Family and Small Business Taxpayer Protection Act

Floor Speech

Mr. Speaker, I rise in strong opposition to H.R. 23. My friend from Nebraska suggested a number of issues that we intend to challenge during the course of the next half hour, based upon the facts.

This is theater tonight, Mr. Speaker. If we didn't get enough of the entertainment factor last week, we are going to proceed with it again this evening.

Mr. Speaker, 87,000 IRS agents, let me debunk that right away. There are regular retirements of up to 8,000 a year, we are replacing them.

How about the methodology of a computer upgrade, an investment in technology, more modeling, or should we have an IRS that operates the way Southwest Airlines did last week--to the dismay of the American family.

This is a messaging bill, Mr. Speaker. The message that they choose to send--and let everybody understand this, the first bill that they have submitted, according to the Congressional Budget Office, adds $114 billion to the Federal deficit. Legislation number one.

They don't want a fairer tax administration. They think it is bad for some of their supporters. You know what they're attempting to do tonight is bad for middle-class families, it is bad for small businesses, who are then asked to pay more when the people at the top don't pay their fair share.

Mr. Speaker, I include in the Record a letter from Charles Rossotti, the former IRS Commissioner. March 1, 2020. Hon. Richard Neal, Chairman, Committee on Ways & Means, House of Representatives, Washington, DC.

Dear Chairman Neal: I was IRS commissioner from 1997 to 2002. At the time, Congress passed a major bill that produced some important, long-lasting reforms, including converting the IRS to electronic filing and improving treatment of taxpayers.

I believe there is a major modernization opportunity today that could efficiently recover a large amount of revenue. It could gradually shrink the tax gap, while also easing burden for millions of taxpayers who interact with the IRS.

I am enclosing my article in Tax Notes, entitled ``Recover $1.6 Trillion, Modernize Tax Compliance and Assistance,'' which explains this opportunity.

I would be happy to talk further to you or your staff about this opportunity. Sincerely, Charles O. Rossotti, Commissioner of Internal Revenue, 1997-2002. ____ [From Tax Notes Federal, Mar. 2020] Recover $1.6 Trillion, Modernize Tax Compliance and Assistance (By Charles O. Rossotti) I. The Problem

Last year the federal government failed to collect $574 billion of taxes that were legally due but not paid. That's equal to more than half the budget deficit and, remarkably, is equal to more than all the income taxes paid by 90 percent of individual taxpayers.

No business would tolerate such a gigantic financial loss, so why is it accepted in the government?

Columnist George Will captured a widespread view when he recently wrote that ``shrinking the tax gap . . . is a decades-old aspiration in Washington that would have been accomplished already if it were possible.''

This resignation in the face of massive revenue loss is a self-fulfilling prophecy. The perception that nothing can be done to reduce the loss rationalizes inaction, which allows the loss to grow year after year.

The tax gap has indeed been around for a long time, but very little has been done to fix it.

As the economy and the tax system have become bigger and more complex, the resources provided to the IRS have been regularly cut. These cuts have been made in small but steady increments over the past 25 years. They have served in some ways to validate complacency about the tax gap, which, while growing in dollar amount, has remained relatively constant as a percentage of taxes due. The implicit conclusion of many observers is, ``If IRS budgets can be cut and the IRS continues to maintain the status quo, maybe nothing the IRS does really makes much difference.'' That conclusion is demonstrably false.

Most taxes continue to be collected without IRS intervention for two reasons: First, most taxpayers have no choice but to pay because their taxes are withheld or their income is clearly reported; and second, about 85 percent of the public has a positive attitude toward tax compliance.

These factors still allow a substantial proportion of taxpayers to fail to pay what they owe, producing an ever- increasing tax gap.

In the limited number of cases in which the IRS audits returns, it directly collects additional revenue that exceeds the cost of enforcement. A recent study by Natasha Sarin and Lawrence Summers showed that revenue collected from audits declined proportionately as audits were reduced. Taking a broader, top-down view, IRS enforcement activities in fiscal 2017 produced $56 billion in revenue, of which $12 billion was from auditing, while the entire IRS enforcement budget was $4.7 billion.

Although traditional IRS enforcement activities do produce revenue that reduces the tax gap, these results are not entirely inconsistent with the perception that there is no way to make a big reduction in the gap. Again taking a top- down view, if all of IRS auditing produces $12 billion of revenue, doubling the audit rate would reduce the current tax gap by only about 2 percent if the revenue increase were proportionate. While an extra $12 billion of revenue per year would be considered a big gain on almost any scale, it is only a dent in the massive amount of the tax gap.

Although not a justification for failing to do more with traditional means to recover taxes from those who don't pay, these facts emphasize the importance of new approaches to shrink the tax gap. This report proposes a program, Tax Compliance and Assistance 2020 (TCA 2020), to put the tax gap on a reliably declining path, recovering an estimated $1.6 trillion over the first 10 years while also improving service to all taxpayers. ii. a new approach

TCA 2020 proposes two major reforms: adding third-party reporting of some income that is not now reported, and using new technology to transform the IRS compliance and assistance process.

Because the biggest part of the tax gap is from income that's not reported to the IRS by third parties, some additional reporting will help identify the missing income. However, the IRS today cannot use all the information it already receives, and significant areas of noncompliance are barely addressed, so more reporting alone will not solve the problem.

New technology will make it possible for the IRS to rapidly assess all returns and sources of information, identify likely areas of noncompliance, and assist in efficient follow-up. It will gradually transform the IRS process for compliance and taxpayer assistance.

This new approach will improve the way millions of taxpayers interact with the IRS, and no additional reporting would be required for individuals who receive modest income from sources like home businesses or driving.

This proposal does not require the invention of new technology, but rather application of new methods already used in government and industry, including methods used on a limited scale in the IRS today.

This proposal is based on more than 50 years of business and government experience that I gained as a company founder, CEO, director of 20 public and private companies, IRS commissioner, and member of President George W. Bush's tax reform panel, and through service on nonprofit boards and government committees. Almost all of these ideas have been previously advanced in some way by others, but TCA 2020 is my own integration of those ideas with practical ways to implement them. I was ably assisted in this work by Michael Udell of the District Economics Group and other experts in tax and technology. iii. summary of estimated results

If these proposals were implemented starting in 2020, we estimate the results would be as shown in the Estimated Results table. The method and details are provided in Appendix A, Exhibit 1, to this report, which is available on our website.

