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tv   IRS Commissioner Confirmation  CSPAN  June 29, 2018 2:38am-4:25am EDT

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>> this meeting will come to order with the nomination for
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to serve as the irs commissioner a very important positions country right now that is at a critical juncture to already see. the benefits and then continue to watch as the wages rise the irises responsible for implementing these new policies efficiently so the benefits can be more quickly realized after years of turmoil and controversy him hopeful the irises started to turn the corner with then organization like the irs there is always room for improvement. and with that technological services and then to go back to the kennedy administration
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and that the irs ability to interact coherently with 21st century technology that empowers the country and the rest of the world if confirmed i expect you to work with congress to modernize the irs infrastructure and technology and with 21st century and that the irs has the aging workforce that the majority of the workforce is under the age of 50 but if that majority of the workforce were to retire around the same time to face shortage of knowledge and experience and if confirmed i hope he will start working immediately to plan for the agency's future as is the irs to continue to implement tax reform to work with the
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treasury department to issue regulations that others have certainty and predictability. and also work with congress to make sure it is implemented and the charges i have a numerate it are greater than anyone commissioner and then to work alongside congress to fairly implement to enforce the new tax laws. and then to remember that the tax system relies on great part and that the system works best and then to contact the irs to receive timely and complete answers to their questions and to confirm to have his work cut out for him
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that i am optimistic he is up to this job and to leave the agency with integrity i am confident about that so this will hold the irs accountable as it always has. at the same time and then the irs will find a better friend than this committee regardless democrat or republican after all to see how important it is and in compliance so i want to thank mr. reddick for being here and for his willingness to serve and with decades of experience before the irs to know the agency inside and out.
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also with passion and dedication that this world will require. and then the earnest partner with this committee to improve the agency and i do want to think the acting commissioner has done a tremendous job and that is not what we confirmed to do and when he was back doing this full time job at the treasury department and the accurate press report with the committee documents that they did not disclose property this is absurd.
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and purchased a 2006 on the committee questionnaire that is a fact with this committee every stage of the vetting process and then to note the name on the side of the building and with any suggestion to be a conflict of interest to be staff of conspiracy theories. and that to purchase these properties in 2006 during season five of the apprentice on the off chance he would become president and to nominate him as the irs commissioner. i'm sure you feel the same way that i do. i hope we can put that to rest and move on to the substance of this morning's confirmation hearing. finally went to note and if at
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any point during the time i will pause the hearing and move immediately to votes on the nominations kessler, johnson and then to resume that hearing and then to turn to my partner for his remarks. >> chairman and colleagues the next commissioner will be in charge to administer a tax system there is one set of rules in america with the cop on the beat the strict rule, no special loopholes the taxes come straight out of your paycheck and then there is another set of rules that america for the high flyers.
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from costly advisors to effectively pay what you want when you want to and mr. rhetoric nominated by the president to lead the irs seems to have made a career on giving advice to a lot of those high flyers and the biggest policy challenge he will walk into is the extremely complicated tax law which does a lot more to the high flyers and the well-connected than from everybody else and given the fact it is up to mr. reddick to demonstrate he can work on behalf of all americans particularly hard working middle-class families and owners of the garages and restaurants and as they talked
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about earlier this week so on another matter if you studied the nixon presidency you know there is a dark history of the white house abusing the irs for political purposes. this will be particularly important for mr. reddick to demonstrate his independence given that he did not fully disclose that the condos that he owns and rents out in the trump brea did property and touching on the leaks of this type of discussion i could only say that last night there was a memo coming from the chairman and myself making it
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clear for all members to understand what was at issue for those that are rented out in the trump branded and managed property. now disclosing that information may not have been required by law, but it would have been a smart exercise of judgment. certainly if you want to eliminate any questions about appearances and to set aside that is critically important for men to make tax decisions for political reasons and that is a recipe and for those that lose faith in institutions like the irs and with those
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opportunities sounds at behest of a well connected daughter in nevada and then to pick economic favorites as a result of the tax law and donor wanted accommodation when the state that that was denied but then to be introducing a new tax law to make the experience filing returns more of a headache for more of americans particularly senior citizens. and those that could not file on the postcard contrary to those republican sponsors and then to crave that same amount onto a smaller form that taxpayers will have to rifle to those certainly to generate
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more errors. and those are a set up to failure so recently the vice president said that the johnson amendment with a 5o1c3 tax-exempt organizations for or against little candidates and that to be enforced under this administration to realize this is the priority of the far right but it is a recipe for even more dark money and i feel very strongly the next commissioner has to be in charge despite the vice president's pledge so a
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difficult job to manage tens of thousands of employees with decades of experience and is a concern as he and i talked about he doesn't have extensive management experience i appreciate your willingness to serve in joining this committee and i look forward to working with you. >> i appreciate working with you very much i like to extend a warm welcome to mr. reddick in joining us this morning. and then -- representing clients the tax division and with those taxing authorities serving on the franchise tax
