tv [untitled] CSPAN April 5, 2010 1:00pm-1:30pm EDT
i worked with the white house and house and senate leaders and champion the that position -- provision in the final bill. caller: i would like to tell you one of my reasons against a health bill is the fact that most american people just don't trust their elected officials anymore. there are too many examples i can give you. for instance, president obama said that if you are making less than $250,000 per year you would not pay director in taxes. that is not true because if you make $100,000 and your company provides with health insurance and the value of that health insurance is $10,000, you will pay taxes on over $100,000. it is added as income. american people are very conscious of privacy. if you go to eat your doctor in this bill and he treats you for
aids, all that information has to be sent to a bureau in washington. if a woman has an abortion, that information is stored in washington. we are also getting to talk about bringing up immigration. we have to have good immigration policy. i thought we went through this in the late 1980's where we had amnesty for about 3 million people congress people promised the american voters that they were coming here for jobs and the congress people were going to give the employer is a way they could check that they were employing legal residence and guess what? the best they can up with was either a fine and limited voluntary, not mandatory.
the democratic party kept refusing to give money to companies or have them -- >> we will leave this as the deadline approaches for filing federal income tax returns. the irs commissioner is discussing the role in overseeing the collection of over $2 trillion in tax revenue. he will talk about new tax rules. this is live from the national press club. . .
gracious introduction. it is a pleasure to be here. before i start, i want to thank one person and one group of people -- out want to thank my wife. being the irs commissioner, i consider one of the best jobs in the world, i'm not sure being the wife of the irs commissioner is. i'm very appreciative of everything the family does. i also want to welcome a number of the senior executives from the irs, my colleagues, the make the tax system work every day. i've done a number of stints in the private and public sector. right now, i work with as talented a group of executives as you will find in any business, any government, any non-profit anywhere in the world. my hat's off to my colleagues here as well. it is good to be here in the spring to address the national
press club. it's good to see the cherry blossoms. those of you live in d.c., it's good not to see snow at this time of year. one of the things when you walk around, probably on your way over here, you noticed lots of tourists going to museums, going to the mall, going to the easter egg roll. you also see police officers attending to the safety of everyone in washington, park rangers showing people where they should go, landscapers keeping the city beautiful, and a number of school teachers taking classis around, educating students and teaching them about the capital. one of those things those people have in common is that they are all public servants. they serve their fellow citizens, their neighbors, their family and friends every day.
there is another group of public servants you will not see milling around the streets of washington. those are the thousands of irs employees to right now, during this time of year, are answering taxpayer questions over the phone, processing tax returns, is issuing $300 billion in refunds out to the american people, and helping taxpayers during these struggling and tough economic times. that's what i want to talk about today. public servants and public service and how we at the irs are advancing in translating our public service commission and into real services that benefit the nation and taxpayers every day. winston churchill once said the further backwards you can look, the farther forward you are likely to see.
what i want to do is take us through a quick tour of what the word service in internal revenue service and the history of the internal revenue service, particularly all our service offerings. around the turn of the 20th century, we were not called the internal revenue service. we were called the bureau of internal revenue. we bore very little resemblance to what we do today. we were a mix of the bureau of alcohol, tobacco and firearms and the food and drug administration. we issued a stamp taxes on distilled spirits, fermented liquors, cheese, margarine, and even opium before it was outlawed. there was no individual income- tax then. there was only a corporate income-tax. we were focused on doing things
like breaking up a legal skills, which was dangerous work in those days. -- breaking up the illegal stills which was dangerous work in those days. the closest thing we did to service was in the 1890's, congress charged the bureau of internal revenue with analyzing samples, such as milk, to be submitted for inspection. we did public safety and people with microscopes and chemists on staff. service in that context meant we were protecting the public's mood and making it sure was not adulterated. even with this very quirky portfolio, we did some public safety and food safety, one of the bureau's early leaders was prescient about the future unique role the irs would play in a growing nation and the
increasingly complex economy. in 1901, one of my predecessors who had a big long beard and a different outfit that i have today, he had a " that the bureau is a business touching closely the interests of thousands of our citizens and coming into your nest of contact with great and small commercial and financial transactions of the nation. even back then, he said this is an agency that touches the economy and people. although he did not get to see is full vision implemented, over the next 40 years, the irs possible changed dramatically during two world wars and momentous pieces of tax legislation. the most famous is the 16th
amendment to the constitution, which gave congress the power to levy and collect taxes. it was the revenue act of 1942 that quadrupled the number of americans subject to tax from 20 million to 80 million americans in just one piece of legislation. probably the most far-reaching tax act when it came to the irs in legislation is the current tax payment act. that was the beginning of the information reporting, where was required that employers when you make wages withhold taxes and send them directly to the internal revenue service, which lasts today. along with these new tax laws came millions of new taxpayers and of the first seeds of tax complexity were born.