As the new proposals are implemented, the gain would steadily increase, reducing the unmitigated tax gap by about 29 percent in the 10th year and gaining a 10-year total of about $1.6 trillion. In subsequent years, the gain would continue to grow both in dollars and as a percentage of the unmitigated gap.

This new approach to address the tax gap would not require a proportional increase in the IRS budget. We estimate that the revenue gained would be 16 to 33 times the additional cost to implement it. iv. understanding the tax gap

The tax gap is not a result of a taxpayer's judgment or interpretation of the tax code. It's a matter of many taxpayers not paying all of what they legally owe, and the government allowing that noncompliance to continue.

The tax gap therefore constitutes a large loss of revenue that's not intended by the tax code. It is intrinsically unfair, because it's a financial advantage that only noncompliant taxpayers receive.

An IRS study of tax returns filed from 2011 to 2013 found that the net tax gap per year was $381 billion. This is the amount that should have been paid under the law but wasn't, even after IRS enforcement efforts. The tax gap grew to an estimated $574 billion in 2019, applying the same ratios of income as in the last IRS study.

This huge revenue loss doesn't even include revenue lost from large corporations that skillfully exploit the many arcane provisions of the tax code to reduce their taxes but usually remain in technical compliance. Only 5 percent of the IRS estimate of the tax gap was from large corporations.

In the years studied, after IRS enforcement, about 14 percent of the amount that taxpayers initially failed to pay was eventually collected. The remaining 86 percent represents an opportunity to increase revenue solely from taxpayers who should have paid anyway.

Unfortunately, the fraction of revenue recovered from the tax gap has remained low and stable for many years. Although some revenue could be gained simply by doing more auditing, substantial progress will require new methods, which are possible today only because of advances in technology. A. Unreported Income by Individuals

The largest source of the tax gap is from individual taxpayers who fail to report all the income they receive from a business they own, rather than income they receive from others as wages, interest, or dividends.

The key difference between these sources of income is that income reported to both the IRS and the taxpayer by payers such as an employer or bank is easy for the taxpayer to report accurately and for the IRS to verify.

The stark difference in compliance accuracy depending on the degree of independent reporting is shown in Figure 1 from the IRS compliance study.

As also shown in the figure, it's not necessary to have perfectly accurate reporting to make a big difference in compliance accuracy. Of income that is subject to little or no reporting, 55 percent is not reported, while only 17 percent of income that is subject to some reporting is not reported.

Nor is it necessary for the IRS to increase reporting about taxpayers who earn small amounts of business income from occasional business activities like babysitting and home businesses.

Sole proprietor income constitutes the majority of income in the low-visibility category. Taxpayers with less than $25,000 in sole proprietor business income comprise about 70 percent of the returns but represent only 14 percent of reported income and a somewhat greater proportion of the tax gap from underreported income.

TCA 2020 recommends that these small-income taxpayers be exempt from any increased reporting requirements.

Taxpayers with more than $25,000 of business income would be required to report to their bank and on their returns the bank account or accounts in which their business income is deposited. Taxpayers who had only income that's already reported to the IRS by employers, banks, or customers (on documents such as the familiar Form W-2 or Form 1099) wouldn't have to do anything except check a box on their return.

The banks that were designated by taxpayers as receiving their business income would be required at year-end to provide the taxpayer and the IRS with a summary report of deposits received and disbursements made in these accounts, including those from credit card payments. This would be a report similar to the Form W-2.

The taxpayer would attach a schedule to the tax return reconciling the total amounts reported by the bank with the income and expenses reported on the tax return. For example, if the cash received in the bank account was greater than the amount reported on the return, the schedule would itemize the difference. The IRS would design a form for this reconciliation schedule that any bookkeeper could complete.

This process wouldn't require taxpayers to change anything about their banking arrangements and wouldn't restrict any banking transactions. Taxpayers wouldn't be required to isolate their business bank accounts from their personal accounts, although many do have separate accounts, and others might choose to do so out of convenience.

Instituting this increased bank and taxpayer reporting would alone improve the accuracy with which taxpayers report business income. Past experience shows that when additional specific data is required, taxpayers improve their own reporting.

For example, in 1988, when taxpayers were first required to list the Social Security numbers of dependents claimed as exemptions, more than 42 million fewer dependent exemptions were claimed than in 1986, on just over 100 million returns. This equates to almost half a claim dropped per return filed, before the IRS did anything with the data.

Additional reporting, while an essential element, is only one part of the TCA 2020 program. The most significant gains would be made possible only by a much more effective IRS compliance process enabled by modern technology that applies newer analytical techniques to larger volumes of data.

With additional bank and taxpayer data, together with data already collected from third parties, the IRS could more readily detect which returns likely had significant unreported income and follow up with more precisely targeted taxpayer communication or auditing. In fact, much of the follow-up could also be automated. This modernized process is described in more detail later.

These reforms would also increase the amount of income recovered where some limited reporting already occurs, such as for capital gains and partnership income reported on individual returns.

We estimate that if this proposal had been fully effective in 2019, it would have generated approximately $97 billion in revenue. However, as discussed later, we estimate that its effectiveness would phase up over a 10-year period. B. Passthrough Businesses

Unlike most corporations, many private businesses do not pay tax as a business. Instead, their owners pay tax on the income of their business on their individual returns. Businesses organized in this way are called passthroughs because the business income is passed through to the owners.

The IRS designates three categories of passthrough businesses: sole proprietorships, partnerships, and S corporations. Sole proprietorships report their business income on a schedule attached to the owner's individual return, while S corporations and partnerships are legal entities that file separate returns.

The amount of business income produced by passthrough entities has steadily and vastly increased in the last 40 years, as shown in Figure 2: Twenty-five years ago, corporations, which pay tax directly, accounted for almost all the income produced by significant-sized businesses. Today passthrough entities account for almost as much income as corporations.

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Mr. NEAL. Mr. Speaker, he points out in the opening paragraph of a tax notes special. By the way, those of us in the tax world know what tax notes means. He said that last year, this would be 2021, the Federal Government failed to collect $574 billion of taxes that were legally due but not paid. That is equal to more than most of the Federal deficit. If they want to reduce the Federal tax deficit, we should do a better job with tax compliance, which, after all, is the basis of a representative democracy.

Mr. Speaker, 86 percent of the American people pay their taxes every year on time. Do you know why? Because they get paid in wages and it comes from withholding taxes, that is what it is about.