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board and that counsel of the california state of equalization and the internal revenue service and mr. rettig is currently the vice chair of administration for taxation that american bar association and previously served as the chair for the section of taxation of the california bar. throughout his career mr. rettig has specialized in federal state civil taxing criminal tax controversy in tax litigation including examination and investigations with business enterprises and partnerships with limited liabilities companies and cooperations -- corporations receiving his bachelors degree and that jd from pepperdine university and then went on
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from new york university so i sure everyone wants to hear how he plans to integrate his past experience with his new role at the agency of confirmed please again with your opening remarks. >> chairman hatch and ranking member is an honor to appear as the next commissioner of the irs and to recognize my family my sister-in-law and my stepsons and my daughter and my son doctor charlie we cannot explain the degree and route the professional and personal career i would not be here in my mind without the
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ongoing support of my family so three of my law partners flew out from los angeles and i headed back this afternoon and my mentor in the practice of law was a very close family friend it is the support of my friendships that allow us to be here today to do the things i have accomplished in my life. my son charlie sitting behind me as a captain in the united states army and returned monday evening from a 12 month deployment overseas. when i was nominated he proudly pointed out dad i am so proud you'll be following me into government service. [laughter] nothing would make me more proud and if confirmed to have
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that opportunity going forward. but this tax season i was pressing my son overseas to get the information to the accountant to prepare his returns and the response that i got was dad, have 180 days from the combat zone to submit my income tax returns. it's tough to get tax advice from your army captain. also to have a one truck air-conditioning business my father taught my brother and i the value of hard work and to get up early and work late. i was the first to my family to finish college and to undergraduate school and graduate school my family joked i would never stop studying and they were right
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and to see with all levels of the irs to have resolutions on behalf of taxpayers to bring them into compliance with system of voluntary selflessness with the advisory council and in the home state of california currently vice chair administration for the 12000 member section of the american bar association to serve as president of the american college of tax councils through decades of experience, i have seen the difficulties faced by taxpayers of all kinds to small businesses to low income taxpayers when the irs started to problem solve to allow taxpayers to come in without an appointment i organized dozens of professionals to assist those that appeared at the irs i also devoted a significant amount of time to
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assist taxpayers who can't afford professional help on a pro bono basis. throughout my career i am privileged to work with professionals and hard-working employees and if confirmed would be honored to work beside them to run their respect despite the challenges the irs is fortunate to have an experienced workforce committed to its mission. in my career i have seen the impact of those challenges firsthand with long waits on the television -- telephone and inadequate it systems are significant part of frustration with taxpayers in the workforce i hope to work with this committee to take on these and other challenges to impact taxpayers across the board. we cannot fall into a trap to deal with the challenges the irs faces as a fact of life that work together to solve them. if i am privileged to serve as commissioner my overriding
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goal is to strengthen and rebuild the trust between the irs and the american people and their representatives in congress. that trust is critical to all the irs does particularly as it works with the department of treasury to implement once in a generation tax reform last year the successful implementation of that landmark reform bill is among the highest priority and enclosing a wish to recognize the procedure at age 101 remains a legend in our field it is the duty of the service to carry out that policy to correctly apply laws enacted by congress to determine the reasonable meaning of code provisions and to enact them and to perform this work in a fair and impartial manner with the taxpayer point of view i am grateful for the opportunity to testify and i look forward to your questions. >> we are grateful you are willing to take on this
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assignment it is one with plenty of controversy i do have some obligatory questions i have to ask. first is there anything you are aware of in your background that could present a conflict of interest with the duties of what you have been nominated? >> no. >> any reason personal or otherwise that would prevent you from honorably discharging the responsibilities of the office to have been nominated? >> no. do you agree without reservation to confirm to any summons to appear and testify to that committee if confirmed? >> yes. finally do you admit to have a proper response in writing 20 questions to address to you by any senator of this committee? >> yes. >> that's great.
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mr. rettig we are at a crossroads with the irs in terms of challenges and responsibilities. in terms of challenges come if confirmed with an agency with enormous responsibilities that touches every single american and every business every function of the government depends on the revenue the irs collects and at the same time it has the aging information technology infrastructure and the aging workforce and changes are needed in this committee is working to help with that in the irs has a lead role to implement and the primary role with the aging workforce and i have to say real and serious challenges
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are needed in this committee is working to help with that the irs had the legal to implement and a primary role with the largest tax overhaul in a generation which delivers simplification for taxpayers across the country. mr. rettig this is a challenge not a lot of people were willing to accept. why are you dumb enough to accept it? [laughter] and why do you want this role and are you up to this challenge? i know you are not dumb. so that is my out-of-control sense of humor. >> chairman i have a deep respect for the irs for this country and this flag and the people who work for the irs and respect the fact the irs is a critical component of the success of this country.
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and i am committed to giving my best effort to the irs has the best agency that it can be. >> i think that's why you've been nominated and from what i see you are very capable of doing that but under the bipartisan investigation into the question of political bias , the issue the only bipartisan report congress has unconcerned of political bias at the irs with a serious issue across the agency's history most notably with the kennedy nixon and obama administration. . . . .
