Pascrell Opening Statement at Oversight Subcommittee Hearing on “Taxpayer Fairness Across the IRS”
(As prepared for delivery)
Good morning. The Oversight Subcommittee meets today to discuss a very important topic: Taxpayer Fairness Across the IRS.
I firmly believe the IRS must treat all taxpayers fairly and equitably. This is essential to the IRS’s core mission and to the taxpayer experience.
Whether the IRS is processing returns, answering taxpayer questions, or conducting audits, there cannot be one tax system for the wealthy and another for everyone else. And yet that is exactly what we have.
For years, I have sounded the alarm on our two-tier tax system. Since I’ve been Chairman of this Subcommittee, we have held multiple hearings on making our tax system fairer.
Clearly our tax code can be fairer. I have offered legislation to close some gaping loopholes in our laws that have faced resistance by vested interests.
Based on testimony submitted before this Subcommittee, I have also made important suggestions to the Treasury and IRS on actions they can take themselves to make things fairer. We will continue to press the Administration on these points.
But today, we will highlight administration and enforcement, looking at some of the ways in which millionaires and billionaires have vastly different experiences with the IRS than average Americans.
We have heard reports about return backlogs in the tens of millions. We have uncovered erroneous notices being mailed to taxpayers. We have learned about millions of taxpayers calling the IRS only to receive no answer from the agency.
You don’t have to be Lieutenant Columbo to see the IRS has major problems. These IRS failures cannot continue.
To learn more about how the IRS is fixing these issues, we have invited Mr. Ken Corbin. Mr. Corbin is the IRS Commissioner for Wage & Investment and the Chief Taxpayer Experience Officer. Mr. Corbin, we are eager to learn how the IRS is actively working to improve the taxpayer experience for Americans who aren’t millionaires.
There are many reports showing that the IRS is auditing low-income families at a much higher rate than high-income taxpayers. Specifically, data shows that a taxpayer with income under $25,000 is twice as likely to be audited than someone earning between $200,000 and $500,000. That disparity is an outrage.
And it’s even worse if you claim the Earned Income Tax Credit. Then the IRS is four times more likely to audit you. Why? Because it is quicker and less expensive. The IRS seems to see poor Americans the same way the Harlem Globetrotters view the Washington Generals: the IRS goes after people who can’t easily defend themselves.
I asked the GAO to study audit trends.
Today, Mr. James McTigue, the Director of Strategic Issues at GAO, will report on GAO’s findings. As a little movie preview: take a gander at the graph behind me showing nose-diving audit rates of the super-rich the last decade.
I understand that the IRS justifies its auditing record on its staff limitations. I know that the IRS has a difficult time operating after Republicans have spent a decade slashing IRS funding to sabotage tax enforcement against the rich.
But too many decisions at the IRS involve looking at what can be done rather than what should be done. Low-income families should not face the consequences of the IRS’s funding problems while the rich get off scot-free.
Deliberate sabotage of the IRS has created an agency that cannot process returns, cannot correspond with taxpayers quickly, and cannot even answer telephone calls for help. This IRS is failing to modernize and prepare for the future.
These failures are why I have now called on the President to fire the Commissioner appointed by Mr. Trump and quickly select a replacement.
I believe in investing in the IRS and I support additional funding. But the IRS must do more to improve its operations – to eliminate backlogs, answer more telephone calls, and to improve audit selection. These are the absolute basics and there is no excuse when you fail the basics.
So, I welcome today’s witnesses, Mr. Corbin, and Mr. McTigue.