The American people are wise to what is being presented here tonight. We live in a two-tier tax system. Wage earners follow the rules. Wealthy billionaires, they get to skirt their responsibilities. That is what we are being asked to vote on tonight.

IRS funding has been stagnant, staffing levels have dropped. Have you tried getting an IRS office on the phone?

How many times will we continue to let those at the top get away without paying their share?

We lose out on--just think of it again--almost $600 billion a year in unpaid taxes. It is very sophisticated tax planning that is done by high-priced attorneys and CPAs. It is estimated that this could be up to $7 trillion because we score items over the course of 10 years.

What might this funding pay for?

How about Social Security? How about Medicare? How about a strong military? How about a child tax credit that could be expanded? How about universal paid family and medical leave? How about bringing down healthcare costs?

The audit rates amongst millionaires have declined by 70 percent since 2010. Let me repeat that for anybody who didn't get that. The audit rate for millionaires has declined by 70 percent since 2010.

Low-income workers who receive the earned income tax credit, they are audited more now than taxpayers who are making over $1 million a year.

All we are asking for is fairness in the distribution of the responsibilities as to how we pay for government. There is a different set of standards across the land now. And to point that out to you once again--what is our commitment to America?

It should be based on a fair tax system that collects what is due from those who ought to be paying.

The former IRS Commissioner, a Republican, Charles Rettig, he pointed out that he was fully in support of the legislation that we were offering because the IRS is continually out-maneuvered and out-gunned by sophisticated efforts from tax lawyers and CPAs.

We have to put American families over the politics in the distribution of theater that we are witnessing tonight.
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Mr. NEAL. Mr. Speaker, I include in the Record the Statement of the Administration Policy opposing H.R. 23. Statement of Administration Policy

H.R. 23--To rescind certain balances made available to the Internal Revenue Service

The Administration strongly opposes H.R. 23, to rescind certain balances made available to the Internal Revenue Service (IRS). The bill would rescind funding passed in the Inflation Reduction Act (IRA) that enables the IRS to crack down on large corporations and high-income people who cheat on their taxes and evade the taxes that they owe under the law.

This reckless bill would increase the deficit by nearly $115 billion over 10 years per an estimate by the Congressional Budget Office by enabling wealthy tax cheats to engage in additional tax fraud and avoidance. To be clear, the Treasury Secretary has already directed that none of the additional IRS resources be used to increase audit rates relative to historical levels for small businesses or households with incomes below $400,000. Far from protecting middle-class families or small businesses, H.R. 23 protects wealthy tax cheats at the expense of honest, middle-class taxpayers. Each year the top one percent hides about 20 percent of their income from the government so they can get away with not paying any tax on it. That means that working people--who report 99 percent of their income to the IRS--pay a larger share of collected taxes than they should. Not only does it shift the tax burden from the wealthy to the middle- class, it would also make it harder for middle-class families and small businesses to get timely tax refunds and other important services from the IRS, by rescinding billions in funding for IRS information technology and operations.

With their first economic legislation of the new Congress, House Republicans are making clear that their top economic priority is to allow the rich and multi-billion dollar corporations to skip out on their taxes, while making life harder for ordinary, middle-class families that pay the taxes they owe. That's their agenda; not lowering costs or cutting taxes for hard working Americans--as President Biden has consistently advocated.

If the President were presented with H.R. 23--or any other bill that enables the wealthiest Americans and largest corporations to cheat on their taxes, while honest and hard- working Americans are left to pay the tab--he would veto it.

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Mr. NEAL. Mr. Speaker, I include in the Record a CBO score for this bill that is showing that it will add $114 billion to the Federal deficit over the next 10 years.

ESTIMATED BUDGETARY EFFECTS OF H.R. 23, THE FAMILY AND SMALL BUSINESS TAXPAYER PROTECTION ACT, AS POSTED ON THE WEBSITE OF THE CLERK OF THE HOUSE OF REPRESENTATIVES ON JANUARY 9, 2023 AS AN ITEM THAT MAY BE CONSIDERED PURSUANT TO A RULE ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ By fiscal year, millions of dollars-- ----------------------------------------------------------------------------------------------------------------------------------------------------------- 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2023-2027 2023-2032 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Decreases (-) in Direct Spending Total Changes in Direct Spending Budget Authority................ -71,473 0 0 0 0 0 0 0 0 0 -71,473 -71,473 Outlays......................... -2,359 -2,835 -4,124 -5,589 -7,252 -9,249 -11,423 -14,027 -14,605 0 -22,159 -71,463 Decreases (-) in Revenues Total Changes in Revenues........... -1,645 -6,186 -12,506 -17,394 -21,574 -25,416 -28,983 -31,441 -31,879 -8,814 -59,305 -185,838 Net Increase or Decrease (-) in the Deficit from Changes in Direct Spending and Revenues Net Effect on the Deficit........... -714 3,351 8,382 11,805 14,322 16,167 17,560 17,414 17,274 8,814 37,146 114,375 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Source: Congressional Budget Office. The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays and revenues

that are subject to those procedures are shown above. The Congressional Budget Office adheres to laws and Congressional rules concerning the federal budget and to a set of principles (called the Scorekeeping Guidelines) created by the Congress.

Those principles guide how the House and Senate Budget Committees, the Congressional Budget Office, and the Office of Management and Budget attribute budgetary effects to legislation, with

the goal of promoting consistent treatment of estimated effects among those agencies. (For more information on those guidelines, see Congressional Budget Office, CBO Explains Budgetary

Scorekeeping Guidelines, January 2021, www.cbo.gov/publication/56507.) When a provision in an authorization bill provides funding for administrative or program management activities, such as when the IRS receives additional funding for administrative activities,

spending of those amounts can result in increases in receipts. Guideline 14, however, directs scorekeepers to exclude those increases when estimating the budgetary effects of proposals that

would provide additional mandatory funding for such activities. Guideline 14 was adopted in part to avert cases in which possible, but uncertain, receipts were used to offset near-term increases in spending resulting from the same bill. That guideline is

asymmetrical, however. That is, even though increased receipts cannot be credited to a bill that would increase administrative funding, estimated receipt losses that might result from a

decrease in such funding are included in the estimated budgetary effects. H.R. 23 would rescind unobligated funds provided by paragraphs (1)(A)(ii), (1)(A)(iii), (1)(B), (2), (3), (4), and (5) of section 10301 of Public Law 117-169. CBO estimates that the bill would

decrease outlays by $71 billion and decrease receipts by $186 billion over the 2023-2032 period. Both of those effects are included in accordance with Guideline 14.

