identify those people, those are 

the ones that we’re targeting for additional, person-to-person outreach, perhaps, you know, by the IRS, you know, folks like that. 

Now, I do think that the biggest effort that we can make now between now and October 15th is to work locally, that we know how 

many people aren’t—haven’t filed in each state; we have some 

rough numbers of that—and that the IRS—as it has been doing, 

but even more so—with the Taxpayer Advocate Service and with 

Social Security and with low-income taxpayer clinics and other 

non-profit groups, go out to senior citizen centers—— 

Ms. SCHWARTZ. Right. 

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Ms. OLSON [continuing]. Go out to synagogues, churches, everywhere, and, person to person, you know, reach out to these folks. 

Ms. SCHWARTZ. It’s pretty labor intensive. I mean, but you’re 

saying right now—— 

Ms. OLSON. It is labor intensive—— 

Ms. SCHWARTZ [continuing]. The way we passed it, we prohibited automatic—— 

Ms. OLSON. Yes. 

Ms. SCHWARTZ. Doing that automatically? 

Ms. OLSON. But I do think you can leverage—— 

Ms. SCHWARTZ. I think that is something we should definitely 

look at, going forward—— 

Ms. OLSON [continuing]. Your networks. The IRS knows a lot of 

organizations. My employees do 40 grass roots outreaches a year. 

If those 40 do a grass roots outreach themselves, you can really get 

out there. We just have to keep doing that. 

We will never get all of them, though, for all the reasons I identified in my testimony. 

Ms. SCHWARTZ. Again, I would just saying going forward I believe we ought to look at that. Again, I was not suggesting that either, you know, SSA or IRS have not done all that they could. But 

I think we are just—you know, we still are making it very labor 

intensive—— 

Ms. OLSON. I agree. 

Ms. SCHWARTZ [continuing]. Very difficult to reach out to a 

not-so-easy population, necessarily—— 

Ms. OLSON. I agree. 

Ms. SCHWARTZ [continuing]. To reach out to. Some of these 

numbers—that’s not the purpose of this hearing—is that there are 

also many people under 65, or not on SSA, who haven’t filed either, 

or haven’t gotten it either. 

Ms. OLSON. Yes. 

Ms. SCHWARTZ. We know those people, we could write to them. 

We could make it simpler. 

But, going forward, it seems that we have—we know who these 

people are. We have got to figure out a way to reach out to them 

and do it more automatically, be able to get, if not those checks, 

maybe automatic deposit to them. 

So, I appreciate your recommendations going forward, and some 

of these questions would apply, I think, to the next panel as well. 

Thank you. 

Chairman LEWIS. The other gentleman from New York, Mr. 

Crowley, is recognized. 

Mr. CROWLEY. I thank the Chairman, and thank you. It’s also 

good to see you again. Welcome back to the Committee. 

Ms. OLSON. Thank you. 

Mr. CROWLEY. I have appreciated the questions, so far, or the 

observations of the panel and your responses, as well. 

I have done a good deal of outreach myself to my constituency 

in a number of ways, to try to elevate the attention to the rebate, 

the stimulus checks. 

We have seen from the IRS data that has been presented to us 

that in New York State alone, some 440,000 New Yorkers have yet 

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rity recipients have not filed for those checks. I know the outreach 

that’s been done by the IRS, as I say, and the private, but I would 

like to know from you, if you could comment, on what you think 

has been the most successful and what has not worked. 

Has the AARP mailers been successful, in your view? Will the 

Super Saturdays—in my district, in parts of the Bronx, I know 

they were holding Super Saturdays to help catch the people we 

were hoping that would—they would get a hold of. 

What do you recommend that take place, or to help get this big 

number? I mean, this is still—— 

Ms. OLSON. Right, yes. It’s a big number, yes. 

Mr. CROWLEY. Also, what could we, as Members of Congress—— 

Ms. OLSON. Right, right. 

Mr. CROWLEY [continuing]. Be doing to help? 

Ms. OLSON. Well, I think that the Super Saturdays were enormously successful. I think because it was a partnership with the 

IRS, with non-profit groups, with the congressional offices, you 

know, we really got attention on that, we brought people in. 

I think, if anything, we need to do another Super Saturday. More 

importantly, we really need to think about how we bring this to the 

individual, because some of these folks are bed-ridden, not able to 

get to the site, but they can—they normally might get to a senior 

citizen center during the week. 

You know, so can we do a Super Saturday or Super Wednesday 

at the senior citizens center in a community? I think the congressional offices can help sponsor some of those events, or publicize 

them, and also maybe overcome the concern that some people may 

have about the IRS doing it, because it’s coming from the congressional office and it’s in a site that the individual is familiar with, 

their senior center, you know, wherever. 

I think that that is—the IRS does have employees who work 

those issues, and I think they need to just be given free reign and 

the funding to be able to do those kinds of events. My own employees are continuing to do those events throughout—until October 

15th. 

I am concerned we do have some of the VITA sites still open, the 

volunteer income tax centers, assistance centers, but there are not 

very many of them. There are only about 64 or so that are open 

between now and October 15th. In New York, for example, none of 

them are open in Manhattan or the Bronx, you know, so you’ve got 

this large population and we don’t have the volunteers—— 

Mr. CROWLEY. So, the poorest populations in the city, as well. 

Ms. OLSON. Yes. I fear that, you know, we really—we need to 

give support to these volunteers so that they will stay open. 

Mr. CROWLEY. I say that because 8 out of 10—8 out of the top 

100 zip codes—— 

Ms. OLSON. Yes. 

Mr. CROWLEY [continuing]. Are in part or in whole in my district in Bronx and Queens. 

Ms. OLSON. Yes. 

Mr. CROWLEY. So, this is something we really want to tackle. 

If I could just switch gears for a moment—I appreciate your response, and we’re going to continue to work on this, and I would 

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suggest to my colleagues we all need to look at this in ways in 

which we can be helpful, in terms of getting this message out—if 

I could just go back to Mr. Pomeroy’s question to some degree, and 

he talked about a different subject matter, in terms of abuse. 

I just want to bring it back to—and see if you’re hearing some 

of these same abuses that we’re hearing about, and that includes 

we’ve heard reports of some abusive practices by private tax preparers overcharging, or gouging, on normal non-filers with high 

costs to get the rebate, including some charging some taxpayers up 

to $200 on a $300 rebate. 

What, if anything, can be done to reign these practices, if they 

are going on, in? Is there something the IRS can do through regulation, or we, in Congress, can do through legislation? 

Ms. OLSON. Well, I have—I think there is a multi-pronged approach to this. One is just the simple outreach that, you know, 

‘‘You shouldn’t be paying these fees. Look out for outrageous fees.’’ 

But I have recommended since 2001 that the—that Congress 

pass a bill to regulate return preparation, so that people who are 

return preparers are professionals, as opposed to just simply being 

in the business to get fees, you know, and sell products like refund 

anticipation loans, and things like that, that there is some professionalism put back into that. 

Then, coupled with that, then, the IRS needs to go out and do 

these due diligence visits, and look at things that are disproportionate, in terms of fees. That’s a very difficult issue, but the IRS 

needs to tackle that head on. I have been after the IRS for—ever 

since I’ve been on this job, and even before then, to get them to do 

this. 

Mr. CROWLEY. Thank you, Ms. Olson. Thank you, Mr. Chairman. 

Chairman LEWIS. The gentlewoman from Ohio is recognized. 

Ms. TUBBS JONES. Everything is going off, okay, except economic stimulus, anyway. 

Ms. Olson, talk to me for a moment about your own office, and 

your ability to handle the onslaught of work that comes as a result 

of these alleged stimulus checks, and the processing. 

Ms. OLSON. Well, I can tell you that when people can’t get 

through on the phone lines because of the level of service and the 

number of—the volume of calls that the IRS is just getting—and 

I’m not being critical of the IRS here, it’s just a fact, a reality—— 

Ms. TUBBS JONES. We understand that. Just say what you 

want to say. 

Ms. OLSON. But my people—— 

Ms. TUBBS JONES. You can be critical if you want to. 

Ms. OLSON. I had a—yes, I know, believe me, I will be critical 

when I want to be critical, you know, when I need to be. 

But I have a four-person office in West Virginia. On 1 day they 

got 86 economic stimulus calls. If you think about that, that’s 20 

calls a day per person, plus they have a workload of about 42 cases 

per person at any given time. So, no work is getting done in that 

office, if they’re needing to talk through these concerns with individuals and reassure them and help them. 

The calls are enormous to us, as well. We have gotten, since the 

beginning of the year, about—over 3,500—about 3,500 cases dealrfrederick on PROD1PC65 with HEARING

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ing with economic stimulus. Just this past week we got 300 of 

them. So, they’re—just since Monday we got 300 more cases in the 

Taxpayer Advocate Service dealing with problems with the economic stimulus—not calls, but cases. 

So, it just comes on and on, and I think they’re just some of the 

kind of things where things have gotten messed up, or people don’t 

know where their payment is, or there is—maybe there is identity 

theft in them. 

Some of them are injured spouse cases where there is a debt that 

one spouse owes, and we’re going to grab one-half of the economic 

stimulus payment to pay back that debt, but the other half should 

go out to the other spouse, who is not a debtor on the debt. But 

the IRS systems aren’t doing that consistently, so the taxpayer 

won’t get their payment, and we have to get in there and get that 

payment. 

Ms. TUBBS JONES. I will say this. If I had known then what 

I know now, using that as a step toward processing, what would 

you—give me two recommendations. 

Ms. OLSON. Well, one would be I would really take the lessons 

that we have learned from this and come to terms with it’s better 

to get the money out to as many people as we can who are entitled 

to it, and tolerate getting some of the money out to people who 

maybe, you know, they have debts to the IRS, or you know, to child 

support or something. Let’s just get the money out there. Don’t put 

so many exceptions into the rules, you know, things like that. Tolerate some payments to people that we wouldn’t necessarily ordinarily give refunds to, but allow it so that we can get the money 

out there, if that’s the goal. 