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a reason that i'm significantly interested in becoming a commissioner is to rebuild the trust in that agency to come from the taxpayers that the revenue service is impartial, nonbiased and colorblind for all purposes. >> the computer equipment is something that we have commonly noted despite updating the equipment substantial progress remains elusive. what are your plans to update
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and how are you going to accomplish that? >> the modernization of the system into the 21st century is one of my top goals. it serves two purposes not only the protection of taxpayer data universally we all agree is a principal concern. >> as a tax attorney especially on the other side of the courtroom to better perform your duties at the irs. i've been a consumer on the consumer side as a stakeholder working with the irs at virtually every level from the revenue office is up through two the corner offices of the
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revenue service, so i think i have a pretty good understanding of the operations and the various roles they play to move the tax administration to this country with an eye toward the benefit of taxpayers. >> thank you very much mr. chairman. >> let me start with this comment. the vice president said the johnson amendment that prohibits a tax-exempt organization like churches from campaigning for or against political candidates bill, and i quote here no longer be enforced under a base administration. i would like to give you the opportunity to respond to the
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vice president of the united states. who is going to be in charge of if you are confirmed as the commissioner who is going to be in charge, will it be vice president of the united states will it be you? >> i will be in charge of the revenue service and will make sure that it moves forward to follow the law and the impartial nonbiased matter. >> do you by the president's statement is troubling i isn't that sending a message inherently political message when what we want whether it is democrats or republicans whether we want the wall isn't that a troubling message cracks >> i can only speak to my viewpoint of what was happening if i were to operate as the commissioner confirmed and i confirm to you and pledge to
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this committee impartial nonbiased from top to bottom. this administration is ineffective of the law and is and what matters. what matters is political. let me move on to the question of the president's tax returns in this matter of being under audit. the president stated he can't release his individual tax return because he has been under these continuous audits. in your 35 years of representing certainly many high income taxpayers complicated business arrangements, had you ever represented anybody who was under continuous audit for ten years or more?
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>> we have had taxpayers put individuals with multiple audits. >> the question is ten years. >> i personally cannot recall the examination that i have no information about the audit with respect to the president. i find it incredulous that somebody could be under a continuous audit, unless they ty have made enormous mistake on their tax returns over and over again.
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the excuse that he made all these months for not releasing his returns for how would one even get in a position like this for my experience i would say it is a more complex returned the longer it takes to get an examination completed that i havbut i haveno familiarity in e president's returns. >> i'm going to leave the record open on that point and i'd like to have you amplify on that. the professionals wouldn't make that possible. now, i'm going to read something that goes into this question of
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fairness for working class people. the tax business and lawyer accountants and other professionals to oversee their business activities and legitimately minimize their potential tax liabilities. does that sound familiar? >> it does. you identified earlier the past reduction as one area where guidance is badly needed from the irs into that as a profession that is so confusing that the tax consultants are already feasting on planning opportunities for their wealthiest clients. given the right opportunities for the tax planning and tax evasion created under the tax law how are you going to combat
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the kind of aggressive tax plan you were trying to describe your feelings about in that quote i gave you? >> taxpayers have teams of representatives handling their terms. typically they are not going to go to a group of tax professionals to put some structure together. that's not universal. >> i'm over my tiny and would like you to just tell me briefly how you would combat those who are trying to rein in every possible advantage out of this in effect to find holes in the wall. >> it would be critical to provide clear and timely succinct guidance as to what the positions are and what the intent of congress was.
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i've had a chance to visit on a number of issues including as the chairman indicated our appreciation that you are willing to step up and serve and if i could mention again. please stand up and give a round. [applause] to make some changes again we did this 20 years ago with a big restructuring reform added that
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came after the commission was formed by this body i cochaired that with senator bob kerrey as you know and then along with senator ben cardin. what's needed is said okay it isn't working. it's not functioning to help taxpayers at that time. only half of the calls were being answered when they would call the irs and they spent about $3 million on a system that wasn't working so we undertook this reform in the oversight board. so half of the calls were being returned and we passed the legislation within ten years instead of half of the calls being returned, ed 3% of the
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calls were being answered as if it is a big improvement. all the ratings what do you feel they've been done a good job ae bottom. they are getting in place about halfway up th the ladder which isn't bad for the agency. i will say here we are ten years later and we are kind of back to a situation where taxpayers are not being served a 2015 only 37% of the calls were being answer answered. i think it is critical to earn the respect of the agency they are interacting with when they get efficient and timely responses. >> the other measurement measurd
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be to get an answer from person and that's also declined another issue that senator cardin and i are looking at is the appeals process that has been more truncated. it's something secretary kerry and i feel strongly about and we put inside the board would bring expertise. it kind of fell to the wayside and the idea is not to have it commissioned every 20 years to have to go the next couple of years with a new commissioner in place hopefully with you, but to
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have the commission performed that role of oversight ensuring that we stay on track there are no members of the commission right now bu that have been appointed and again this goes back administrations no more separate than the clinton administration. it assists in the transparency of the operations of the service as well. the more ideas the better and then we will work on the ideas collectively.
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i hope that this will be a part of the discussion just the last question is briefly on the idea of having an independent appeals process do you support them having access to an independent appeals process? >> thank you mr. chairman. >> congratulations on your nomination. as you know, new jersey joined 32 other states and dc pay recently passing a law that authorizes towns and cities to create charitable funds that provide tax credits to encourage donations but in an advisory notice released in may it seems they are arbitrarily singling out new programs like new jersey and one that the taxpayers could face penalties if they write off their donations i should say. this fundamentally flawed advisory contradicts the case law all the way up to the
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supreme court and discriminates against the states apparently based on political affiliation. so, my question to you if you are confirmed what you adhere to the principles of federalism and states rights and respect the authority of the states to set their own tax policy? scenic if i am confirmed, we will follow the law impartially any nonbiased manner and as i indicated previously, nobody should presuppose my position on any particular issue across-the-board that the internal revenue service will appropriately look into the facts, look at the relevant policy procedures, prior guidance that has been issued and i believe come to the accurate conclusion issuing whatever guidance.