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Mr. NEAL. Mr. Speaker, I include in the Record an op-ed piece from the former IRS Commissioner Charles Rettig, a Republican, titled: ``IRS sets the record straight: We're going after tax evaders, not honest Americans.'' [From Yahoo! Finance, Aug. 25, 2022] IRS Sets the Record Straight: We're Going After Tax Evaders, Not Honest Americans: Op-Ed (By Charles P. Rettig)

As the nation's tax administrator, the IRS plays a unique role in our nation. It can be a difficult job. After all, does anyone really like paying taxes? Of course not. But they're essential to fund the roads we drive on, the schools our children attend, support our military and so much more. Unfortunately, given the nature of this work and historical stereotypes, the IRS is often perceived as an easy target for mischaracterizations of what IRS employees do--and that's exactly what's happened in recent weeks.

The recent debate over providing badly needed funding to the IRS is filled with outright false suggestions about what the agency and our hardworking employees do--as well as how the additional resources will be handled.

The bottom line is this: These resources are absolutely not about increasing audit scrutiny on small business or middle- income Americans. The investment of these important resources is designed to support honest, compliant taxpayers. Our investment is designed around a Treasury directive that audit rates do not rise relative to recent years for households making under $400,000.

We all want a fair and impartial system where everyone contributes their fair share, no more and certainly no less. A robust, visible tax enforcement effort focused on high-end tax evaders and those supporting them is a priority. Underpayments by tax evaders shift the burden of operating our great country onto honest, hard-working Americans who follow the law. With this new law, honest taxpayers will see badly needed, meaningful service improvements at the IRS. The IRS should be able to answer the phones and process information--including tax returns--in a timely manner. Enhanced IT systems and taxpayer services will mean that honest taxpayers will be better able to comply with the tax laws, ultimately resulting in a lower--yes, lower--likelihood of being audited and a reduced burden on them.

To set the record straight on this important legislation and dispel any lingering misperceptions, here are some key facts to keep in mind:

False Statement: The IRS is hiring 87,000 armed special agents to harass taxpayers.

Reality: Absolutely false. The majority of new hires the IRS makes will be those who answer the phones, work on processing individual tax returns or go after high-end taxpayers or corporations who are avoiding their taxes. Less than 1 percent of new hires will be in our IRS Criminal Investigation (IRS-CI) area, which currently has a total of about 2,100 special agents and is currently hiring about 300 more.

These CI special agents investigate criminal tax violations typically related to money laundering, Bank Secrecy, National Security and National Defense matters. They have been involved in dismantling terrorist financing efforts and criminal cartels as well as eliminating child exploitation operations in the Dark Net that led to the arrests of hundreds of people throughout the world. They do not perform civil tax administrative functions such as audits of tax returns. They are law enforcement officers, and every American should be extremely proud they are on our team.

False Statement: All IRS employees--and those being hired under the new legislation--will carry firearms.

Reality: Again, absolutely false. More than 97 percent of IRS employees do not carry weapons. This includes key civil- side enforcement personnel, including revenue agents, examiners and others involved in audits and compliance work. Less than 3 percent of IRS employees--expressly limited to Criminal Investigation special agents--carry firearms. IRS Criminal Investigation oversees the entirety of the work related to criminal violations of the tax law and other financial crimes. This is consistent with other federal law enforcement agencies.

False Statement: The additional funding will be used to hire more auditors to ``shake down'' average taxpayers.

Reality: False. Wage-earning taxpayers like firefighters, construction workers, teachers and police officers are among the most compliant taxpayers, given that their incomes come from Forms W-2 and 1099. These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans. Instead, the additional resources will also be focused on large corporate and high net-worth taxpayers to enforce laws already on the books that the IRS does not have enough resources to pursue.

False Statement: The new legislation will be a massive overnight expansion of the IRS.

Reality: False. This funding--which will be spread over 10 years--will add employees over time as we modernize our operations with meaningful technological enhancements. In addition, the IRS has one of the oldest workforces in government, and staffing has been in a deep decline for many years. More than 50,000 employees will retire in the next few years, leaving the foundation of the tax system that the nation relies on at risk. We've been losing 10,000 employees a year.

Overall, current IRS staffing is far below historical norms. In 1992, the IRS had 117,000 employees--38,000 more than today. Back then, the agency was dealing with fewer taxpayers; the U.S. population has grown almost 30 percent since 1992.

False Statement: This new funding will allow overreach by the IRS, putting agents on every street corner and prying into people's personal financial lives.

Reality: False. This funding will allow the IRS to better serve the nation's taxpayers--and ultimately meet the critical needs of our country. Our employees care and, like others in government, take an oath to support our country. We take pride in hiring veterans, people with disabilities and people from all walks of life and from every corner of our country. Many of our employees, including myself, are members of a military family. And all of our employees reflect the taxpayers we serve.

I am an extremely proud American, a member of a proud military family, and simply will not accept baseless, harmful assertions against the interests of our country and the proud, hard-working employees of the IRS.

Everyone should know this about IRS employees: We care, a lot, about this country and you.
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Mr. NEAL. Mr. Speaker, I thank the gentleman from Kansas, my friend. He just pointed out that the people at the bottom are audited more than the people at the top. That is precisely the point that we are attempting to make here during the course of the next few minutes.

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Mr. NEAL. Mr. Speaker, let me congratulate Mr. Smith, incidentally, on his recent elevation to become the chairman of the Ways and Means Committee. We look forward to a productive session during the next couple of years.

Mr. Speaker, I include into the Record a blog post by the Center on Budget and Policy Priorities summarizing the fact check that has repeatedly debunked the false claim that we just heard a few seconds ago, that the IRS is going to hire 87,000 new agents immediately. [From Center on Budget and Policy Priorities, January 9, 2023]

House GOP's First Bill: A Misleading Gambit To Protect Interests of Wealthy Tax Cheats (By Chuck Marr)

House Republicans have announced that their first legislative priority is to rescind nearly all of the Inflation Reduction Act's $80 billion in ten-year funding for the IRS, while repeating falsehoods and inflammatory rhetoric about how that funding will be used. While the Republicans have launched a campaign about a false ``army'' of 87,000 agents, the debate should focus on one accurate and alarming number: the IRS has 2,284 fewer skilled auditors to handle the sophisticated returns of wealthy taxpayers than it did in 1954. The decade-long, House Republican-driven budget cuts have created dysfunction at the IRS, where relatively few millionaires are now audited. If House Republicans succeed in rolling back this critically needed funding and maintaining this dysfunction, the IRS would be woefully understaffed, hindering its ability to administer the tax code and collect legally owed taxes--particularly from high-income and high- wealth taxpayers. On behalf of honest taxpayers, policymakers should reject the House Republican effort to protect wealthy tax cheats.

