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Written Testimony of Charles P. Rettig,
Commissioner Internal Revenue Service before the House Ways and Means Committee, Subcommittee on Oversight on the Filing Season and IRS Operations
Over the course of the last decade, the IRS's budget has decreased by more than 15 percent in real terms. Because of this decrease, in FY 2021 we realized less than 79,000 full-time equivalents (FTEs), which is close to 1974 levels. Since 2010, IRS Enforcement FTEs have decreased by 30 percent, while real Gross Domestic Product has increased by 29 percent, and the filing population has increased by 14 percent. Over the next six years, we estimate we will need to hire 52,000 employees just to maintain our current levels. This estimate is based on a reduction in the workforce of approximately 35,000 through retirement and 17,000 through non-retirement attrition. Every measure that is important to effective tax administration has suffered tremendously in recent years, with profound deficiencies resulting from under investment in human capital and information technology.
Collection function management stated that budgetary constraints led to reducing discretionary programs in order to deal with the receipts of significant volumes of taxpayer requests, most notably for IAs. IA requests are customer-driven inventory that must be worked, compared to discretionary delinquent return and ASFR TDI notices, which management can control by reducing the number of notice issuances. In prior years, management used overtime funding to process the Balance Due Correspondence (mostly IA requests) received. Without overtime funding, discretionary programs such as the issuance of ASFR TDI notices were halted in the middle of FY 2015 to enable the CSCO to stay somewhat current with the receipts of customer-driven inventory.
The IRS has not conducted any major studies to assess the compliance impact of the decision to reassign resources away from ASFR inventory. However, this decision has led to an imbalanced approach to managing work streams in the Collection function programs. Nonfiler inventory represents S32 billion of the overall Tax Gap, and the IRS is not fully using its enforcement tools to ensure taxpayer filing compliance. It is important for Collection management to study the risks and impacts on compliance before making policy decisions to ensure that the benefits outweigh any negative impacts.
As of March 30, 2017, the CSCO FY 2017 work plan had not been finalized. Collection function management stated that they were currently evaluating opportunities to adjust staff going forward, using the historical inventory volumes, in an effort to balance enforcement within the Collection program. However, in January 2017, Collection management once again suspended nonfiler TDI case creation, this time to allow the temporary reassignment of employees to the Automated Collection System (ACS) because management wanted to improve the level of customer service in that function. Management expects that permanent reassignments and promotions of ASFR staff to positions within the ACS will further reduce ASFR staff, which it now projects will be fewer than 100 FTEs by the end of FY 2017.
The IRS is imploding! Watch the full presentation below.
Full video is less than an hour long
Danny Werfel serves as the 50th Commissioner of the Internal Revenue Service. As Commissioner, he presides over the nation's tax system, which collects approximately $4.1 trillion in tax revenue each year representing about 96% of the total gross receipts of the United States. Commissioner Werfel oversees an agency of about 85,000 employees and an annual budget of more than $12 billion.
Commissioner Werfel has an extensive range of experience inside and outside of government. Prior to becoming Commissioner, he was the global leader of Boston Consulting Group's (BCG) Public Sector practice. Previously, he was the leader of BCG's Public Sector practice in North America. In these roles, he worked with government agencies worldwide on finances, service delivery, transformation plans and risk-assessment initiatives.
ASFR - Automated Substitute for Return - The Automated Substitute For Return (ASFR) program, now suspended indefinitely, used third-party misinformation "snitch"reports such as W-2 and 1099 forms to identify non-filers and automatically create a tax return for the non-filer.
...collected less than one-third of this amount, approximately $11 billion. The IRS abated about $10 billion (29 percent) of the ASFR assessments. However, it is not unusual for ASFR cases to have a high abatement rate because the IRS cannot make an assessment that includes exemptions, deductions, and credits that must be claimed on a tax return.
The Taxpayer Advocate Service also questioned the usefulness of the ASFR Program due to a low return on investment reported by the IRS Office of the Chief Financial Officer as $2.25 for every $1 spent. However, the ASFR Program serves an important purpose for balanced tax administration by addressing both filing compliance and payment compliance. For example, the cited ASFR return on investment was based only on dollars collected while the case was worked within the ASFR Program (up to the point the tax is assessed via a secured return or a default ASFR assessment); it does not include the subsequent revenue collected from balance due...
Recommendations
The Director, Collection, SB/SE Division, should:
Recommendation 1: Reassess the decisions to suspend the ASFR Program, including the reduction of TDI inventory and the reassignment of ASFR staff. The reassessment should weigh the benefits of processing other types of correspondence against the negative consequences to tax compliance, such as not pursuing high—net tax due nonfilers and the significant reduction in subsequent voluntarily filed returns.
Management's Response: IRS management stated that, while it is reviewing its overall nonfiler program, resource constraints resulted in their decision to suspend the ASFR Program. The IRS did not commit to taking corrective action on this recommendation unless resources become available in the future.
U.S. Treasury auditors gave the IRS a list of the 100 richest income tax non-filers, who each would owe the IRS about $100,000,000, and recommended to the IRS to go after these people for taxes.
The IRS is so broken, disorganized, lazy and irresponsible that the IRS refused to commit to going after these extremely rich high-income non-filers.
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Watch the videos below to stay aware.
You've watched the short 9-minute video.
Now enjoy the full 52-minute complete version!
"In a recent conversation with an official of the IRS, I was amazed when he told me, 'If the taxpayers of this country ever discover that the IRS operates on 90% bluff, the entire system will collapse!!!"
You have more power against the IRS than you realize!
In this presentation, Peymon Mottahedeh, Founder and President of Freedom Law School, shows how the IRS uses bluff to deceive you into filing 1040 income tax "confession" forms. The IRS is extremely weak and powerless to come after non-filers.
We will be short-staffed for the Holidays. If you encounter difficulty reaching us by phone, kindly leave a detailed voicemail, and we'll promptly return your call. Alternatively, you can contact us via email at questions@freedomlawschool.org.