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the. it's not an issue in my practice that i've dealt with but what i've heard with respect to the issue it is my understanding there is a possibility that the post-tax act situation could not on all fours with the earlier position taken by the internal revenue service and the 2010 chief counsel. >> you were given early warning i would be asking these questions at this hearings that this is a serious issue that can raise property tax burdens for hundreds of thousands and this is going to deserve a clear answer. would you undermine the law and deny people deductions for charitable contributions in line
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with 32 other states and the district of columbia that are doing this right now. >> as we both know, they are working on guidance and my incentive is tha that it would e accurate and impartial, nonbiased and clear and it shouldn't be lost on the committee. let me give you some background. the chief counsel released an advisory memo clarifying state credit does not prohibit them from writing off the full value of their charitable donations. in other words getting a tax break doesn't mean you earn more and shouldn't be taxed more as a result. the court confirmed this interpretatiointerpretation rule tax credits given for charitable
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donations are not considered a thing of value but are rather the government declining to impose a tax. we can all agree that it's impractical and fundamentally backwards to tax people on the value of a tax break that they've received. in some states, they have provided about how they are using their program to circumvent the property tax gap. for example, an alabama the financial advisers explained the so-called nations treated as if you pay alabama taxes for federal purposes your donation will be reported as a charitable contribution otherwise the tax x payment would be reported as a deduction subject to the 10,000-dollar cap and provide a tax benefit to you. even before they gutted the property tax deduction and indeed they have been urging their clients to shift the itemized deduction from texas to
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charitable donations and other to avoid the alternative minimum tax. some are alabama and georgia programs in compliance with the law and irs rules? >> i'm not specifically aware of the programs themselves, but when we met, you raised an issue that perhaps the difference between the credits and deductions and i'm not sure. both of us went about a minute or so. [inaudible] >> i let you know if you are near the end.
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i know where you you're concernd with this issue and others into the concern of taxpayers across the country with respect to this issue and i would look forward to a resolution that universally people could sa saves the right resolution. >> i will close on this i don't want to see the irs weaponize against states like mine. it's either good for everybody in the district of columbia or it is good for nobody. i hope that you will seriously look at this in that manner because otherwise we will feel we are being treated unjustly simply because we are the states that we are. thank you mr. chairman. >> the senator was here before me. >> i just want to say welcome today to you and your family it
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is a pleasure to welcome you here and i hope that we will welcome others to. we just passed a tax bill last year that's going to increase the budget deficit by a couple of trillion dollars over the next ten years we are spending a deficit that is already at norma's levels. one of the ways we can reduce the deficit and increase revenue without raising any rate at all what you see is the funding of over the last several years by about almost 20% the number of and use down double digits. what would you do to try to turn that around? >> it is the responsibility of the irs to extend any funds received in a responsible and
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forthright manner. that is critical to obtaining the trust of the american people. if confirmed and i'm in the position, one of my priority iss would be to analyze the budget of the internal revenue service for the training related issues all of which encompass from the outside all of which encompass the probability and the need for additional funding resources and the possibility of additional workforce. i am a huge believer in training the workforce player but it would be best on the planet i think that we need to universally get onboard with the training of the internal revenue service so that they can provide top quality service to the american taxpayers. he's greatly criticized by folks but i thought for somebod somebm to come out every time you get the aged 70 to take on a job
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like this than he deserves our does but he called on them to outline the program and we talked about this yesterday can you inform the committee of the views on the streamlining of the ready please and additionally can you tell us in the absence of what your plans are to ensure that they are able to track the talent especially given the ongoing cybersecurity theft threats are growing ever more prevalenprevalent? prevalent? >> i'm a proponent for the service particularly with respect to the it side of the operation. it's publicly known that the internal revenue service system gets taxed between two to 3 million times a day and it is critical to the success of the country and the appearance and trust that we have a system that defenddefends tax payer data ber than any other system on the planet and in the absence of critical care pay scales.
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they want to remain there and proud of remaining there but to encourage people on the outside the benefits of government service. we have a huge problem here. the senator introduced legislation that i was in the committee to ensure that folks are preparing to what they are going to increase the number of affairs that flow from that. i would like to ask if i could for your views on this.
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>> people have tax returns on behalf of others should be capable, confident and understand the tax law for the returns. it's a typical regulation or involvement in a. from the press on the outside wawith easy on the outside i thk that the american taxpayer to serve the most up-to-date it system.
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the a quick word under management experience a lot of people manage. >> it is based on that leadership and ththe leadershipd creating teams with. i proceed myself as pretty good people with interaction with others. i'm open to criticism and i'm open to providing criticism as well. >> first of all thank you for your willingness to serve. you have a very distinguished career in understanding the tax laws and advocating on behalf of others, so i thank you for your willingness to get involved in this area that is not without controversy. and i think your family.
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i want to follow up on some of the comments made by senator portman and carper on the tax administration, but i want to start with the budget that the senator asked about. we have gone through a series of budget years where they have taken a hit on the budget. the only reason you got an increase in this year's budget is to implement a new tax law that didn't deal with the underlying capacity within the irs itself and i appreciate the fact you recognize you have to live within the funds appropriated to. making sure our tax laws are administered fairly to have the resources they need to be able to carry out their mission. are you going to be that type of advocate within the trump
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administration to have adequate resources to carry out this mission? the >> people who've known me the last 50 years they would characterize me as shy. the committee, the taxpayers should be knocking on every door possible if i make the determination that i think i need something to accomplish the goals that we have set out. >> and you will be prepared to tell us directly those needs so that we as an independent branch of government can get that information? >> yes, the committee will hear from me directly. >> i want to underscore some of the planes on the legislation that is moving through here. you mentioned several times you want to make sure the personnel are adequately trained to deal with the complexities of.
