Internal Revenue Service commissioner Chuck Rettig testified Wednesday before a House oversight subcommittee about the IRS’s performance during the novel coronavirus pandemic, where he heard complaints from lawmakers about their constituents missing stimulus payments.
The hearing also focused on the financial condition of the IRS and the state of its aging technology systems.
The worst is yet to come from the coronavirus pandemic, said the commonwealth's revenue secretary, Dan Hassell.
The Internal Revenue Service and the Treasury Department have reversed course on requiring senior citizens to file a “simple tax return” in order to receive a stimulus payment as part of the coronavirus package passed by Congress last week.
Brad Finkelstein is the originations editor of National Mortgage News. While he covers the entire process, Brad's specialty is loan production and its associated parts from lead development through secondary marketing.
Brad joined National Mortgage News in 1990 after working on the North Hempstead/Northeast Queens desk for This Week publications on Long Island and then as associate editor of the Airport Press, covering both passenger and cargo stations at the New York area airports. While part of the NMN family, Brad was the editor of its wholesale publications Broker Magazine and Origination News, and in those roles and now in his current role, coordinates the annual Top Producers survey. Brad is a past president of the New York Financial Writers Association.
- Awards — Among the awards he has won was as regional finalist for the Azbees in 2021 for Online - Online Breaking News Coverage for work in stories on the coronavirus pandemic's impact on the mortgage industry along with Paul Centopani and Bonnie Sinnock. The following year he was part of the regional finalist for Online - Online Single Topic Coverage by a Team for coverage of industry layoffs along with Bonnie Sinnock, Andrew Martinez and Maria Volkova.
- Education — He has a Bachelor of Arts in Political Science with a minor in Urban Studies from Queens College. He also attended the graduate journalism program at New York University..
- Experience — In 1989, Brad was a reporter on the North Hempstead/Northeast Queens desk for This Week publications on Long Island, with primary coverage of the Great Neck and Little Neck areas. Between January and May 1990, he was associate editor of the Airport Press, covering both passenger and cargo stations at the New York area airports. Brad joined National Mortgage News in May 1990.
- Journalistic affiliations — Brad is a member of the New York Financial Writers Association, where he also served on the board of directors and as an officer of the organization for four years, culminating as president in 2004. Since then he has served on a number of NYFWA committees, including membership, Financial Follies and nominations.
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“IRS employees have worked around the clock since mid-March to develop new tools and deliver meaningful guidance to simultaneously deliver Economic Impact Payments in record time while still keeping the annual filing season on track,” Rettig said in his opening statement. “In fact, millions of Americans started seeing EIPs show up in their banking accounts within 14 days after the CARES Act was enacted on March 27. So far, more than 160 million payments totaling more than $270 billion have been delivered, most by direct deposit and some by paper check or prepaid debit card.”
He noted that in the IRS’s efforts to deliver the Economic Impact Payments, the agency balanced the statutory requirement to provide the payments as “rapidly as possible” with the need for accuracy and concern about potential fraud. He pointed to a report in June from the Treasury Inspector General for Tax Administration saying the IRS correctly computed the payment amount for approximately 98 percent of the more than 157 million EIPs issued as of May 21.
Subcommittee chairman Gerald Connolly, D-Virginia, praised the IRS’s ability to operate during the pandemic despite years of budget cuts and aging computer systems, but also pointed to the complaints about the stimulus payments that were never received.
“While our witnesses will testify that the IRS did what it could with the available resources, it’s what didn’t get done that is really troubling,” he said. “It’s the millions of taxpayers who were unable to get their refunds because they filed a paper return. It’s the millions of tax returns that hit a snag and the corresponding taxpayers couldn’t get assistance because IRS call centers were closed. It’s the 9 million people who have yet to receive their stimulus checks, primarily because the IRS does not have their information because their income is so low they don’t qualify to file a return. These are our nation’s most vulnerable. We have a duty to help.”
Rettig pledged to do more to help. “Although the IRS has sent out the vast majority of these payments, it continues its extensive outreach efforts into the historically underserved communities of our nation,” he said. “We have remained especially focused on getting payments out to people who are homeless, who don’t normally have a return filing obligation, or who otherwise live their life outside normal lines of communication. The IRS is taking every possible step to reach potential EIP recipients. We have extended our reach far beyond our normal contacts to many lower-income, military, veterans, retired, older, limited English proficient, and homeless communities around the country. In fact, we have worked with our partners to distribute EIP outreach materials in 35 languages within these communities.”