also, the first seeds of taxpayer service was born. a major breakthrough was in 1952, when there was a reorganization of the bureau. the bureau of internal revenue became a thing of the past and quietly slipped into the pages of history. the internal revenue service was born. i don't want to make too much of a name, but the old name did not have the word "service" in it and the new one does. if you look at the legislative history, there's a newfound emphasis on service because we now had tens of millions of people we were interacting with and the expectations were high. in the 1952 annual report, which was the first annual report of the internal revenue service, there is a quote that says the easier it is for the taxpayers
to file, the easier the job of the tax office. the reorganization will provide one-stop service for taxpayers. this is the first time the concept of complying with taxes and service came to the forefront. i will tell you that 1952 is when punched cards and electronic typewriters were cutting at. service was pretty bare bones. but in the 1950's, telephone service started, all the local telephone service where you could call your local office. the was no toll-free line. we also made irs personnel and executives available for everything from local rotary clubs to radio interviews, telephone interviews, to make sure we got the word out and educated people about the tax laws and what was expected and how we could help them. the taxpayer service kept me and bring down this road until the 1960's.
our first toll-free telephone line service came and then in 1975, the first big refundable tax credit was. it was official, all the sudden, that policymakers in washington viewed the tax system and the internal revenue service at mission distribution system for societal benefit, the mechanism to collect funds to run the government and i think the tax system has moved in that direction ever since. later in the 1970's, there was a very telling sign of service. the first ever assistant commissioner for taxpayer services was founded.
internally at the irs in the 1970's, the signal to people the service was no longer an adjunct or a stepchild of enforcement, but it actually was an integral part organizationally of the irs. if you pick up the pace, you see things are rippling through the tax system today. his home in the 1980's, we started electronic filing -- in the 1980's, we started electronic filing, which has been a big boon to the taxpayer, and then tax reform was passed which was very complex and took three years to implement. the irs was asked to do more and more things as we went forward. we produced a two-hour program explaining the bill to the american people that aired on to
under 26 stations and had 4.6 million viewers. then the tax system kept changing and kept getting more complex. the tax code became complex and that was viral. it grew larger than four times -- four times longer than "war and peace." in the national commission on structuring the tax reform was structured in the mid-90s, amid complaints about service. in the mid-90s, the 1998 restructuring and reform act, there was, since 1952, there is the second big restructuring of the irs with a real focus on service. so the history is one that started with enforcement. to this day, we take very
seriously our dual mission of providing service to over 100 million people trying to get right with a complex tax code. we also have robust enforcement programs for those who are not going to pay. what i think about service, there are a couple of interesting things. in many ways, we are large financial services addition, just like a large bank or credit card company. we have to process payments and answer questions. the neat thing about the irs is our customer base has a 100% overlap with our businesses. most businesses do analysis by figuring who served their customer. we have every financial institution in the country generally serving one of our customers. that means taxpayers are comparing us to the last interaction they had with other financial service provider.
at the end of the day, taxpayers want the same thing for us that they want from them, which is predictable service, and hassle- free experience, and they want to get their transaction done as quickly as possible and get on with doing other things. in a very real sense, the service today as the filled my predecessor's vision. we touched every adult american, every non-profit, up every business each and every year. this is a diverse tax airbase where we have to have phone service for people who want to call. we have to have the internet and technology applications for technology-savvy citizens who want to interact with us over the web. and we have to have a part -- in-person service, a lot of times for older people who feel more comfortable talking face-
to-face or someone with english proficiency issues. we have, a long way from the turn of the century -- or the turn of the last century -- but even since 1998. the most telling of the measures we watch is something called the american customer satisfaction index. that's an index of people to interact with your business or agency run by independent firms that look at people's perception of interactions with you. in 1998, we were at 51%. we're now consistently in the high 60s and that's a trend that has continued to go forward. we have come a long way. that said, we cannot rest on our laurels. what comes to taxpayer service, we need to be willing to break with orthodoxy. we cannot become calcified. we have to be open to new ideas
and best practices. we need to always be willing to keep doing what works well and throw away things that do not or change as the time changes and continue to innovate. that brings me to the tale of three taxpayers. i want to take you through three taxpayers with different needs and give you a sense of how we are serving the american people today. the first taxpayer i will call mary. she is single, in her 20s, in a management training program at a department store. she does not own her own home and she rents. her in come comes largely from her salary. she also owns a mutual funds and reinvest your dividends. on the surface, her tax needs are pretty simple. but i will tell you that we have a lot of services that can
benefit very and the taxpayers like her use every day. harkening back to the current tax payment act of 1943, her taxes are withheld by her employer and reported to the irs. she may want to go on-line to our calculator and make sure they are withholding the right amount. you don't want to withhold too much because you are giving the government and interest-free loan and you don't want to under withhold be issued by a late penalty. if she does have an account question or wants to figure out what to do on her tax return, there are more options now than ever before. she can call our toll-free number and talk to someone live or get automated help. just last year, we added a week time feature, so she calls a peak time and there is a seven- minute wait, she can hang up and call back at a time that is more