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you are aware when there is tighthere's tightbudgets that tr some of the first to be cut. will you work with us to protect the resources that go into training to make sure that your people are adequately trained? >> absolutely. >> there's also a program as you know to deal with income taxpayers for assistance in the irs. are you prepared to work with us to strengthen the program? >> absolutely. >> you've already answered the question. i think we need to make sure consumers are protected when it comes to those that are out there using consumers as a part of business. i appreciate that answer on the private debt collection we have been debating that for a long tg time and every study has shown the debt collection usually ends up costing more money than we've raised. i think the house ha house has p with an effort to try to deal
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with the size of the taxpayers. one of the methods. will you work with us so we can try to resolve this issue as to private debt collection? >> i will. >> the last thing, i am the ranking member on the business of the entrepreneurship committee. the chairman of th that committ. we have been -- we've received a greawe have receiveda great deam the committee as to the administration of the tax law before the change in the tax code. and now since the change, we have heard a lot more. as to how the small businesses will be able to deal with the changes that have been made. you've had a lot of concern about the tax preference of business income for small businesses. would you be prepared to come before the small business committee as we request to work on ways we can help small
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businesses deal with the complexities of our tax code that was there before the tax reform but now may be more complicated tax debate could >> i believe small business is the backbone of the country. >> thank you mr. chairman i will yield back the balance of my time. >> in that order i will call on you and then we will have a second round after i've asked my questions. senator cassidy. >> thanks for coming. i enjoyed were meeting in my office. in february i had an exchange with the acting commissioner on identity theft and protection of taxpayer data. my identity was stolen once and it still has implications in terms of how we violated when we receive the dollars back. so, the significant reductions in id theft since 2015 is
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1.4 million fraudulent returns in 201 2015 of 600,000 this yea. what thoughts do you have as to how we can move the 600,000 which cost billions of dollars in fraudulent returns down towards zero? >> i'm oui encoded the fact thae interim reserve has made a bit debate could end and it would still be too much that any identity theft is still too much. there are issues with respect to the timing of certain functions in the internal revenue service if they were a lot more time they could prevent the theft situations and stuff like this is confirmed by bot by the forwo working with you in that regard. >> i'm told that my sou my stoln return did not note that i had three children, which formerly i had threhad three said you coule checked to see if something had happened. but it does seem that integration with the social security fund or something could have revealed that kind of simple thing. >> there is internal pressure
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and i believe that that is a part of the issue to be dealt with. and i share that concern any identity theft related to the internal revenue service. >> congress is considering some administrative reforms that would improve this. let me give you some ideas and see what you think of it. a single point of contact with an id theft victim to call, notifying taxpayers by an id theft is suspected and updating criminal prosecution. i would like to know that this isn't just this is happening and we don't care command of an expansion of thextension of then program. any thoughts on those? >> single point of contact is critical because it is confusing people who suffered theft so i think a single point of contact with the significant. the criminal investigation issues i think a significant
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part of the investigations function in the revenue is deterrence and so making people who might consider going down that road in terms of id theft to make them aware they could be looking at significant sentences is critical. >> of somebody i know stol i noy ids and frankly that's going to get out in my community and so the kind of -- and presumably somebody that i know where it could have been somebody logged on and got my info, but any way to kind of reverberate. >> i think it is critical and i understand there's even contemplation of maybe an issuance of different social security numbers and things beyond. most of us can remember her sociathesocial security number e might not remember a pin code and even getting into government buildings when they ask for the last four of your social sometimes some of us have to start at the beginning to get to
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the last four to the possibility of issuing new numbers might also generate some respect by the victim the fact that the government stands with them. >> we talk about the term review program to improve detection that's been implemented in recent years into posted be a significant improvement. the tax administration report from september 17 noted that the irs may not meet its target for retiring the legacy system. how can you prioritized for implementation of the system? >> i am not personally familiar that ibut it would be a high pry if confirmed to look into it with the rest of the committee.
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>> the irs has undertaken an information pilot sharing program to reduce theft and i understanunderstand 24 states participated in 2017. it seems reasonable to expand that. i'm an advocate of information sharing with other age in. i think that is critical. >> no protein wisdom if you will. last i will say that i'm pleased to see that they've improved customer service but still i think one in five people calling never get their uncle answered. what can we do to improve that? >> i believe it is critical for the respect of the agency and to earn the respect of the american taxpayer that they receive somebody answering the phone. >> it seems pretty basic. any idea on how to improve for more manpower or woman power?
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>> when you call him you ge in a recording and it says plotinus 17 minutes if you leave your name you back. they are getting a three minute hold and they will call you back and i would like to see them working with the committee.