The IRS workforce is composed of civilian public servants, such as accountants and customer service representatives, who collect nearly all the federal revenue to fund our government, from Medicare and Social Security to our armed forces. Its skilled auditors, also known as revenue agents, are highly trained to handle sophisticated tax returns of wealthy people and multinational corporations. All of these IRS employees perform a core function of government, are central to the workings of our democracy, and work on behalf of honest taxpayers.

Republican IRS critics, however, have constructed a narrative around the IRS workforce becoming an ``army'' of 87,000 ``armed agents'' whose enemies are ``hardworking American families and small businesses.'' This rhetoric is false and dangerous.

Fact checkers have repeatedly debunked the 87,000 figure, which comes from a prior Treasury estimate that it would use new funding to hire 87,000 total staff over the next ten years, including IRS employees in all departments, not just skilled auditors. These are people who answer phones, process returns, program computers, as well as a fraction--albeit an important one--who audit complex tax returns.

The House GOP campaign ignores the reality of today's IRS-- which has resulted from the sharp budget cuts that Republicans have pushed since 2010--as well as the harm that would flow from rescinding much of the Inflation Reduction Act's new IRS funding. The upcoming debate needs to cut through the obfuscation of the House Republican campaign and focus on honest and pertinent numbers.

Consider, in 2021, the IRS had 8,321 skilled auditors. That's 40 percent fewer than the agency had in 2010, the year before House Republicans were in the majority and began driving the last decade of steep IRS budget cuts.

Moreover, it's 2,284 fewer revenue agents than the IRS had in 1954--not a typo. The last time the IRS had fewer revenue agents than it has today was in 1953. Today's economy is seven times larger than it was in 1953 and our population has more than doubled since then. Today's tax returns of wealthy people and large multinationals are more complex and global, which take more time for auditors to review.

As a result of these budget cuts and fewer skilled auditors, audit rates have plummeted for wealthy individuals and large corporations.

For the largest corporations (those with more than $1 billion in assets), the audit rate fell by more than half between 2010 and 2017. For millionaires, the audit rate fell by roughly 77 percent over the same period. Preliminary audit data for 2018 and 2019 suggest that the audit rate may have declined over 90 percent between 2010 and 2019.

House Republicans want to scare people with their false claims about how the IRS would use the new resources. But the reality is that, today, the IRS skilled audit staff is 2,284 smaller than in 1954, only a tiny fraction of millionaires is audited, and large multinationals can hire large squads of lawyers to easily overwhelm the resources of the IRS. One only needs to skim President Trump's tax returns, the indictment of convicted tax cheat Paul Manafort, and a ProPublica investigation of how Facebook outgunned the IRS to grasp the resources necessary to be serious about enforcing our tax laws and how reckless it would be to keep the number of skilled auditors at 1950s levels, as the House Republicans would do.

Honest taxpayers and business owners deserve better. They deserve an IRS that processes their tax returns and tax refunds efficiently, answers the phone when they call with questions, and ensures that the wealthy and profitable corporations are paying the taxes they legally owe.

A key element of a healthy, functioning democracy is a transparent tax system that is fairly enforced so that people and corporations pay what they owe and the well-heeled and powerful cannot flout their responsibility to pay their taxes.

Efforts to protect wealthy tax cheats and purposely undermine the IRS's ability to enforce tax laws are anti- democratic and should be resoundingly rejected.

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Mr. NEAL. Mr. Speaker, I include in the Record a FactCheck.org article confirming that not all of the 87,000 people who will be hired are going to work on enforcement. [From FactCheck.org, Aug. 18, 2022] IRS Will Target `High-Income' Tax Evaders with New Funding, Contrary to Social Media Posts (By Brea Jones) QUICK TAKE

The Inflation Reduction Act includes $79 billion for the IRS. Social media posts misleadingly claim the IRS will now hire ``87,000 new agents'' to investigate average citizens. But most new hires will provide customer services, and enforcement efforts will be aimed at ``high-income and corporate tax evaders,'' a Treasury Department spokesperson said. FULL STORY

President Joe Biden signed the Inflation Reduction Act--a climate, health care and tax package--into law on Aug. 16.

The legislation includes roughly $79 billion for the IRS over 10 years. The nonpartisan Congressional Budget Office projects that the enhanced IRS enforcement funded by the law will generate an additional $204 billion in revenue over 10 years. That represents additional taxes that are owed under existing laws, but which go unpaid.

Treasury Department officials say not all new hires will work on enforcement and increased revenues won't come from middle-income earners. Treasury Secretary Janet L. Yellen directed IRS Commissioner Charles P. Rettig not to use the new funding to increase enforcement of taxpayers earning less than $400,000. The IRS is a bureau of the Treasury Department.

``Specifically, I direct that any additional resources-- including any new personnel or auditors that are hired--shall not be used to increase the share of small businesses or households below the $400,000 threshold that are audited relative to historical levels,'' Yellen wrote in an Aug. 10 letter to Rettig. ``This means that, contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited.''

But Republican members of Congress and social media users have spread the false claim that the new law will be used to hire ``87,000 new IRS agents.''

Sen. Ted Cruz, in an interview on Fox News that was posted to Facebook, got it doubly wrong when he claimed that ``87,000 new IRS agents'' will be going after small businesses and regular Americans.

``And, by the way, these IRS agents aren't there to go after billionaires,'' Cruz said. ``They're there to go after you. They're there to go after your small business.''

But, as we will explain later, not all of the new hires will be ``agents.'' There's a big difference between IRS agents, such as revenue agents and special agents, and the workers who make up the bulk of the IRS staff. And, as we said, the Treasury Department has directed the IRS not to focus on small businesses and those earning less than $400,000.

Some versions of the claim suggest that the 87,000 new ``agents'' will be armed--but, as we've written before, only ``special agents'' who investigate criminal violations of the tax code are authorized to carry firearms.

Rep. Matt Gaetz took it one step further, calling it ``bizarre'' that the IRS bought $700,000 worth of ammunition between March and June 1 of this year. He suggested that the purchases are part of a ``broader effort'' to get ammunition off the market. But, as we will detail later, the purchases this year are in line with past years, according to government data.