Because I think the biggest problem with the economic stimulus 

payment is we have got this general statement saying, ‘‘Everybody 

is going to get their economic stimulus payment, except you and 

you and you and you and you and you and you, and then there are 

special rules for you, over here, and there are special rules for you, 

over here.’’ 

Ms. TUBBS JONES. Only time will tell us whether it has really 

been stimulus. 

Ms. OLSON. That is just a disaster for—— 

Ms. TUBBS JONES. The dollars that we have expended in attempting to use it, to make it a stimulus, and in addition to which, 

dollars that could well have been put to use that might have made 

it better for Americans across the board versus throwing it so that 

we could spend it at Wal-Mart, K–Mart, or whatever-Mart. 

But what else would you like to tell me, Ms. Olson, in terms of 

second thing that if you knew then what you know now? 

Ms. OLSON. Well, I do think we should do what I have suggested before, which is try to figure out a way to get automatic payments out to the population that already isn’t part of the IRS, the 

Social Security recipients, the Veterans Administration recipients, 

you know, who are not filing with the IRS. 

Ms. TUBBS JONES. Would you have suggested, then, that that 

had been their responsibility, versus the IRS, or we should 

have—— 

Ms. OLSON. Well, again, I want that to be explored more, but 

I really view that the two agencies, between the two of them, 

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should be able to identify who in that population was eligible for 

the payment, and then we should have figured out a way to get it 

out to them, rather than asking them to file a return, you know, 

and come in, and do some affirmative act and get it. 

I think that’s a problem with that population. It’s asking too 

much of them. So it doesn’t surprise me that we’re not getting the 

pick-up from that population, you know, that we might have hoped 

for. 

Ms. TUBBS JONES. Then a lot of people said, ‘‘To heck with 

spending that money, I’m going to put it away, because I could use 

it for something more important to me than going to a store and 

buying some immediate piece of whatever,’’ in terms of stimulus. 

Ms. OLSON. I am just worried about getting the money out to 

them. I don’t know what they’re doing, once they get it. 

Ms. TUBBS JONES. I feel you. Thank you. I yield back the balance of my time. 

Chairman LEWIS. Mr. Kind is now recognized for his questioning. 

Mr. KIND. Thank you, Mr. Chairman. I want to thank you for 

holding this important hearing. Ms. Olson, you have been very generous and very kind with your time here today. 

I would agree with your last statement. I think the greatest obstacle that we have for the non-filers, those who we’re trying to do 

our best to reach out to right now, is inertia, trying to get them 

to take some type of step so that they get into the system, and then 

qualify for the stimulus check. 

But let me just redirect you on a different line of questioning. My 

pet peeve—and I expressed this earlier in the year, too, when we 

had an earlier hearing—was the tremendous amount of money 

that’s being spent on not one, but two notifications to tax filers in 

the country. According to our calculations, it wasn’t just one notice, 

pre-filing notice, but also a second notice that went out, close to 

$100 million in just those 2 notices. So, $1 out of every $16 that’s going out for stimulus is going out 

or being used for basic notification purposes, going to traditional 

filers, the vast majority of whom filed in the past, are going to file 

again, will get automatic stimulus checks, based on what they file. 

The vast majority of them aren’t going to be contacting the IRS for 

additional information. 

I understand the importance of outreach and notification, especially for the non-filers out there, and the job we have to do. I just 

don’t want to be critical of the IRS or what we are giving the IRS 

direction to do, because I think they’ve been doing an incredible 

job, as far as turnaround time with not only the stimulus, but with 

AMT late last year—and hopefully we’re going to be able to avoid 

a late AMT fix for the next fiscal year, and avoid that box. 

Ms. OLSON. Thank you. 

Mr. KIND. But I would like to, you know, in the future, with lessons learned with this latest stimulus, perhaps work with you and 

others—— 

Ms. OLSON. Right. 

Mr. KIND [continuing]. To see if there is a way we can tighten 

up the notification—— 

Ms. OLSON. Right, right. 

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Mr. KIND [continuing]. For these stimulus measures, so it’s not 

just a broad—— 

Ms. OLSON. Right, right. 

Mr. KIND [continuing]. Overreach, and I think a lot of redundancy out there—— 

Ms. OLSON. Right, right. 

Mr. KIND [continuing]. And perhaps find some taxpayer savings 

at the end of the day, while still getting to that harder-to-reach 

community—— 

Ms. OLSON. Right. 

Mr. KIND [continuing]. That we want to reach out to right now, 

who traditionally wouldn’t file. That’s where most of the focus has 

been. 

I know the IRS has been inundated yet again from questions 

coming in. But my guess is that it’s not the majority of those who 

are receiving notification, the traditional filers, and they basically 

have to do what they have always done in the past. So, maybe 

there is a way of being able to tighten that up, and with suggestions that you’re offering today too, have a better outreach with 

those harder-to-reach individuals. 

But, you know, I was never a great fan with the whole stimulus 

idea to begin with. The thought of borrowing $160 billion from 

China to give to people to fill up their gas tank and sending the 

dollars to—it didn’t really seem like it was going to have much of 

a stimulus impact. 

But this past week I have been back home, battling flood waters 

with many of my constituents and communities in southern Wisconsin, and I know that this, the timing of the stimulus, is going 

to be welcome, whether it’s $600 or $1,200, whatever they get, in 

trying to help them get back on their feet. So, in that respect, I 

know a lot of people have been struggling to make ends meet right 

now. This little bit, as far as the stimulus measure, can go a long 

ways to helping that take place. 

But if you have any ideas, as far as outreach and notification 

that might save us money and have a little more targeted version, 

we would be interested to know. 

Ms. OLSON. Well, Sir, I think one thing that the IRS has to do 

is we have had a—if you look at this as a grand experiment, we 

have had a real opportunity to learn a lot about how to communicate with taxpayers as a whole, and with hard-to-reach populations, in particular. What we really need to do is not after this 

is over—you know, ‘‘over’’ in quotations—we have to sit down even 

now, and then on an ongoing basis, and say, ‘‘What have we 

learned, and what is better?’’ 

I know that the IRS wanted to do those mailings in the first 

place, based on its experience with the last tax rebate in—— 

Mr. KIND. Right. 

Ms. OLSON [continuing]. 2001, hoping to fend people away from 

the phones. But I think the complexity of the message was so 

great, and the contacts just generated so very early, and people— 

you know, the message was, ‘‘You’re going to get your money,’’ and 

people were like, ‘‘When can we get the money,’’ and they were 

going to pick up the phone and call. 

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I think we just really have to study how we deliver a message 

like that, where we deliver it, who delivers it, and at what level, 

whether it’s national or, you know, area, or local community, and 

what is the best way to get out what parts of the message. I think 

we’ve got lots of data in which to learn from this experience. 

Mr. KIND. Right. 

Ms. OLSON. I will certainly be studying it. 

Mr. KIND. Right. Thank you very much. Thank you, Mr. Chairman. 

Chairman LEWIS. Thank you. Mr. Neal is now recognized for his 

questioning. Congratulations, Mr. Neal, on Boston winning. 

Mr. NEAL. I appreciate that. 

Chairman LEWIS. I know you’re not from Boston. 

Mr. NEAL. I played—— 

Chairman LEWIS. I know you represent the home of—— 

Mr. NEAL. But I did play a heck of a game. 

Chairman LEWIS. You represent the home of the beginning of 

basketball, Springfield, right? 

Mr. NEAL. It’s true. It’s nice to return that trophy to where it 

belongs. 

Paper correspondence. Crisis proportions yet? 

Ms. OLSON. I think it is in crisis proportions. I think, you know, 

once we get through October 15th with the stimulus, we’re going 

to be dealing with the fall-out from what has happened to the IRS 

in handling these calls into the next filing season. 

Mr. NEAL. What does that mean to the taxpayer, Ms. Olson? 

Ms. OLSON. Well, for the taxpayer, if someone writes in—gets 

a notice from the IRS—let’s just give a simple example—saying, 

‘‘We see that there is a 1099 on your return, a W2 that you forgot 

to list on your return,’’ and that taxpayer is a victim of identity 

theft, it’s somebody else’s information, the taxpayer writes back 

saying, ‘‘No, no, no, this is not mine,’’ if we don’t get that correspondence to the person who is working that case, that person, 

that IRS employee, is not going to know that there is another explanation, and they’re going to go ahead and assess the tax against 

that taxpayer, and the next thing the taxpayer knows is that 

they’re either going to have to go to Tax Court, or request an audit 

reconsideration, or they may be in the collection arena. 

Mr. NEAL. Thank you. Thank you very much, Mr. Chairman, for 

that skill in getting my question in and promoting the Celtics, and 

a reminder that that championship trophy, the Lawrence O’Brien 

Trophy, is named for a son of Springfield. Thank you, Mr. Chairman. 

Chairman LEWIS. My pleasure, very delighted. Mr. White, Ms. 

Olson, I want to thank you for your testimony, for being here 

today. We look forward to working with you to reach taxpayers who 

have not filed a rebate check. Thank you for your good work. 

The Committee will recess for a half-an-hour. We have a series 

of votes on the floor. 

[Recess from 11:34 a.m. to 12:14 p.m.] 

Mr. MCNULTY [presiding]. The hearing will come to order. 

Chairman Lewis has another commitment at the present time, and 

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mony of the second panel. In the meantime, he has asked me to 

reconvene the two Subcommittees. 

I want to welcome both of the commissioners for being here, and 

for the tremendous job that they are doing for our constituents all 

over the country. I would remind both commissioners that your entire statement will appear in the record. We ask you to try to summarize, if possible, within 5 minutes, so that we can get as many 

questions as possible. 

It is now my pleasure to introduce the commissioner of the Internal Revenue Service, Douglas Shulman. 

STATEMENT OF DOUGLAS H. SHULMAN, COMMISSIONER, 

INTERNAL REVENUE SERVICE 

Mr. SHULMAN. Good morning, Chairman McNulty, Mr. 

