Full Committee Hearing with Internal Revenue Service Chief Executive Officer, Frank J. Bisignano
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House Ways and Means U.S. House of Representatives
Follow its sittingsSpeaker 3
Thank you, chairman, and welcome, commissioner. I think that this administration owes the American people an explanation for the war that has been waged on the IRS over the last year. The chairman referenced 87,000 agents that had been hired. That request came from a Republican commissioner of the IRS. That's where the money came from.
People that I have known who have taken the job that you have, they have served the country with honor. Last week, we learned that a federal judge found that the Trump administration violated the law not once, not twice, but 42695 times when improperly sharing confidential taxpayer immigration information. Think about it. Forty-two thousand six hundred and ninety-five abuses of sensitive information that Americans entrusted to their government. Amazingly, consistent that a red flag was raised by our colleagues on the Republican side.
Tasked with overseeing the IRS and the protection of American data is the responsibility of this committee. With the 42,696th violation of the law raised a republican eyebrow. What will it take to finally get to the bottom about what has unfolded under their willful blindness towards the danger coming out of this administration? What we all need to be concerned about with the IRS, as was previously referenced, is that we are not to adhere to a Trump agenda at the IRS. We follow the letter and spirit of the law at the IRS.
America needs an IRS that serves them reliably, not one that is repurposed as a tool for this president or any other president. But it becomes clear that for our Republican colleagues, a functional, transparent IRS does not seem to be a priority. It won't blink as the president tries to sue the IRS for $10,000,000,000 while simultaneously being a champion of slashing the resources that help Americans, cutting direct file programs, which had a substantial approval rating, and saved taxpayers millions of dollars. More than 20% of the IRS workforce has been cut. Now the administration is papering over these self-inflicted failures by putting bodies in chairs with little processing experience for how to serve the customer.
With poor decisions piling up, wait times climb, calls go unanswered, I know what my congressional office is hearing back home, and Americans know exactly who they should blame. Meanwhile, wealthy tax evaders are celebrating as investigations into abusive schemes, listen to this number, have plunged by 65%. When refunds do come, more fractured, broken promises. The president promised the largest refund season in history, that's his quote, with increases of 1,000 dollars. But Republicans' own data now show that the gains for average Americans are much smaller than promised and are skewed once again to the wealthy, like their tax bill, and nonexistent for most households earning under $100,000.
The filing season data is showing increases averaging just about $350, a far cry from what the majority guaranteed. And over half a million people who have had their refunds delayed by the president are instead receiving an unknown, quote, letter. The Treasury refused to provide to this committee, not to mention that any modest increases are being wiped out by the tariffs that the president chaotically imposed, costing the American family an average of $1,700. When democrats ran the show, we made overdue critical investments that made filing easier, cut wait times, saved Americans' money, and recovered more than $1,000,000,000 from rich tax avoiders. Republicans have wasted no time reversing course in a campaign to dismantle the IRS' ability to function, leaving their friends at the very top and our president himself able to take advantage of these filings. This hearing and what we've watched on full for the past year serves as a reminder of what Republicans made their permanent tax cuts to billionaires to mean, leaving families with temporary gimmick-filled relief that won't combat soaring costs.
People understand this for what it is. So time and again, during my long tenure in this house, the IRS was a challenge. It was still a well-regarded referee in our tax filing system. All of a sudden, it became the enemy of the Republican Party as it relates to tax collections. A fair, transparent tax-collecting agency is essential to a functioning representative democracy.
And with that, Mister Chairman, I yield back my time.
Speaker 1
Thank you, ranking member. Today's sole witness is the chief executive officer of the Internal Revenue Service, Frank Bisignano. The committee has received your written testimony, and it will be made part of the formal hearing record. CEO, you have five minutes to deliver your remarks, and you may begin when you're ready.
Speaker 4
Thank you, Chairman Smith, Ranking Member Neil, and members of the committee. I appear before you today to discuss the tax filing season and the IRS operations. It's an honor to be the first chief executive officer of the IRS, and it comes at a time of historic tax relief benefiting seniors, working families, and children across America. I am grateful to President Trump and Secretary Besson for the opportunity to lead the transformational work at IRS. I am pleased to report to the American people that the 2026 filing season opened on schedule on January 26, and has gone smoothly so far.
Through March 2, the IRS received more than 55,000,000 individual federal returns and issued about 37,000,000 refunds totaling about $137,000,000,000. I come from the private sector, having spent 4 decades leading some of the nation's largest financial institutions. In every job, we consistently served our customers and navigated challenging times with good processes and plans. I also have deep ties to the federal government. My father was a treasury employee for 44 years.
He did customs enforcement, boarding ships, and making sure our ports were safe. I have great respect for the treasury's work and for the mission of the IRS. Since becoming CEO in October, I have worked with the management team to shape a clear, focused vision for the IRS. I recently put in place an organizational structure that created greater spans of control and eliminated layers of management to be closer to the excellent workforce. Now more functions report directly to me.
This structure will translate to better accountability, improved performance, and faster service delivery. To execute our vision, I have assembled an outstanding leadership team. I am confident they will help the agency deliver world-class service to the American people, a pristine control environment, all while driving a high productivity agenda. As part of our efforts to ensure a successful filing season, the IRS has been implementing the tax benefits of the Working Families Tax Cut Act. The tax relief enacted under this landmark legislation forms a cornerstone of the administration's growth agenda.
The tax benefit to individuals provided under the working families tax cuts is estimated to be $220000000000. The average American family is already seeing greater benefits than ever before. This is thanks to a few of the signature provisions of the Working Families Tax Cuts Act, including no tax on tip, no tax on overtime, no tax on car loan interest, and a special tax deduction for seniors. I applaud congressional Republicans for having a focus on a key element of the legislature, permanency. Thank you for your work.
Critical provisions of the Tax Cuts and Jobs Act were made permanent in the Working Families Tax Cuts, including doubling the standard deduction and increasing the child tax credit, domestic R and D expensing, expensing for capital investments, and the 199A pass-through deductions. These provisions are leading to an economic boom for American businesses, which directly impacts American workers. Another major provision we're implementing is the Trump accounts, a new type of individual retirement account that will provide families a financial head start for their children. The IRS is focused on making it as easy as possible to open and contribute to an account. Demand has been very strong.
The IRS has received over 2,000,000 forms 45, 47 already, with more on its way. Along with filing season and other day-to-day operations, we are transforming the agency. We are laser-focused on creating a digital IRS. The transformation is not just an operational need. It's a modern-day responsibility.
It allows us to better identify and address areas of significant noncompliance, provide taxpayers with 24/7 access to their information, and safeguard the sensitive financial data entrusted to us. To date, we have seen visits to irs.gov increase 43% over last year, coinciding with decreased phone service demand because the American public can do it the way they do many things online, when they want to. Our goal for taxpayers is our transformational efforts to create a seamless customer experience, where taxpayers can interact with the IRS with the same ease they expect from the private sector. We are building an IRS that leverages advanced technology, empowers its workforce with better tools, and delivers secure and easily accessible services. Mister chairman, I'm happy to take questions.
Speaker 1
Thank you. We'll now proceed to the question and answer session. With birth rates near historic lows, Republicans on this committee wanted to do everything possible to make it more affordable to start a family and the working families' tax cuts. The cost of adoption, for example, is estimated to be as high as $60,000, which is more money than many Americans make in a year. We cannot accept that cost.
It is a true barrier to giving a child their forever home. That's why Republicans gave more families access to the adoption tax credit and the working families' tax cut. Working class families who sacrifice to adopt a child into their home can miss out on the full value of the credit. So the working families tax cuts made a portion of the adoption tax credit refundable to ensure adoption is accessible to every family regardless of income. Mister Visignano, with refund season now in full swing, can you speak to how the IRS and the Treasury Department are working to implement the refundability of the adoption tax credit for families welcoming a new child into their home?
Speaker 4
Thank you, mister chairman, for the question, and thank you for your leadership. After reviewing this issue, I am pleased to announce that for tax year 2025, carry forward amounts of the adoption credit for prior years are refundable up to $5,000 per qualifying child, and the IRS is implementing this policy as expeditiously as possible without disrupting the current filing season. The IRS will publish additional information on this very soon. Taxpayers should continue to claim the credit as directed by the current forms and instructions during tax season since the IRS is pursuing post filing remedies to resolve this issue, sir.
Speaker 1
That's great to hear. We are currently in the midst of what is projected to be the largest tax refund season on record. Taxpayers are expected to see on average a 1000 dollar boost in their tax refund. This is putting more money back in the pockets of working families. It is not just the fact that working families are going to see larger refund checks, with refunds already 10% higher than last year.
We must also ensure that money gets into the hands of working families as soon as possible. What is your agency doing to make filing smoother for American taxpayers who are set to benefit from these historic tax refunds? And what, if any, additional efforts do you think are needed to ensure the working families of this country get the tax relief that they deserve?
Speaker 4
I'm proud to update the committee on a set of financial metrics and performance metrics. Of 55,000,000 returns received to date, 43% of them were with schedule one a. Schedule one are the four big provisions that we talked about. And when you look at that, the largest filings were for no tax on overtime. Right?
That's a statement about the Working Families Tax Cut Act. It's actually when we look at the distribution of it, our research and analytics group, which does all the reporting for us, right now, if you scheduled a schedule one a, on average, the refund increase is $775. Now we had talked about a thousand dollars, but the analytics group has a scale that shows by the end of this, it will be 1000 dollars. Bigger refunds, faster. If there was a direct deposit, which is in the high 90%, right?
And increasing, it's 9 days on average for that refund to get to the taxpayer. So I think what you're finding is bigger refunds, quicker refunds, and an easier IRS to operate through, right at this moment. We are statistically 40% through the filing season. 40%. We statistically get 160,000,000 a 140,000,000 during the season, and we have 55,000,000 today.
It is a very good indicator of how the filing season is going. Faster returns processed, and bigger refunds distributed. That's where we are right now, chairman.
Speaker 1
Commissioner, your answer leads to my next question pretty easily. To say the IRS is the least trusted agency in government would be a gross understatement when you talk to my constituents who I represent. If ever there was a part of the bureaucracy that could benefit from some private sector expertise, it is the IRS. The Ways and Means Committee has made it a priority to make the IRS more efficient, to better serve and protect taxpayers. Can you please share how you're applying your extensive private sector experience, managing global payment systems, to the administration's efforts to modernize IRS systems and processes?
Speaker 4
Yes. I appreciate the question. And, I've many years, forty years, whether it was in 911 and Lower Manhattan, whether it was during the financial crisis or, my major role in the recovery of the housing market with housing secretary Donovan. I went on to go run one of the largest fintechs out there, and we did 850,000,000 payments a day for 2 and a half trillion dollars a day. And it was all designed around a technology philosophy to make it easier for our customers.
And what you're seeing right now with the 43% increase we talk about in online usage is the technology being applied by a fabulous CIO who reports to me, who had been three levels down in this organization and promoted up and is doing an outstanding job. The career people in the agency are feeling highly motivated by something we like to call straight-through processing. Comes from the client, gets processed through the system, and ultimately gets an outcome for the client. The ability for our American taxpayers to go online and use the where's my refund function? That function's existing and live and well.
We are creating right now, and we are doing it on a double digit percentage of amended returns, a capability to take a process that took sixteen weeks in amended return to less than one, and that will be fully implemented by the end of this tax season. And lastly, you would be proud and happy to know what's going on in the department because all we are getting done is the planning for 27's tax season right now.
Speaker 1
Thank you, sir. I now recognize the ranking member for any questions he might have.
Speaker 3
Thank you, chairman. Mister Visciano, do you know when the IRS first entered into its union contract with the NTEU or its predecessor?
Speaker 3
Right. 1938. So that means for 90 years, the NTEU has protected hundreds of thousands of employees across the federal government. Without the NTEU, employees collectively lose their ability to negotiate, take legal action, and advocate for themselves. This administration certainly has declared the IRS to be a battle zone, as it cut the workforce by 20%.
By terminating the union contract, it makes it even easier to take apart the IRS. I think we differ on this termination. But I stand by my statement that the Trump administration cannot take away the hard-fought rights of IRS employees to unionize. We have always been and will continue to be an ally of the employees' right to organize. Do you wish to respond to that?
Speaker 4
I do, sir. You know, I treat our employees as they're our employees. I'm highly motivated by the work they do. And as I would like to remind you, my role model was a 44-year federal employee in the Treasury Department. He was an orphan, and I grew up in a multi-generational household.
He was a veteran, as was my immigrant grandfather who lived with us, who joined the US Army to become a citizen. So I understand better than most what it means to grow up in a federal household led by a federal employee. My mom was a working mom also. And what I like to tell you, having spent my career in the private sector, is that federal employees, under statute, under law, have greater benefits than any union in the world can provide for their people. Their pay is under the statute.
Their employment is under statute. Their benefits are under statute. Their time off is under the statute. Their promotions are under statute. I can go on.
So I would say that our employees work for the federal government, and they're proud to do it. They have these federal jobs, and I can attest to this being the son of a federal employee because of the benefits provided to them that no private sector union can get for their people, sir. Thanks. So they're losing nothing.
Speaker 3
So since January 2025, there have been numerous allegations that confidential taxpayer information has been leaked. We've had this discussion. It's substantial. What's the agency undertaking in terms of a response to the issues that have been raised by both sides of this committee?
Speaker 4
When I talk about larger spans of control and being closer to the workforce, we have functions reporting to me that never had the light of day in the organization. And I'll start with a risk management function, which we have a weekly risk management meeting to go through all the issues, inclusive of that cyber. So I think one, first and foremost, it's the first time in the history of the IRS that reporting into the office of the senior executive is a risk management function. Risk management's a primary job. It allows for preparedness.
A thorough review of all cyber is undergoing right now, and we are also doing outside reviews. We will, as I have my whole career, have private information, PII, as the foremost responsibility of this agency. It is a responsibility. I take it seriously. I've taken it my whole career seriously for the largest financial institutions in the world.
Speaker 7
Thank you, Mr. Chairman. And, commissioner, thanks for being here. We have similar backgrounds in a sense that I was in business for thirty years. But I also chaired the Florida Chamber. We had 130,000 businesses that were in that chamber.
And part of my job was to try to work with a lot of midsize and small companies. That's always been my focus coming up here. And people said, why are you so focused that way? And I said, because they're the job creators. Most of those 130,000 businesses weren't big companies.
There were quite a few that were. Most of them, 93%, were pass-through entities. And that's why I'm so excited about what we've got done on the tax front. And I know you would feel the same way. The corporate rates, what it is, what it is, but I'm excited about the idea of full expensing.
It's a powerful tool whether you're buying or selling. And then also, 199A is another powerful tool where you get some parity with corporate America in terms of reduction of 20%. Let me ask you, and you touched on it, but what I'm hearing back home in Florida is, they're very excited about no tax on tips, no tax on overtime, no tax or 80% minimal tax on Social Security, 80% reduction, and then no tax on interest on cars or whatever. But the point is, give me your thoughts just quickly, because I got another question after this. Wanna, in terms of where that's at.
I know you've hired quite a few people, but the big thing is they wanna make sure they get their benefit. A lot of them have, some of them are a little nervous about getting it. And I just wanna see if you could reassure them, that'd be great.
Speaker 4
Well, Daly, myself, as I've my whole career, and the treasury secretary review the stats of the IRS. And our most important stat is serving the American public, both what comes in and how quickly it goes out. And you heard me talk about building new technology, so items that took sixteen weeks, like an amended return, would be down to a week. I applaud your passion for small business. Through my career, I was the largest technology provider to small businesses across America.
And I understand, to me, it's the lifeblood of America. Right? And many small businesses are owned by an entrepreneur that, in fact, really is a risk taker because they're risking their whole family's income on their ability to operate. Let me. Our ability to deliver for them is so darn important.
Speaker 7
Let me just add to it, you know, because we always talk about the billionaires and all that. My wife's here today. We started a company together, two of us, and it ended up being a billion dollars. So that's America that I believe in, that anything's possible and exceptional from that standpoint. One of the questions I get a lot is in the past, is in terms of dealing with the IRS.
People have had struggles where they get a challenge from the IRS. And many times that could go on three or four years. You got legal fees. You got accounting fees. You got everything else.
What can we do to expedite or help push to expedite that, so people can get back on their feet quicker?