Some of the claims about the IRS on social media were tied to an unrelated event--the FBI search of former President Donald Trump's Mar-a-Lago home in Florida.

``The IRS is coming for you. The DOJ is coming for you. The FBI is coming for you. No one is safe from political punishment in Joe Biden's America,'' the official Twitter account for the House Judiciary Committee Republicans tweeted.

But Rettig, the IRS commissioner, wrote in a letter to lawmakers on Aug. 4 that the resources obtained with the funding from the Inflation Reduction Act ``are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.''

``Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers,'' Rettig said. Funds for Customer Service and Enforcement

A Treasury Department report from May 2021 estimated that a similar $80 billion investment proposed in Biden's American Families Plan would have allowed the IRS to modernize and restore the ``IRS enforcement capability'' in several ways-- including by hiring 86,852 full-time employees. That's where the claim about hiring ``87,000 new agents'' apparently comes from.

The 2021 report said the $80 billion investment to restore the IRS would be broken down into two components: ``a dedicated stream of mandatory funds ($72.5 billion over a decade) and a program integrity allocation ($6.7 billion over a decade).''

The $6.7 billion program integrity allocation will be used for ``the hiring and retention of at least 5,000 new enforcement personnel,'' the 2021 report said. ``The mandatory funds are allocated over a 10-year horizon. They provide enforcement resources, including a significant investment in revitalizing the IRS's examination of large corporations, partnerships, and global high-wealth and high- income individuals.''

Over the past decade, the IRS has lost 40 percent of its ``complex revenue agents''--agents who handle complicated tax returns of large businesses and corporations and go after high-end tax evaders--as its budget has been gutted, according to a Treasury Department spokesperson. ``Today, the IRS has the same number of IRS revenue agents for complex work as it had in WWII,'' the spokesperson told us in an email.

Over the next five years, the IRS is expecting to lose up to 52,000 employees to attrition, the Treasury Department spokesperson told us in a phone interview. Most of the new hires will replace the outgoing employees and will be on the service side of the IRS.

``The majority of hires made with these resources fill positions of the 50,000 IRS employees who are on the verge of retirement. Of the net new hires, the majority are hired to improve customer services--from upgrading IT to answering phone calls,'' the Treasury Department spokesperson said.

The IRS might net about 30,000 new hires, as a result of the number of retirements and new funding. But the IRS hasn't yet released estimates for how many new employees the agency could hire with funding from the Inflation Reduction Act. The IRS is expected to release the final numbers and breakdown in the coming months.

``The resources to modernize the IRS will be used to improve taxpayer services--from answering the phones to improving IT systems--and to crack down on high-income and corporate tax evaders who cost the American people hundreds of billions of dollars each year,'' the spokesperson said. ``The majority of new employees will replace the standard level of staff departures over the next few years and will be hired to improve taxpayer services. The agency will 'also bring on experienced auditors who can take on corporate and high-end tax evaders, without increasing audit rates relative to historical norms for people earning under $400,000 each year.''

A White House spokesperson told us in an email, ``both Treasury Secretary Yellen and the IRS Commissioner have been explicit that these funds will be used for the wealthiest taxpayers and not those making less than $400,000 per year. These resources will improve technology and customer service, which will make it less likely that honest taxpayers get audited.'' Spending on Ammunition and Armed Agents

Gaetz, a Republican from Florida, raised concerns in June that the IRS spent $700,000 on ammunition from March to June of this year, and he introduced the Disarm the IRS Act in July.

Gaetz described the ammunition acquisition as ``bizarre'' in a recent interview. Others have also echoed the claim.

But that's not an unusual amount of money for the IRS to spend on ammunition and is on par with what has been spent in previous years for the IRS Criminal Investigation division, which was established in 1919.

IRS Criminal Investigation is the sixth-largest federal law enforcement agency in the U.S. But it's a small unit of the IRS overall, less than 3 percent of its total workforce, according to the Treasury Department spokesperson.

The IRS Criminal Investigation division doesn't perform routine IRS audits on average Americans.

``The bulk of IRS's tax administration work is done by civilian auditors and revenue collectors,'' Justin Cole, a spokesman for the IRS Criminal Investigation division, told us in an email. ``IRS Criminal Investigation oversees the entirety of the work related to criminal violations of the tax law and other financial crimes.''

The division investigates cases related to money laundering, cybercrime, bank secrecy, national security, national defense and narcotics organizations--a large reason for the need for firearms and training. The division is famously known for the arrest of American gangster AL Copone. More recently, the division has been involved in the task force that is tracking the assets of Russian oligarchs.

``In order to carry out their daily duties, which include search warrants and arrests, CI special agents carry firearms,'' Cole said.

Using usaspending.gov, the official source of U.S. spending data and the site used by Gaetz, we found that the IRS has spent $816,248.90 so far in the fiscal year 2022 for ``duty ammunition'' from Vista Outdoor Sales. That's a little less than last fiscal year ($842,989,60) and slightly more than in fiscal 2020 ($761,265,40). (All amounts are ``total obligations,'' as of Aug. 18.)

The majority of the recent $725,460.10 spending went for handgun ammunition and equals about 2,545 cases of ammunition--``just enough for Special Agent handgun qualifications,'' Cole said. ``CI purchases the minimum amount of ammunition necessary to cover training and firearms qualifications for its law enforcement employees.''

The IRS spent an average of $712,500 on ammunition for fiscal years 2010 to 2017, according to a 2018 report to Congress by the Government Accountability Office on firearms and ammunition purchases by federal law enforcement agencies.

``There are about 3,000 employees in [the IRS Criminal Investigation division], 2,100 of which are special agents and the remaining professional staff. Only special agents carry firearms,'' Cole said.

In 2021, there were 2,046 special agents, who ``are among the most highly trained financial investigators in the world,'' according to the 2021 annual report.

The number of special agents in the division hasn't changed much in five years, according to the division's annual reports. In 2017, there were 2,159 special agents. But the number of special agents has declined substantially since 2009, when the bureau had 2,725--as we noted 12 years ago while addressing a misleading claim about the IRS hiring ``16,500 new agents.'' That's a 33 percent decrease from 2009 to 2021.

New special agents complete six months of training, including firearms training.

The IRS is not the only government agency that purchases guns and ammunition for enforcement officers. The 2018 GAO report lists several other agencies that make those purchases, such as the Food and Drug Administration, the National Institutes of Health and the Veterans Health Administration.
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Mr. NEAL. Mr. Speaker, that is precisely the point that we have attempted to make. Customer service is not occurring because the IRS has been cut by 30 percent over the last 15 years.