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we have a president that apparently is regularly demanding loyalty. we witness the administration leaning on both independent regulators and on agencies of government like the doj that are supposed independent to try to impose their will. that combination of factors raises the question of how have you made any loyalty pledge when asked to make a loyalty pledge fax fax >> no on both accounts. and along the spectrum of yielding to political pressure when it's brought to bear versus
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being staunchly independent as the commissioner where do you expect you would fall on the spectrum? >> i would hope that the members of the committee see me as staunchly independent or more so. >> one of the problems we talked about in my office is the problem of the shell corporations. they are used for tax avoidance and evasion and i've also used for a considerable degree of criminal activity. much of that is a matter of state law, but there are signals that the irs commissioner can standby for instance telling investigators looking into tax fraud that when they bump up against a shell corporation they ought to redouble their efforts and not just walk away because we can't figure that out, and also to be a voice with respect to the corporation problem as
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congress deliberates. but we know your thoughts on dealing with the corporations in those two ways. if confirmed i will be a vocal advocate for the strength of the enforcement mechanism of the internal revenue service including the criminal investigation service and in my neck on the criminal investigation doesn't back down from a challenge. they appreciate the challenge and move forward. would you be willing to make the report to us once you've been here for a while and got a look at this as to how bad the shell corporations problem is from your perspective in terms of law enforcement? >> absolutely. >> thank you. there is a collections gap between what the taxpayers so and with the irs collects that is estimated to be $400 billion. would it be fair to evaluate the tenure as commissioner based on
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what you can do to reduce that number? the >> i'm very familiar with the tax gap, the majority comes from the individual side in the underreporting and underpayment. i look at the tax gap as a roadmap to tax avoidance cut tax evasion. it's been identified coming back to 2001 was the first that was created to. very sensitive to that issue and sensitive to the needs to reduce the issue for a variety of reasons including a little bit more respect if we got one more percentage of complaints we withdrew from 83 to 84% and that is another $40 billion a year and on the other side, if we lose the interim service respect of the american taxpayer and it reduces one person, that is a 30 million-dollar a year loss. i'm extremely helpful to put a dent in the tax gap.
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my last question is a lot of the work that the irs does is based on truthful reporting by taxpayers. it should come to your attention that a taxpayer is claiming one thing under oath in a filing to the irs and is claiming something that on its face appears very different to other regulators or reporting environments what do you think should be done about that and is thanow worth at least a prelimiy look to see why the taxpayers for finding something very different to the irs than they are elsewhere? >> the commissioner isn't responsible for the audit selection of taxpayers that is more thabut thatis more than thi think that the irs itself has those mechanisms in place and they do read the newspapers and
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pay attention to what is going on outside of the service. >> does there appear to be inconsistent reporting to determine whether the reporting to the irs is truthful or not? >> they have looked into that. >> and should it continue to do so? >> that has been my experience. >> mai tamy time is up and i the chair. >> what you tell me that the extension of the scholarship fund do you know anything about that? >> i would probably tell you. >> then i will probably listen. >> i created the scholarship fund through ucla for the purpose of the extension is the number two extension program in the world in terms of actual registrations. the scholarship fund is intended to provide scholarships to active duty and veteran and came from the situation of uc reality
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tv or uc soldiers in a sandbag installation in iraq or wherever they happen to be and maybe playing video games or whatnot and the intent is to allow soldiers serving overseas in something like a sand bunker to actually earn extension credits and areas of finance accounting and such so that when they leave if you've been a machine gunner for three years and have a giant bill, the ability to go to the college or university and set an age biography class may be a challenge coming out of the environment you've been in. it's to provide active duty soldiers and veterans with the ability to assimilate into society with some financial literacy and accounting and maybe in time they would go to college but immediately to give them some respect when they come back into the job market. >> you are the cofounder of the
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program is that correct? >> i'm the chairman of the veterans committee in the united states senate and it's great for me to pick up a citizen that is lending their expertise and career to support a veterans deployment in education and having code written the act of years ago when we started distance learning in the united states military ground and come to the coast college credit you are taking video games out. i have in the last seven years had a freestyle event every april.
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give me an idea of permanency and the problem. if confirmed i would look into it in more detail and a huge supporter of whatever makes it more for the taxpayers to get two planes. thank you for that answer and lastly for my questions to turn back to the ranking member for his questions my personal feeling and this is me personally, i pay taxes since april 15, 1959 when i made $40 a week as a surveyor's assistant and had $8.90 withheld from my 40-dollar weekly check which was my first experience of paying taxes. some say that's when they became a republican. i became one leader but nevertheless, that isn't relevant one way or another.
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what is relevant is i paid them for a long time and i've had professional help. and a lot of the time, because it went beyond my ability to do it an and if you like i was doig it right. for the filing and paying income taxes and my wrong or right? the >> i know from the outside we are on that course to come up with a right or wrong we need to see how the filing season goes. >> i'm talking to you as a taxpayer but it just seems like the enhanced individual deduction for doubling with some of the reductions and itemization's that take place between the new laws the last changes it has made the train ondreamone day of having one pae
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you sign and send it and maybe within reach and i hope the commissioner will work towards completing the task to move towards simplification of the system because you just said in answering the sentence to be question with regardthequestione amount of income. reiterating the collection from 83 to 84. >> i agree. >> mr. chairman, we make a commendable point about simplicity.
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the small business guidance on the pass-through provision. to figure out what is expected of the small businesses.
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for the clarity on what is going to be done for my next question i would like to turn to the charity area because we have had strong bipartisan support in the committee for the charity centers. we have prosecuted that case for a long time. the secretary said that the bill can encourage more charitable donations. the nonpartisan experts at the pepsi center's sake in their view the number of taxpayers claiming the charitable deduction will be cut by more than half, and overall charitable giving will decline by as much as $20 billion annually as you have probably seen in the press. a love of the charities are already speaking out publicly about their concerns, and the concerns about the vagueness of the provisions and in many instances know how to comply in the new rules.