Pascrell, Mr. Brady. This is my first appearance before Ways and 

Means. I am two-and-a-half months into a 5-year term. I have gotten to speak with a number of Members individually, and I am 

looking forward to working with all of you while I am here. 

As you know, I am here today to discuss the economic stimulus 

legislation enacted by Congress last year. The responsibility for distributing this one-time payment to taxpayers was assigned to the 

IRS right in the middle of filing season, which is our busiest time 

of year. Nevertheless, we understood that the point of the economic 

stimulus was to provide a stimulus to the economy, and so we tried 

to balance getting the checks out as quickly as possible with some 

of the operational realities of doing so. 

I would also just like—before I say a few words about the 

progress—just to recognize my colleagues from the Social Security 

Administration, the Department of Veterans’ Affairs, as well as my 

colleagues at the Financial Management Service, who are responsible for actually distributing the checks, once we identified the 

amount, et cetera. The support in partnership was phenomenal. I 

think it’s a model of how the Federal Government—at least I would 

hope—would work. 

As of June 13th, we have distributed $63.8 billion in stimulus 

payments to over 76 million taxpayers. I am proud to report that 

the first stimulus payment was direct deposited into a taxpayer’s 

account a mere 70 calendar days after the stimulus legislation was 

enacted. I will tell you I came in the middle of this, I started March 

24th. I have 3 meetings a week with the 40 people most responsible 

for stimulus, from technology to operations to customer service to 

compliance, and it’s really been a phenomenal job. I am quite proud 

of the people of the IRS who made this happen. 

In addition, outreach was incredibly important. As a general 

matter, we tried to publicize that all you needed to do was file a 

tax return to get your stimulus payment. We also paid special attention to the potentially 20 million people who usually don’t file 

a tax return, but needed to file a tax return this year to receive 

their economic stimulus payment. 

We partnered with AARP and the United Way, just to name a 

few. We ran what you’ve already talked about, Super Saturday. We 

opened 320 of our sites and 400 partner sites to seniors, veterans, 

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ment—by filing their stimulus return. We worked very hard to 

spread the word. 

As you know, as the nation’s tax administrator, we did not start 

this process with a master list of those Social Security and veterans beneficiaries who are eligible for stimulus payments but usually don’t file a return. Nonetheless, through our outreach, I am 

pleased to say that, as of now, we have accounted for 15 million 

out of the 20 million people who we thought might be eligible. 

I do want to correct the record. I know a previous witness said 

that we had found seven million people. We have actually accounted for 15 million. They have either filed for themselves, or 

they’re listed on somebody else’s return. 

While this is good progress, we also recognize that there is more 

work to be done. So we’ve planned an outreach campaign for this 

summer. We’re going to entitle it, ‘‘It’s Not Too Late to File.’’ 

Today, we are distributing to your offices and offices of other 

Members of Congress a packet that will give you detailed demographic information about who in your District might be eligible to 

file a return and hasn’t yet filed. We would love to partner with 

Members of both Subcommittees to try to do outreach and get more 

people into the system. 

We are also going to send another mailing. We’re going to do 

more media. Just this afternoon, we have a conference call with 50 

Spanish language media outlets to try to promote to people who 

haven’t yet filed that they can still get a stimulus rebate. 

Let me just give you a couple of on-the-ground observations from 

stimulus program. I have been visiting our taxpayer assistance centers, and our phone centers, during this time. Any undertaking 

that is this large and complex is certainly not going to be error 

free. We currently estimate, though, that over 99 percent of people 

eligible for stimulus who have filed their tax return are on schedule to get their stimulus payment on time with no issues and no 

problems. 

To give you a sense of, when issues occur, how we’re trying to 

attack them, let me just talk about the child tax credit issue that 

emerged. We found out about a month ago that there were taxpayers who didn’t check the box correctly on their tax return, saying that they were eligible for child tax credit, and therefore, 

weren’t getting their stimulus child tax credit. 

We also found there were some software vendors who had a 

glitch in their program. When returns came in to us, they came in 

improperly, and so people weren’t getting their child care—weren’t 

getting credit for dependent children for their stimulus returns. 

Under normal circumstances in tax administration, we would say 

either the taxpayer didn’t do it right, or the software vendor didn’t 

do it right, and so we would send it back to the taxpayer and we 

would say, ‘‘File correctly’’. They would need to file correctly to get 

their stimulus payment. 

Because we know it’s so important that we go the extra mile 

with these people—about 230,000—we actually now are correcting 

their return for them, correcting the error that either the software 

provider or the taxpayer made, running a batch of new stimulus 

checks, and in July those people will get the extra $300 per child 

that they were due under stimulus. That’s the kind of thing we’re 

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trying to do, is be creative and be very aggressive in making sure 

we fix problems as we see them. 

I’d be happy to answer questions. As you know, our phones have 

gotten quite overloaded, and we have worked hard to manage our 

resources against those. We are using the same people to run the 

stimulus program as run filing season. We’re doing the late AMT 

fixes to get ready for filing season. So, this hasn’t been the easiest 

undertaking for the IRS, but I’m quite proud of the work we have 

done, and I’m happy to answer any questions. 

[The prepared statement of Honorable Mr. Shulman follows:] 

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Statement of The Honorable Douglas H. Shulman, Commissioner of the 

Internal Revenue Service 

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Mr. MCNULTY. Thank you, Commissioner Shulman. 

I am now pleased to welcome Social Security’s Deputy Commissioner for Operations, Linda McMahon. 

STATEMENT OF LINDA S. MCMAHON, DEPUTY COMMISSIONER 

FOR OPERATIONS, SOCIAL SECURITY ADMINISTRATION 

Ms. MCMAHON. Thank you, Mr. Chairman and Members. On 

behalf of Commissioner Astrue, I appreciate the opportunity to testify before you regarding the Social Security Administration’s (SSA) 

efforts to help implement the Economic Stimulus Act of 2008. I 

would like to explain what we have done in support of IRS to provide stimulus payments, including our substantial outreach efforts, 

and how we have used the funding that Congress provided for this 

purpose. 

The President and Congress took swift action to provide targeted, 

immediate financial assistance to individuals and families across 

the country. It was with that same sense of urgency that SSA 

worked closely with IRS to develop a process that would ensure 

prompt delivery of stimulus payments to eligible Social Security 

beneficiaries. 

Our initial challenge was to provide IRS with the data they needed to inform Social Security and the Department of Veteran Affairs 

(VA) beneficiaries that they had to file a tax return in 2007 if they 

hadn’t filed one in 2006, in order to receive the stimulus payments. 

We already had systems in place to deliver Social Security data to 

IRS, but the VA lacked the systems capacity to match its beneficiaries against IRS records. 

To work around this problem, SSA added the 2.6 million VA 

names to our own listing of Social Security beneficiaries, eliminated most duplicates, and then forwarded a single file of 55.5 million names and addresses of VA and Social Security beneficiaries 

to IRS. 

We also worked with IRS to develop a simplified packet of information that would be understandable for our beneficiaries, and 

provide step-by-step instructions on how to file a return and qualify 

for the stimulus payment. The packet included instructions, forms, 

and even a postage-paid return envelope. 

IRS matched the names that we sent them against their files, 

identifying approximately 21 million VA and Social Security beneficiaries in the United States who did not file a tax return in 2006, 

and mailed the informative stimulus packets to them. We understand from IRS that—and I think you’ve heard it here—that this 

streamline process is leading to a significant response rate. Everybody wants 100 percent, but believe me, in these kinds of programs, 75 percent is outstanding. 

The targeted mailing was a vital step in ensuring our beneficiaries received information about their eligibility for a stimulus 

payment. 

But we didn’t stop there. We placed a prominent link on both our 

English and Spanish Internet homepages, directing individuals to 

the IRS website, and the information there on the stimulus payment. 

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We utilized e-mail, sending a message about the stimulus payments to nearly 800,000 individuals who are signed up to receive 

Social Security-related news. 

We worked with IRS to create a stimulus payment flyer that specifically targeted Social Security beneficiaries. We then printed 

more than 1.6 million of these flyers in English and in Spanish for 

our field offices to distribute to visitors. 

We worked with advocacy groups at the national level and in 

local communities, sharing copies of the flyer with them. 

Across the country, in hundreds of speeches and other Social Security-related events, SSA employees have provided information 

and answered questions about the stimulus payment. 

In addition, our Regional Communications staff has joined IRS 

professionals in outreach events. 

Also, every caller to our National toll-free 800 number receives 

an up front message about the stimulus payment. Our toll-free 

number has received nearly 27 million calls since that message was 

placed online, and every one of those calls presents another opportunity to tell people about eligibility for the stimulus payment. 

Turning to budget issues, as a part of the Economic Stimulus Act, Congress provided SSA with an appropriation of $31 million. 

So, far, we have obligated $18 million of those funds. We have 

spent about $6.4 million on printing and postage—actually, for the 

notice that IRS sent out to our beneficiaries—approximately $10 

million answering beneficiary inquiries and providing replacement 

1099s, and $1.4 million on training and required systems work. 

We were actually able to reduce some of the anticipated costs by 

working with IRS on a simplified method of processing stimulus 

payment tax returns. For example, at our suggestion, IRS ruled 

that individuals could estimate the amount of Social Security benefits received, reducing the need for SSA to replace 1099s. 

While many Social Security beneficiaries have already filed the 

necessary forms to receive a stimulus payment, we know there are 

still some individuals who have not responded to the first mailing. 

We will continue our efforts to reach these individuals through the 

means that I have already described, and working with IRS. 

In conclusion, I thank you for the opportunity to share what we 

have done, in collaboration with other Agencies, under the leadership of the IRS, to facilitate the economic stimulus payments. Together we have made great strides, and I am especially pleased 

that, so far, we have been able to make this progress in a manner 

that has not threatened SSA’s core workloads. 

I also will be glad to answer any questions. 

[The prepared statement of Ms. McMahon follows:] 

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Statement of Linda McMahon, Social Security Administration Deputy 

Commissioner for Operations 

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Mr. MCNULTY. I thank both of you for your testimony. I thank 

you for the job that you have done so far, under the difficult circumstances, especially in the middle of the tax season. 