convenient. she can't log on to our web site, irs.gov, where she can type in questions and get them answered. she can also check the status of for refund or check tax law changes, including things you can get or tax advantages from the recovery act, which a lot of people have questions about now. she does not own her own home. on her once -- on our web site, she is still eligible for the first-time homebuyer credit for a couple of months, so she can get an $8,000 refund if she decides to purchase a house. when it comes to preparing and filing her return, there is a whole set of options. she can use her home computer
or commercial off the self-off -- commercial office salt -- commercial, off-the-shelf software. if people can file and deposit, they can get their refund and a week. she can split a refund and by a u.s. savings bond with a refund and we can be part of being sure people save and give them vehicles to do so. since her adjusted gross income is less than $57,000, she qualifies for free file, a free federal tax preparation and electronic filing service that is just a click away. there are a lot of taxpayers whose situation is not as simple as mary's. one of the things we have done is try to go the extra mile and the taxpayers based on their own individual circumstances. as the american people have been
struggling with unprecedented difficult economic times, we have put in place a number of special programs for the zoo for the first time ever had a hard time meeting their tax bills and other bills. let me give an example of a taxpayer -- we will say this is a family with three children. in early 2009, frank was laid off from his job at an odd parts manufacturing plant. although he hopes to be called back when the economy picks up, he is worried about paying his bills. he has picked up some part-time work for now and his wife works a few days a week at day care center and has some w2 in come. but their savings have dwindled and they're worried that they're paying the irs on the installment agreement from money they ago when a few years ago,
he had to withdraw money from his 401k and forgot to put that on his return. they cut back on their expenses but are worried about making ends meet but they don't want to get behind on the installment agreement. they heard on their local news that the irs this year was instituting special saturday open houses a goal of resolving taxpayer problems and making sure people are available to work through issues in this tough economy. they got an appointment, but together all their records and drove over to one of our centers. they met with an individual taxpayer advisory specialist. they explained their situation and asked if there is anything
they do to help. they went to the documents and pay stubs, the receipts, helps them calculate their adjusted gross income, and she had good news -- the recovery act actually created a new earned income tax credit category for families with three or more children. they would qualify for the maximum tax credit of $5,657. that wasn't all. they also qualified for the make them work pay credit and child tax credit which is $1,000 per child. in hardly any time, with the specialist right there, they got their return filled out, filed electronically from the center, had it deposited directly. so from the time that were wondering what to do, they showed up at a special open house, filed and one week later got a sizable refund check. what about the installment agreement?
that did not get handled. during the last year, we put special provisions in place that if there are taxpayers who are always meeting all their payments on time, defaulting are missing a payment would not default the installment agreement. we could take into consideration the economic hardship and come up with a smaller monthly payment. while they were there, they came up with a smaller monthly payment, their installment plan is something they felt comfortable they could meet. they never thought they would turn out that way. that was not their image of the irs, but they drove away having gotten quite a bit of assistance. the third and last taxpayer is a small business owner, a general contractor specializing in home remodeling and renovation. times have been tough this past year for the general contractor. in this economic downturn, --
don't look this up on line, it's an assumed name -- with the housing market problems, he found himself having trouble meeting bills, having trouble making ends meet and had to lay off a couple of employees. he had just about given up when he read his local chamber of commerce was conducting a small business tax workshop where representatives from the irs would present answers to questions about how we are trying to help struggling businesses in tough economic times. at the workshop, the irs representative explained a lot of valuable information. he explained as a new net operating loss carry back provision where if he filed a return and has losses this year, he can carry back and get an expedited refund from taxes paid in an earlier year, which
he realized he could do and had not realized before. they also explain small-business owners are generally going to be qualified for the making work pay credit. they also encourage people to go to the web site. so he did not think the chamber of commerce representatives show up and help them out and work through what can we do for you, but that happens all the time across the nation. when he went to the web site, he found in our recovery act portion that there is some refundable credit for installing things like energy-efficient windows or insulation. he figured out he could do some marketing to current and past customers and would be able to pitch them and get new business. so he walked away feeling better having interacted with us. i hope these scenarios have made the point that every day, across
the country, there are thousands of irs employees helping taxpayers. but we also serve honest and hard-working taxpayers through our robust and evolving enforcement programs that ensures everyone pays what they go. here, we are innovating and evolving our programs every single day. we will continue to use new and enhanced techniques to bring people into the tax system and make sure they pay the taxes, as they have been hiding assets overseas. we have a new global high wealth operating unit, where we are taking a unified look at the entire web of business and economic entities controlled by high wealth individuals so we can better assess their compliance risk. we are making betterse