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do you have any reason to doubt the findings of these nonpartisan experts who talk about the decline of charitable giving as i've described? >> i have not reviewed those reports personally so it would be unfair for me to comment on what they are saying that i believe in the concept of charitable giving. >> on the management found what is the largest number of employees that you have managed? >> 35. >> so, as 70,000 people who are going to be working at the irs if you are confirmed. i thought your point was respect senator carper were that you've shown leadership and had all of these kind words. i would like you to furnish for the record because time is short and we have business to do. i would like to hear more specifics about the management approach that you would actually
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take because there is a big difference between managing 35 and managing 70,000. the statement was way over the line, not even close because that is trying to interfere in the impartial administration of tax law. but i continue to be concerned about these issues given the allegations that the trump campaign operation coordinated or diverted to help the foundation grants were distributed to provide maximum benefits to the campaign. in a meeting that you and i had, you emphasized the importance of the irs using its resources to send a message to the public.
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you talked about some examples. what kind of a message would it send not to pursue evidence of the law being violated by high government officials? i'm not talking about a specific case of devices like to hear your thoughts about the kind of message it would send for the irs not to pursue evidence of a violation. >> in my experience, the irs looks into a lot of batters and develops the facts of the matter and sometimes we hear about them publicly and sometimes we do not come as a public acknowledgment of what they might be doing doesn't really serve until something gets through the system also in my experience, they do read the newspapers and create cases. >> given what has happened recently, literally a month ago with the vice president of the united states basically saying that his views were more
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important than the johnson amendment which prohibits politics from the public i think we ought to understand we are in a different kind of time. we agree we have other business to do after senator brown has a chance to ask questions. i appreciate the second round.
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was unacceptable if confirmed but you commit to a full review of the private debt collector program including a review of its collection. the issue is implementation is being implemented in an impartial manner. you are suggesting the work to ensure the extremely portable taxpayers are not being target targeted.
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the reasoning of the terminated employees and i share your concern with the 800 individua individuals. i hope i calling us on the other side of the aisle will also. i know you've discussed in your experience. you have done that from the time that you were in school since the tax compliance especially with respect to the earned income tax credit which is one of the most important parts of the tax law and the rewards for work to the low to moderate income workers and every march or april lots of literally hundreds of thousands who make
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20 or 30 or 40,000 a year because of this refundable tax credit of things you know will get a check of two or $3,000 which at that income is very, very significant obviously. they have a 93% accuracy rate and really the gold standard. describe for us because i think it is important to have an irs commissioner that those practices that care. tell us about your experience and reassure all of us on this committee that you will work to make sure they have the resources they need to meet the demand for their service. the service. >> i'm a huge proponent. it serves two purposes. the taxpayers of this site is providing free services to the taxpayer and the other side i of significant number of tax professionals in the country started out understanding that the tax administration was about preparing returns and acting on behalf of taxpayers in that
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context rather than taking the closest in a college type environment, so for many professionals i know that the spark of interest of being involved in the administration began in the program and as you've indicated, senator, the accuracy related from the programs, the training of the people involved in the program is significant and the purpose of preparing accurate returns which is critical to the success if you will in the tax administration that returns could prepare as accurately as possible. >> thank you. i so appreciate the work that you've done and appreciate your comments and i hope we can count on you when there are members of this committee and there are politicians in this town that loves to talk in a deceitful way by playing with numbers about fraud in earned income tax credit always exaggerating and it's a good sometimes by newspapers like "the wall street
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journal" because so often what they call the fraud is either understand or overpayment that the taxpayer had nothing to do with and they were simple mistakes. .. >> the tax reform measure that we passed almost six months ago is contributing enormously to very good economic environment. were seen encouraging data,
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record low on employment. there are people looking for jobs in america today. there looking at the gdp growth for the year. they're expecting 3.3%, our goal to eliminate the lockout affect on foreign earnings by changing to a more territorial based system that's clearly working has dividends from a broader coming home. this is proving to be beneficial. as you know, there are provisions that need rules for implementation. i would simply ask that you commit to working with this committee and members of congress to ensure any ambiguities are addressed in your taking into account the intent of those of us who wrote this legislation so we get it
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right for the constituents. >> if confirmed, ente internal revenue service will follow the law with what congress intended. i look forward to the opportunity to assist in providing clear, concise and timely guidance so taxpayers can get it right the first time. >> thank you. we spoke briefly about the foreign it count act. this is the requirement that foreign financial institutions that hold assets for american citizens have to report to the u.s. government, or withhold 30% as attacks. the fact is, many foreign financial institution find it cumbersome and they put refuse to provide banking to citizens abroad. the problem for americans abroad, record number have
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renounced their u.s. citizenship because they cannot manage their finances and they choose to live abroad. makes it a huge competitive disadvantage for americans seeking to work. sometimes distant overseas can be a valuable experience for one's career. i don't think we should be putting americans or multinationals at a competitive disadvantage. can i get a commitment that you will work with us in congress to find ways to lessen this burden that's been imposed on americans. >> i would commit with respect to every issue we can come up with to lessen the burden on taxpayers going forward. >> finally, it struck me as surprising when i learned the irs has so few appointed positions. there's a lot of terrific career staff. my understanding is there is a
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commissioner and chief of staff that are the commissioners direct discretionary hires. otherwise, everybody is a career staff. i wonder if it would be better for the commissioner to assemble his or her own management team to a greater extent. >> i believe the workforce in place, career irs workers are world-class. having a private-sector experience in bringing that inside is critical so there's a deep understanding of the impact of each step they take on american taxpayers make thank you. >> it was the committee's intention to report for nominees during today's hearing.
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because we don't have a quorum will have to move the consideration to the floor later today. understand the rate can member would like to make a brief statement. >> thank you mr. chairman. i agree with the decision to vote on these nominees off the floor later. we are going to be voting on the four nominations as chairman isaacson noted. several are of her positions on the tax court. key positions with respect to fairness for taxpayers. mr. chairman, i note that our friend, senator scott has come. i believe he wants to ask questions of mr. reddick. why don't i hold off making my comments about the nominees and we could let senator scott go before we go to another man. >> senator scott, your recognized you make thank you very much.