But we still have five million people to get to. That’s a lot of people. We want to get as close to 100 percent as we possibly can. So, 

I want to commend you for the outreach efforts you have made so 

far, and the renewed efforts that you talked about today. 

We are going to try to help with that. Chairman Lewis and I, 

along with Ranking Members Ramstad and Johnson are sending a 

letter to all Members of the House of Representatives, asking them 

to include in their newsletters, press releases, press statements, 

press events, and so on back in their home district, information 

about how to get the proper paperwork filed so that we can help 

you along with getting the word out and getting these checks to as 

many people as possible. 

The one question I would like—issue I would like an update on 

is, you know, when you do the outreach, a lot of times you increase 

the number of phone calls that come in, and I know that has been 

overwhelming. We might need a little bit more help with that. 

There was some talk, I believe, between both of the agencies 

about getting GSA involved to help with that. Could you give me 

an update on where we are on that? 

Mr. SHULMAN. Sure. As you know, we have had a chance to 

visit—we have had an unprecedented number of phone calls. Just 

to give Members of the Committee a sense, in 2007 we had 19 million phone calls in the month of May come into the IRS. It was 

kind of clean-up for the tax season. In May of this year we had 72 

million phone calls come into the IRS. So the numbers are staggering. 

I reached out a couple of weeks ago to Commissioner Astrue, he 

said, ‘‘Okay, I’m thinking about who else had large phone operations,’’ and said, ‘‘Does Social Security have capacity?’’ So that is, 

I think, what started this conversation to give us some assistance, 

because the phone calls keep coming in a little longer than we had 

thought. 

We are in the process, just like that phone call, of exploring a 

variety of options. There are actually some limitations in going outside of our building to answer phone calls. As you heard earlier, 

and you’ve seen in my written testimony, we have diverted some 

personnel to answer phones from other duties. We have also kept 

overtime workers on to answer phone calls. 

One of the major problems is people outside of the IRS can answer simple questions like, ‘‘How do I fill out the form, where do 

I send it?’’ Anyone who has a specific issue, which a lot of the taxpayers who call do, have to actually get into their tax records, 6103 

implications. 

So, we are exploring all options, and looking outside the Agency, 

but we’re also going to keep our head down, and make sure we do 

everything we can inside of the IRS. 

Ms. MCMAHON. Mr. Chairman, I want to thank you very much 

for your earlier comments today, recognizing the constraints that 

SSA is under, and the problems that we’re dealing with, just handling our core work. 

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We want to be as helpful as we can, and we are in a position, 

because of the funding that we were given by Congress, to actually 

provide some funding to IRS to help with either a contract with 

USA Services, or to assist with the next mailing they do, those 

kinds of things, and we’re going to do that. 

Our problem is we don’t have actual capacity. We are working 

maximum overtime now. Anything we do on this is something that 

we’re not doing on our core work. It’s not a question of if we have 

people who can come in on overtime and do some other work. It’s 

a question of if they come in on overtime, instead of doing our 

work, they will do the other work. We would prefer not to go there, 

if we can avoid it. 

Mr. MCNULTY. Thank you very much. Mr. Ramstad may inquire. 

Mr. RAMSTAD. Thank you, Mr. Chairman. Thank you, Commissioner and Deputy Commissioner, for your testimony, and also for 

your important work on behalf of taxpayers and Social Security recipients. 

Mr. Shulman, you really had to hit the ground running when you 

became the commissioner in March. I know you arrived in the middle of a hectic filing season, and had to, at the same time, oversee 

the massive economic stimulus project we are discussing today. I 

want to congratulate you for doing a tough job very well. 

I would also like to ask you two questions on two different topics. 

First, with respect to our brave—the spouses of our brave soldiers, sailors, airmen and Marines, I know in order for married 

couples to qualify for the full rebate, that both spouses must have 

valid Social Security numbers. Just this week, as I’m sure you 

know, the President signed the Heroes Earnings Assistance and 

Relief Tax Act, which waives this rule for spouses in military families. 

How will the IRS determine which returns are affected by the 

new rule? 

My second question, is the IRS working with the Department of 

Defense to do a military outreach, to do outreach to military families on the new law? 

Mr. SHULMAN. Yes, we obviously agreed with the law, and have 

been tracking it. 

But, initially, we actually talked to this Committee and others, 

and told them that we wouldn’t be able to true this up until next 

filing season, a year from now. As it passed, and as we’ve tried to 

do with all things stimulus-related, we’ve said, ‘‘Let’s get creative, 

let’s push very hard.’’ 

I am pleased to report that the current plan is some time around 

mid-October, when all the returns get in, we will run a match and 

aim to distribute checks no later than November to these families 

who weren’t eligible under the first run. We will do another run 

once we have a full complement. So, we can’t identify them, and 

we plan to get them out later this year. 

We have done a lot of outreach to many communities, and we 

will definitely reach out to the Defense Department, and make sure 

people understand, really, that they don’t need to do anything, as 

long as they have already put their—Social Security number on 

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there of a spouse or someone who doesn’t, that we will get this out 

to them. 

Mr. RAMSTAD. Well, thank you, Commissioner, for that response, because you can obviously—or you obviously do see the significance of this. I mean, of all taxpayers, we—there are so many 

military families who are hurting right now, financially and otherwise. I think this is—I am glad to see the Service giving this such 

a top priority, and I appreciate your leadership and your creative 

creativity, in terms of getting this done. 

The other questions I had concern the refund anticipation loans 

and taxpayer refunds. Earlier today—I know you were here, and 

you heard Mr. Pomeroy say that a number of taxpayers signed up 

for refund anticipation loans when they went to paid preparers. 

Some preparers did not indicate the bank accounts listed on the returns—did not indicate that the bank accounts listed were temporary refund anticipation loan accounts, and not a permanent account of the taxpayer. 

I know I have had a couple of constituents broach this problem 

with me. In the cases in which the IRS sent a payment to a temporary account, how did the IRS or the bank work to correct the 

problem? Is that—are you on top of that? Were the payments returned to the IRS? Were banks able to forward the payments to the 

rightful recipients? I would like you to address both those questions, please. 

Mr. SHULMAN. Sure. Well, the way this works is when you get 

a refund anticipation loan in the normal filing season—any taxpayer—the service provider who gave the loan, files the return. 

They actually disperse money ahead of time to the taxpayer, and 

they receive the refund. When they file with the IRS, they’re required to put a RAL indicator on the account, so it will indicate 

that they have an account. 

So, what we did was we didn’t actually send them to those accounts. What happened was anyone who had a RAL indicator, we 

knew that wasn’t their account, and that was the account of the 

service provider. So, we were sending it to the taxpayer. So, those 

people never got a direct deposit. It was rerouted, and they were 

sent a check. 

There was one vendor that we found who actually hadn’t put a 

RAL indicator on accounts. We talked to them very early. We put 

RAL indicators in and sent checks. 

So, the real issue and confusion that I think some constituents 

have had is around that they got a refund anticipation loan direct 

deposited to an account of theirs, or a RAC. They assumed they 

were in the direct deposit stream for stimulus, and they weren’t, 

because again, we didn’t know that they had accounts. 

So, there was a lot less—we haven’t heard of, or at least I’m not 

aware of ones that accidentally went to an account we had to get 

back because of a refund anticipation loan. The bigger issue has 

been there is a lot of people who thought they were going to get 

the direct deposit, which came quicker in May, and they’re actually 

getting checks now, and through the week of July 11th. 

Mr. RAMSTAD. Well, thank you very much, Commissioner. I 

yield back. 

Mr. MCNULTY. Mr. Pascrell may inquire. 

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Mr. PASCRELL. Thank you, Mr. Chairman. Commissioner 

Shulman, thank you for doing a great job in a very short period of 

time. You have, I believe, the tiger by the tail. But there is a tremendous amount of work ahead of you. I want to get into that 

work. 

I want to thank you, Commissioner McMahon, for all your service to your country through the position with the Social Security 

Administration. 

My first question is this, Commissioner Shulman. We have pay- ments going to 76 million Americans, payments of a total of $63.8 

billion. That is 70 percent of what we are trying to target. Is that 

correct or incorrect? 

Mr. SHULMAN. We—I think, if you’re asking about—let me presume what you’re asking, and you can tell me if I’m right. I think 

you’re asking about the targeted population that we’re doing extra 

outreach to? 

Mr. PASCRELL. How far do we have to go—— 

Mr. SHULMAN. Yes. It’s—so the $63 billion that has gone out is part of the total $100 billion economic stimulus payments. So, 

those are numbers for the entire population—— 

Mr. PASCRELL. Right. 

Mr. SHULMAN [continuing]. Regular filers, and people who normally wouldn’t need to file. And—— 

Mr. PASCRELL. So, what percentage do we have to go after, approximately, and how much more money needs to be sent in checks 

to those individuals? 

Mr. SHULMAN. Well, we’re on target for the original projections. 

Mr. PASCRELL. Right. 

Mr. SHULMAN. So, by the week of July 11th, when the first 

wave of checks would go out to anyone who filed on time, we will 

have $95 billion distributed to about 110 million households. 

Mr. PASCRELL. That’s how we come up with the five million 

that we’re having—— 

Mr. SHULMAN. No, that’s totally different numbers. 

Mr. PASCRELL. Totally different? 

Mr. SHULMAN. Yes. 

Mr. PASCRELL. How do we get to that number? 

Mr. SHULMAN. That number, the 5 million, we estimated with 

Social Security and Veterans’ Affairs Department, that—we 

thought—there was a special population of about 20 million people 

who were eligible for stimulus, but normally wouldn’t file. 

Those—— 

Mr. PASCRELL. So, in other words—— 

Mr. SHULMAN [continuing]. We have hit about 74 percent. 

Mr. PASCRELL. Is it safe to say that the majority of those people that still have to get their stimulus check are veterans or nonSocial Security recipients? 

Mr. SHULMAN. I don’t think it is. 