Speaker 4
of business people. I like to talk about the governance model, Sarah, that we're running the IRS under, which is a pretty consistent governance model. I'm gonna hit on one element of it. Obviously, the staff and I get together every week, two hours, once a month, all day, to go through everything in the agency to ensure we're delivering. Once a week, we look at for an hour and a half to two hours, the key operating indicators of the business.
And we have two levels deep coming in, representing their numbers. And we now implement aging. How old is the oldest item? And, you know, we talk about beating whatever the best record ever had, and then beating it again. I talked about the weekly risk meeting, and we look at every item we procure for over $300,000.
It's a government model designed to serve the American public. Most of the indicators are about how we are serving the American public. I look at them daily, and so does he.
Speaker 7
In terms of, I think I read something about you looked at hiring 5,000 people, or in terms of customer service. Is that what I understand?
Speaker 4
We seasonally bring in a few thousand people. K. And that is fundamentally what we do. Right now, we feel great about the staffing levels. Wait times on the phone are single digits, and that's a really good performance.
It'll compare with the commercial industry. And in fact, you know, like I said, 43% more transaction queries online, everything like, where's my refund? So we've hired staff, built new technology, and deployed other staff there to serve the American public.
Speaker 8
Thank you, Mr. Chairman. Mister secretary, thank you for being here, and thank you for the work that you're doing. You know, the IRS holds immense power over the American people, as you know. It can take your wages. It can freeze your bank account, ruin your credit.
But that power only works in a free country if it's exercised fairly and lawfully, and you know that. Americans are told the law applies equally to everyone, but that's not what we see right now. They're seeing working families chased over the smallest discrepancies in regard to their taxes, and they see wealthy interests with armies of lawyers slipping through the proverbial cracks. They see speed when the government is owed money, and silence when the government owes them money. And they see an agency that demands total compliance while failing to comply with the law itself.
A voluntary tax system depends on trust. And right now, I'm concerned that trust is collapsing with many Americans. The federal law prohibits the disclosure of taxpayer information without statutory authorization. Is that correct, sir?
Speaker 8
Yet the IRS transmitted the taxpayer data to ICE without proper authorization. Is that correct?
Speaker 8
It is. And a federal court has already found that those disclosures were unlawful. Isn't that correct?
Speaker 8
I'll help you. It is. And I'd like to enter into the record this court order showing that the IRS violated the law 42,695 times. Without objection. That's not a typo.
42,695 times. And it's not a paperwork error. It's a breakdown in leadership. What did you do, sir, to stop it?
Speaker 4
We don't, we're not gonna comment on current litigation. I talked about the risk governance.
Speaker 8
Okay. I'll move off from the litigation. Was anybody fired as a result of these 42,000 illegal disclosures? No, sir. Was anyone disciplined?
No, sir. Was anyone held accountable?
Speaker 4
I don't wanna debate the numbers. I don't wanna debate the item. I'm in a current litigation, and I'm not gonna go.
Speaker 8
Out and ask, won't we? Won't debate it. But I just ask that you ask yourself, why should Americans trust an agency that broke the law tens of thousands of times?
Speaker 8
I don't, I'm not asking for a response. Just, you know, I want you to ponder that. The largest portion of the tax gap, or the money that is owed versus what is actually paid, comes from high income earners. Do you agree with that?
Speaker 8
You're in a minority because most experts do. And those audits require specialized agents. We know that from the past work that this committee is doing. So when you cut staffing, those complex audits seem to be the first to go. Isn't that correct?
Speaker 4
We just settled a $2,000,000,000 one, sir. So I don't really think they're the first ones to go, but you can have your opinions.
Speaker 8
Looks like we all have our opinions, sir. But fewer audits of wealthy tax cheats and more scrutiny of working families, I don't think that builds trust among American taxpayers. And I wanna enter into the record this New York University tax law center report, documenting the shift that I just mentioned. Without objection. Thank you.
So the IRS violated federal law tens of thousands of times. Enforcement resources are moving away from the wealthy, yet the agency tells Americans, just trust us. Trust is not demanded. It's earned. Right now, the IRS needs to earn the trust of the American people.
Credibility and tax administration start at the top, and I think you have the ability to bring trust to the agency. I would hope that you would work with us to make sure that we can close that trust gap and that gap in money owed and money collected, and I yield back the balance of my time. Thank you. Mr. Smith.
Speaker 10
Thank you, Mr. Chairman. Thank you, Mr. Bisignano, for being here today. These are important issues that we are discussing. I think it's important to also note, as was indicated moments ago, that federal workers often work hard to do their job. The most worker-friendly thing we can do is pay them for showing up.
And when we have a significant number of federal employees going to work every day to keep us safe, incidentally, and we're telling them, we'll pay you later while we amass some political leverage here. I think those workers deserve better. The American people deserve better. And it makes me think about various federal workers who work hard to do the right thing, and the bureaucracy stands in the way. I think we should pay very close attention to hearing the messages that can oftentimes come from a federal worker who is suggesting better ways of doing things.
And that's why a categorical, call it an earmark of $80,000,000,000 that would have added more employees that would actually squeeze a lot of dollars, sometimes even without authorization, out of the middle class with more audits. At the same time, when I think there's common agreement that we want taxpayers to have better access to better service. And when the bureaucracy stands in the way, we should be concerned. I'm glad to have led the effort to put an end to the direct file pilot program, supposed pilot program. This program was launched without clear statutory authorization.
It overran projected costs and created a concerning conflict of interest by placing the IRS in the role of both tax preparer and tax enforcer. We saw troubling indicators that the program was not serving the taxpayers as intended. For example, individuals who use direct file receive refunds that average roughly $1,600 below the national average. We've even seen recently, some Democrats acknowledge that the Biden administration launched direct file without the authorization of Congress that we know was required. I was proud to lead the effort to put an end to the pilot program, and I certainly appreciate your team's work in helping bring that chapter to a close.
Now moving forward, we know that a free file, for example, is an option for the American people. That is an important distinction to make between free file and the direct file, previous direct file, as inefficient as it was. But looking at free file, I'm wondering if you can reflect a little bit how you view taxpayers having access to the free file program and what changes to various options you might suggest or are pursuing to expand eligibility or make these free file programs easier for taxpayers?
Speaker 4
Free file is used. It's well received. And I think what I am hearing across the board, I asked a question this morning to the national taxpayer advocate who actually, you know, publishes a report at tax season. And I asked a very direct question. How do you characterize many of the elements working right now?
And the national taxpayer advocate, who does not report to me, said it's going smoothly across the board. The outliers will obviously show up in other people's offices, and that's why we're here to help them through it. And, when I talked to the head of taxpayer services, he talked about the free file, its utilization, its use, and more importantly, the amount of trust the American public has in the IRS and their ability to do the right thing for the American public. We may talk about difficult situations, but by and large, the American public does trust the IRS in their matters by and large and free file, and the elimination of direct file fall in that category, sir.
Speaker 10
Well, thank you. I think, you know, millions of Americans would concur that your work is important, that collecting what is due is important, and that with today's technology, we should be able to see a future where taxpayers have more ease in paying their taxes across the board. But, in the interest of time, I must cut my other questions short. Thank you. Thank you, Mr. Daggett.
Speaker 5
Thank you. If you would, sir, just with a simple yes or no, tell us whether you have received either directly or indirectly any communication from anyone in the Trump regime suggesting that specific tax-exempt organizations should be scrutinized because of their political views. No. You have not. Good.
And will you commit today that under your leadership, the IRS will not initiate audits, investigations, or revocations of tax-exempt status based on political targeting?
Speaker 5
Just to be clear what I'm talking about, though, in that regard, The Wall Street Journal reported, quote, the Trump administration is preparing sweeping changes at the Internal Revenue Service that would allow the agency to pursue criminal inquiries of some groups more easily. So are they an error, and no such sweeping changes or any changes are being prepared there to use the IRS.
Speaker 4
I hope that you understand that every form of the daily news is not a bible. That's why I'm asking you this. Sir.
Speaker 5
Since. You've never heard that the Trump administration was trying to weaponize the IRS? 100% not. Then you're not familiar with President Trump's tweet specifically attacking citizens for responsibility and ethics in Washington or crew, asking that its tax-exempt status should be reevaluated? You didn't you're not aware of that.
Speaker 5
Very interested in ethics, so I was concerned about that. Let me switch then to the question of audits. As you know, the audit rates for large corporations have fallen about 70%, and of those making over $1,000,000, have fallen by about 50% over the past decade. Can you assure us that you will restore the ability of the Internal Revenue Service to ensure that our tax laws are implemented and applied to those who have the most power in our society?
Speaker 4
I've heard before a comment about the tax gap. I wanna be very clear in general of the objectives that both the treasury secretary and myself have. First and foremost, higher service to the American public. Second, higher collections. And then, third, privacy.
Right? We are here. And when I think about the tax gap and why, it's been reported for years, the tax gap. Right?
Speaker 4
We're doing analysis right now to understand what the reality of the addressability of the tax is.
Speaker 5
You don't do your job on audits, then you have a tax gap. But my specific, well, if
Speaker 4
You make compliance easier, we have countries that have higher compliance rates.
Speaker 5
I'm glad you recognize that job. And my question again, just so it will be clear, and I think I may get the numbers right. Over the last decade, the audits of large corporations have declined by 50%, and those earning over a million dollars have declined by 70%. And I'm asking you if you're going to restore those audit rates to where they were over the past decade. Are those people going to continue to be able to be assured?
Speaker 4
Gonna increase compliance. We're gonna increase compliance. We're gonna have an easier way to operate with. And we have 30,000 people working on compliance and
Speaker 5
Improve that, we'll be able to see that those audit rates rise to the level they were at, and that people that are at
Speaker 4
The top. There's nobody that told me ever, including yourself, that those were the audit rates that were standard audit rates. Let us go do our work the right way, and then we will get the right outcome. We will do that. You're asking for a commitment to a number that's never been proven to be the right number.
It could be bigger. It could be smaller.
Speaker 5
I'm asking you to treat those at the top the way you've treated those at the bottom, and we're not seeing audits.
Speaker 5
Fairness is equity. Equity. Appropriateness. Require dealing with those at the top the same way as those at the bottom, and that's not happening now. And I'm not assured from your answer that you're gonna raise those audit rates to a level where we will see the powerful treated as everyone else.
Thank you very much.
Speaker 13
Thank you, Mr. Chairman. Mister Craig, thanks for being here today. I can't imagine anybody wanted to head up the IRS and the head up Social Security. And as the old saying goes, the beatings. It's
Speaker 13
Yeah. Well, the beatings will continue until morale improves. I can just tell you, coming from the private sector, the greatest fear we always had in our business is that we weren't in compliance with something or other, and there's a lot of people in and out of the dealership that I don't pay. The taxpayers pay them to come in and do audits on us, so I understand the importance of audits. If you could, because in the beginning when you did your introductory piece.
So for years, we would have commissioners of the IRS come in. We never had anybody that had come from the private sector with the experience you have. When you talk about Fiserv, the largest financial service and payment technology company, I am really glad that somebody like you decided to step out of the private sector that was much more comfortable and much more profitable, by the way, and to step into this and try to get it straightened out. There's nothing more feared in this country than not complying with the IRS, because they can completely shut you down. In fact, I have a friend of mine who spent over $3,000,000 so far defending an IRS investigation.
He's, these are legal fees, which he'll never recover, but we're still working on it with him. And I will work with you on it because I know I'm glad to talk to somebody from the private sector. I really believe that nobody should be in public office unless you had experience in the private sector where you worked on commission only, and you lost your job at least once through no fault of your own. That's the only thing that really matters. And I get the idea that the rich don't pay their fair share, when you look at the percentages, thank god for the rich because they pay an awful lot.
During the financial crisis, which you talked about, if you could, I just wanna go through this. So earlier this week, the IRS published its Schedule 1A and Form 1040 instructions for middle class taxpayers that can utilize to deduct amounts for tips, overtime, car loans, and enhanced deductions for seniors. This is an incredible boost to the hardest-working people in the nation. So this working families tax cut, it helped everybody. If you could, can you just maybe expand on that a little bit more and the fact that people get to keep more of their own money than they ever have before?
Speaker 4
Yeah. I mean, landmark legislation. And I give everybody a ton of credit, obviously, the president, but, you know, obviously, everybody here had a role in it. Let's just think about it. No tax on tips.
No tax on overtime. No tax on car loan interest. New tax deductions for seniors. Trump accounts, we have over 2,000,000 forms, 45, 47, and over 3,000,000 dependents right now. Right?
Expensing for qualified factories. And then I think the permanency matters a real lot. Domestic R and D expensing, expensing for capital investments. Right? 199 a.
You and I talked about small businesses. Right? Pass through, you know, EBITDA standard, double standard deductions, child tax credit expanded and permanent, opportunity zones, you know, protecting the 21% rate. It's fueling the stimulus. What I think everybody has to recognize also is that $775 was dominantly a $100,000 and under AGI.
But they also have a lower withholding this year, and are getting a double benefit. The benefit of a tax return that wouldn't have happened without the Working Families Tax Cut Act, and the benefit of lower deductions right now. I think we're gonna see the long term effects of this, and I commend you guys for your hard work.
Speaker 13
Well, I will just cover this with you because I'm still in the private sector. A gentleman named Thad Gazo runs our service departments. And I was saying, talking to him, I said, hey, Thad. We've got to get the guys to come in on Saturdays so we can pay them time and a half or double time. We've got work in the back that needs to be done.
And he said, Mike, are you kidding me? Because when they work overtime, they look at that and say, you know what? It was better for me if I didn't work overtime. By the time I get done paying the other costs that are involved and with my family at home, I can't afford to come to work and work overtime because I get taxed so heavily on it. We had the most upside-down incentive for people working overtime, and it comes down to the seniors that have worked their whole life.
They get to keep more of their money. There's so many things in this bill, the family taxes bill. This is an incredible boost to the morale of the American people. And I will tell you this. I appreciate.
I looked at your resume. What in the hell were you thinking to step out of that role and come into this jungle? And you're gonna get the living crap beat out of you no matter what you do, good or bad, and we'll go back and drag up things that happened before and say, oh my god. This is horrible. And it depends who it is that's sitting in the White House.
If we could work together on things that affect the American people, and I'm talking about strong policy that allows hardworking American people to keep more money in their pockets for their families. So I wanna thank you for stepping out of where you stepped out of, the way in the world you would do that, Social Security, and the IRS. My god. You're never gonna be able to finish the complaints on it. But I appreciate what you're doing, and I especially appreciate the staff that works every day to get this done for the American people.
Mister chairman, I'm sorry to go on, but I can tell you what. This has never, in the life that I have as a private sector person, seen the results of this and the incentive now for hardworking American people. They wanna work overtime cause they get to keep the money. They don't have to pay it to government. They're able to actually put it back with their family.
So.
Speaker 4
Twenty fourth and twenty sixth off. And, given the fact that we had a shutdown and that was a hardship for a lot of our people, we gave them the opportunity to volunteer and come in. And in fact, I believe because of what Congressman Kelly said, the change in tax status on overtime, we had volunteers come in and work on the 24th and 26th, serving the American public when it never happened before. So that's about the morale of the people and the good work done here. So I just think it's important you recognize we have people volunteering to come in, get overtime, and serve the American public on days that are considered holidays.
Speaker 14
Well, thank you, Mr. Chairman. And, commissioner, thank you. And, I always like to follow Mr. Kelly. I think a number of the things that he said have great relevance, including your integrity and resume, etcetera. And I appreciated the meeting that the chairman organized with me and Mister Neil and yourself.
But I wanna pick up where mister point that mister Neil was making earlier. Before I do that, I'd like to submit for the record, Mister Chairman, the Borges whistleblower report. The DOJ amended court filing, and the IRS fiscal service defied judges, terminated union contracts, which is where.
Speaker 14
Where I wanna go, starting with that. And you seem to, in your answer to Mister Neil, say, well, they don't need this. It's in the statute. So my question to you is, the Social Security Administration, their employees, expect that their union contracts will be terminated as well?
Speaker 4
I'm the CEO of the IRS in this hearing, and I'm not if you wanna have a meeting on SSA, you know, I'm always wanting to have it with you.
Speaker 14
Alright. I get the answer. And well, but my grandfather Nolan, as we get close to Saint Patrick's Day, always says, you know, trust everyone, but cut the cards. And so I would like.