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mr. redding, the department of treasury and we look at nominations from the state and designate opportunity zones in areas of jurisdiction. this is good news. securing the provision in the tax bill was a huge win for millions of americans living is struggling in communities. please think acting commissioner carter and his team for their hard work in pushing out the guidance that help local leaders select their opportunity zones. this will help create permanent positive change to benefit generations to come. i look forward to further guidance on establishing investment vehicles and qualified investments most likely to drive jobs and economic activity. innovative taxes such as my
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opportunity so have been created to achieve important public policy goals that risk being severely underutilized because of fear of irs retribution. if confirmed, what will you do going forward to more closely align irs guidance and enforcement with congressional -- >> if confirmed, i look for to working with you and members of the committee in making sure the guidance issued is clear, concise and timely. i would hope we could get to a situation where american taxpayers don't retribution but respect the irs and know that they respect the american taxpayer. >> that's good. as you think about the opportunities on the legislation. were talk about legislation that could divide to more than 52 million americans throughout this nation. the positive impact of
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attracting a few trillion dollars of capital gains back into the most distressed communities would be impressive and necessary. having grown up in one of those distressed communities i understand and appreciate the potential that is lost in those communities. and we have a way of excavating that human potential. it's incredibly important. >> the irs currently wields of power over the folks of south carolina and across the country. far more than the founders intended. one example is in civil axa forfeiture. this practice allows the irs to confiscate a citizens wealth and the suspicion of wrongdoing. doing a two-year investigation the ways and means oversight committee discovered the irs had
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seeds assets without providing evidence to support the claim. that's why it i introduce the respect act which would require them to show probable cause before seizing access and proof that would clear them of wrongdoing. will you commit to working with me to protect taxpayers and small businesses? >> absolutely. >> this is basically an issue of liberty. there is a bipartisan consensus that a single act of forfeiture needs to be stopped. thank you for your indulgence. i yield my time. >> since i'm acting chairman i'm going to commend senator scott on the issue this been brought up. there is the georgia tax pair that is the base of that movement around the country to end the abuse.
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i hope the irs will do it they can to cooperate and get to a positive resolution. >> senator wyden you are recognized. >> thank you. i'm sure it is hard for folks to assess where we are. unless members come in, will look forward to getting written responses continuing our discussions. chairman isaacson and hatch have agreed that we will vote on the nominations that are before us off the floor of the senate when we have a vote. there are several nominees of her position on the u.s. tax. those positions deal with fairness for taxpayers that we have been talking about today. if confirmed -- would play a key role in another area bipartisan concern, tougher enforcement of trade laws.
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i will support each of those three nominees. fourth is up for consideration is johnson was nominated to serve as assistant secretary for family support. she would be the head of the administration for children and family. there are several specific issues regarding that nomination that i will touch on. the first deals with the child welfare system. our committee has passed landmark bipartisan child welfare laws and it is our job to perform vigorous oversight of those laws in congress should do that they need access to the information that shows how child welfare programs around the country actually work on the front lines. unfortunately, less to the trump administration announced a plan that would make it frequently
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harder to get the information this committee and the public needs to conduct oversight of the programs effectively. this is not a criticism of that particular nominee, ms. johnson, but it was certainly a mistake by the trump administration. a big mistake in my view, a mistake in the wrong direction for kids in foster care. i've been working on the issue for several months. i still do not think there has been enough actual progress on that front. that brings me to the issue with respect to ms. johnson. if confirmed she would oversee the office of refugee resettlement. this is the agency that has custody over the refugee children the trump administration separated from their mothers and fathers. americans have been horrified by the stories of weeping mothers
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unsure whether children have been taken. some of the audiotapes have been heard about young children crying out in fear and americans want answers as to how this will be fixed. when mr. johnson ran the colorado welfare program greenlighted the law allowing foster kids to be placed in juvenile detention facility. when the committee met there was one issue among several that committee members had to consider. now, because of the new firestorm the trump administration has created, the issue of putting children and detention facilities is very much on the minds of the american people. in my view, the committee has not had an opportunity to learn enough about how ms. johnson
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would handle this part of her job if confirmed. the fact is, we have been in the dark to a great extent on the matter for several weeks. we had secretary a's are in respect to the children under his custody not able to give straight answers with respect to how many of the parents have been told whether children are. so, ms. johnson if confirmed is going to have a key role in addressing this issue of protecting these kids, making sure these children are safe when we have seen significant evidence that they really are at considerable risk. she has a big job ahead of her. we will have the vote off the floor of the senate. a number of my colleagues on
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both sides of the aisle are going to support her. in view of the issues i have mentioned, i will not be able to support her nomination today. thank you chairman and it looks to me like we are done. >> we are almost done. i have a statement to read. thank you for attending today and thank you for your attendance and commitment to public service. commend you and your work on veterans affairs. we appreciate that very much. we appreciate the questions provided by the members the more questions can be submitted for the record. should you serve the american people rel you will have no greater friend in this committee. we hold the responsibility for the american people and it will continue to be the place where your actions will be overseen. we will be the greatest watchdog you and the agency had.
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ask any member who wishes to submit questions do so by the close of business on tuesday july 3. with that said, this hearing is adjourned. thank you for your attendance. [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation]
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