He pointed to the IRS’s efforts to offer tax information in Spanish and other languages, noting his wife is an immigrant for whom English wasn’t her first language. Rettig said the IRS has also been getting assistance from hundreds of local community groups and religious organizations and has developed a special online toolkit containing helpful information for them to use in identifying and getting the word out to people who qualify for EIPs. He said the IRS is also mailing out letters to approximately 9 million Americans who either haven’t received an EIP yet, or haven’t filed a tax return for 2018 or 2019, as the stimulus payments initially went out to those who had filed returns for those prior years, using their direct deposit information on file with the agency.
Lawmakers pressed Rettig to provide more specific data about who was still owed the payments and to allow incarcerated people to receive the stimulus payments as well. The CARES Act did not specify that incarcerated individuals couldn’t receive the payments, but the IRS and the Treasury Department later made that interpretation. Some lawmakers argued the exclusion of incarcerated people from receiving the payments also leaves out those who are joint filers, exposing their spouses and families to further economic hardship during the recession. Rettig refused to commit to rectifying the situation, citing ongoing litigation, although a judge in California ordered the IRS last month to stop withholding the stimulus funds from incarcerated individuals and their families.
The hearing also covered other matters, such as the IRS’s relatively high audit rate of low-income taxpayers who receive the Earned Income Tax Credit compared to wealthier taxpayers. Rettig bristled angrily at accusations of improper bias at the agency.
“According to studies out of the University of Pennsylvania, by simply beefing up the auditing capacity of the IRS to allow for more oversight of the super wealthy — those claiming more than $10 million in adjusted gross income — our government would collect more than $7.5 trillion over the next decade,” said Connolly. “Because that’s the size of the tax gap that the wealthy — who fear little consequence from a beleaguered IRS — have left in our nation’s coffers.”
Connolly said he was pleased with reports this week that the IRS is finally investigating allegations of criminal tax fraud at the National Rifle Association. “I have long led congressional efforts asking the IRS and the Department of Justice to investigate the NRA and its CEO Wayne LaPierre,” he said.
The hearing also looked at the IRS’s aging computer systems. In conjunction with the hearing, the Government Accountability Office released a report that found problems with those systems.
Vijay D’Souza, director of information technology and cybersecurity at the GAO, also testified at the hearing. “Effective IT is essential to IRS’s operations and was important to the distribution of millions of economic impact payments dispersed as part of the CARES Act,” said D’Souza. “IRS’s IT budget has been fairly flat over the last 10 years.”
Rettig said the IRS has been working on improving its technology in response to the Taxpayer First Act, which Congress passed last year in an effort to reform IRS operations. He also outlined the ways the IRS has been using technology to respond to the pandemic.
“During this time, the IRS has been using innovative approaches to make sure our employees can deliver on the agency’s mission,” he said. “We have set records for the number of IRS employees teleworking, thanks to the continued support of our Information Technology division. Our IT systems continue to perform at a high level. Our internal networks are supporting approximately 57,000 employees online at the same time, all in a secure environment.
He noted that the IT department provided the equipment necessary to allow thousands of IRS customer service representatives to telework, and the IRS was able to continue bringing on new employees through the use of a virtual onboarding process.
“We have also been continuing the agency’s ongoing work to find new ways to serve taxpayers, including our efforts to expand online and other options for them,” Rettig added. “For example, this summer for the first time we began offering an electronic filing option for taxpayers who need to amend their income tax returns. Providing an online filing option for the amended return — also known as Form 1040-X — has been an IRS goal for many years and is a major milestone for us. Electronically accepting Form 1040-X posed a number of unique challenges, but we succeeded thanks to a great deal of hard work by employees across the agency.”
Some lawmakers agreed with Rettig that the IRS could use a bigger budget to update its computer systems, some of which date back to the Kennedy administration.
“We need to be asking what the IRS could have done to help our country if it had been properly funded and adequately staffed, instead of being subjected to years of bitter Republican abuses,” said Rep. Carolyn Maloney, D-New York.
National Taxpayer Advocate Erin Collins said the IRS could use some help with its technology to deal with the pandemic and just the regular tax season. “In the best of times, the filing season presents challenges for the IRS,” she said. “Considering the additional challenges the pandemic has presented, the IRS has performed admirably. Yet despite the IRS’s best efforts, some taxpayers experienced unusual difficulties in their dealings with the IRS. While a portion of those difficulties is attributable to the impossibility of anticipating and planning for the impacts of a national shutdown, some of the difficulties would have been substantially lessened if the IRS had better technology and more staff to meet the needs of taxpayers.”