Mr. PASCRELL. You don’t think it is? 

Mr. SHULMAN. Yes. I think—we—separate population. There 

are a lot of Social Security recipients and veterans—— 

Mr. PASCRELL. Right. 

Mr. SHULMAN [continuing]. Who have gotten the check. There 

are also folks who needed to file regularly. So, we are really breakrfrederick on PROD1PC65 with HEARING

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ing it down into everyone who is going to file anyway, and get a 

stimulus payment—— 

Mr. PASCRELL. So, between the last numbers that you provided, $63 billion, and $120 billion, which should be out by July 

11th, that’s a lot of checks to have to go out. 

Mr. SHULMAN. The total number by the end of the year will be 

about 100 billion. 

Mr. PASCRELL. 100 billion. 

Mr. SHULMAN. Yes, Sir, yes. 

Mr. PASCRELL. Not 120; 100. 

Mr. SHULMAN. Yes. 

Mr. PASCRELL. Okay. 

Mr. SHULMAN. There is real—we basically identified everyone, 

or they self-identified by filing a tax return, except for that five 

million who, as we’ve talked about, we’re going to make an extra 

effort to go find. 

Mr. PASCRELL. Just a quick question, and then I want to get 

into my second series. What is the status of the paper inventories? 

Mr. SHULMAN. Yes. One of the consequences of having so much 

overload on our phone, there are temporary employees we bring on 

every filing season. They answer phones and they workpaper inventory. They usually would roll off of the phones near the end of 

May, and start working down a paper inventory. 

Right now, we have a lot of extra paper inventory. The numbers, 

we’ve got about two million pieces of paper inventory to work 

through. 

Mr. PASCRELL. Right. 

Mr. SHULMAN. Usually, we would have about 1.3 million at 

this time of year, so it’s not an absolute number. 

Mr. PASCRELL. It’s 700,000, 800,000 more. 

Mr. SHULMAN. Yes, it’s significantly more. That’s one of the 

issues we’re going to need to work through this year. 

Mr. PASCRELL. Do you have the resources to respond to that? 

Mr. SHULMAN. If we can keep our temporary employees later, 

we—— 

Mr. PASCRELL. What does that mean, though? You have money 

that’s allocated. Do you have enough money that’s allocated, so you 

can keep them? 

Mr. SHULMAN. We are in the process of actually talking with 

different Committees in Congress. The money has been appropriated, we just need some authority to move it between different 

accounts. If we do, we will be able to staff up and work down that 

inventory. 

Mr. PASCRELL. There are many complaints that I get in my office up in Patterson, New Jersey, in the same building that conveniently, or inconveniently, is the IRS and Social Security. 

Several of my constituents have complained that they are not 

able to get assistance from IRS. You talk about this phone overload. There is a toll number that you can, you know, dial up. They 

can’t get the—the same thing happens on the rebate line. 

Can you address that? Is that a common problem throughout the 

country? 

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Mr. SHULMAN. Yes, it is—we have an 800 number. I gave you 

a few stats, you know, 72 million calls in May versus 19 million 

last year. 

Mr. PASCRELL. Right. 

Mr. SHULMAN. Another interesting statistic, in 2001, when 

there was another stimulus program, we got 42 million calls during 

the 15 months of that program. Again—— 

Mr. PASCRELL. You’re up about 52 million calls from what you 

usually have. 

Mr. SHULMAN. What’s that? 

Mr. PASCRELL. You’re up about—— 

Mr. SHULMAN. Yes. So—— 

Mr. PASCRELL. How do you handle it? 

Mr. SHULMAN. So, here is what’s happening on the phones. You 

call the IRS phones, we have been very clear on the message that 

you don’t need to talk to us if you filed a tax return. So we encourage you to, if you filed a tax return, be patient, you will get your 

stimulus payment on time. We encourage people to go to our 

website. 

We also tell people there is heavy call volumes now, so they’re 

going to have to wait longer than normal. Normally, people wait a 

few minutes, our target is under 6 minutes now. In the month of 

May it was up to about 13 minutes, average. 

So, people can get through. They might have to call a couple of 

times. Some people get to automated service, some people hang up 

when they hear there’s a wait time. Again, this is where we’d like 

not to be, but it’s a fact of doing stimulus in the middle of filing 

season. 

Mr. PASCRELL. But, Commissioner, the people that you want to 

go to your website are the very people who can’t get to your 

website. The very people that are the majority of individuals who— 

and I don’t care what the program is, what we’re talking about, 

whether it’s EITC or AMT, or whether, in this case, the stimulus 

checks. You know, we’ve got to find another way to get to them, 

because they have no way of getting on to the website. They may 

be in homes, they may be—— 

Mr. SHULMAN. Yes. 

Mr. PASCRELL. You know, I just have one other quick question, 

if I may? 

Mr. MCNULTY. Yes. 

Mr. PASCRELL. You said in your testimony that one of the 

major problems was differentiating between the refunds and stimulus payments, because they came at the same time, correct? Tax 

refunds, right? 

Mr. SHULMAN. In the same—— 

Mr. PASCRELL. On page three you address that. The economic 

stimulus payments, you wrote, overlap with the normal tax refund 

season. 

Just very briefly, tell us what that convoluted system—you know, 

how did it result? What was the outcome? 

Mr. SHULMAN. Oh. It’s as I said in my oral testimony, when 

Congress passed the bill—— 

Mr. PASCRELL. Bad timing. 

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Mr. SHULMAN [continuing]. For stimulus, and the President 

signed it, the goal was to get the money out as quick as possible. 

Mr. PASCRELL. Right. 

Mr. SHULMAN. The reason we started in May is because we 

didn’t want to endanger tax filing season in April. The numbers are 

pretty compelling. This year we sent out $241 billion in refunds. So 

we were trying to stimulate the economy, we thought it was quite 

important to get the refunds out, as well. 

So, this was just a fact. We basically moved the stimulus payments to a place which was as quick as possible, yet being prudent, 

acknowledging the—— 

Mr. PASCRELL. So, the—— 

Mr. SHULMAN [continuing]. The filing season. 

Mr. PASCRELL [continuing]. The refund total was a greater 

stimulus package than the stimulus package? 

Mr. SHULMAN. The refunds were $241 billion. 

Mr. PASCRELL. Thank you, Mr. Chairman. Thank you, Commissioner. 

Mr. MCNULTY. Mr. Brady may inquire. 

Mr. BRADY. Thank you, Mr. Chairman. I don’t raise the fuel 

price issue to make anyone in this chamber uncomfortable, it’s just 

that the price of fuel is making so many of our families uncomfortable, especially seniors, who are on fixed income. When you take— 

when they have to deal with paying $536 more this year than last 

year on gas, plus increased Medicare premiums and they’re on a 

fixed income, they’ve got a problem. 

I visited with a senior the other day at a gas station in Bridge 

City, Texas, who was upset because she could no longer attend 

church on Wednesday night because she needs the gas to take her 

husband to all of his doctor visits during the week. So, seniors on 

a fixed income are really getting hurt by these fuel prices. A number of them are eligible for stimulus checks. 

I really appreciate the job both of you are doing in reach out to 

them. We have a long way to go. 

But in Texas, we have a number of retirees who are not covered 

by Social Security. They are in a Social Security substitute like the 

Texas Teacher Retirement system. They have asked us a question 

about whether their pension benefits would make them eligible for 

the stimulus payments. 

As you may recall, Social Security benefits, certain railroad retirement benefits, and certain payments to service men were specified as counting toward income levels needed to make someone eligible for the stimulus payment, but there was no mention of pension income counting, such as from non-covered employment. 

Others have said since these pensions are taxable, recipients 

would qualify for a payment, because they have a net income tax 

liability which is greater than zero. 

Commissioner Shulman, would you set the record straight for me 

on this issue? What is the right answer for them? 

Mr. SHULMAN. The right answer—and I would go back to our 

technical folks as well—but is if they have tax liability for any income, then that makes them eligible. 

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In general, pension payments are not, unless they are taxable 

pension payments. So—but all of this is us just executing the law 

as it was written. 

Mr. BRADY. So, as I understand it, seniors would be eligible, in 

this case, if they had $3,000 of earned income, or at least $1 in income tax liability. That would trigger them, correct? 

Mr. SHULMAN. I believe the answer is yes, but let me get just 

the details of your question and come back to you afterward, so I 

don’t get the record wrong. 

Mr. BRADY. Here is my worry. Retired teachers, especially those 

who retired from many years ago who had low salaries, and therefore very low retirement benefits, if they don’t get enough in Texas 

Teacher Retirement to trigger tax liability, my understanding is 

they would be left out of a stimulus check. 

Mr. SHULMAN. Well, my understanding is, in reading the law 

and administering it, that the law was written very specifically, 

that you had to have $3,000 in taxable income, unless you were 

part of an exempted category. 

So, you know, if the law was written that way, that’s probably 

correct. 

Mr. BRADY. So, the Social Security benefits don’t qualify them, 

because they don’t get them. If they don’t reach the tax liability 

trigger, they don’t move in—they aren’t eligible under that category. I am—— 

Mr. SHULMAN. Well, I think Social Security was exempted 

under the law, and that was the design. 

Mr. BRADY. Right. 

Mr. SHULMAN. So, Social Security counts, pension benefits 

count—— 

Mr. BRADY. Right, but if they don’t receive Social Security because they’re in a substitute, and those substitute payments aren’t 

enough to trigger even a dollar of liability, they wouldn’t receive a 

stimulus check? 

Mr. SHULMAN. I believe that is correct, under the law. 

Mr. BRADY. Okay. That is a worry, because we do have a number of teachers in that situation in Texas. Again, you know, while 

those with modern-day retirements, I think, would trigger into it, 

because the liability—those who, again, thankfully taught back 

when wages for teachers were just intolerably low, their benefits, 

I’m afraid, won’t move them in the trigger yet. 

I think they are probably some of the group that we most need 

to reach with these stimulus payments. Chairman, thank you very 

much. 