Speaker 14
And we need to reshuffle a new deal as a matter of fact, and FDR would appreciate the reference. But, also, I wanted to ask you, will you turn over to this committee the Doge information that they gave to an outside political source to alter elections? Now I realize it might have happened before your watch, but Social Security has that information.
Speaker 4
If you wanna talk about Social Security, come see me anytime you wanna talk about Social Security. There's an IRS.
Speaker 14
That's a no. So, mister chairman, would you commit to subpoenaing this information? I would think that everybody on this committee would want to know when your personal data and information is being poured over by outside groups that are unaccountable, have never been vetted, and are in these agencies currently and have this information that they have given to outside sources. I'd also like, mister chairman, to get the whistleblower before us as well. My god.
We were all upset, and we made sure that Hillary Clinton's emails and Hunter Biden were top of the list. We had to make sure about that. But when it comes to the American people and the data and information that is gone through by DOJ employees and then distributed to outside people? Does anyone on the other side want to investigate or get to that, or is this just something we let fly? The commissioner's not gonna answer because he's gonna say, well, look.
I'm here to discuss the IRS. And if you wanna meet with me privately, aka, that's called the Tuscaloosa two-step, he's not gonna answer the question, and I understand that. But, hey, it's not about answering the question. It's about the integrity of this committee. I commend the chairman.
He brought him in to talk about these things that have been ignored by the committee, that have been ignored by the agency in not addressing this. But as members of this committee, we have a responsibility to the American people, especially as it regards Social Security, the number one anti-poverty program for the elderly and for children. I get calls all the time in my district from people saying, what have they done with my information? Who has my information? Is it in a cloud?
What does that mean? It's in a cloud. Is it insecure? What happened? And why is it that we can't get the names?
This was the Trump judicial department that indicated that these people fraudulently gave private information of the citizens of The United States to an outside source who was using it to alter elections. That doesn't interest any of you on the other side. It sure does interest the American people, and we need to continue the integrity of this committee by calling forward these individuals. Mister chairman, I hope you will subpoena them. I hope we will lift, you know, a resolution of inquiry.
Are you guys gonna suspend that again so that we can't call witnesses before us? Thank god, at least the commissioner was here.
Speaker 16
Thank you, Mr. Chairman. Mister Bisonado. Okay. Going back to 2017, when we were working on that, we actually had a dataset that basically said simplification was the most powerful thing we could do for taxpayer compliance. In that since that time, I cannot tell you how many meetings I've had with your technical staff because I'd love to have the conversation where we're not gonna argue tax economics right now, efficiency.
I just wanna talk about management with you. You know, you have this actually pretty impressive resume of technology, moving money, those things. How do I help you get the IRS off of its own servers? It's absurd, when you actually still have that audit from a few years ago that your server farm, and what is it, West Virginia, the floor is sinking in. Get you know, if the Pentagon can use encrypted cloud, why can't you?
The technology that grandma can call a phone number. It's actually an AI, but it is beautiful and smooth and stays on the phone with you and will help you fill out your paperwork and text you the YouTube video of how you do it, the PDF of the form. We'll stay on the phone with you all night. That's not cutting-edge technology. That's three or four years ago now.
I appreciate all the statements and the written testimony of you actually, for the first time, used the word AI and things like that. We're in a time of revolution. If my brothers and sisters up here want compliance from the wealthy all the way down, why can't I have my taxes on my app? Why can't I have something that interacts with me? This isn't cutting-edge technology.
Help me. Help me understand what I have to do as a policymaker to stop having more meetings with your people that tell me, oh, that would be hard. Our union doesn't like that.
Speaker 4
Like hard. Right? I think our job is to make hard look easy. Right? Great athletes make hard look easy.
Great leaders make hard look easy. I'm happy to come visit you because I'm sorry that you spent so much time with people who told you you couldn't, and I will tell you we will. We're five months into me being in the job, and you're seeing 43% more queries online. We're talking about 40,000,000 more. I understand.
Right? And so that's the beginning. And I'm happy to partner with you. I'm happy to do anything in the world to make it easier for the American public to file their taxes, to get served by us, and to increase compliance. And the only answer to that that I know through my whole life is technology is the great enabler.
Speaker 16
It look. You just nailed the language. Now we need the execution, because I've been making an argument to our fellow members here. It wasn't about sticking bodies in chairs. It was the adoption of the technology that makes every American taxpayer's life easier.
And, you know, I'm tired of the references saying, you know, we have technology going back to the 50s and 60s. You don't need to go find a Fortran coder anymore. You have these things, you know, translation, you know, the translational, you know, bolt-ons of AI can just take the code and put it into whatever the hell you're using. And you run them in parallel for a tax season, and you know you're safe. It's not like it was just two years ago.
Go hire some data scientists that are revolutionaries and bring us into this century. And there's a handful of us up here that believe that's both moral, incredibly efficient, and actually would dramatically raise compliance. And if coming and having another meeting with our team, great. But maybe I should set up meetings with, you know, AI coders for you.
Speaker 4
Sir, I've overseen the largest technology organizations in the world. JPMorgan, Citigroup, both in times of change. Number one function we had in my last company was software developer. We were a third of our employees were software developers, and we had thousands employees. If you wanna give me some resumes, I'm happy to have them.
But I know how to recruit technology talent. My point.
Speaker 16
is, but my point is you and I grew up in a time where we hired a team, you know, to.
Speaker 4
Not anymore. I'm still not done growing up. Okay? Because I'm transforming. We're not modernizing the IRS.
It's not a word I use. We're transforming the IRS. And we can only do it through advanced technology, and that will increase compliance and simplification. And you should expect '27 to be far better than '26, and '26 is far better than '24 by a boatload.
Speaker 16
Look. I'm a big fan of everything I know about you. Let's let the revolution of making people's lives easier and better, and do this better, faster, cheaper, and more accurate. Thank you.
Speaker 17
Thank you, mister chairman, and thank you, mister Bizignana. I thank you for confirming that the pre-2025 carry forwards qualify as refundable in 2025. So, thank you. I also wanna thank Paulette Lowe with taxpayer services, the office of tax policy, and Robert Chapman in ledger affairs for their careful implementation of the partially refundable adoption tax credit, and also the amazing experts at the joint committee for all working to make this possible. I'm also deeply concerned that the Internal Revenue Service has delayed over 530,000 refunds this year to date by requiring a bank account, especially knowing that these taxpayers are likely the individuals who need their refunds the most.
So first, could you please provide me and the members of this committee a copy of the C5CP53E note being sent to tax filers who do not provide bank account information?
Speaker 17
The IRS website states, if you don't respond to the notice, we will issue a paper check after six weeks. So for taxpayers who don't respond to the latter, their paper refunds are delayed at least two and a half months, which is thirty days for the latter plus six weeks, according to the website. So for individuals who do respond, when does the six-week clock begin to tick for them to receive their paper check?
Speaker 4
Well, I will go back and look at the whole process, sir. Right now, if you have direct deposit, which is, you know, fundamentally more than 98%, we're doing that within nine days. I'm positive that the six weeks was decided quite some time ago, and we'll go look at the whole process.
Speaker 17
Thank you very much, Kurt. I also would like to receive the state-by-state data because that helps me, and I think it might help other members know where these people are located and how they can be more effective trying to do outreach to them.
Speaker 4
I'll go find out. I'll go take a look at it, sir, and I'll come back to you.
Speaker 17
Alright. Thank you very much. And, also, before closing, I wanna praise the work of the Chicago office of the taxpayer advocate service under the leadership of VZ Olombaru Milo, Katrina Britt, and Fred Tavares, who have professionally helped two of my PEO constituents on their ERC claims for 3 and 2 years, respectively. I also wanna thank Richard Jones, Andrea Dunlap, Nicole Nandigapua, James Griswadz, and Anna Alvarez who've all done great work for us in the Chicago region. And, mister chairman, I would ask unanimous consent to enter into the record the Tax Notes article, which is an excerpt from the IRS website about the delayed refund.
Without objection. I thank you, mister chairman, and you're back.
Speaker 19
Thank you, Mister Chairman, for having this hearing today. Mister Bisignani, great to have you here. I've said this before when we've had conversations. Grateful for your private sector experience, your business experience for a lot of years, and bringing that to this job, I think, is immensely beneficial. And I would just continue to advocate to you to not shy away from your experience in the private sector.
There are plenty of things you could be doing in your career, besides being the CEO of the IRS. And so we're grateful, and I'm sure your wife probably wonders that too, on why you're doing this job. But we are grateful that you've stepped up and taken on this role, and wanna compliment you on that in a very, very, very difficult job that you have. Before I get into my questions, I do just want to acknowledge, obviously, the importance of constituent service and the role the IRS plays for my office but for every member of Congress. And, one area particular for my office is to work on IRS casework.
Over the last year, we've helped 108 constituents recover over $13,000,000 owed back from the IRS. One specific example was the recovery of 3,700,000 from the IRS to one of our service agencies in my district that provides direct care payments to persons with developmental disabilities. Again, proud of that work and working with the IRS to do that. The title of today's hearing, mister CEO, is 2026 filing season implementation of the working families tax cuts and the Trump administration's priorities for the IRS. For most Americans, the clearest sign the system is working for them is the size of their refund.
And as of February 14 of the 2026 filing season, the average refund amount is up by an impressive 14.2% over the same point as last year. And the average direct deposit refund is up 13.1, meaning families are seeing noticeably higher and larger deposits hit their bank accounts compared to 2023. From your vantage point, what factors are driving these double-digit increases in average refund and average direct deposit refund amounts so early in the 2026 filing season? And what does that signal about how the working families' tax cut and other reforms are reaching middle-class households?
Speaker 4
Well, today with 55,000,000, almost 56,000,000 returns already submitted. And when we calculate tax filing season and we decide that's closing on the fifteenth, we're 40% through the volume. And, really, the systems have held up extraordinarily well, and the people are doing an outstanding job service in the American public. 43% of those returns have a schedule one A, and therein lies the answer. Right?
No tax on the tip. Overtime, no tax. Senior deductibility. No tax on car loans. You know, what I find so encouraging, and many of you have talked about this already, is the fact that the largest filing category is no tax on overtime.
Right? Congressman Kelly talked about it. I talked about it for our federal workforce. We're encouraging hard work here, also. And then, you know, I think, probably the largest economic benefit at the moment is the senior deduction.
Right? The ability for them to have that deduction. But all of this is putting more money into the system, more money in people's pockets. I like to say higher refunds, quicker refunds, and future deductibility. So they're also seeing the benefit right now in lower deductions because of these benefits.
So I think you guys have done an outstanding job in getting what is landmark and cornerstone legislation. The American public are feeling it really deeply, and, we're really surprised. President's Day weekend is supposed to be this huge call volume weekend, and it didn't amount to itself because we have 40 million more online queries. We have the ability for everybody to go online to my where's my refund and find out where it is. So the American public is getting served better while they're having quicker refunds and bigger refunds.
And I will tell you at 100k and below, you know, that's fundamentally today, you know, performing at a level of putting hundreds of dollars into their pocket. And at $7.75, as the current increase in refunds, $7.75. And like I said earlier, our research and analytics group trended it out from where it started to where it is, and it holds up to a thousand per refund, gonna be higher this year.
Speaker 20
Thank you, Mr. Chairman. Mister Bisignano, as you sit before us today, President Trump's understaffed, underfunded, and corrupt IRS is already backing down on its promises. Americans won't see the $1000 refunds that they were promised. They can no longer use direct file, and they risk having their sensitive data shared illegally with other agencies. A United States district judge found last week that the Internal Revenue Service violated federal law 42,695 times when it shared confidential taxpayer addresses with immigration enforcement officials last summer.
There have been two injunctions by federal courts ruling that the IRS illegally shared private taxpayer information. And I would like to ask you how the IRS is handling this issue. Is the IRS currently sharing or planning to share any taxpayer data with DHS or ICE?
Speaker 4
First and foremost, as I said before, we have current litigation going on, and we're not going to comment on current litigation. I also have law that says we have mandatory responsibilities on some of these issues to share data. And those are legal statutes that are responsible attorney?
Speaker 20
Don't talk over me. Then let me share some information with you, because there are three court cases concerning the unlawful sharing of sensitive data from the IRS with DHS and ICE. One of them said facially a member about a memorandum of understanding that you could share, but only in specific cases, not a broad-based grant of power for the IRS to share that sensitive information. And, in fact, two courts have upheld injunctions saying that the IRS cannot share in a broad-based manner sensitive taxpayer information. So my question to you is, has any taxpayer data been shared with DHS or ICE since 11/21/2022?
Speaker 4
I don't know of any. And once again, we are in the midst of a litigation, which you keep referring to, and we're not getting any comments.
Speaker 20
Litigation, but two court injunctions have been upheld because section 6103 permits data sharing only with law enforcement officers who are directly engaged in a specific criminal investigation. Again, as I've stated, it is not a broad grant of authority to share thousands of people's sensitive information. The Fitzgerald declaration filed in CDC versus Besson in the Massachusetts district court showed that multiple different ICE employees had access to this data and that they compared addresses against those individuals with removal orders. And last month, the Massachusetts district court enjoined ICE from acting or even viewing any of this illegal data. So can you identify since this data has been shared, and the courts have found that it should not have been, can you identify even one individual criminal investigation that was being conducted by the officers who received that data?
Speaker 20
From the 47,000 records that were shared illegally. Any prosecutions? I think the answer is probably no. A few weeks ago, I led my democratic colleagues in requesting an investigation into this issue by the inspector general of tax administration, and they are now in the final stages of their investigation. So I guess we will find the answers to these questions, and those who are responsible for illegally sharing this data, hopefully, will be held accountable.
Because when taxpayers file their tax returns, they don't expect the IRS to take that information and share it with people that they're not authorized to share it with. And with that, I yield back the balance of my time.
Speaker 22
Well, thank you, Chairman Smith, and welcome, Mister Buzzignano. As chairman of the social security subcommittee, I appreciate our work together on the social security side of your portfolio. But, you know, currently, we're in the middle of the tax season, which is the first one since the working families' tax cuts, which is a monumental shift for American taxpayers. In Kansas, folks in my district are finally seeing the benefits we fought for. No tax on tips, no tax on overtime, the $6,000 senior tax deduction, and so much more.
Thanks to the working family tax cuts, 94% of my constituents in the 4th District of Kansas are having an easier time ever filling out their taxes due to the boosted standard deduction. Average refunds are expected to rise nearly $1,000 compared to last year, with the middle class getting the largest relief of any income group.
Speaker 22
AARP estimates that seniors will get an average refund of $1,320 from the senior tax deduction. You know, not too long ago, my Democrat colleagues funded acres of IRS agents through their Inflation Act. This bottled-up tax returns with audits and errors harming working families in Kansas and across the country. You know, I continue to get questions about why individuals 2022 or 2023 or 2024 returns were so slow in getting back and being processed, which was hampering individuals and businesses and what they were doing. But now under President Trump, the IRS is focused on what matters most to American families: quick and accurate returns compared with reliable customer service.
Critical component of the improved services modernizing the agency to provide taxpayers with a better experience with the IRS. Specifically, the IRS is enhancing taxpayer services by upgrading technology to modernize systems with AI integration to do more for taxpayers and by helping staff be more efficient. These changes already show significant improvements in IRS operations. In 2025 tax year filing statistics, the IRS has been able to process 2,300,000 more returns when compared to 2024 under the previous administration's bloated budget. Early 2026 tax filing data showed that President Trump's IRS is building on last year's success and continuing to improve the taxpayer experience.
The provisions in the working family tax cuts have and will continue to provide so many benefits to the American taxpayers, and it will be extraordinary for years to come. I'm honored to be part of the committee and to join in on this important conversation on how to celebrate our successes and look at what we can do more in the future to bring affordability back to the kitchen table for so many Americans. CEO Visignano, for years, CAO and others have warned that the IRS has been running the tax system on outdated technology dating back to the 60s and 70s. Maintaining this patchwork is expensive. Independence analysis noted that in 2024, the Biden IRS wasted over $39,000,000 just to keep 34 legacy systems on life support.