Mr. Speaker, I include in the Record a letter from the IRS Commissioner to the House of Representatives confirming that the IRS will not raise audit rates on those making under $400,000 a year. Department of the Treasury, Internal Revenue Service, Washington, DC, August 4, 2022.

Dear Member of the House of Representatives, It has been the greatest honor of my professional life to spend the last four years at the helm of the IRS. I am struck each day by the commitment of dedicated IRS employees to helping American families. And our employees have done all that without the tools to do so effectively. For too long, the agency has not had the resources that it needs to ensure the tax laws are enforced fairly and that Americans receive the level and quality of service they deserve. We are the greatest country in the world, yet the agency that touches more Americans than any other continually struggles to receive sufficient resources to fulfill its important mission.

The resources in the reconciliation package will get us back to historical norms in areas of challenge for the agency--large corporate and global high-net-worth taxpayers-- as well as new areas like pass-through entities and multinational taxpayers with international tax issues, where we need sophisticated, specialized teams in place that are able to unpack complex structures and identify noncompliance.

These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans. As we've been planning, our investment of these enforcement resources is designed around the Department of the Treasury's directive that audit rates will not rise relative to recent years for households making under $400,000. Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers. Enhanced IT systems and taxpayer service will actually mean that honest taxpayers will be better able to comply with the tax laws, resulting in a lower likelihood of being audited and a reduced burden on them.

Large corporate and high-net-worth taxpayers often engage teams of sophisticated representatives who pursue unsettled or sometimes questionable interpretations of tax law. The integrity and fairness of our tax administrative system relies upon the ability of our agency to maintain a strong, visible, robust enforcement presence directed to these and other similarly situated taxpayers when they are noncompliant. These important efforts also support honest taxpayers who voluntarily comply with their filing and reporting requirements.

The IRS has fewer front-line, experienced examiners in the field than at any time since World War II, and fewer employees than at any time since the 1970s. Advances in technology have been helpful but have not kept pace with the ever-increasing responsibilities and challenges facing the IRS. As a result, the IRS has for too long been unable to pursue meaningful, impactful examinations of large corporate and high-networth taxpayers to ensure they are paying their fair share. This creates a direct revenue loss from evaders and lessens the potential to deter others from pursuing a similar path of noncompliance. Every American should support a fair and impartial system of tax administration supported by an appropriately resourced tax administrator. In fact, the continued success of our country depends, in part, upon the success of the agency in appropriately, fairly and impartially enforcing the tax laws and in providing meaningful, impactful services to every American.

As an extremely proud American, I'm grateful for your support of the IRS and our dedicated employees. I cannot be forceful enough in emphasizing that these resources will be transformative for the agency and for American taxpayers. I am available to meet with you at your convenience to discuss the foregoing. Thank you, Charles P. Rettig.

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Mr. NEAL. Mr. Speaker, I include in the Record a letter from Secretary Yellen to the IRS Commissioner, directing the IRS not to use any additional funding to increase audits on small businesses and households earning less than $400,000 a year. Department of the Treasury, Secretary of the Treasury, Washington, DC, August 10, 2022. Charles P. Rettig, Commissioner, Internal Revenue Service, Washington, DC.

Dear Commissioner: The Inflation Reduction Act includes much-needed funding for the IRS to improve taxpayer service, modernize outdated technological infrastructure, and increase equity in the tax system by enforcing the tax laws against those high-earners, large corporations, and complex partnerships who today do not pay what they owe.

These crucial investments have been a focus of the Biden Administration since the President's first day in office, and I was heartened to see the legislation pass the Senate this weekend.

Notwithstanding the changes that arose because of Republican challenges during the Byrd process, I write today to confirm the commitment that has been a guiding precept of the planning that you and your team are undertaking: that audit rates will not rise relative to recent years for households making under $400,000 annually.

Specifically, I direct that any additional resources-- including any new personnel or auditors that are hired--shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels. This means that, contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited.

Instead, enforcement resources will focus on high-end noncompliance. There, sustained, multiyear funding is so critical to the agency's ability to make the investments needed to pursue a robust attack on the tax gap by targeting crucial challenges. like large corporations, high-net-worth individuals and complex pass-throughs, where today the IRS has resources to initiate just 7,500 audits annually out of more than 4 million returns received.

This is challenging work that requires a team of sophisticated revenue agents in place to spend thousands of hours poring over complicated returns, and it is also work that has huge revenue potential: indeed, an additional hour auditing someone making more than $5 million annually generates an estimated $4,500 of additional taxes collected. This is essential work that l know the IRS is eager to undertake.

For regular taxpayers, as you emphasized last week, the result of this resource infusion will be a lower likelihood of audit by an agency that has the data and technological infrastructure in place to target enforcement resources where they belong--on the high end of the income distribution, where the top 1 percent alone is estimated to not be paying $160 billion in owed taxes each year. That's important as a matter of revenue-raising, but it's also essential as a matter of fairness.

Crucially, these resources will support a much-needed upgrade of technology that is decades out-of-date, and an in vestment in taxpayer service so that the IRS is finally able to communicate with taxpayers in an efficient, timely manner. I look forward to working with you on creating new digital tools to allow taxpayers to get information from the IRS instantaneously and on improving taxpayer service, so the agency is well-equipped to answer calls when they come in.

This historic investment in our tax system will accomplish two critical objectives. It will raise substantial revenue to address the deficit; and it will create a fairer system, where those at the top who do not today comply with their tax obligations find it far less easy to do so, and where all taxpayers receive the service from the IRS that they deserve, and that your dedicated workforce is eager to deliver. The importance of the work ahead cannot be overstated. Sincerely, Janet L. Yellen.

Mr. HIGGINS of New York. Mr. Speaker, Charles Rettig, the former IRS Commissioner, who was appointed by the Trump administration, said early last year that the United States is losing $1 trillion in unpaid taxes every year. He said the agency lacks the resources to catch tax cheats. Most of the unpaid taxes, he said, are a result of evasion by wealthy and large corporations.

With this legislation we are considering today, it is clear that the GOP once again is putting tax-evading profits over people.

Mr. Speaker, I am asking my colleagues to join me in rejecting this legislation to protect working families that play by the rules and fight fairly every day.

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Mr. NEAL. Mr. Speaker, the challenge that was offered by the gentlewoman from California is as simple as this: We are weaponizing billionaires not to pay their fair share. That is what is happening.

