WASHINGTON — Today, Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL) delivered the following opening statement during a hearing on the 2015 tax filing season and general operations at the Internal Revenue Service.
"Welcome to the Oversight Subcommittee's third hearing of the 114th Congress. Today we will review the 2015 tax return filing season and general operations at the Internal Revenue Service.
"The American people have the right to expect excellence from their government—including the IRS. This is a standard familiar to ordinary Americans every day in their jobs and family lives, and it is a standard that is especially important in light of the tremendous power that they have delegated to their government to perform key functions and administer them fairly and effectively. Last week, the House of Representatives passed the Taxpayer Bill of Rights to make the rights of individuals the law when they deal with the IRS. One of those rights is the Right to Quality Service.
"Unfortunately, many taxpayers did not receive quality service this filing season. Many didn't receive assistance at all.
"For filing season 2015, the IRS reported that only 54 percent of taxpayers who called the agency were able to talk to a live assister. By April, the IRS estimated that the telephone level of service was less than 40 percent. Keep in mind that the IRS’s goal for customer service is 80 percent.
"Those who could get through at all had to wait an average of 34 minutes, over 15 minutes longer than last year. The number of abandoned calls increased by 1.3 million. The IRS also reported that as of April 8th, the number of 'courtesy disconnects'—a nicer way to say the system automatically hangs up on you because the wait time would be too long—had reached 5 million.
"The IRS has blamed the decline in customer service on budget cuts. But Congress didn't cut the IRS's budget for taxpayer assistance from 2014 to 2015. Let me repeat that. The amount of money Congress appropriated to the IRS for taxpayer assistance was the same this year as last year, but the level of service has decreased drastically. The Commissioner himself has said that taxpayer assistance this year is quote 'abysmal.'
"So what happened? The IRS made the decision to move money away from taxpayer assistance. The IRS has access to its user fee account, which includes fees collected for various IRS services. Last year, the IRS spent $183 million of its user fees, or 44 percent of the total user fee account, on taxpayer services.
"This year, the IRS only plans to spend $49 million in user fees on taxpayer services. That's $134 million dollars less than last year, a 73% cut. If the IRS had used that $134 million to answer calls for assistance, it could have helped 16 million people.
"At the same time the IRS was diverting user fees from taxpayer assistance, it was also failing to allocate the resources it already has available wisely. For 2014, the IRS spent $60 million dollars on performance bonuses for employees. In recent years, bonuses have been paid to more than 1,000 IRS employees delinquent on their own taxes. The FY2014 bonus money could have been used to answer 7.2 million additional taxpayer phone calls.
"The IRS also spent $23.5 million, and over 491,000 hours on union time in 2014. That could have been used to answer nearly 2.5 million phone calls.
"The IRS recently hired an expensive, white-shoe law firm to conduct litigation activities, with some lawyers on the account billing the U.S. government at over $1,000 an hour. This makes no sense, since taxpayer money already goes to pay the salaries of IRS and DOJ attorneys who should easily have been able to perform these duties. The IRS gave the law firm a $2.1 million dollar contract. That money could have instead helped 252,000 people resolve their tax filing questions.
"The IRS has also complained specifically about the impact of budget cuts on its enforcement resources. Commissioner, you've gone so far as to characterize these cuts as a quote 'tax cut for tax cheats.' But the IRS could increase its enforcement budget by over $100 million every year through third party debt collectors using authority it already has under current law.
"Sequestration has forced everyone to do more with less and make tough choices. But I'm concerned that the IRS, by its own admission, is doing 'less with less.' And the IRS's choices—and they are choices—on how to allocate resources have been deeply disappointing. They don't meet the reasonable expectations of the American people, and the IRS needs to do better.
"Finally, there is another issue that continues to be a matter of serious public concern—is the IRS auditing me because they don't like my personal views? Through this Committee's investigation of IRS targeting we found that senior IRS employees defied internal safeguards to decide who should be audited. As part of this fact-finding I asked the IRS to tell us: How many audits are started because someone inside or outside the IRS complains about a given taxpayer. The answer is startling: More than one out of four audits are started on the basis of internal or external complaints—that is—on the basis of the IRS's own discretion. What I want to learn is whether there are any meaningful safeguards in place to prevent the IRS from auditing people or groups that it does not like, or if taxpayers are simply at the mercy of the IRS under this enormous amount of discretion.
"The American people deserve excellence from their government, and they have the fundamental right to always receive fair service at the IRS regardless of their personal political views. I hope this hearing will give us an opportunity to further develop these important issues as we review the 2015 tax filing season."
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