GAO has repeatedly cautioned that such legacy environments drive security risks, staffing problems, and higher long-term costs. In sharp contrast, under President Trump, the IRS has cut roughly $2,000,000,000 from its 2025 IT budget without operational disruptions, just signaling how bloated the prior spending has become. Can you walk us through the process for retiring this decades-old legacy system, and how are you prioritizing modernizing systems so that the biggest risks and most taxpayer-visible systems are addressed first?
Speaker 4
I've had the benefit of spending a fair amount of my career overseeing financial services technology, and, you know, I've spent a lot of time converting systems. I could honestly say, my family would attest to it. Never had a three-day weekend because back in the day, three-day weekends were times to convert systems and retire systems. And, I will tell you our technology leadership, our CIO is very strong. And we've moved from this concept of modernizing to transformation, because modernizing will just get us the next legacy system.
And so you could think about it in a set of components. The most important thing is for our clients, our overseers, not to actually know this is going on, but get the benefits of what today's technology afford, which is much better than three years ago. So, there's a 10-part plan. The plan is being executed against, that we will be retiring systems, and we will be running more modern modularized systems. The client facing elements of this to me are the most important things, and those are the ones that we're getting the benefit of now.
And that's why you hear me talking about our ability to do an amended return, which took sixteen weeks, and do it in a week, to be able to do 43% more volume and actually have it cost us less. And that's why you hear me focused on procurement, because we buy a lot of technology, and we need to be smart. We need better partners. I also was surprised by this. For the first time, someone called the heads of the tax preparers and said, we need you to do a better job for us.
And they said, love to. And this is really the our taxpayers deserve a seamless experience from whether they're doing it themselves on free file, whether they're using one of the preparers, and there are many preparers out there, straight through to us, and everybody having the same communication. So I think that's what you'll see as we talk about preparing for the '27 tax season, a completely different approach.
Speaker 22
Well, thank you very much for being here. I yield back, Chairman. Miss Sewell.
Speaker 23
Well, congratulations, sir. I understand that you're before this committee as the chief executive officer of the Internal Revenue Service, which is a newly created position by President Trump. Sir, do you believe that the American people deserve a leader of the IRS who has been confirmed with the full trust and competence of the Senate? Yes or no? Simple yes or no.
Speaker 23
I'm reclaiming my time. I believe that this is very important. The confirmation by the Senate is very important, which is why I asked the question. You know, it's important because I believe that it goes to the legitimacy, oversight of the role, a very important role that you play. And so my concern, a role that has been duly created by the president, is whether or not that new role has authority and is constitutional.
And so I think it's really important, sir, that you be confirmed. Now, having said that, I'm gonna move on. The White House celebrated the one big bill and said that taxpayers could expect refunds to rise by an average of 1,000 dollars or more this year. While we know billionaires and millionaires are very happy with their tax breaks, I've heard from my constituents, and they're getting back much less. Right now, the average refund is only up by $350, and that's the 14% that my colleague referenced.
If you also consider the fact that Trump has illegal tariffs and those are taxes on the American people, my constituents have costs and the average American family has costs that are around $1,700 just because of the tariffs alone. Now when you add on that, this many of my constituents are on the ACA, and we did not extend the ACA tax credits. That's even more money out of their pocket. While Trump and his family are expecting a $10,000,000,000 windfall from the IRS, from their lawsuit, if Trump is successful in his lawsuit, he will take 10,000,000 no. Billion with a b, from taxpayer funds.
Sir, do you know how many times larger that number is over the average American person who gets a refund of $350? Well, good. I can tell you. Trump and his family will take home 28,500,000 times more than the average American family will get back from the IRS this year. This corruption is what we are talking about when we tell the American people that this president is on a power trip to achieve more personal wealth than to help the American people.
I also serve as the ranking member of the subcommittee on oversight, and I take that duty very seriously. The level of quality assistance and the degree of service that my constituents and our American public deserve from the IRS is incredibly important. While costs continue to rise and massive staff cuts are occurring at the IRS, I am incredibly concerned by the report that President Trump and his allies are using an already limited resource to weaponize the IRS criminal investigative division, and to intimidate, attack American taxpayers. I wanted to follow up on what my colleague, Lloyd Doggett, initially started. I really am gonna ask the question again because I think it's important.
Has the president or anyone from the White House asked the IRS to audit, investigate, or prosecute any taxpayer or organization?
Speaker 23
Has Secretary Bessent or his staff made any similar requests? Never. I know that the IRS has procedures in place to help ensure that politics doesn't improperly influence criminal probes, and the internal revenue manual specifically states that the chief counsel's office should be involved in these cases to reduce the possibility of political influence. Since president Trump was sworn into office, have there been any attempts by the IRS to change the internal revenue manual to reduce the power of the chief counsel's involvement in criminal cases? Yes or no?
Speaker 23
Sir, you have a very important role that you play, and it does concern me that you not only have that role, but you're also a commissioner of the Social Security Administration. Both are critical roles that so many taxpayers, especially my constituents, depend upon, whether that's managing the tax code or providing benefits for seniors so they can live in dignity. These are important jobs. I want you to be successful. I want you to hear me say that, but I am concerned that the refunds and the delays on these refunds and the myriad of questions that people get regarding their bank accounts has been quite confusing.
I can say that the call volume in my office has increased exponentially because of it, and therefore, delays have increased. And so I hope that you can do something about that. And as I, I wish you much luck in your role. It does concern me that your role has not been Senate confirmed. Thanks.
I yield back the.
Speaker 26
Thank you, Mr. Chairman, for holding this hearing. Thank you, mister Bizigano, for testifying today. Thank you for being willing to take on this role, and I know others have mentioned it as well. I think you bring exactly the kind of experience we need to an agency that badly was in need of an overhaul, an improvement, and a transformation as you put it. You know, I think every, excuse me, member here has constituent service individuals.
And, basically, you know, I have several on my staff whose sole job is to step in when agencies are not doing the work that they should do serving our constituents. And the IRS has always been one of our top agencies. This will be individuals who've been waiting for a refund for years, sometimes thousands of dollars, waiting for years. And I somehow believe that, under your leadership, we're gonna see a big reduction in that. I think we're seeing improvement already, and so I'm very grateful for your work.
I do wanna mention, just highlight, and mister Estes covered some of what I had intended to say in regards to the one big beautiful bill that we passed. And I just wanna remind folks of some of the benefits, but the most important was it would have prevented what would have been the largest tax increase in American history. Roughly 22%, tax increase for the average American family would have been the equivalent, on average, of about two months worth of groceries. The child tax credit would have been cut in half, and draining dollars from budgets and wallets when households were still feeling the impacts of the tremendously high inflation we saw under the previous administration. I also wanna remind folks that not one Democrat voted for this bill.
And I appreciate so much the leadership of Chairman Smith in bringing this bill, keeping Republicans together, and passing this bill. I find it really interesting today. Democrats are complaining that the increase in refunds that we're seeing, I heard Miss Sewell just say, is on average about $350. They're complaining that it's not as high as maybe we think it is. But I wanna remind folks that had they had their way, had we not passed this bill, the refunds would have been much less.
Individuals' families would have seen a 22% increase if Democrats had accomplished what they wanted to accomplish in killing this bill, resulting in the largest increase in a tax increase in history. So tax refunds up nearly 9%, and your figures, I think, are showing around $3,800 on average as of last week. I think your point, mister Bisganano, about the importance of small business to the health of our communities. And so, specifically, the provisions in the tax bill that affected small businesses, like the 20% deduction on the 401k. That would have gone, or I'm sorry.
On the k one, that would have gone away. And then we brought back growth provisions like expensing of research and development, really important to a lot of businesses in my area. The full expensing for capital expenditures, the full expensing for structures for manufacturing, these were already seeing the impact. But I guess I was wondering, what are you seeing specifically in regards to the reaction to some of those growth provisions in the bill? Wonder if you could talk about that just briefly.
Speaker 4
You know, as I said, I called the largest tax preparers, CEOs who run them. I wanna know two things. You know, one, how are we performing? Right? And interestingly enough, they it's a person.
So we get a lot of phone calls, and we're telling them this is going as well as anyone could have expected. Remember, there were a lot of pundits out there saying IRS is going to fail. There's a large implementation. There's the Trump accounts. There's less staffing, and they have old technology.
We're 40% through the tax season, and we hear in every corner that it's going well. But the second thing they say is how beneficial the new enactment was, and the permanency was. And they say it especially for small businesses, and they say it especially for people making it under 100k. So I use the taxpayer advocate as a form of input. I use the organization as a form of input, and I use external constituents who are embedded in the daily business of preparing tax returns.
And I think we've done a good job across the board. This committee and the execution.
Speaker 26
I'm running out of time, and I know I talked for a while. But I'm just excited to see the impact on investment in businesses over the next few years as a result of the bill. I'm excited to see how the IRS is going to transform. I know already last year, 2,000,000,000 I think it was $2,000,000,000 less in your budget because you're leveraging technology, and you're gonna continue to do that. So, again, thanks for stepping up.
Thank you, Mr. Chairman. Miss Delbene.
Speaker 27
Thank you, Mr. Chairman. Thank you, mister Bisignano, for joining us today. I am deeply concerned that you don't take the responsibility to protect Americans' taxpayers, their sensitive information seriously. Under your leadership, you allowed the IRS to violate taxpayers' privacy tens of thousands of times. It's been mentioned before.
This is a catastrophic leadership failure, and it also really is a huge hit on the public's confidence in your agency's integrity. You told ranking member Neil earlier today that you have implemented a risk management function that includes risk management meetings that discuss cyber policy. Unfortunately, this issue wasn't caused by a cyberattack. It was caused by your department illegally handing over taxpayer information to the Department of Homeland Security. So, again, what are you doing to rectify this misconduct, ensure that this doesn't happen again, and attempt to earn back the trust of the taxpayers?
Speaker 4
Probably never said this, so I'll say it now. Obviously, all these events occurred before my tenure. So but I take I oversee the organization, and it's my responsibility to get right. And, I don't know how often you all have overseen a risk management function. I understand the depth of a risk management function in what is really a large organization protecting Americans' privacy, increasing collections, and driving higher service.
Speaker 27
But does your risk management do something to make sure that people internal to the agency are not providing illegal information to other agencies? You haven't clearly stated that you're making sure that does not happen. One,
Speaker 27
Know aware. You are not prepared to say that you are gonna make sure that no.
Speaker 4
I'm gonna make sure. I'm just trying to make a point that your words are not gospel. Right? The words you're using, the numbers you're using, there's litigation, and I'm not going to comment on it. I am overseeing the there's a kind.
Speaker 27
Of old, axiom that you can't fix something if you don't know it's broken. Do you acknowledge that this has been broken and needs to be fixed at the IRS to protect taxpayer information?
Speaker 27
And we also need to hear from Homeland Security and the president about this infringement on Americans' privacy protections. And I am coleading a resolution of inquiry with representatives Gomez and Sanchez that would require the executive offices, the president, treasury, and DHS to provide information to Congress regarding the IRS's improper disclosure of confidential taxpayer data to ICE. Normally, we'd be able to debate this kind of privileged resolution rule in committee, but earlier this year, Republicans snuck a provision into a house rule that prevents these kinds of resolutions from receiving any consideration in committee or on the floor. And, it really is a cowardly attempt to undermine transparency for the American people. And, you know, one of our jobs in Congress is to conduct oversight.
In late January, the treasury inspector general for tax administration took to release a memo outlining concerns about the IRS's readiness for the 2026 filing season. Similar to the national taxpayer advocate's report, they cited concerns related to staffing reductions, growing inventories, and incomplete modernization efforts, whatever you wanna call that. And they also highlighted potential customer service delivery challenges related to closed taxpayer assistance centers. These centers are responsible for assisting taxpayers in person. And during last year's filing, CD season supported about a million taxpayers.
So, mister Bizignano, are you taking any steps to reopen these centers?
Speaker 4
Spent a lot of time on the taxpayer advocate letter and on the inspector general's letter. And, I think the results you're seeing in the performance today.
Speaker 4
Showing the mitigation factors that went into. We are serving more Americans across the board right now. So you're not gonna have a.
Speaker 4
This weekend, we serviced and had our taxpayer experience day, and saw twice as many people as we did last weekend in our taxpayer centers. So you are. And with taxpayer centers closed before I came on board, I have not closed the taxpayer center since I've been here. But you're not gonna serve more Americans than we ever have.
Speaker 27
You are not gonna reopen these, and we hear it from constituents across, all of us do, folks struggling to get information from the IRS. So we also know that.
Speaker 9
Mister Brizignano, thank you so much for being here today. You inherited quite a mess from the Biden administration on the ERTC program. Can you inform this committee on specific steps the IRS is taking right now to expedite review and issuance of refunds to legitimate law abiding claimants who properly have qualified for the credit or not involved in fraud or promoter schemes? And how is this being done while protecting the program against improper claims, so that compliant small businesses and their employees do not continue to suffer cash flow harm from the unnecessary delays?
Speaker 4
We had, what I would consider, a backlog of over a million items, and we deployed the appropriate resource both from the compliance enforcement and taxpayer services org. It was a weekly brief to myself and the Treasury secretary. And, as that million and change, it was over a million, is less than 29,000 items today, and they are all in the compliance arm being worked on right now, sir.
Speaker 9
Thank you. And, I have significant concerns about third-party financing of litigation in the United States, particularly regarding the tax treatment of the profits derived from it. Currently, these financiers are claiming capital gains treatment, and I think it's highly questionable, at best, that the unadjudicated assertions of harm constitute capital assets. Would you be willing, your team, to look into how the IRS can work with us on this and on the tax treatment of this practice? You know, it's one thing to participate in the court system.
It's another thing to abuse our court system by outside funds that manipulate the system, create partnerships, and other forward derivatives to take this on as a capital tax situation when it should be ordinary income.
Speaker 4
I want to sure my staff gets with your staff, and we'll report back to you, sir.
Speaker 9
I appreciate that. And then one last thing. In a testimony to your predecessor in the prior administration, everybody on this dais agreed that their offices were basically a part of the IRS because our offices were being pinged so many times that we might have been working for the IRS because there were so many complaints about the organization. I wanna applaud you because I have had zero people reach out to me during this tax season about the IRS. We've come to know you both in this committee and elsewhere that you're sincere about this.
You bring your business acumen to this. If anybody on this side thinks that you don't care about the American people, they don't know who you are. And I just want to say thank you. I wanna say thank you on behalf of the American people. As you've adequately said, you're not about passing the buck or casting blame on anybody else.
You're here to fix a problem. If we have more people like you in the administration than in the past and in the current future, this will be an important thing. We need more people in Washington, DC who wanna solve problems, not create problems. That's all the American people want. They just want problems solved.
They don't need more problems created, problem solved. Really appreciate all the work you're doing. Madam chair, yield back.
Speaker 28
Thank you. And it is getting a little out loud in the audience area. So if you could please keep your conversations outside, I would really appreciate it. Thank you very much. Miss Chou?
Mister Bisognano, affordability.
Speaker 29
is the number one issue of Americans. As hundreds of millions of Americans are in the midst of the tax filing season, it's imperative that we focus on common-sense solutions to improve this process for all Americans. And I think we can all agree that taxpayers deserve an efficient, clear, and affordable system to file their taxes. And that's exactly why Democrats and President Biden established direct file, a pilot program allowing taxpayers in certain states with simple tax returns to file directly and for free with the IRS. And it worked.
In just two filing seasons, Direct File handed back $90,000,000 in refunds to taxpayers and saved $5,600,000 in tax preparation fees for just federal returns, lowering the cost of tax filing for hundreds of thousands of Americans. Unfortunately, this progress was totally squashed when President Trump, the Treasury Department, and your agency eliminated Direct File last year, leaving taxpayers with the so-called Free File program where the IRS partners with private tax preparer companies to purportedly provide free services. And the biggest winners from that decision were not taxpayers. They were the giant tax preparation companies like Intuit and H&R Block that have spent years and millions of dollars lobbying to keep the IRS from offering a true free filing option. So I want to be very clear.
Free file is not free because what happens is this. A taxpayer logs on to file their taxes thinking it will be free because that's what the program is called. So they start entering their information, clicking through page after page, and it's only after they've invested time and effort that they are suddenly told they must pay a fee to continue. At that point, many people feel they have no choice but to pull out their credit card just to finish paying their fees. The private industries that control Free File have repeatedly been caught steering eligible taxpayers away from free services and toward paid products.