Mr. MCNULTY. Thank you, Mr. Brady. On behalf of Chairman 

Lewis and Ranking Members Ramstad and Johnson, I want to 

thank both commissioners for being here today for your good work, 

and for your testimony. 

I want to compliment you again on the job that has benne done 

so far, but reiterate the fact that five million people are still out 

there and eligible, and we need to get to them. So, I commend you 

for the outreach efforts which you are undertaking. 

Jim and I just signed letters that are going to be signed by Sam 

Johnson and John Lewis to every single Member of the House of 

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Representatives to reinforce that message all across the country. 

So, I hope we can help in that regard. 

Also, I would like, obviously, both agencies to keep in close contact with us, to let us know any other ways in which we can be 

helpful. 

With that, this hearing is adjourned. 

[Whereupon, at 12:51 p.m., the Subcommittees were adjourned.] 

[Submissions for the Record] 

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AARP, Statement 

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Morrison Affairs Public Group, Statement 

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National Council on Aging, Statement 

The National Council on Aging (NCOA) thanks the Chairman Lewis, Chairman 

McNulty, and Committee Members for the opportunity to submit testimony about 

our work to assure that all eligible seniors get an Economic Stimulus Payment and 

to make recommendations to you based upon our experience with the stimulus payments to date. 

NCOA is the oldest nonprofit organization dedicated to improving the lives of 

older adults, with a special focus on ensuring that low-income seniors are able to 

access the benefits that will improve their lives. When the economic stimulus payments were being discussed by Congress, NCOA immediately recognized the importance of also including the many millions of Social Security beneficiaries and veterans who receive disability benefits, but who no longer file tax returns in the economic stimulus package. NCOA and other organizations encouraged Congress to include these populations in the final economic stimulus package. 

Upon passage of the economic stimulus package we went to work on a special outreach campaign to reach out to seniors who do not normally file tax returns. We 

developed and posted economic stimulus payment resources for seniors and the 

aging network to the National Council on Aging Web site www.ncoa.org For our 

partners in the aging network we developed a new page on the My Medicare Community, our online community at www.MyMedicareCommunity.org, as a central repository of information about the program for benefits counselors who work with 

seniors. There have been over 2,000 views of this page. We have also worked directly with the IRS and many new and old partners to assure that all seniors receive their stimulus payment. 

As Social Security and IRS matched data to identify 20.5 million seniors and veterans who do not usually have to file tax returns, it became apparent that lack of 

familiarity with even the simplest tax return could prevent many from filing for 

their stimulus payment. NCOA worked quickly with AARP Tax-Aide to develop a 

user-friendly online tool to assist in the completion of IRS 1040A forms. 

The Web based tool does not look like a tax form; it asks seven simple questions 

and then pre-populates the required 1040A tax return. Moreover, the tool offers simple, easy-to-understand directions to assist individuals in completing and printing 

the IRS 1040A form. The tool provides personalized instructions on where to mail 

the completed form and prints a second completed 1040A for individuals to retain 

for their records. The tool makes it easy for stimulus payment filers, family members, caregivers, and benefits counselors to take the necessary steps to file for the 

stimulus payment. 

Since its launch in March 2008, more than 25,000 people have used the Stimulus 

Payment Tool, and traffic to the tool continues to grow. This tool can be accessed 

either at NCOA’s www.BenefitsCheckUp.org or through AARP’s Web site at 

www.aarp.org/stimulus help 

NCOA commends the IRS and SSA for their efforts thus far and congratulates 

them on reaching over 70 percent of this special population, but continued efforts 

are now urgently required to engage the individuals who have not yet filed a 1040A. 

Based on our prior experience reaching out to low-income seniors, and our intensive 

work to get stimulus payments into the hands of this population, we make the following recommendations: 

National Council on Aging Recommendations 

1. We are impressed with the extensive database IRS has shared with the Congress and with national partners that shows where the remaining 5.2 million 

seniors and veterans live. We believe the data can be used to drive an energetic 

outreach campaign to reach this cohort that has not yet filed. In order to assure the widest and most effective use of the data to target outreach, education 

and tax filing, we have committed to post the database to our Web site so that 

community-based organizations within the Aging Network can have easy access in order to plan outreach and filing campaigns. Further refinements to 

this and other similar databases of seniors with limited income and resources 

have the potential to provide critical information in promoting efforts to find 

and enroll this hard-to-reach population in benefits they are eligible for, but 

still not receiving. 

2. We fully and enthusiastically support the IRS in its decision to send a second 

letter to reach out to the 5.2 million seniors and veterans who have not yet 

filed for their stimulus payment. 

NCOA is disappointed, however, that the IRS has determined not to include prepopulated 1040A tax returns with each letter. IRS has a significant amount of data 

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change between IRS and the Social Security Administration, we believe IRS has sufficient information to pre-populate tax returns for this hard-to-reach population with 

minimal risk to IRS error rates. Pre-populated forms would alleviate the anxiety 

and fear of complexity that many people who have not had to deal with the IRS 

in many years feel about filing tax forms. Additionally, removing many data entry 

elements would encourage more individuals to apply for the stimulus payment to 

which they are entitled. The population that subsists solely on disability and/or Social Security payments could truly benefit from the stimulus payments. Prepopulating forms would ensure that more people receive their payments. 

Next, NCOA very much appreciated the opportunity we were given to comment 

on the draft of the second IRS mailing. We recommended to the IRS concise text 

and a call to action designed to motivate the specific hard-to-reach cohort of 5.2 million seniors and disabled veterans. We urged clear, plain language in order to encourage individuals to take the action needed, with language and format to accommodate possibly low literacy levels of many within the remaining 5.2 million. 

We would also suggest customizing a message and design for the envelope in 

order to motivate those who receive it to open and read the important message contained within it. 

3. We encourage the IRS to continue its very productive partnership with national organizations, like NCOA, that have experience reaching out to low income older adults. NCOA successfully reached the much of the elderly population during the introduction of the Medicare Part D benefit and provided personalized assistance to many seniors to enroll in the low income subsidies 

(Extra Help). Collaborating with local partners and organizations across the 

country has proven to be effective in the past and NCOA proposes that the IRS 

work closely with local organizations that the remaining 5.2 million individuals 

already know and trust. These organizations can readily use the Economic 

Stimulus Tool to file tax returns for their clients, so they can get the stimulus 

payments that are so important especially in light of rising food and fuel 

prices. 

4. We encourage congressional offices to use the Economic Stimulus tool developed by AARP Tax Aide and National Council on Aging and found at 

www.BenefitscheckUp.org and www.aarp.org/stimulus help to promote its use 

and to enable constituents who are unfamiliar with IRS forms to easily file for 

their stimulus payments. 

5. We urge the Committee to do all it can to ensure that the Social Security Administration and the Veterans Administration make a more robust effort to 

reach out to those among their constituents who have yet to file in order to 

get their stimulus payments. 

Thank you for the opportunity to provide our input. We look forward to working 

with the Congress and the Executive Branch agencies to ensure that all eligible individuals file for the economic stimulus payment. 

For more information, please contact Howard Bedlin, Vice-President of Public Policy & Advocacy at howard.bedlin@ncoa.org

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. 

Paul Donnelly, Statement 

ReformtheRebate.com is a coalition organized to change the tax rebate rules that 

discriminate against legal immigrants. We believe that Congress over-reached when 

U.S. citizens and legal immigrants whose spouses or children are not ‘‘illegal’’ but 

who do not have Social Security Numbers due to SSA policies were barred from the 

stimulus rebate if they file jointly, as married taxpayers are authorized to do. We 

urge the Congress to extend to such civilian families the same consideration that 

was recently applied to military families, and for the same reasons: those who obey 

immigration law should not be penalized in the name of fighting illegal immigration. 

If this cannot be accomplished, the legal spouse should be able to receive the rebate without losing the benefit of joint filing this year and in the future as the price 

of getting a rebate. 

We suggest the following questions: 

1) The IRS has never been put into the position of enforcing immigration law. To 

avoid requiring the IRS to determine that a spouse is here legally without a 

Social Security Number, Congress has directed that when someone in the milirfrederick on PROD1PC65 with HEARING

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tary files a joint return with a valid SSN, the couple is eligible for the stimulus 

rebate. 

Isn’t that the fair way to treat civilian couples, as well? 

2) If the Congress directed the IRS to determine the immigration status of a 

spouse who does not have a SSN when there is a joint return where the other 

spouse has a valid SSN, would that impose a substantial administrative burden on the IRS? 

3) Whether or not someone is working here legally, the law requires that they 

pay taxes on their income. Because many, if not most illegal workers have 

taxes withheld by their employers, the IRS acknowledges that illegal workers 

who file returns receive refunds based on their withholding just like anyone 

else. 

Does the IRS have an estimate for the total amount of taxes that are refunded 

on returns with no SSN or an invalid SSNs each year? 

4) Does the IRS accept tax returns without a SSN or ITIN? If so, are refunds paid 

if due on such returns? What if more than one return uses a single SSN? How 

are payments and refunds processed? Isn’t it true that sometimes taxpayers receive deficiency notices due to other individuals’ earning wages on their account which are reported on W–2s? 

5) Does the IRS verify the validity of an SSN before processing a return? Does 

the IRS identify duplicate filings on a single SSN? How does the IRS sort out 

the situations of multiple W–2s on a single SSN when some may reflect multiple jobs and others may reflect identity theft? 

6) There are many thousands of cases, beyond the military, where a U.S. citizen 

or legal permanent resident is married and files jointly with a spouse without 

an SSN. Does the IRS have an estimate for the total amount of the stimulus 

rebates these families would be eligible for if the Congress applied the same 

fair standard as to the military? 

7) The IRS has a difficult job to do in the best of times. Were Congress to clarify 

the intent of the stimulus package to be fair to the U.S. citizens and legal permanent residents married to those who lawfully file joint returns with only one 

SSN, would a credit on next year’s taxes equal to the amount of the stimulus 

rebate be the most efficient use of IRS resources in correcting this unfair and 

unintended slap at legal immigrants? 

