Hice: Throwing Taxpayer Dollars at the IRS Won’t Solve the Agency’s Problems    

WASHINGTON —Subcommittee on Government Operations Ranking Member Jody Hice (R-Ga.) opened today’s hearing examining the Internal Revenue Service (IRS) by emphasizing how the agency has failed to properly modernize its operations and Americans are suffering the consequences. Hice explained how millions across the country are having difficulties accessing their tax refunds and highlighted how the Democrats’ push to simply throw more taxpayer dollars at the agency won’t solve the issues plaguing their system. He championed the need for the IRS to regularly appear before the Committee and encouraged the agency to provide Congress a justification for the taxpayer funds they seek. In addition, Ranking Member Hice slammed Democrats for failing to hold meaningful oversight over the IRS, especially after the leak of taxpayer information in ProPublica and reports indicating President Biden and the First Lady potentially owe money in back taxes. He concluded by stating Republicans will continue to seek information and hold the IRS accountable.     

Below are Subcommittee Ranking Member Hice’s remarks as prepared for delivery.

Chairman Connolly, I appreciate your calling this hearing, the title of which is “IRS, Is it Ready?”

No, it’s not.

As we speak, the IRS is desperately trying to hire 10,000 people to put last year’s filing season to bed and keep up with an avalanche of paper from this year.

And, as the Wall Street Journal and New York Times both report, they are having a hard time competing with other employers.

That is no surprise, when the job description is to enter millions of numbers and letters into a computer.

So how is it that an organization which spends billions of dollars every year on information technology is in this position?

In our recent hearing on program integrity, we heard how COVID exposed inherent weaknesses in federal fraud prevention capabilities.

And this is no different.

The IRS may have gotten by with a paper-based system before, but the challenges and complexities associated with the pandemic brought it crumbling to the ground.

I, like many of my colleagues, have heard from constituents at wit’s end – they have not gotten tax refunds, and they need that money.

They cannot apply for COVID relief because they cannot get the required documentation from the IRS.

They cannot reach the IRS on the phone.

If they use the “Where’s my Refund?” or “Where’s my amended return?” tools, they get the technological equivalent of a shoulder shrug.

The IRS says it is because they did not get the money they asked for.

Democrats are all-too-willing to agree and point to FY2010 – during the Obama Administration when Democrats held both bodies of Congress – as the benchmark for IRS funding.

Of course they do.

The IRS is their soul mate, as evidenced by their plan to give the IRS $80 billion in the Build Back Better bill. 

But that is far too simplistic of an answer, and it assumes money spent on the IRS will achieve the intended result.

But how can you possibly draw that conclusion?

The IRS is the home of the Individual Master File – the backbone of most of what the IRS does – which holds the distinction of being the oldest system in the Federal government.

And the effort to replace the IMF – the Customer Account Data Engine, began in 1999.

That failed, so we are now on CADE 2.

“Transition State 2,” a key milestone for CADE 2, was delayed 9 years.

It is running at 4 times the original estimated cost.

And the best they can say is that it might be done in 2030 – 8 years from now.

But even then, it will not be a complete replacement of the IMF. 

This is a high profile, but certainly not unique, example of the IRS’s poor management of IT projects.

IRS also has a reputation for hiding the ball – of not providing information unless asked, which tends to come when there is a problem.

Like today.

So no, Republicans are not willing to simply give the IRS more money to spend on a long-term basis.

Proper oversight requires the IRS come back frequently and justify what they are asking for.

That is the only way Congress has any hope of finding out what is really going on over there.

Yet most of the funding in the Build Back Better proposal I mentioned earlier is mandatory.

That’s right – it would reduce oversight.

And to the point Democrats like to raise about staffing levels being at 1974 levels – this only further illustrates my point.

The purpose of IT projects is to increase efficiency.

So are you saying that after 50 years’ worth of technological advancements and untold billions spent on projects that the IRS has gained no ability to do more with fewer people?

The IRS’s core mission is successful completion of tax filing season.

Can you really tell me there was no risk assessment that flagged a system based on manual keystroking as a potential serious risk to your core mission?

Some of the funding you received should have been spent on scanning capabilities to address an obvious weakness.

And let me end by raising a second core responsibility of the IRS: maintaining the trust of the American people.

No agency has the ability to impact the lives of as many Americans as does the IRS.

So let me remind everyone that since 2010 – the Democrats’ benchmark for IRS funding – we have seen the Lois Lerner scandal, in which conservative groups seeking tax exempt status were targeted.

I would add that this is a perfect example of a federal employee who should be covered by Schedule F – which I am seeking to bring back through legislation. 

From 2010-2012 IRS also spent $49 million on lavish conferences, and then there were the infamous Star Trek-themed training videos.

And last June saw the leak of massive amounts of taxpayer information to the press, making possible a running series of stories from ProPublica.

These stories focus on the tax filings of high-profile individuals, focusing on the ultra-wealthy like Elon Musk and Warren Buffet.

Making the argument those people are not paying the government enough – even though much of their wealth is tied up in unrealized capital gains.

Oddly enough, the Biden Administration has proposed taxing unrealized capital gains – so it would seem the ProPublica stories, and the leak from the IRS, serve a political agenda.

But if we are interested in who is not paying their “fair share,” why don’t we start with the person who says the buck stops with him: President Biden.

An IRS whistleblower – not a leaker – alleges the President and First Lady owe $127,000 in back taxes.

I am sure my Democratic colleagues will join me in calling for a public examination of their tax filings just as they did for President Trump.

Then there is Hunter Biden, who as the New York Times reported, took out a loan to pay off more than $1 million in back taxes.

Or how about Stacey Abrams, who wore her $50,000 tax debt like a badge of honor.

As for the ProPublica leak – this is information supposed to be held in the strictest of confidence.

And while Committee Republicans have written seeking information, we still have no idea how this happened.

We wrote Chairwoman Maloney, asking for a hearing on this issue, but that has not occurred.

We wrote to Commissioner Rettig asking for detailed information, but we did not get answers.

All of the examples I have raised highlight need for close oversight over the IRS.

And yet…Democrats think the solution is more money with no strings attached.