What we are asking here is the simplicity of allowing people at the very top to pay their fair share.

Sewell), a capable and valued member of the Ways and Means Committee.

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Mr. NEAL. Chu), a very capable member of the Ways and Means Committee.

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Mr. NEAL. Moore), a very capable member of the Ways and Means Committee.

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Mr. NEAL.

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Mr. NEAL. Mr. Speaker, I think part of that new recruiting class at the IRS is going to simply answer the phones. That would be helpful, a step in the right direction.

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Mr. NEAL. Mr. Speaker, a reminder that the 87,000 is over 10 years. The $80 billion is over 10 years. That is $8 billion a year for replacement of those who retire, who leave the service of the IRS.

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Mr. NEAL. During those 4 days, I think the child grew by 2 inches. That is how long we were there.

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Mr. NEAL. Jackson Lee).

Ms. JACKSON LEE. Mr. Speaker, let me rename this legislation to the billionaire tax cheats happy days are here again because that is simply what this bill is about.

I know my constituents are in one of the difficult districts in the Nation, and I realize that small businesses in my district, those who are getting earned income tax credit, they want refunds. They can't get them if the phones are not being answered and there are not enough staff to help them get the refunds that will help them propel their small business into the next year.

Then, of course, Mr. Speaker, what about the lady who was trying to close a real estate deal, and there was no one at the office? That created a $68,000 tax burden because the tax office was not available to assist.

We need to provide those workers to help Americans, not to create tax cheats.

This legislation is deserving of opposition because we as Democrats are trying to make the IRS work for working families, get their refunds, get their dollars, help them propel into the next year, and be better for the moneys that they deserve to get back.

Vote ``no'' on the underlying legislation.

Mr. Speaker, I rise in strong opposition to H.R. 23, the Family and Small Business Taxpayer Protection Act. This bill would rescind $72 billion of the $79.6 billion appropriated to the Internal Revenue Service to refine its services and technology and reform its enforcement practices of the federal tax code. The passage of H.R. 23 would widen the already massive tax gap and unfairly relieve the wealthiest 1% of Americans from paying their fair share of taxes.

The historic passage of the Inflation Reeducation Act under the leadership of Speaker Pelosi and signed by President Biden authorized $79.6 billion to allow the Internal Revenue Service to bolster taxpayer services while firmly and fairly enforcing the federal tax code.

Through the implementation of the IRA, we continue to help the millions of Americans who most depend on federal government assistance and who contribute disproportionately to the federal revenues that pay for our government to operate.

$45.6 billion of the authorized funds included in the Inflation Reduction Act were allocated for tax enforcement activities, including hiring more enforcement agents, providing legal support, and investing in investigating technologies.

These funds are necessary to bridge the unjust tax gap that Americans have been subject to for generations and will continue to endure under Republican leadership.

The entirety of the $79.6 billion is critical to cracking down on ultra-rich and corporate tax evaders who have avoided paying their fair share of taxes for years.

The passage of this bill would dismantle key components of the Inflation Reduction Act that have injected fairness into the enforcement of our tax system.

The IRA reduced rising costs for hardworking middle-class and working class families and ensured that taxpayers are not left to foot the bill for ealthy tax cheats--both of which would be erased with the passage of this bill.

These unfair tax practices have gone on for far too long.

I urge all my colleagues to oppose this bill and see it for what it truly is:

an effort by Republicans to give tax breaks to the ultra-rich and the corporations who fund their campaigns, and

an effort to continue carrying out their distorted notion of America by decimating the programs set in place to help the Americans who depend on government assistance the most.
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Mr. NEAL. Mr. Speaker, as my friend, the gentleman from Nebraska pointed out, with the Presidential audit system, Joe Biden overpaid his taxes. I hope the Record will reflect that, that the Democratic President overpaid his taxes, and the IRS wisely made sure that he had the proper refund.

Kaptur), the longest serving woman in the history of Congress.

Mr. Speaker, this has been an edifying debate. But as Harry Truman noted, let's just talk about the facts. Let's debunk the argument that we are hiring 87,000 armed IRS agents to go knocking on doors in the middle of the night.

This is a substantial investment in technology. This is a substantial investment in customer service. Yes, the $80 billion is over 10 years. That is $8 billion a year to improve customer service. That is what we are talking about.

At least 8,000 agents retire from the IRS every year. We are simply replacing them. You know, in our school systems back home, when 200 teachers retire, we replace 200 teachers. That is what we are doing here with the IRS.

They make this preposterous argument that all of a sudden, next week, 87,000 armed--because you always have to use the language that is incendiary enough to get people worked up around here--that 87,000 armed agents in the dark of night will be hounding innocent taxpayers, despite what Janet Yellen said about no taxpayer making under $400,000 a year is going to be targeted.

Mr. Rossotti, the former IRS commissioner, not me, said at least $574 billion a year goes uncollected. He is a Democrat. A Republican IRS commissioner, Mr. Rettig, who we worked with, said it might be a trillion dollars a year that goes uncollected, a Donald Trump appointee, who stated that and raised that issue a number of times in front of the Committee on Ways and Means.

Let me make a point that I raised earlier. Tax compliance in a representative democracy is a fundamental commitment to civilization and first-class services.

So by not collecting this revenue, are we going to say down the road, well, maybe we will cut Social Security; maybe we will cut Medicare; maybe we will cut Medicaid; or maybe we will cut the American military.

Now, we all know that in this discussion that the facts are very clear here. They have been upset with the IRS for a long period of time. We all remember the Lois Lerner episode, even though the facts in that case pointed out that the advocates on the right and the left were audited at the same rate. That is a fact.

So as we close this argument out, let's stand up for the honest taxpayers in America and make sure that the IRS that currently cracks down on the EITC will be able to actually address some of the complexities of modern tax law, which we all agree, by the way, the system is far too complex, but I have been through that argument many times here, as well.

This fear-mongering that you are hearing tonight about upgrading the technology and software investments at the IRS for the purposes of modeling for better tax compliance is just that. It is fear-mongering.

All we want is a set of rules that is applicable to all as it relates to tax collection. This is not anything other than simply suggesting that there is a fairness that is applied to the Internal Revenue Service, so that they might address and make sure that those at the very top are complying with the same laws we ask the wage earners through withholding to address every single day.

Thanks for a spirited debate, Mr. Speaker, and to our friends on the other side.

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Mr. NEAL. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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