Intuit even paid $141,000,000 to settle allegations that it charged taxpayers who should have been able to file for free. So when Direct File began proving that the government could offer a simple and actually free alternative, it threatened a very lucrative status quo, and the Trump administration pulled the plug. So, mister Busignano, I only want a yes or no answer. Will you commit to restoring direct files so that Americans are not forced to pay private companies just to file their taxes?
Speaker 29
Well, as I expected, you didn't answer. And that's why I just led over 100 members and senators in introducing the Direct File Act to restore free tax filings, so taxpayers don't waste their savings while corporations profit. So let me say again, free file is not free, and we will do what your administration refuses to do, which is actually lower costs for working class Americans by bringing back free file. And mister Berenice Nano, last year, cuss commerce secretary Lutnick appeared on Fox News and proudly proclaimed that president Trump planned to abolish the IRS and replace it with an external revenue service. Well, the external revenue service never materialized, and Trump's illegal regime certainly did not replace income taxes.
Instead, it functioned as a national sales tax, ripping $1,700 out of every American's pocket. And when that rebranding failed, then Trump fired 28,000 IRS employees. That's 27 of the entire agency. So your agency is under attack by the president tasked with overseeing it. The result is exactly what you'd expect, worse service for everyday taxpayers and more opportunities for wealthy tax cheats to game the system.
That is not right. The pattern here is unmistakable, and that is increasing costs for the American taxpayer. And I yield back.
Speaker 30
Thank you, madam chairwoman. And thank you so much for being here, Mister Besignano, so that people can hear what you have accomplished in the short period of time you've been here, and what a great job you've been doing. The working families tax cut is a major win for gig workers who support local economies through their products and services. And I was so pleased that my legislation, which reverts the 1099k reporting threshold back to the $20,000 and 200 transactions, was finally signed into law through the working family tax cuts. This will keep the gig workers like hairdressers, Uber drivers, and craftsmen who sell products online from being harassed by the IRS for taxes they really don't owe.
Mister Buzzignano, for taxpayers who may not have traditional wage incomes, such as gig workers or small business owners, what guidance and tools is the IRS providing so that they can fully benefit from the working families' tax cuts?
Speaker 4
Appreciate your hard work, and I appreciate the question. Thank you. Thank you for having me here. Obviously, the gig economy over the past 10 years has turned into something that Americans rely on. And proud to say that during the course of this year, we put out more than 900 pieces of policy and guidance, and we will continue doing that.
I've applaud the work that you do. I will ensure that we continue the work on the gig economy, communication of the guidance, and policy. We've ensured that tax preparers understood it as well as we communicate it to the American public. And we'll go back and ensure that it's as good as humanly possible, and any recommendations your office may have to improve it. We're happy to hear it.
Speaker 30
Thank you so much. For most Americans, the clearest sign that the system is working for them is the size of their refund. As of February 14 in the 2026 filing season, the average refund amount is up by an impressive 14.2% over the same period last year, and the average direct deposit refund is up 13.1%, meaning that families are seeing noticeably larger deposits hit their bank accounts compared to this time in 2025. This provides Americans with well-deserved financial flexibility and is particularly important in my home state of West Virginia. What exactly is driving these double-digit increases in the average refund and average direct deposit refund amounts so early in the 2026 filing season?
And what is this signal about how the working families' tax cuts and other reforms are reaching middle-class households?
Speaker 4
You know, the fact that we have 56 as of the second, we have 56,000,000 returns, and 23,000,000, 43% have schedule one a's. And schedule one, when I think about it, is all the hard work that you did to the American public. Right? If you look at the one a's, you know, I like saying overtime filers are the largest individual category. There's no harder working Americans than people who work overtime.
Right? And then you think about the senior deduction, which I know many of you were very, very interested in having happened. And I think that'll probably be the largest form of it. We also see that people under 100,000 are fundamentally the largest beneficiaries on a percentage basis. And when you look at it, I just think it's important to think about no tax on tips, no tax on overtime, no tax on car loan interest, new tax deductions for seniors.
Let's not forget 45, 47, which has 2,000,000 forms. That's the Trump accounts and 3,000,000 dependents already enrolled. Right? And then expensing qualified factories. On top of that, you have domestic R and D expensing.
You have expense for capital investments, full expensing. $1.99 a pass through, and I hesitate because I think about the small businesses, the lifeblood of America, you know, double standard deduction, double debt tax exemption, the child tax credit expanded and permanency. These are all permanencies, and then an opportunity zone. So, you know, assault extension till 2030. So the power of it, and we talk about fundamentally 1,000, and I think that's what our research group shows, 775 today, and it will trend upward as time goes on.
Powerful legislature. Great adherence and hard work by the American public in getting their tax returns in at the rate they are. And we count on the.
Speaker 25
Thank you, madam chair. And I just wanna thank our CEO for appearing today. You are the CEO. You're the first one, as you mentioned. And I'm wondering how your duties or your perception of your duties have changed with being the CEO?
Is it because of your tremendous and impressive background in data? Or has it expanded in other areas that you wanna share with the committee?
Speaker 4
Well, first of all, I take the responsibilities with the utmost respect for what the job is. And the job is administering a tax code, overseeing the agency that has 5,300,000,000,000 of revenue. The 70 plus thousand employees, okay.
Speaker 25
You. That's a good answer. And the reason I'm asking that question is because the treasury is planning to issue regulations limiting who qualifies for the refunded portion of certain tax credits. And I just wanted to be clear that you don't perceive your duties or responsibilities or authorities to write the tax law. I mean, do you agree with my assertion that you do not write tax law?
Speaker 4
I agree so much. You heard me define my responsibilities, and one of them was not.
Speaker 25
So why is it that the Treasury Department, so first of all, in the 2026 election cycle, have you implemented your plans to limit who qualifies for the refunded portion of certain tax credits? Currently, noncitizens with work-authorized Social Security numbers who meet other eligibility rules can claim several refundable credits. The earned income tax credit, the additional child tax credit, the American opportunity tax credit, the savers match credit, as examples. Now the implementing legislation to implement the welfare reform, the PRWORA, the PRORA, limits eligibility for federal public benefits to noncitizens. But have you overlaid those exclusions from Prora onto tax credits?
I mean, public federal public benefits are not tax credits. Have you done that in this cycle?
Speaker 25
Okay. Thank you. I'm pointing out to the committee here that the treasury department is attempting to issue guidance that would disqualify noncitizens, even those who are legally in the country with Social Security numbers, from receiving refundable tax credits, even though they, you know, they're working here. They have work permits and Social Security numbers, and they're not illegal aliens. They have their people with temporary protected statuses, DACA recipients, pending asylum applications, and including those people who are legitimately working.
Can you share with us just briefly, because I don't want you to consume all my time, why you are trying to promulgate these rules?
Speaker 25
There is no law. It says so you so is it so is it it's not true then the treasury plans to issue regulations to limit who qualifies for the refundable portions of certain tax credits?
Speaker 4
I said I just wanna be very clear. I do not write the law. I implement law and uphold law and ensure law is obliged.
Speaker 25
Well, that's very good to hear. I'm gonna yield back my time, and I just want to commit the record to reflect that the CEO has said he has no intention of writing tax law, and he has no intention of asking us to write law that would limit tax credits to eligible, noncitizens. Thank you, madam chair.
Speaker 28
I yield back. Gentlewoman has yielded. Pursuant to committee practice, we will now proceed with two-to-one questioning. I recognize the gentleman from North Carolina, Doctor Murphy.
Speaker 2
Thank you, madam chairman, and thank you for coming and talking with us today, and thank you for helping clarify that we write the law and you enforce the law.
Speaker 2
Thankfully, we have an administration that does that. I wanna turn back a little bit just to artificial intelligence. I'm a physician surgeon by trade, and the world of artificial intelligence is exploding in the field of medicine, and it will explode in every other field. I wondered if you could talk a little bit about how the agency is dealing with this. You know, there's a great crack on the IRS and, quote, people, quote, pay their fair share and all this stuff.
I want you to, if you can, talk about AI, how AI is helping go after people who are cheating, as this that's, I think, a 100% bipartisan thing, should be anyway, and not be able to affect average Americans. How we're able to use data correctly, not let it misguide things as far as policy and interventions within the IRS, but how you're able to craft this new technology to root out fraud and all the other things that the American people want.
Speaker 4
I'm delighted to hear the question, and thank you. I'm also delighted to hear you call it new technology because I like to remind everybody all the time, you know, AI is a technology. Right? It's not a foreign object. And, of course, all technologies that are going to get the desired outcomes also have humans ultimately responding to them.
And, you know, I've been heard publicly saying, and before I was in the government, I was using AI before it was called AI. You know? And I think, you know, right now, we are heads down on implementing things that make it easier for our workforce to get to the answers. I believe AI will be part of increasing the compliance rate to 100%. I believe AI will be part of speeding up everything we're doing.
The stuff I talked about taking sixteen weeks to less than one week on amended returns is AI. But AI has technology around it also, and it has people around it. So I have high expectations. I don't see a world where an organization cannot use enough AI and be responsible with AI. And responsible has to be that we have overseas of it.
We have a governance model for it, and we also have people that are actually reacting to it. It will change the way our workforce works in a better way.
Speaker 2
Alright. Well, thank you. I appreciate that because I was over at HHS yesterday and, speaking with the secretary. It was mind boggling how the systems that they have in place there are literally 1970s technology, and nobody has heretofore addressed any of these things. And so I’m thankful that the administration, very business mind, very efficiency oriented, is going after the processes that have made government so inefficient in the past.
We want this to be a program that works for taxpayers and for the people who are not abiding by the law to be able to go after them. So I appreciate the effort being put in by the IRS. I will just say real quickly, one new implementation. I have a bill passed into law, disaster related extension of deadlines act. I live in eastern North Carolina.
We get a lot of hurricanes. We have a lot of these issues. And sadly enough, people have, you know, a lot of difficulties coming out of these periods. I just wondered, with new implementation of laws, how you're able to quickly, if I can get a quick answer, assimilate that into the text code to make it something that is applicable very.
Speaker 4
You know, we've already responded to that, and, you know, it's enacted. And, we actually have cases that we've responded to already.
Speaker 2
Great. Well, thank you for being so nimble and making sure that's good for my constituents. So, thank you, Madam Chairman. I'll yield back.
Speaker 28
Gentleman yields back. I recognize the gentleman from Tennessee, Mr. Kostov.
Speaker 12
Thank you, madam chair. Thank you, sir, for appearing today. I could, going back to the one big beautiful bill, one thing that we worked hard on was restoring the R and D tax credit. I've been hearing from manufacturers back in my district that it's not working the way we intended to work. When they do research on the flat factory floor, whether that's improving products or refining processes, what I'm hearing is that the IRS is increasingly treating that work as just manufacturing and that they are disallowing the related cost.
And they tell me that posture is being driven largely by case law rather than anything that we wrote into the statute. So we want American manufacturers to be competitive and stay competitive. We want them to integrate new technologies. Doctor Murphy was just asking you about AI, and we want to incorporate that into production. Is that something that you and the IRS can take a look at to apply that so that it's not being pushed out of the R and D credit?
Speaker 4
Yeah. First time hearing of it, sir. And we will talk to your office, and we will have a rapid response to what may be a misunderstanding or why things are happening the way they are.
Speaker 12
Thank you very much. I appreciate you getting back to me on that. If I can also, from accountants back in my district in West Tennessee and small businesses, I'd like to ask you about audits because I think I hear and I know and I think we all know that sometimes these audits can drag on even when the taxpayer or the small business is cooperating, and sometimes they feel like the goalposts get moved by the IRS. And I think we know the approach of the prior administration. We know that president Trump has adopted a taxpayer first vision, which I appreciate, I think we all appreciate.
Can you address what the IRS is doing or can do to make these audits more focused, maybe more timely, maybe more predictable for families and for small businesses?
Speaker 4
Well, you know, in a spirit of productivity, efficiency, and quality, we are measuring everything. And that means how long things take. It's not just how many you have, but how long they took and why they took it. You know, we talk a bunch about AI, but process engineering matters a lot, and it matters in audits. And so you should expect closure over the next year to be at greater rates than we've ever seen before because of the president's attitude of taxpayer versus hours of delivering customer service.
And even in audit, there's a customer, and we gotta we need to treat it with the highest dignity and treat out tech all taxpayers fairly across the board. You have a commitment on that, sir.
Speaker 12
Thank you. So you can see those audits being more streamlined, if you will.
Speaker 4
Yeah. I think we could just see them closing out faster. Right? I can't force a taxpayer to do something, but I can ensure we're managing to a set of standards to close items out in a period of time, and understanding the outliers, and then we'll build process for the outliers.
Speaker 4
As opposed to think of it as just one big pile. We gotta have standards of operating on time.
Speaker 12
We do hear from, I think, we all hear from our constituents about when they reach out to the IRS that it's difficult to talk to somebody, that they get passed from representative to representative. Can you talk about your vision and how maybe we can work on addressing and correcting those deficiencies?
Speaker 4
Yeah. I like it. You know, April 15 will be a declaration of the closing of tax season. Obviously, that goes on a lot longer. There's probably 20-plus million returns that come in after that.
I'd like to take a status check with you on what people are saying, then. You know, there's a, you know, I know I keep pontificating at some level, 43% more online inquiries, 40,000,000 more online users than ever before. And then, you know, the fact that we're answering the phone in a single digit, which is equal to commercial business. So I think we're in the transformation process, whereas there's no victory lapse going on here. We'll have a whole another year of doing better and improving, but, you know, I'd be happy to come back and my staff and your staff spend time on a recap at the end of the season.
Speaker 18
Madam Chairwoman, thank you very much. And Mr. Vignano, CEO, thank you for being with us. Congresswoman Chiu was trying to get a yes or no question out of you on direct file. I'd like to go a little deeper just because it was overwhelmingly popular. In fact, 94% of users described their experience as excellent or above average.
More than 70% said they'd use direct file if it were eligible. If the program were fully implemented, it was projected to save families up to $23,000,000,000 every year in fees, time, and tax credits. And there are recommendations to both the independent government, the GAO, and the treasury's inspector general, that the administration, despite those recommendations, the administration chose to indirectly file. And, basically, as Miss Chiu pointed, directly under the arms of the for-profit tax preparers. So, mister Vignano, other than making life more difficult, what did that accomplish?
And if your goal is to provide world-class service to the American people when they file their taxes, why not support a program that was free, overwhelmingly popular, and easy to use? So why the opposition? And why end it?
Speaker 4
Well, as I was trying to say before, I've read this report inside and out that was handed to Congress before I was in the job. And I think the most stark important details can be easily summarized. Right? Less than half of 1% of the filers used it. Its cost was far above anything we see anywhere else, and there was 41,000,000 extended to this without all the overhead that went around the organization itself.
So that's why the Treasury Department suspended it. And I've heard more than once about the overwhelming percentage of successful filers are complementary. What we haven't actually articulated is how small that absolute number is, sir.
Speaker 18
So let's say you're a businessman. I am too. And one of the things we know is when a program just begins, you get a relatively small thing. For example, in Virginia, our governor would not let us use it. There would have been many people in Virginia who would have picked it up if that one half percent would have certainly grown to 2%, to 10%, to 20% if we're allowed to go.
And by the way, the cost per person would have fallen dramatically as it expanded. Let me move on though, because the tax cut, there's a group of these Democrats and Republicans who are very worried about the budget gap. We're, what, 101% right now, 2,000,000,000,000 more this year, spending to grow to 3,000,000,000,000 per year, and by 2036. The long term risk of the stability of this nation, and we have a massive tax gap. 650,000,000,000, 750,500 depending on who you listen to.
And we know that almost all that is from wealthy taxpayers underreporting. If you get a 9, 10, 99 or W-2, 99 percent of the people were paying their appropriate taxes. But what's greatly concerning to me is how much we're dialing back on that. You know, we just had the $11,000,000,000 tax cut or $11,000,000,000 cut to the IRS, and the CBO estimate that's gonna cost $40,000,000,000 in government revenue. The IRS's own tax data shows that investigations into abusive tax schemes dropped by a staggering 63% in the last year.
So how can we justify constant cuts to the agency's own budget when we know that cutting the IRS will cost three times the lost revenue? And I know you wanna use AI to do that, we're very much supportive of it. But AI alone, without the resources, without these sophisticated auditors, without the attention to that huge tax gap.