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Santa Barbara Bank & Trust, Statement 

Dear Mr. Chairmen and Ranking Members: 

We are submitting this statement for the written record of the joint hearing held 

by the Oversight and Social Security Subcommittees on Thursday, June 19, 2008, 

to examine the status of the economic stimulus payments (ESP) provided for in the 

‘‘Economic Stimulus Act of 2008’’ signed into law by the President on February 13, 

2008 (P.L. 110–185). 

Santa Barbara Bank & Trust (SBB&T), a brand of Pacific Capital Bank, N.A., is 

one of the nation’s largest providers of tax-refund related bank products—refund anticipation loans (RALs) and non-loan refund anticipation checks (RACs). We are particularly concerned about comments made during the hearing which inferred that 

the RAL industry was somehow responsible for the fact that ESPs were delayed up 

to eight and a half weeks for taxpayers who elected this year to use RALs or RACs 

in order to more quickly receive funds in anticipation of their tax refunds. 

In her written testimony, Nina Olson, the National Taxpayer Advocate, highlighted as a major concern the fact that more than 20 million taxpayers who obtained RALs and RACs during the 2008 filing season were ineligible to receive their 

stimulus payments quickly via direct deposit and had to wait up to eight and a half 

weeks longer to receive their checks by mail. Ms. Olson noted that the delays were 

not caused by IRS error, but failed to provide any other contextual background as 

to why the IRS decided to mail checks to these particular taxpayers, rather than 

provide ESP quickly by direct deposit. 

On February 15, 2008, the IRS issued a press release (IRS Press Release 2008– 

21) announcing that ESPs would be made by paper check to any taxpayer who received RALs or RACs in this year’s filing season. There were very good reasons for 

the IRS’s decision to deliver ESPs to these taxpayers by paper check. Taxpayers who 

utilize RALs to more quickly obtain funds in anticipation of their tax refunds generally receive payment (minus fees for tax preparation, filing, financing or processing) within 24 hours after application. In the case of RACs, taxpayers receive the 

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1 National Taxpayer Advocate, 2007 Objectives Report to Congress, Volume II, p. 14 (July 

2006). 2 Remarks of FDIC Vice Chairman on June 21, 2007, to FDIC’s Alliance for Economic Inclusion. 3 Id. 4See http://www.irs.gov.pub/irs-soi/07ifss13.xls. 

net proceeds of their refunds (minus tax preparation and account set-up fees) when 

the refunds are received from the IRS (on average, 11 days after filing). The lending 

institution that provides the RAL or RAC opens temporary bank accounts for its 

customers into which the tax refunds are deposited. These temporary accounts are 

closed after delivery of a RAC to the taxpayer or satisfaction of the taxpayer’s RAL. 

More important, a large percentage of taxpayers who utilize RALs or RACs to 

more quickly obtain funds in anticipation of their tax refunds do not maintain regular bank accounts at a financial institution. As the National Taxpayer Advocate’s 

2007 Objectives Report to the Congress noted: 

‘‘It is estimated that approximately ten percent of American households do not have 

an account at a financial institution. These unbanked taxpayers have fewer refund 

delivery choices. They can request that the IRS mail a paper refund check on either 

an e-filed or paper return. However, these options generally entail high check cashing 

fees and take up to six weeks to actually deliver the refund. For taxpayers unwilling 

to wait four to six weeks for a check, the only real option is to buy a bank product, 

which typically involves high fees.’’ 1

More recent data indicates as many as 28 million Americans are ‘‘unbanked.’’ 2

‘‘Forty-six percent (46%) of African Americans and thirty-four percent (34%) of Hispanic Americans do not have an account at a federally-insured financial institution.’’ 3 Those without mainstream banking relationships cannot take advantage of 

IRS direct deposit of their refunds. RALs and RTs bridge the potential eight-week 

gap that many taxpayers who need quick access to funds would otherwise have to 

wait to receive a paper check from the IRS. Thus, a very large percentage of the 

taxpayers affected by the IRS’s February 15th guidance would have received their 

ESPs by paper check regardless of whether they elected to obtain a RAL or RAC. 

Ms. Olson’s testimony also failed to note that all taxpayers who elected direct deposits of their income tax refunds into multiple bank accounts (by filing IRS Form 

8888), or who failed to elect direct deposit of their refunds (approximately 30% of 

all filers 4 were required to receive ESPs by paper check, not simply those taxpayers 

who chose to obtain RALs and RACs. 

Several Subcommittee Members were understandably concerned by Ms. Olson’s 

testimony pointing out the delays in delivering ESPs to taxpayers who obtained 

RALs and RACs in this filing season. Rep. Earl Pomeroy (D–ND) asserted that the 

RAL industry should have done more to notify taxpayers before they elected RALs 

or RACs that doing so would delay their ESPs. The fact is that responsible tax return preparers did notify RAL and RAC customers as soon as they received notice 

of the IRS guidance of the potential delays in receiving their ESPs. However, the 

vast majority of taxpayers who utilize RALs and RACs generally do so very early 

in the tax filing season. In SBB&T’s case, 75 percent of our RAL/RAC customers 

in the 2008 filing season had already made their decision to obtain RALs/RACs before the IRS’s press release was issued on February 15th. 

In order to prevent additional ESP delivery delays, RAL lenders proactively 

worked with the IRS before the first ESPs were scheduled to be direct deposited to 

prevent ESPs from being deposited to the temporary accounts established to facilitate RALs and RACs. In fact, SBB&T alerted the IRS to an error in a large tax 

practitioner’s software that would have caused over 500,000 ESPs to be erroneously 

deposited had the error not been corrected. The bank also provided the IRS with 

the solution to fix the error. According to IRS policy, in the handful of cases where 

the IRS inadvertently deposited ESPs into a temporary account, SBB&T immediately sent a check to the affected taxpayer without charge. 

It is somewhat ironic that critics of the RAL industry are concerned about the impact on taxpayers of the delays in delivering ESPs, yet seem to dismiss the very 

real value that RALs provide to taxpayers by giving them quick access to much 

needed funds early in the tax filing season. Particularly for many low-income taxpayers eligible for the earned income tax credit, their annual tax refund represents 

the largest sum of money they will receive at one time in the entire year, and it 

comes at a critical time of the year after many families become overextended during 

the holiday season. 

In her 2007 Annual Report to Congress, the National Taxpayer Advocate stressed 

the negative impact to low-income taxpayers of delays in receiving their tax refunds: 

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5 National Taxpayer Advocate’s 2007 Annual Report to Congress, December 31, 2007, Volume 

I, p. 5. 6 IRS Report to Congress on the Debt Indicator, June 2006 

7See www.WesternUnion.com for Western Union’s charge for its ‘‘Money in Minutes’’ wire 

transfer program to send $2,999 (their maximum) anywhere in the United States. 

Tax refunds are particularly important to low-income taxpayers—A taxpayer for 

whom the refund is so significant often makes financial plans based on when he or 

she anticipates receiving the refund and may view the refund as a lifeline. For some 

taxpayers, a delay of two to four weeks in receiving the refund could mean eviction, 

inability to pay the high heating bills that arise during winter, or defaulting on credit card bills from the holiday season.5

The Taxpayer Advocate was specifically addressing the delays in this year’s filing 

season resulting from the fact that Congress did not pass legislation to address the 

so-called alternative minimum tax ‘‘patch’’ until December 2007. However, the same 

considerations apply to RALs as well. If the ability to receive the proceeds of one’s 

tax refund two to eight weeks earlier than the IRS can deliver it means the difference between paying for housing or being evicted, paying for heat or enduring 

the cold, or paying off credit card debt or defaulting, paying a reasonable fee to obtain a RAL is a sensible decision. 

It is important to recognize that fees charged by SBB&T are indeed reasonable. 

Critics often use Annual Percentage Rate (APR) measurements of RAL costs to justify the argument that RALs are high cost loans that take advantage of taxpayers. 

However, the use of APR calculations to measure the cost of RALs is very misleading. Due to the short-term nature of a RAL, APR calculations create an inflated 

representation of their true cost. In its 2006 Report to Congress on the Debt Indicator, the IRS contended that the APR is an inappropriate measure of the cost of 

a RAL: 

‘‘Unlike loans of one year or longer, APR calculations for loans not based on simple 

interest rates add multiples of costs that borrowers will never pay. [When calculating 

APRs for RALs], finance charges are assumed to be paid 36.5 times over the course 

of the year, when in fact they are paid only once, no matter how long it takes to pay 

back the loan—The reason this is important information is because some critics of 

RALs cite the APR as the real interest rate that taxpayers are charged.’’ 6

The average RAL funded by SBB&T during this filing season was $3,200, for 

which the bank charged an account set-up fee of $31 and a finance charge of 2.5% 

of the loan amount, or $80. This equates to a total cost of about 3.5% of the total 

loan amount. These fees remains fixed regardless of how long a RAL is outstanding. 

SBB&T does not impose late charges or additional interest charges, even if a RAL 

is never repaid. Nevertheless, we are required by federal banking laws to calculate 

an APR on a RAL loan using an 11-day repayment period. Under the example cited 

above, this transforms our fees of 3.5% of the loan amount to an APR of 115%, even 

though the total cost to the taxpayer remains at $111. 

RALs (when not viewed in the context of an APR) cost less than other common 

financial transactions that are entered into on a daily basis. For example, Western 

Union charges consumers $145 to send $3,000 within the United States via wire 

transfer.7 Unlike RALs, a wire transfer is a completely risk-free transaction. Fees 

for credit card advances can range from three to four percent of the advanced 

amount, plus interest charges—or $96 to $128, plus interest, on a $3,200 advance. 

Payday loans, without taking into account the even greater interests costs when 

rolled over, range from $15-$20 per $100 borrowed. By comparison, the average 

SBB&T RAL costs consumers $3.50 per $100 borrowed. When viewed in proper context of the relatively few choices that many RAL borrowers actually have to obtain 

credit, the cost of a RAL is comparatively inexpensive. 

