WASHINGTON, D.C. – Ways and Means Committee Chairman Jason Smith (MO-08) delivered the following opening statement at a Committee markup of tax administration legislation.

As prepared for delivery.

“Welcome to our markup of tax administration legislation.

“The Ways and Means Committee is dedicated to improving the IRS for the benefit of taxpayers. To that end, we will consider seven bills that strengthen taxpayer protections, improve customer service at the IRS, and provide transparency regarding the questionable activities of certain tax-exempt organizations.

“Several of the policies in these bills come as recommendations from the National Taxpayer Advocate, an independent office within the IRS charged with protecting taxpayer rights at one of the most feared federal agencies.

“Our first piece of legislation postpones tax deadlines for hostages and individuals wrongfully detained abroad. Upon their return home, these hostages could be greeted with a stack of bills from the IRS seeking to collect the income tax they owe from the time they were detained abroad. That’s not right. The IRS shouldn’t add insult to injury with demands for payment while these Americans were held in captivity. Representatives Tenney and Beyer have introduced legislation that extends the tax deadlines for Americans held hostage or wrongfully detained and their spouse.

“The next bipartisan bill introduced by Representatives Max Miller and Suozzi protects victims from taxation on the losses they incur due to theft. Today, Americans face countless scams, and many victims may not find out they have become the target of one until years later. Unfortunately, current tax rules require victims to pay tax on their scam-related losses. This bill helps make taxpayers whole again by allowing them to deduct the losses incurred from scams, and if they discover they have become a fraud victim years after the fact, allowing them to file an amended return to receive a tax refund on those losses.

“We will next consider legislation from Representatives Steube and DelBene that strengthens the voice of taxpayers in court cases related to taxpayer rights. This legislation would allow the National Taxpayer Advocate to file amicus briefs in federal courts in support of fundamental taxpayer rights, particularly those contained in the Taxpayer Bill of Rights.

“Next, we will look at legislation from Ways and Means Committee Vice Chairman Buchanan and Representative Horsford that harnesses the power of Artificial Intelligence to identify fraudulent or inaccurate tax returns. AI could make the IRS workforce more efficient, and ensuring the IRS is prepared to utilize this technology is important to the future of the agency. That’s why this legislation creates a new pilot program for the use of AI in identifying tax returns to test the best approaches for keeping private information secure.

“Our next piece of legislation tackles fraud in tax preparation. Too many Americans have encountered so-called ghost tax preparers, shady businesses who, unbeknownst to the taxpayer, file income tax returns that appear as if the taxpayer prepared the return themselves. This illegal act can cause taxpayers to become entangled with the IRS through no fault of their own. This bill from Representative Malliotakis cracks down on these illegal operators and clarifies the tax law so innocent Americans deceived by these fraudulent tax preparers are not on the hook for assessments, taxes, or penalties for the indefinite future.

“After, we will consider legislation from Oversight Subcommittee Chairman Schweikert that modernizes the IRS workforce by establishing a data scientist fellowship program that will help the agency solve complex tax administration problems and improve customer service at the IRS.

“Lastly, we will consider legislation that updates the Form 990 Schedule H, the annual disclosure form required of all U.S. tax-exempt hospitals. Committee hearings and investigations into hospital empires have made it clear that the 990 form, in its current version, is woefully inadequate and makes it possible for these entities to hide potential abuse of the tax code.

“Tax-exempt hospitals, who are supposed to care for needy patients at low-cost or no charge in exchange for their lucrative tax break, do not always reveal how much charity care is provided at each of their member hospitals. What we do know is tax-exempt hospitals look less like hospitals and more like hedge funds. 

“These multi-billion-dollar tax-exempt hospital empires engage in real estate and stock investments, purchase stadium naming rights, and even participate in political activism. The CEO of the nation’s largest tax-exempt hospital chain admitted to this committee that his hospital empire invested $718 million in equities along with paying $21 million in compensation to the previous CEO. If all this money is being spent on items unrelated to health care, Americans deserve to know how much charity care a tax-exempt hospital provides to vulnerable patients.

“This bill, introduced by Dr. Murphy, promotes more transparency by updating the 990 form so tax-exempt hospitals share additional information to give taxpayers a clearer sense of how hospitals choose to take advantage of their generous tax breaks.

“Sunlight is the best disinfectant. If passed, I’m hopeful many entities will be inclined to put more money into patient access through charitable care and less into self-promotion. 

“I look forward to working with my colleagues to advance these bills out of Committee and to the House floor.”