Speaker 4
Yeah. I think, first of all, you know, there was fundamentally 100,000 people in IRS. And I've yet to find one piece of paper that explained why that was the right number. So I understand that we have fewer people, but I'm not sure that there's anything that ever said what the right staffing level was. The fact of the matter is we are measuring more than we ever have.
We're delivering more than we ever have. And, in fact, we have a talented workforce that's highly motivated. Right? The tax gap, the last document produced was on '22, and it 2022. And it talks about $650,000,000,000.
I am deep with the team in research of understanding every element of that. Right? And in fact, I'm not sure we're ever gonna find out that more research is gonna go on, and I'm happy to come in front of you when I'm done with that, or come visit you and talk to you about it. I wanna understand what the direct addressable market is. How much of that is actually, and how much of that is in our noncompliance rate?
The gentleman's time. And part of streamlining the organization is having a better way for simplicity and higher compliance, and I'm happy to come see you, sir.
Speaker 32
Thank you, madam chair. Mister Bizuno, thank you for joining us today. It goes without saying that for too long, outdated technology at the IRS has created delays and frustration for many American taxpayers. Our offices across America are oftentimes a go-between between those very frustrated taxpayers and the agency. Paper returns could sit for weeks without being processed, which slows refunds, creates errors that oftentimes require very time-consuming corrections that many of our constituent service staff have to help our constituents navigate.
With paper filings, you know, also being indispensable for many Americans, ensuring technology is up to date to reduce those inefficiencies, obviously, is very, very critical. Upgrading systems to securely and accurately handle filings will reduce errors, accelerate refunds, and deliver the high quality service that our taxpayers and our constituents deserve. Sir, the IRS in the past has relied heavily on what most would agree are outdated processing systems, scanning only a small fraction of paper returns and requiring employees to manually key in millions of pieces of information even as backlogs and errors risks mounted. The taxpayer advocate service has described how the IRS only recently began scaling up scanning technology. Your modernization agenda at the IRS is aimed at streamlining paper processing, with a plan to cut paper handling costs from roughly 450000000 in 2024 to about 20000000 in 2029, freeing up hundreds of millions of dollars to improve service and reduce waste.
So if you could just take a minute, sir, to number one, how many paper returns does the IRS estimate it will receive this filing season, if you do have that information?
Speaker 4
You know, it'll be less than 2%. And if you think about 160,000,000, so you're gonna get, you know, call it 8,000,000. You know? I think the way we, you know, we have the zero paper initiative. And I know there's a lot of concerns about that because that includes checks, and that includes a whole, but by the way, if you think about it, it's on the small tail of what's being done.
And why the cost is so absorbent is because, you know, we had housed the infrastructure to handle all of this. What you're seeing going on right now, I think, my anticipation is, those numbers are completely accurate, but maybe their time frame could be quicker. And I think it's better for the American public. I think the issue of lumbering organization is really about not only technology, it's about process engineering. If you think about the zero paper initiative, it is scanning technology, but it's also process engineering.
And when you have a 75,000-person organization, processing, engineering, everything to get better outcomes may be as big a payback as anything. And when you add technology on top of it, you get hyper good outcomes. So we're maniacally focused on it. It is in our mainstream set of objectives. You hear us talk about it every week in this app meeting, and you should expect those outcomes for the American public.
Speaker 32
And what are the specific investments in scanning technology and automation that are being implemented that, hopefully, will drive down paper costs, also deliver faster refunds, and improve accuracy for the taxpayers who do rely on paper filings.
Speaker 4
Well, I think you go across the board. You know, it's the back end, the scanning part. Right? Our ability to help that small percentage that is not electronically filing now is part of really what is our taxpayer experience group that are focused on changing their ability to interact with us. I also believe that all we've built is to give people tools to go online, and a large amount of Americans access their data online and would prefer to do that.
We've invested a lot. We're seeing the returns this year. I think we'll see much better returns in '27. That means an experience. I look forward to the time when you and I are talking about, maybe the way one of the other congressional leaders said, you know, they're not getting the phone calls anymore because we're getting the job done.
Happy to come to your office and talk about any of it.
Speaker 33
Thanks, madam chair. On 12/12/2024, my Federal Disaster Tax Relief Act of 2023 became law. My bill delivered long overdue tax relief to victims of federally declared disasters, especially to Floridians who were impacted by the destructive hurricanes Ian, Debbie, Helene, and Milton. Casualty loss and disaster relief have traditionally been retroactive subsets of the tax code. Likewise, hurricane victims must file amended returns to reflect a casualty loss the year of the disaster to claim relief.
Some taxpayers have faced administrative challenges in claiming this relief. Some, upon filing the amended return, the IRS indicated that the adjustment didn't change their taxes or their credits, and that no further action was required. Other examples of calls that we've gotten to my office from people all over the country, not just my district, were that the claims were being flagged as fraudulent by the IRS. Survivors are being told their physical addresses were not in the designated zones. Claims are being incorrectly routed to the international department.
Tax filings are being labeled as frivolous, receiving letters that it's been paid when it has not been paid, being told that there are errors but not giving specifics on what those errors are, extremely long all-day hold times on the phone. Some victims are still waiting for all of those three years, 2021, 2022, and 2023. Our office has received a number of complaints about IRS's inability to adjust its procedures to reflect this newly designated law, for qualified disasters in tax exempt wildfire settlements. How is your office committed to working with Congress to ensure that amended filers receive their legally entitled relief?
Speaker 4
This matter is a boatload for us, and getting it right is of the utmost importance. And I would love for us to come down and sit down with your staff and see where our failures are and fix it immediately.
Speaker 33
Okay. So do you have the IRS, as you're aware, hasn't made any changes to ensure that filers that have been affected by disasters.
Speaker 4
Out committed to the disaster relief act, and, you know, I don't have the information you're giving me is honestly the first time I'm hearing it, sir. Okay.
Speaker 4
The only thing I can actually do is say I'm happy to come and go to work on it.
Speaker 4
And do a deep dive analysis so we understand it doesn't happen to anybody else.
Speaker 33
So you're not aware of anything internally that's changed to ensure that these people that have been affected by disasters aren't getting these type of responses for the IRS?
Speaker 4
Well, what I'm aware of is that we implemented change to execute it, but it's obviously not working right, as I'm hearing firsthand from you, and my only desire is to go fix it.
Speaker 33
Okay. How does your office plan to work with repair services and accountants to provide them with the necessary information that would minimize the need for taxpayer advocate services?
Speaker 4
I mean, as I said earlier, I talked to four largest preparers, and it's the first time I've ever heard of someone from the IRS at the senior level calling them, and we committed to help them do their job better, to help us do our job better for the American public.
Speaker 33
What is the IRS's current estimate of the scale of the problem of ghost preparation, a practice where paid tax preparers do not sign returns or otherwise follow the rules for preparing returns, and what data gaps could be filled to support a more accurate assessment?
Speaker 4
Yeah. I mean, there's a fair amount of work going on to eliminate and actually, you know, appropriately deal with when that ghost prepare occurs. I mean, it is a real issue, and it needs to get stopped.
Speaker 33
Okay. I only have a little bit of time left. I would just, sorry. I would encourage whoever be in the back bench or whoever needs to contact us to provide you. We will. That information.
Speaker 33
That office has received. And I would highly encourage the IRS to ensure that these people that have been affected by these disasters over this period of years, I can speak to Florida. We've had six hurricanes in two years in my district, all of the major hurricanes. We passed this bill because it was important not just to my district, but to California and the wildfires and work bipartisanly to get this done. And so when you're hearing from filers that they're being told that this isn't legitimate, and their claims are being rejected when they file the amended returns.
It's obviously a significant problem. So whatever I can do to assist you guys to ensure that that's not a problem, I would love to work with that, because this is a huge issue to districts like mine that have been annihilated by hurricanes. And this is the least that we can do as the American people to ensure that the people who have been affected by this have the ability to at least deduct their expenses from their taxes. I yield back.
Speaker 28
Gentlemen, yields. I recognize the gentleman from Pennsylvania, Mr. Evans.
Speaker 31
You, Mister Chairman, for calling this hearing today to highlight the president's failure to protect the American taxpayer. The president and his billion dollar buddies have continued to make it harder for working families to get tax credits and refunds. Instead, the president has been making it easier for billionaires to cheat the tax code and make themselves richer. This administration is for the rich and against American workers and families. In my city of Philadelphia, we have a highest center that does great work to assist American workers, and it's important that they continue to have their belief.
Unfortunately, the president has been making it harder for IRS employees to do their job. Just last week, he terminated the union contract for IRS employees for no reason. The president is continuing to make it harder for the federal government to serve the average American. Democrats will continue to fight against these attacks. Taxpayers depend on efficiency and well-managed government and does not serve the rich.
So it is important that we have this opportunity, we make it clear. And the reason I don't specifically point to you is because I understand you're not really in charge. The president is in charge. And the fact of the matter is you work for him. And it's very clear to me that you obviously are not doing what is necessary in the benefit for the American public.
And I say these comments today to express to you that at least this representative, this congressman from the city of Philadelphia, where it all started, is not satisfied with what is happening. So I share with you, sir, that it's clear to me that you're not protecting American taxpayers. We work for the American taxpayers. It is important that we'd be very guarded about the American taxpayers and their dollars in this very difficult time. So we don't want to take that lightly.
So I only have the opportunity to voice my opinion to you, since the president is not sitting in front of me. And I wanna express to you in hoping that you hear what I say, and you will say to the president that you need to do a better job for the benefit of the workers and the people of the state. So as a real madam chairman, I'd like to yield back my time. Thank you very much.
Speaker 11
Thank you, madam chair. Thank you, Luciano, for being here this morning, and I wanna thank, obviously, your staff for the preparation for this hearing. First off, I'm gonna have a couple of questions. I'm gonna lay them out so you can have the mindset. The first, I'm gonna talk a little bit about crypto as it relates to the staking rewards.
Secondly, if we have some time, I'd like to talk a little bit about some of the AI tools, kinda build upon what some of the other members have talked about. As you know, when the taxpayer stakes their crypto, the taxpayer produces new tokens through their own computation activity of validating the network's transactions. Similar to a farmer who is harvesting crops or a miner who's actually extracting some type of mineral or manufacturer producing products. Now in 2023, the Biden IRS issued guidance treating newly created tokens as actual income, taxed at the time of creation, unlike any other newly created property. I think you and I have talked about this before, but the White House working group of 2025 digital assets report explicitly recommended to the Treasury and the IRS to review previously issued guidance on the timing of the income from staking and mining and considered whether to clarify or whether to modernize or, to reverse it.
So a few months ago, along with me, several of my colleagues, I think 18 in total, including five of us that actually sit on this committee, inquired about this guidance. What's the IRS's current timeline for completing that review? And is the agency prepared to reverse the previous administration's era guidance if it is found to be inconsistent with how other self-created property is taxed?
Speaker 4
Yeah. Thank you very much, and it's a timely question. We're in deep review on it. I'm happy to have my staff come and brief your staff. Yeah. On our progress and talk about next steps forward if that works for you, sir.
Speaker 11
That works. It works great. And let me just one other thing is, and if we're gonna get our gonna get the teams together here, one other thing is many of the digital asset foundations that steward blockchain protocols are based. Yep. Outside of the United States and due to the regulatory uncertainty. I firmly believe that the tax policy should, I mean, I think we all want to, you know, make sure that we continue to grow.
But this tax paid, pay this tax policy, should, you know, we should encourage the onshoring of these digital assets. So it's something that I'd like to work with your team on. As we get together, we'd like to do that. The next topic I'll quickly discuss is the IRS implementation of certain AI tools. I know that you talked a little bit about that.
There was a lot of back and forth. I just wanna ask you a question. I'll let you expand upon it in the mid in 40 some seconds. How are the AI-driven tools currently helping taxpayers during the 2026 filing season? For example, by answering those routine questions, guiding people through common issues, or easing the pressure on call centers.
And with that, the floor is yours.
Speaker 4
Thank you. I think first of all, the natural place I started with AI probably was over ten years ago in call centers.
Speaker 4
And we weren't calling it AI then, but it was really how not only to assist the caller, but to assist the operator. So our ability now to put the information in front of our service representatives so they can get to it faster, where they used to have to traverse multiple systems or try to go figure out the answer. We're prompting that in a manner. So that's taking both calls out of the queue and also allowing our representatives to answer more calls in a day with more timely information. That would be a very simple application.
The second set of applications you hear us talking about, you know, is an example of taking everything it took in sixteen weeks to get an amended return back to the taxpayer and taking it down to single digit days because it's one of the great tools that we have here throughout the whole process. And, you know, it will affect the compliance positively over time. Here also, is the ability to gather information, bring it together, give answers that need to be reviewed by a human, give them categorical opportunities, or tell them where to search for more. So I'm excited for it.
Speaker 6
Thank you, Chairman Fischbach and Ranking Member Neil. I just wanna thank, mister Busiano for all that you've do and how you've really transformed the IRS in less than six to eight months. I mean, it's just truly incredible. I think of Iowans and Americans, farmers, families, seniors that are filing. I mean, there you made the process easier, you modernized it, and it's more responsive.
I mean, this is what customer service is all about. This is what the government should stand for. So I truly applaud you for this. We continue to work with President Trump. I mean, think of the working family tax cut act, that, you know, was passed and all the dollars that you noted that are coming back in refunds.
You noted that this is the largest tax refund year that we've ever had in the US history. That's incredible. You noted that you modernized the IRS system for 43 percent increase in those using online services. You've taken it down from 16 weeks to 9 days for returns. Alright?
That's well done.
Speaker 6
A little bit about I've got a bill that was introduced. It's called the IRS Math Act, which requires the IRS to provide clear itemized explanations because over the last decades, math errors were never, you know, obviously, we're human. People make errors. And the IRS never really told people, you know, hey, how the error was done or whatever. Can you address how you are working with the taxpayer?
When they make an error, how do you identify it? And what do you do to give notice to them that says, hey. Heads up. We got a concern here.
Speaker 4
Sometimes it happens right in the online submission that we're advising, you know, we can see something fundamentally wrong in the math. And I would say that happens, you know, on the simple stuff all the time. Our technical skills capability gives them a prompt or gives the prepare a prompt that says we see an error. Yep. Right?
Oddly enough, not 100% of the time do they correct it. Sure. But we'll work on that. Yes. But I think we're building deeper tools.
It gets back to why, I like the idea of thinking about the extension from the taxpayer to the tax preparer or directly to us as turning it into what I would call straight through processing and a seamlessness. We are in business to help the taxpayer.
Speaker 4
I know if you stood here and listened, you might not believe that, but that is our job to help them. Yep. And, you know, everything we're doing is trying to get it right for them so they could get on with their life, get their refunds as we've sent out, you know, you heard over 130,000,000,000 already, and prepare for next year.
Speaker 6
Yep. Well, I applaud that. And I thank you for what you're doing. I know a system, a computer system that's, you know, updated and stuff like that. Can do a lot of these things.
Again, more customer service. I got one more thing. You know, the American workers, we want to protect them. And government, I'm worried about foreign governments and illegal immigrants siphoning off US tax benefits. The working families tax cut stopped foreign governments from grabbing US tax revenues and closed the loopholes that allowed tax-fair funded benefits to flow to not flow to illegal immigrants, including social security number protections.
Can you just address this a little bit? To me, you know, I think we're always concerned about I got this big refund coming. I don't want it stolen. I don't want it taken. I don't want foreign adversaries, you know, coming after me and things like that.
Can you address that a little bit?
Speaker 4
I think, you know, what we built in Where's My Refund is actually a defense mechanism and an offense mechanism. You know, it wouldn't be uncommon. We see it. People get up every day and check that. Yep.
And then they know if their direct deposit's going to be there. It's why direct deposit is so powerful. Yes. I understand. I believe there will always be people who need a check, but that is a larger form of fraud occurring.
Speaker 4
Right? We've done a great job across this government with the president's leadership and everybody else's leadership, to be able to reduce fraud. And I think one of the most important things we have to do is protect the refunds and make sure they get to their destination. We're putting tools in the taxpayers' hands to know it, and they have the tool to see it in their account.
Speaker 6
Absolutely. Thank you. Thanks for all you do. I greatly appreciate all your work, and I yield back.