We appreciate having this opportunity to provide Members of the Subcommittees 

with this additional background information explaining the reasons for the delays 

in delivering ESPs to taxpayers who obtained RALs and RACs, and request that you 

include our statement in the written record for the hearing. 

Sincerely, 

Joe Sica 

SVP—National Government Relations Director 

Santa Barbara Bank & Trust 

70 Oberlin Drive 

f 

San Diego, California 92121 

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1This figure differs from the number issued by the IRS because our review includes payments 

that have not yet posted to taxpayer accounts. 

The Honorable J. Russell George, Statement 

Chairman Lewis, Chairman McNulty, Ranking Member Ramstad, Ranking Member Johnson, and Members of the Subcommittees, thank you for the opportunity to 

submit testimony for this hearing. My comments will focus on the Treasury Inspector General for Tax Administration’s (TIGTA) audit and investigative actions pertaining to the Economic Stimulus Act of 2008. 

The Economic Stimulus Act of 2008, signed on February 13, 2008, was enacted 

to energize the national economy. For most individuals, the amount of the stimulus 

payment received is dependant on their net income tax liability. Single taxpayers 

will generally receive the greater of $300 or their actual tax liability up to $600 and 

couples will generally receive the greater of $600 or their actual tax liability up to 

$1,200. Anyone with qualifying children will also receive an additional $300 per 

child. IRS began issuing stimulus payments on May 2, 2008. 

The stimulus payments are being estimated using information reported on 2007 

tax returns, so that individuals can benefit from the payments as soon as possible. 

Individuals who qualify for a larger payment as a result of changes between their 

2007 and 2008 tax returns will receive the additional payment when they file their 

2008 return (generally between January and April 2009). Individuals who receive 

more than they would have if the payment had been calculated using information 

from their 2008 return will not be asked to pay the excess back. 

Due to the time-sensitive nature of these payments, we have been advising the 

IRS of our concerns as soon as we have identified them, to allow the IRS to take 

immediate corrective action when possible. In August 2008, we plan to issue the 

final report of this phase of our work on the Internal Revenue Service’s (IRS) efforts 

to implement the stimulus payments. 

Status of the Stimulus Payment Program: 

• The IRS issued approximately 76.5 million stimulus payments as of June 13, 

2008, totaling approximately $63.9 billion. • The IRS has made progress on resolving the back-log of stimulus-only tax returns. The IRS had processed 94 percent of the 7.7 million stimulus-only returns received as of June 7, 2008. • The IRS plans to issue stimulus payments through December 2008 for those tax 

returns filed by October 15th. 

Audit Status: 

We have reviewed approximately 102.7 million 1 stimulus payments generated 

from returns processed as of May 30, 2008. We determined that theIRS is correctly 

calculating the stimulus payment for approximately 99.6 percent of the returns. 

Correct calculation includes ensuring that payments are not issued to individuals 

without a valid Social Security Number, individuals who do not meet gross income 

and net tax liability tests, and individuals who exceed income limitations. However, 

we have identified approximately 385,000 stimulus payments in which our calculation of the payment does not agree with the IRS’s payment calculation.Preliminary 

review of these payments found that the differences resulted from: 

• Programming that did not include qualified self-employment losses in the determination of eligibility. The IRS, with the Department of the Treasury’s concurrence, is using a percentage of the self-employment tax reported on Self-Employment Tax (Schedule SE) in the computation of the stimulus payment instead of the actual self-employment income or loss reported on various tax 

schedules. The IRS and the Department of the Treasury indicated they were 

aware that this methodology did not address Profit or Loss from Business 

(Schedule C) and Profit or Loss from Farm (Schedule F) losses. However, the 

Treasury Department chose to use the Schedule SE percentage because it would 

have been too complex to program the payment for every possible self-employment scenario, given the time available. The Treasury Department indicated 

that the Schedule SE percentage would result in a correct payment for most individuals. As of May 30, 2008, TIGTA had identified approximately 104,000 returns with approximately $55 million in stimulus payments that should not 

have been paid to individuals with Schedule C and Schedule F losses. 

• Programming did not include all qualified self-employment income in the determination of eligibility. As of May 30, 2008, TIGTA had identified approximately 

25,000 returns for which the stimulus payment was not allowed. In these cases, 

we believe that taxpayers were entitled to an additional $16.5 million. These 

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errors affected clergy and other individuals whose income is not subject to the 

self-employment tax. TIGTA plans to review the IRS’s programming of the stimulus payments for Tax Year 2008 to ensure these individuals will receive the 

payments they are entitled to when they file their 2008 return. 

• Taxpayers were not receiving the child portion of the stimulus payment because 

they did not check the Child Tax Credit qualifying box on the tax return.When 

TIGTA raised this concern, the IRS initially responded that it could not allow 

the child portion of the stimulus payment in these instances because eligibility 

for the Child Tax Credit could not be determined from the information on the 

tax return. The IRS subsequently announced that it will issue the additional 

child portion of the stimulus payment to approximately 350,000 households in 

July. TIGTA is in the process of quantifying the number of individuals that 

might be affected. 

Other Items of Interest: 

• TIGTA has initiated a review to evaluate the effectiveness of the Criminal Investigation (CI) Division’s actions to prevent the issuance of stimulus payments 

to individuals whose tax returns claimed false income tax refunds or who filed 

false stimulus-only returns. To date, we have obtained data extracts to be used 

in our assessment of whether the CI Division implemented controls as indicated 

and whether the controls are functioning as intended. We also plan to select 

samples to determine if the appropriate freeze was placed on accounts previously identified as fraudulent to ensure that a stimulus payment is not issued 

and to ensure that controls designed to stop stimulus payments for fraudulent 

returns are working as intended. 

• On May 22, 2008, Congress passed H.R. 6081, the ‘‘Heroes Earnings Assistance 

and Relief Tax Act of 2008,’’ to amend the Economic Stimulus Act of 2008 to 

allow thousands of military personnel to receive a stimulus payment, regardless 

of whether they or their spouse, or their children have a valid Social Security 

Number.The Joint Committee on Taxation estimates that this provision will 

cost $14 million in Fiscal Year 2009. It is anticipated that the President will 

sign this legislation. The IRS is currently working on identifying affected military personnel. If this legislation is enacted, TIGTA will review the IRS’s implementation 

Additionally, TIGTA is monitoring the following issues: 

• As of June 7, 2008, the IRS identified 246,079 duplicate paper-filed stimulusonly returns. These stimulus-only returns were filed using the same Social Security Number as another tax return. The IRS has consolidated the processing 

of these returns at its Andover, Mass., facility to expedite their processing and 

minimize the delay in issuing the stimulus payment. The IRS has resolved 

55,852 of these returns. We are in the process of evaluating the procedures for 

forwarding these returns to Andover, as well as the procedures that will be used 

to resolve the duplicate filing conditions. Our review of a random sample of50of 

these returns showed that 39 (78 percent) were duplicate returns filed by the 

same taxpayer, which indicates these cases did not involve identity theft. To 

date, 31 of 50 have had the rebate issued. No rebate has been issued for the 

remaining 19. 

• The IRS has determined that between 18,000 and 22,000 Understanding Your 

Economic Stimulus Payment Notice (Notice 1378) were issued to the wrong individuals. This was the result of a vendor error, and the problem has been corrected. 

• The IRS identified a programming error that resulted in approximately 1,500 

payments being directly deposited into the wrong individual’s bank account. 

These payments totaled approximately $1.4 million. The IRS has since corrected 

the error and is in the process of reissuing payments to the entitled individuals. 

IRS is working with the banks to recover the incorrect deposits. 

• The IRS reiterated that it will issue a paper stimulus-only check to anyone who 

1) used a Refund Anticipation Loan (RAL), 2) split the direct deposit refund 

among more than one bank account, or 3) had tax preparation and other fees 

deducted from the refund (refund anticipation check (RAC)). This process was 

established to ensure that the individual received the stimulus payment instead 

of the financial institution or tax preparer that provided the RAL or RAC. As 

of April 17, 2008, 9.9 million taxpayers had used a RAL and 10.3 million had 

used a RAC to receive their refunds. For split refunds, the IRS decided to issue 

a paper check because it did not know which account the taxpayer wanted the 

stimulus payment deposited in. As of June 2, approximately 225,867 taxpayers 

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had split their direct deposit refund among more than one bank account. Not 

all of these individuals may qualify for an economic stimulus payment. 

• IRS officials stated that on May 28, 2008, they had been notified by a tax preparation firm that approximately 450,000 tax returns had been submitted to the 

IRS without the RAL indicator. The IRS, aided by the firm, was able to identify 

these accounts before the stimulus payments were issued. Payments for these 

accounts are being correctly issued via paper check consistent with IRS’s decision to issue paper checks on accounts having a RAL. The media incorrectly reported that these payments were being deposited into RAL accounts. 

• As of May 30, 2008, TIGTA identified approximately 8,800 individuals (0.15 

percent) who filed a stimulus-only return had a balance due on their tax accounts. Some of the balance-due conditions are the result of IRS input errors 

or taxpayers entering information on the wrong line of their tax return. The 

IRS is aware of this condition and has taken steps to resolve these accounts. 

Office of Investigations: 

TIGTA has initiated 12 complaints involving economic stimulus payments. The allegations are as follows: 

• One case involves an alleged return preparer scheme that was reported to IRS– 

CID in Bogota, Colombia. CID referred the case to TIGTA; 

• Two cases involve allegations of false impersonators requesting bank information via the telephone; 

• Nine cases involve phishing emails, most of which direct victims to follow an 

Internet link purportedly associated with the recipient’s economic stimulus refund. 

In closing, I would like to emphasize that TIGTA will continue to closely monitor 

the issuance of the economic stimulus payments and to promptly alert the IRS of 

any problems or emerging issues. Mr. Chairman and Members of both Subcommittees, thank you for the opportunity to provide TIGTA’s assessment of the IRS’s implementation of the Economic Stimulus Act of 2008. I would be pleased to respond 

in writing to any questions you may have. 

Æ 

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