Speaker 15
Mr Panetta. Thank you, Mr. Chairman. Thank you, Mr. Busiano, for being here today. Second time here in front of this committee. Appreciate your time.
Appreciate the information that you have to offer and giving us an update on the operations, especially being in the middle of the tax season. So, thank you. I think as you heard here and there, if you see through some of the words and emotions, we do share the same goal of ensuring that the IRS fulfills its mandate to provide top quality service to our taxpayers, to our constituents, to all of us. Obviously, that requires an agency that acts, as I think you'll admit, nonpartisanly, efficiently, and is accessible when our constituents need the help that they deserve, especially when it comes to their taxes. However, it seems that many of the steps that this administration has taken can undermine some of those shared goals.
The very structure of your role, for instance, requires you to oversee the operations of both the IRS and Social Security. With all due respect, your background divides your attention. And I think it could lead to shortchanging these two very important agencies. Meanwhile, you got the IRS staffing that's been reduced by roughly 20%, with some of the deepest cuts hitting frontline roles in accounts management and field assistance. And those are the important positions responsible for processing returns, resolving errors, and assisting taxpayers.
And it seems that that's a recipe for pretty overworked staff, including yourself, based on your roles, but also what I'm seeing and hearing from my constituents: a lot of long lines for assistance, rushed in some very slow work. And I think you'll agree that the American public, our constituents, deserve much better. Now we've already seen some results since this administration took over in my district, the 19th Congressional District in the Central Coast of California. It's seen a 45% increase in IRS-related casework. None of the tax policy and the surge has been driven by a lot of refund delays, unfortunately, missing returns, and the inability of constituents to reach an IRS representative.
Now, look. Don't get me wrong. That is our job to make the bureaucracies work. I always tell my constituents that. It's kind of one of the three main things we do, besides legislation and federal funding for the district, which is casework, especially when it comes to the IRS.
And let me tell you, my constituents, don't have good things to say about the IRS because a lot of the delays they're dealing with, unfortunately. And so it is nice. I admit that. I'm sure my colleagues will say the same thing, that we can come in, and you have been responsive to us. And I appreciate that.
And that we've been actually able to get people the refunds that they deserved and have been waiting on. And so I do appreciate that you've been able to do that, but it shouldn't take us to call you and to get that stuff going. I think you would agree to that. But don't get me wrong. We'll be happy to do that, and we'll continue to do that when necessary.
Now I think you'll agree. We need a fully functional supported IRS to serve the taxpayers and collect revenue that funds government operations and implements the laws that Congress pass. Now I'm gonna go on to one bill that I got, I wanna talk to you about, and I think we might have talked with your staff about this as well. Look. Many taxpayers turn to paid preparers to help file for the tax season.
But I wanted to raise the issue of error rates among paid preparers. The GAO recently found that paid preparers have an error rate as high as 60%, and in some cases, perform worse than taxpayers filing on their own. Under current law, the IRS cannot revoke preparer tax identification number, PTINs, as you're aware of, even when the preparer has shown clear incompetence or misconduct. Now I have the bipartisan taxpayer protection and preparer proficiency act with representative Stube across the way, that would address the problem by allowing IRS to revoke the PTINs of preparers that engage in misconduct or fail to meet pretty straightforward professional standards. My questions to you in the last 30 seconds.
You think you should be able to obtain a PTIN and continue preparing returns despite repeated errors that cost taxpayers money, one. And, two, will you commit to working with me and Mister Stuvey on the Taxpayer Protection and Preparer Proficiency Act, one of the most difficult names to say fast, and give the IRS the ability to revoke PTINs from preparers who harm taxpayers and undermine the tax administration. Yes. Thank you. I'm gonna leave it at that.
I yield back.
Speaker 4
I would like to have us come visit your open items and work on them jointly. And I know you said it shouldn't come to that, but we use that as a form of root-cause analysis. There are no one offs, and so it'll usually be helpful if we can come do that with you.
Speaker 15
Absolutely. I'd love for that and love to connect with you subsequent to this morning. Thank you again for being here.
Speaker 24
Thank you very much. Good to be here with you again, and I want to first thank you for coming to visit my district. We visited the Social Security office on Staten Island. And, you know, first of all, I commend you for the time that you've been there, the way that we've seen wait times at our call centers drop. They were nearly cut in half.
Disability claims backlog has declined by more than 25 percent. Americans now have 24/7 online access to Social Security. You've done such a good job that the president gave you a second role. And now you're doing the same things at the IRS. We're seeing call time go down.
Call centers are better staffed. You had, I think, 2,200 more employees now working in the call centers, and given that customer service that is so needed, and, of course, improving the IT so people can do a lot of this stuff online. All fantastic things, and I appreciate your efforts. I would love to talk to you today about some of the provisions in the working families' tax cut package that we passed. Obviously, the big news is that the tax returns are higher this year, about 10.2% increase over last year.
Can you specifically talk about what is attributing to that? What specific provisions are most Americans taking advantage of? Personally, to me, obviously, the state and local tax deduction was huge for my high-taxed New Yorkers. And this we'll talk about Social Security as well shortly, but I just wanna get your sense on where you think the benefits are most being received.
Speaker 4
Well, you know, I like saying we're 40% through tax season. So that's a fair amount, and we kinda got a good trajectory. That means 55,000,000 Americans have filed their returns. 24,000,000 Americans, 43% have had a schedule 1A, and schedule 1A is where the provisions are. No tax on tip, no tax on overtime, no tax on car loan interest, and a new deduction, as you well know better than anybody, for seniors.
We also have the Trump accounts, 45, 47. And we have 3,000,000 dependents who are enrolled in that already. I think it's important when you take a look at this and we sat yesterday with the research analytics group who produces all the data that gets consumed by the public, that if you looked at the refunds for schedule one a as of now, they have a $775 increase. And so the logical question is, I thought you guys thought it was gonna be 1000 dollars. The curve shows that it's grown to $7.75, and will continue getting to a thousand dollars.
And remember, that's on, right now, 23,000,000 tax returns. So that's a big benefit. We see the largest percentage benefit in the 100k and under category, and we see the largest dollar benefit, and I know you're gonna like this answer, to the seniors.
Speaker 4
And that was their hard work earned money. So I think it's reforming, as many of our calculations have laid out. I think the American public also, if they have a direct deposit, are getting it in an average of 9 days from filing.
Speaker 24
That's fantastic. Well, first of all, let me say again, thank you for your work to make things more efficient. We have in the past had serious concerns about bureaucratic errors, poor interagency communication, delays in refunds, as well as stolen checks, my colleague had brought up. And I see that this administration is really paying attention to those issues and trying to correct them so we don't have some of those issues that we had in years past. With that said, I do wanna point out again that the salt relief for my constituents increased to $40,000, which is significant.
Sadly, my mayor now is talking about increasing property taxes even more, which is, you know, unfortunate. We're giving tax relief at the federal level. They're looking to take it with the other hand away from my constituents. And, but that will benefit 98% of the households in my district. The other big provision, which I was proud to author, that was included in the working families tax cut package, was for senior citizens.
88% of seniors across America, 51,000,000 seniors across America, will benefit. And the deduction is large enough where they're basically getting whatever they paid in Social Security taxes refunded to them. Right? If they are, income 75,000 for individuals or 150,000 for a married couple.
Speaker 4
Yeah. And I think a couple of things. You know, you brought up salt, is out till 2030. We also have permanency that occurred. Right?
Domestic R and D expensing, expensing for capital investments, $1.99 a pass through, double standard deduction, double death tax exemption, child tax credit expanded and permanent opportunity zones. And I bring that up because we're seeing the benefit in people with faster payments and bigger checks, but we're also seeing the double benefit going forward of lower deductions, and it's gonna affect American rights.
Speaker 24
They thank you for your work, and thank you for making sure that they get it timely and that their checks aren't being stolen in the mail. We appreciate your efforts.
Speaker 36
Thank you, mister chairman, for holding this important hearing, and thank you to mister for being here today. It's certainly no secret that the Democrats' American Rescue Plan was an absolute and total disaster. It certainly supercharged President Biden's generational inflation that saw prices go up by more than 20% by the time he left office. It forced the Fed to dramatically hike interest rates, which led to record lows in home affordability and car affordability. And it was certainly prone to waste, fraud, and abuse, that was so typical during the Biden administration.
We were reminded of this in a report from the Treasury Inspector General for Tax Administration, or TIGTA. In December 2024, weeks before the Trump administration took office, the Biden IRS pushed out American rescue plan stimulus checks to 1,200,000 people who had over three years to claim those checks but hadn't yet done so. Then IRS commissioner Danny Werfel said the IRS had looked through the internal data and, quote, we realized that 1,000,000 taxpayers overlooked claiming this complex credit when they were actually eligible. So they decided to just pay them out automatically. These payments, quote, are an example of our commitment to go the extra mile for taxpayers, WERFL added.
One problem, a quarter of those people who were paid were actually not eligible. $317,000,000 went to non-resident aliens. $117,000,000 went to people who had already received a check. The Biden administration and the IRS went the extra mile in the wrong direction. All told, 301,000 improper payments totaling nearly 450,000,000 taxpayer dollars were given to people who weren't eligible, and the IRS has only been able to recover 29,000 of them.
Mister Bizignano, can you please provide an update as to how the IRS plans to recover this money, particularly from nonresident aliens who may not still be in the United States?
Speaker 4
Well, that was not a very good set of facts. And, you know, when we talk about stamping out fraud, waste, and abuse, there's a prime example of things that we maniacally check and double check to ensure. We have a powerful collections arm, and that powerful collections arm is engaged in this set of efforts. I'm happy to give you updates over time on what's going on there. But, clearly, you know, in a category of getting back what we're owed, those areas clearly sit at the top of the list.
Speaker 36
Thank you, Mr. Bisignano. I certainly appreciate the follow-up because the Biden administration improperly cut checks to foreign workers in the United States on temporary visas. And we don't, it appears, have a great way of recovering that money. So your continued follow-up and engagement on that would certainly be appreciated. Over and over again, the Biden administration promised the moon but delivered boondoggles.
A $42,000,000,000 broadband program that connected zero people, a 7.5 billion dollar electric vehicle charging program that only connected 50 vehicle charging stations. There were splashy press releases announcing infrastructure grants that immediately got kneecapped by red tape. And we also had an IRS with billions at its disposal for an IT modernization program that continue to blow past deadlines. Both the treasury inspector general for the tax administration or TIGTA and the government accountability office have warned that IRS modernization efforts are behind schedule and over budget while the agency relies on outdated legacy systems. Mister Buzzano, Democrats gave the IRS billions of dollars to spend on modernization.
Can you walk through how much of that was obligated and spent before your arrival on true monetization work, as opposed to day-to-day operations, as well as other unrelated priorities? And will you provide this committee with a detailed breakdown?
Speaker 4
Yeah. I think, first of all, I have a philosophy which is going backwards is not what my job is about. It's about going forward. As you know, we rescinded a fair amount of the money. A lot of that money was originally allocated to increase staffing to proportions that were unimaginable.
But the more important thing right now is all runners on base are ours. They're all charged out earned run average, as I like to say. And we are committed to the modernization program, and that's you see happen during this tax season. Any further breakdowns you want, we're happy to give to your office. But I'm maniacally focused on having a great tax season this year, and we're in the process of it in a manner that we're already planning 27, and we know the technology map that will be delivered in '27.
Speaker 36
Thank you, sir. And finally, a simple yes or no would suffice. Would you call the Biden administration's IRS IT modernization efforts a success?
Speaker 35
Mister Horstford. Thank you, Chairman Smith. And to the ranking member, mister Visignano, it's a pleasure to have you here today. I appreciate you taking some time off from your other job as a Social Security administrator to talk to us about the operations of the Internal Revenue Service. This weekend, I met with just over 100 members of the Culinary Workers Union, local 226, to discuss the implications of no tax on tips.
Speaker 35
Chance to talk with Leslie, who's a bartender on the Las Vegas Strip. Her husband also works in hospitality. Like many couples who work in Nevada's hospitality and tourism sector, they both earned tips for a living, and they filed their taxes jointly. And when they heard no tax on tips, they thought, great. Washington is finally listening.
But then they read the details and learned that the deduction is temporary. Married couples face a filing penalty, and automatic gratuities may not qualify. And Leslie asked me a question that cuts right to the heart of this hearing. If this was supposed to help workers like us, why wasn't it written with workers like us in mind? So with Leslie's story top of mind, I'm gonna ask you just a few yes-or-no questions.
The promise of no tax on tips should apply to every worker who earns tips and pays taxes. Right? Yes or no?
Speaker 35
Can you please answer my question? Is the promise of no tax on tips, should it apply to every worker who earns tips and pays taxes? Yes or no?
Speaker 35
Thank you. As the deduction is currently structured, some married tip workers face a marriage penalty. Is that correct?
Speaker 35
As the deduction is currently structured, some married tip workers face a marriage penalty. Is that correct?
Speaker 35
It is. Unlike the tax breaks provided for billionaires and corporations, the relief provided to working families via the no-tax-on-tips deduction is temporary. Is that correct? Yes or no?
Speaker 35
If an employer shifts from tips to service charges or automatic gratuities, that income may not qualify for the deduction. Is that correct? Yes or no?
Speaker 35
So under federal law, tip workers can still be paid as little as $2.13 for their work. Is that correct?
Speaker 35
That is the current sub-minimum wage, as sad as it is. So what I'm hearing is that the promise of no tax on tips and, frankly, the other so-called working family tax cuts that are in the so-called one big betrayal of a bill does not fully match or respond to the realities that workers and their families are experiencing. The promise of no tax on tips does not fully work for workers like Leslie and her husband. That's exactly why I've introduced the tips improvement act, to make tip tax relief permanent, inclusive for all workers, and protected from employer manipulation. Because if we're going to say no tax on TIPS, it should actually work for the people who live on TIPS, and that includes workers like Leslie in Las Vegas.
Congress also passed the no tax on overtime last year. But like no tax on tips, the devil is always in the details. So, again, yes or no. Do airline employees, railroad workers, and school bus drivers qualify for no tax on overtime? Yes or no?
Speaker 35
You do not know. Okay. The answer is no. They do not. 3,000,000 workers who typically work overtime are currently ineligible for tax on overtime.
That's why I've worked with representative Malatakis to introduce the no tax on overtime for all workers act, to ensure that this program is expanded to include these essential workers. Would you be willing to work with my colleague and I to support this no tax on overtime for the 3,000,000 workers who are missing out on that provision?
Speaker 35
Great. I look forward to working with you on that as well. Let me conclude by touching on the issue you didn't want to talk about at the beginning of the hearing, but it does fall within the IRS. As you know, the IRS holds the most sensitive financial data in the federal government. We're talking about Social Security numbers, banking information, and income records for over 160,000,000 taxpayers.
The expectation for the American people is that the IRS will protect their personal information. And as you also know, under President Trump's watch, Doge shared the Social Security data without agency officials' knowledge and in violation of security protocols. So with your IRS hat on, why should the taxpayer trust you to protect their most sensitive information when you were not able to do it over the SSA?
Speaker 4
First and foremost, I've spent my career protecting PAI, and I've protected it in any job I've ever had, including my current responsibilities. Don't think her facts are accurate.
Speaker 35
So it's not accurate that millions of Americans' personally identifiable information, including Social Security information, and other vital information was leaked by Doge? Yes or no? No. It was not despite the fact that the Trump administration's own counsel in court records had to admit that fact. You still won't take responsibility for that information on behalf of millions of Americans.
It is the biggest data breach in US history, in my estimation.
Speaker 35
Well, what's not inaccurate is that people do not feel that their information is being protected by this administration. And it is something that you, in both of your hats, as IRS CEO, and as the administrator of Social Security, should take more seriously.
Speaker 37
Thank you, Mr. Chairman. Right now, I thanks for coming. I wanna focus on the tax modernization and really wanna focus on digital assets. I believe digital assets represent one of the most significant economic opportunities in the global economy right now. The United States can lead in this space, but leadership requires clear, workable tax rules that promote compliance without stifling innovation.
The IRS plays a critical role in getting this right. Clear rules, smart reporting thresholds, and administrable standards will strengthen compliance while ensuring that innovation and capital it attracts remain here in The United States. CEO, Bizignano, the IRS recently issued revenue procedure 2025-31, allowing digital asset ETPs structured as grantor trust to participate in staking. This updated guidance provided a first step toward meaningful certainty, and demonstrated that IRS can adapt as markets evolve. However, important interpretive questions remain about the scope and mechanics of safe harbor.
Will the IRS issue additional clarifying guidance, such as FAQs or informational guidance, to ensure taxpayers can comply with confidence? What support from Congress would help you deliver that clarity efficiently?
Speaker 4
First of all, 100%. We're deep in it. Would be good to come talk to you about it and make sure that for everything you're thinking about, we understand it and have it covered in that guidance. I'd say that'd be fabulous support.
Speaker 37
Thank you. In regard to digital asset reporting, we expect Form 1099-D a implementation will generate a significant volume of information returns. Many of these may involve regulated payment stablecoins that are designed to maintain a stable value, often resulting in minimal or no economic gain on routine transactions. Compliance is crucial, but it must be practical and strategically focused. Has the IRS evaluated whether processing extremely high volumes of low dollar digital asset transactions will materially improve compliance relative to the administrative burden, and what legislative solutions will help the IRS concentrate resources where they deliver the greatest ROI?
Speaker 4
That analysis is in process right now with some preliminary, but I think we probably got a little more time to really have directly where the sweet spots are and where the issues are, sir.
Speaker 37
Yeah. I really appreciate your time here today, and I know I haven't been in my seat that long. But I'd have to say I am disappointed. I really would you guys and his team, you need to do a better job of educating the IRS commissioner about the questions that he's coming here to answer. I mean, I I'm very embarrassed right now, from my side, and you're doing the best you can, sir.
I know you're coming into this with an amazing background. And what I'm saying is gonna get me in a lot of trouble, but this is unacceptable. You really need to come in here and answer the questions that these members ask you directly, and saying, I'll come see you in your office, even to me, on very basic questions that I'm asking you, is really upsetting. And I don't actually think it's you who's letting us down. I'm gonna look at your team right behind you.
Because if I was working for a principal, I would never let them walk into a hearing like this if they worked for me. Mister chairman, I yield back.
Speaker 34
Thank you very much, Mister Chairman, and good afternoon, Mister Visignano. Is that correct?
Speaker 34
Okay. Great. Thank you. Wanted to have I represent the Virgin Islands, and we have a very unique tax system as you're well aware, where we have a mirror code of tax administration. Our residents, of course, as you know, pay income taxes to the Virgin Islands Bureau of Internal Revenue, not the IRS, but their liability is calculated using the federal tax rates.
And this distinction is foundational to how our territory functions. In 2025, many Virgin Islanders received notices from the IRS claiming non-payment of federal taxes. And these notices were alarming and confusing to a lot of constituents who had dutifully paid their taxes through the territorial system as they always had been legally required to do so. Our office contacted the IRS about the problem, and your team responded promptly and effectively. We're really grateful for that. I learned that before the recent restructuring, the IRS system automatically generated notice letters for all non-filers.
And then previously, you had employees who would manually review and then remove letters scheduled for Virgin Islanders, because they recognize the MERS tax system. However, with the restructuring, this led to this disruption, and letters went out when they should not. I understand that your team is working with the Virgin Islands Bureau of Internal Revenue to address the problem, and just wanted to make sure that I have your assurance that they will continue to do that as we come into the new tax season.
Speaker 34
Thank you. The other issue I wanted to raise to you is one that is fundamental inequity affecting territorial residents, not just Virgin Islanders, but all of the US territories. In your role as commissioner of Social Security, you oversee federal benefits intended to provide a safety net for elderly, blind, and disabled Americans. I wanna direct the committee's attention to a significant gap in this safety net. The exclusion of United States citizens residing in US territories from supplemental security income eligibility.
Now this committee has looked at this issue previously and has tried to make congressional fixes to it in previous legislation, which went through the committee, passed in the House, but was not taken up in the Senate. I wanted to know, sir, if you would commit to working with my office to seek a solution to the problem that would provide SSI eligibility to people living in the territories.
Speaker 4
Although I've answered multiple times, this is not an SSA hearing. Yes, ma'am. I will.
Speaker 34
Okay. I appreciate that. And I wanna thank you again for working with us, and the unique tax structure that we have with a mirror code, that means that additional attention needs to be paid sometimes to how we are paying into the Virgin Islands system rather than the federal system. And, of course, wanna thank you again, and hopeful that yourself or someone from your team would work with us on the SSI issue. I recognize that the Supreme Court has said that this is a congressional issue, but I'm sure that having the support of your office would go a long way in convincing other Americans that, in fact, there is benefit to this rather than keeping these individuals out and then in some ways becoming a greater financial burden because of illness and other issues that they may have by not having this support of SSI, that, in fact, something can be done to fix it.
And with that, I'm going to yield back the balance of my time, which I do have. And thank you for the opportunity to speak with you.
Speaker 38
Thank you, Mr. Chairman. CEO Bisgnano, thank you for being here this morning. I'm really excited that we're getting to talk about how your work at the IRS is making lasting impacts for the good of the American taxpayer. We talk a lot in this committee about the amount of money that the taxpayers are getting back because of the substantive decisions that we've made. But I think it's also important for us to talk about a lot of the process-oriented matters that your office is taking advantage of to make the process better for taxpayers and to provide better service for them.
So thank you for that. As you know, congressional Republicans are working to modernize all of the tax enforcement and dispute resolution matters, but I'd like to specifically talk about the latter part of that process. My bill with Miss Sewell, HR 5349, the tax court improvement act passed out of the house last December, and it gives the tax court clearer authority to sign subpoenas, obtain discovery evidence before a hearing, streamline judicial review, and hold tax court judges to the same disqualification standards as other federal judges, all whilst improving security and civility in court proceedings. From your vantage point, here's my question as IRS CEO. How can these improvements in tax court procedures and standards help the IRS conduct more efficient, fair, and timely enforcement and audit operations?
And are you aligning your modernization efforts, such as case management systems and litigation support tools, to take full advantage of these needed changes?
Speaker 4
Thank you for the question. And, you know, I think the tax law changes are a big deal for us. I think, you know, this is an end to end process, and our ability to, in every step of the end to end process, make improvement both with your help and, technically, we'll get better outcomes. You know, we're maniacally focused on taking time down. You know?
And I appreciate your comments earlier because the fact that matters is we've been able to give the American public time back with all the modernization we talked about, or transformation of allowing them to do 40,000,000 more queries online this year than last year. And it all is part of the same equation helping the American taxpayer.
Speaker 38
Yeah. There's lots of improvements to be made in your office under your leadership is doing that. So, thank you. I wanna shift focus to a more specific tax enforcement issue that has plagued the IRS the last 5 years, the employee retention tax credit. A recent report from the GAO published this month confirms the massive scale of the crisis that you inherited, noting that the IRS has processed nearly 5,000,000 ERTC claims totaling approximately 283,000,000,000 dollars as of June 2025.
Shockingly, the GAO found that 83% of those refunds, roughly 235,000,000,000, were not even issued until years after the pandemic ended, primarily because the Biden administration was so unprepared to assess improper payment risks or process the surge in claims. Here's my question. The GAO report specifically criticized the IRS back then for not allowing key risk management principles, and for failing to even produce an estimate of improper payments as required by law. As CEO, how are you using your new staff redirection and modernization tools to finally quantify these improper payments and claw back the billions of dollars that the GAO suggests were paid out to bad actors and ineligible claimants?
Speaker 4
Yeah. You know, we had about 1,500,000 outstanding. That's down to 29,000. So that was the ability to clear it all out accurately. Earlier, I talked about a risk management meeting, and that discipline is to go at all GAO comments, all IG comments, and solve the problem.
And so, you know, as we get together on Fridays, this is on the to-do list of things that have to, look back, and there's fraud, waste, and abuse in here, and our job is to deal with it.
Speaker 38
One other thing I'd like for you to put on the to-do list to end my time today, I wanna reiterate on behalf of a number of the companies in my district the importance of the factory floor research that's routinely excluded from qualifying for the R and D tax credit, something that my colleague, Congressman Custoff, raised with you. This, along with the compliance burdens companies face due to inconsistent interpretations each year, are stifling innovation, and that's not what we want. It's not what you want. It's not what I want. I know it's not what this committee wants.
So I would just urge you to look into that matter, that factory floor research, and its inclusion into the R and D tax credit. So thank you for your time. Thank you again for being service oriented and oriented towards the taxpayer, bringing more value and efficiency to the taxpayer themselves through everything that you're doing. So, thank you. I yield.
Speaker 21
Thank you, Mr. Chairman. Mister Bisignano, thank you so much for being here today. I know it's been a long hearing, and I appreciate your service to the country. We're grateful to you for the hard work that you put in on behalf of the American people. We got a big problem in our country with massive deficits.
It's a major problem. And there are only two things you can do. You can either increase revenues or decrease expenses. That's the only choice you have. Increase revenues or decrease expenses.
And that's a very big part of where your job comes in. When it comes to the decreased expenses, they tried earlier on before you were in this position to use Doge to try and cut expenses in different departments. And Doge, especially at the time that mister Musk was running the whole thing, I don't think did a very effective job. In fact, I think it may have cost us money in the process. And we've heard today about the release of some private information.
Do you think that Doge, when it was under Mr. Musk, did a good job here for the country?
Speaker 4
You know, I like to say when I came in, really, Mr. Musk was gone. And so I said earlier about looking back. It's not really where I spend my time. I spend my time looking forward. I think we're driving a client service agenda.
Speaker 21
No. No. I know that. I was just saying because this whole thing about the release of people's private data, and I know privacy is a very big issue for you both in your private sector career before this. And now if you said many times today, I've been listening to you, how important it is to you.
But they did release private data back then. And so I'm just asking, do you think that they did a good job under Mr. Musk in their efforts to try and reduce expenses and also releasing this information? Did they do a good job?
Speaker 21
Okay. Let’s not talk about it then. Okay. So you said earlier that there are three things that are your priorities. Number one is service.
Number two is collections, and number three is privacy. Privacy, we're not gonna discuss any further because we think there have been some real privacy violations that took place under the Doge leadership that was there before you took this position. Number two is service. I know service is really important to you. What was important to you in your private sector career before you came here?
You're trying to work on service, but we heard a lot of complaints about delays and things like that today, which have always existed at the IRS, but there are some concerns that it's gotten worse. One of the things that happened before you got there, before the Trump administration took over, is they increased the size of the number of employees in the IRS dramatically. They increased it to 100,000 employees. And then at the beginning of this year, it was down to 80,000 employees. So that's where the 20% reduction comes from.
Has there been, what do you think, the right number of employees for the IRS?
Speaker 4
What do you think? Right now, you know, I heard your comment about delays, but if you look at the data, we're getting the best performance for our client base.
Speaker 21
Okay. Let's say you're doing a better job. I just wanna say, what do you think the number of employees is for the IRR? You know this number. I'm sure you I feel.
Speaker 21
So there's been a 25,000-person reduction in the number of employees. How does it stand as far as the customer service employees? How many employees do you have in customer service?
Speaker 4
You know, I mean, that's the largest component of the place. And in fact, you know, right now, we're answering the phones in single digits, which is.
Speaker 21
Okay. I just wanna try and get the actual numbers on the right? Okay. Let me move on to the last part because I'm running out of time, it is collections. Collections is really the big thing.
Do you think that the idea of the tax gap is a real thing? Bunch of people out there that are not paying their taxes and should be paying their taxes. They're not, you know, there's been testimony before this committee by previous IRS commissioners and others about how big the tax gap is. Do you think the tax gap is a real thing, that there's money out there that we could be collecting that we're not collecting? And number two, how big do you think the tax gap is?
Speaker 4
That's a it's like a really great question. And, I've talked a couple times today about it. You know, the last report out says the tax gap is $650000000. That's 2022. Historically, it appears that the tax gap was not a tact item if you look at it.
Right?
Speaker 21
Not a fact. Not. I mean, yeah. So we need to attack the tax gap and try to get that $650,000,000,000.
Speaker 4
Going underway right now is to understand what's the real addressable market of the tax gap. And I think I said I'm happy to come back when you think appropriate, right, after that analysis is done to understand it better.
Speaker 21
Well, I'd like to meet with you personally because my impression right now.
Speaker 21
No. I'll be here in Washington. That's fine. But Long Island, we'd love to have you, too. But I think that right now the tax gap is the result of some of the, you didn't say before you didn't think this was the case.
I still think it's the case. I'm willing to be educated by you. But I think it's wealthier people and corporations that have had fewer audits than they've had. Like, I think it's something like 30% less than they used to be ten years ago. And so we need to figure out how we can collect the money from the people that owe us money that are not paying their taxes, to make sure we're getting what the US government deserves pursuant to the existing tax code.
Speaker 39
Thank you, chairman. Mister Buzzignano, like, sir, I really appreciate you today. Appreciate it. Our closed door meetings anytime you're in public, one of the most forthright officials that I've had a chance to interact with. You communicate reality.
You're about the numbers, and it's very much appreciated. I'm lucky representing Ogden, Utah. They represent over 7,000 IRS employees in Ogden. It's clear to me these employees are hardworking, dedicated people who they're excited to be part of the technological innovation that you wanna bring to, ultimately increase their efficiency and their ability to do their job. And I love that we're seeing good numbers on this, and it's something that, you know, we'll always be willing to work closely with you.
Happy that the IRS is prioritizing customer service and timeliness in the process of returns this season. Can you speak to how you are simultaneously incentivizing the number of claims processed and ensuring the accuracy of those claims being processed?
Speaker 4
Well, the only way to do more is with technology. Right? And, I mean, obviously, direct deposit, which we're huge advocates for both eliminating fraud and also improving timeliness, is really allowing us to get more money in Americans' pockets better. And then, you know, the accuracy is the job. Right?
There's nothing more important than timeliness and accuracy. And, you know, we continue to build systems that allow us to react quickly to the data in front of us. Like I said earlier, simple math, there are a lot of times are immediately prompted to the filer to know. So I think, you know, we implemented a pretty big set of rules, that, you know, there was lots of reports out, whether it be the inspector general or GAO, you know, or the national taxpayer advocate wondering how we could get this done. But the good, hardworking people of the IRS were highly motivated to execute on this.
And I can't say enough about having a good, dedicated workforce and career leadership that's getting the job done.
Speaker 39
Yeah. Well, you're welcome to Ogden anytime. The working families tax cuts last summer, we prioritized setting families up for success with larger and permanent child tax credit, increased standard deduction. And, of course, one of my priorities was making investment accounts available to every American child. Over the next four years, every baby born will have a seated account in Trump accounts.
Plus, you have philanthropy stepping in and doing, and then just, like, a mind boggling amount of contribution to enabling children 10, basically, to be able to start this concept of investing for their future at the youngest age possible. I think it's a game changer. I know you're aware of it. These are you, you've done the IRS has done a great job of making this easy to sign up for. We've already had, I believe, 3,000,003 children already signed up for this.
And so making forms 45, 47 available is huge, and it's an operational goal as well as an aspirational one as well. You've had an extensive background in financial services. Can you share how you would approach this new opportunity, in, you know, in one of your, say, former roles in that sector? How would these accounts set up a new generation of Americans for success?
Speaker 4
Well, I mean, you know, you've seen the math on it. You see what it's worth. I think it's innovative, creative, and I think it's being well received. I think it will become explosive. You know, it's, obviously, it's July '26 where it's fully enacted, but the fact we have 3,000,000 enrolled, one and a half per family, almost a million newborns getting a thousand deduct a thousand benefit.
And I think, you know, we're gonna have what I call plenty of distribution partners. Right? All types of financial advisors are going to advise families. It will be a natural adjunct as the IRA was. It's just a different form of an IRA.
It's innovative, creative. I give everybody a ton of credit for what they've done, and I think we've only just begun it.
Speaker 39
And I can't express my appreciation. Simple as we can make this for people to recognize that this is a good program. It gets signed up, and they get set up for success. Companies can send their contributing at grandparents as well as philanthropy. It's gonna be an awesome opportunity.
So thank you so much, sir. Appreciate it, and thank you to your team.
Speaker 1
I wanna thank you, CEO Bizignano, for appearing before our committee this afternoon. Please be advised that members have two weeks to submit written questions to be answered later in writing. Writing, those questions and your answers will be made part of the formal hearing record. And with that, the committee stands adjourned.
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