Full Committee Hearing with Internal Revenue Service Chief Executive Officer, Frank J. Bisignano

The committee will come to order. Good morning, I want to welcome the IRS CEO Bisignano to the Ways and Means Committee. We look forward to having you back to discuss your great work as commissioner of the Social Security Administration soon as well. Thank you for being here with at least from the IRS's hat today. Under President Trump, the IRS is putting the American taxpayer first and supporting working families. Look no further than this tax filing season, which shows how the promise of the working families tax cuts we enacted last year is becoming reality. Americans are getting bigger refunds that put more money back into their pockets. Average tax refunds amounts are 10 percent higher this filing season than last. No tax on tips, no tax on overtime, no tax on Social Security, no tax on auto loan interest for cars made in the USA. Trump accounts a larger child tax credit, a boosted standard deduction. These tax cuts are making life more affordable for working families. Let's take a family of four with two kids. A family like this making up to $73,000 would owe nothing, would owe zero to the federal government thanks to the working families tax cuts. That same family can also expect to have up to $10,900 more in take-home pay. That is real money that helps people get ahead. Republicans secured more than 7 million jobs, and we're already seeing higher than projected economic growth thanks to these pro-growth tax cuts. Just in the past week, traveling through Southeast Missouri, I heard directly from a young lady who's a waitress who had a record refund of nearly $12,000 because of all the different provisions within the Tax Cut and Jobs Act. That $12,000, Commissioner, is her year-long's rent and also her grocery bills. This makes a different from people who are just living from paycheck to paycheck trying to put food on their table, clothes on their backs, and gasoline in their cars. The IRS is where the rubber meets the road for delivering this tax relief. It is vital that the IRS must deliver timely refunds. This money, a direct result of the working families tax cuts, will make a difference for millions of hardworking Americans: waitresses, linemen, seniors, welders, farmers, and small business owners just to name a few. We look forward to hearing what the IRS is doing to quickly issue refunds, and we will continue to engage with the agency to deliver relief to working families. This committee also has a duty to ensure that our tax code is not exploited by bad actors. That is why we are conducting an investigation into tax-exempt groups whose activities potentially violate their tax-exempt status. Our investigation has uncovered organizations operating in the United States who push Chinese propaganda. They incite violent protest and riots, facilitate foreign interference in our elections, and support terrorism. Tax-exempt status is a privilege, not a right. On behalf of the American people, we will fight to ensure this privilege is not abused. The agency must work to ensure our tax code is not weaponized against the American people to carry out the agenda of foreign actors. As the IRS carries out President Trump's agenda, it is also using modern technology to become faster, leaner, and more efficient. That work complements the bipartisan legislation passed out of this committee including four tax administration bills that have now become law to make tax filing easier and more fair for Americans. The modernized technology being implemented under your leadership stands in stark contrast the approach of the Biden administration's IRS. When they had complete control of Washington, Democrats handed the IRS an $80 billion check to hire 87,000 new IRS agents whose purpose we uncovered in this committee was to in fact audit more middle-class families and small businesses. They gave the IRS the power to snoop on the Venmo or Cash App transactions of Americans buying a couch from their neighbor or paying a neighborhood kid to mow the lawn. This was the wrong approach then, and thanks to this committee's actions, taxpayers can breathe a little easier after the largest tax cut in American history. I want to thank you for coming to testify about the IRS's progress to better serve taxpayers, the successful filing season, and how you are ensuring Americans get their money back in their pockets faster. I'm pleased to recognize the ranking member, Mr. Neal, for his opening statement.

Thank you, Chairman, and welcome, Commissioner. I think that this administration owes the American people an explanation for the war that has been waged on the IRS over the last year. The chairman referenced 87,000 agents that had been hired. That request came from a Republican commissioner of the IRS. That's where the money came from. The people that I have known who have taken the job that you have, they have served the country with honor. Last week we learned that a federal judge found that the Trump administration violated the law not once, not twice, but 42,695 times when improperly sharing confidential taxpayer immigration information. Think about it. 42,695 abuses of sensitive information that Americans entrusted to their government. Amazingly consistent, not a red flag was raised by our colleagues on the Republican side tasked with overseeing the IRS and the protection of American data is the responsibility of this committee. Would the 42,696th violation of the law raise a Republican eyebrow? What will it take to finally get to the bottom about what has unfolded under their willful blindness towards the danger coming out of this administration? What we all need to be concerned about with the IRS, as was previously referenced, we ought not to adhere to a Trump agenda at the IRS. We follow the letter and spirit of the law at the IRS. America needs an IRS that serves them reliably, not one that is repurposed as a tool for this president or any other president. But it becomes clear that for our Republican colleagues, a functional, transparent IRS seems not to be a priority. They won't blink as the president tries to sue the IRS for $10 billion while simultaneously being a champion of slashing the resources that help Americans, cutting direct file programs, which had a substantial approval rating and saved taxpayers millions of dollars. More than 20 percent of the IRS workforce has been cut. Now the administration is papering over these self-inflicted failures by putting bodies in chairs with little processing experience or how to serve the customer. With poor decisions piling up, wait times climb, calls go unanswered. I know what my congressional office is hearing back home, and Americans know exactly who they should blame. Meanwhile, wealthy tax evaders are celebrating as investigations into abusive schemes, listen to this number, have plunged by 65 percent. When refunds do come, more fractured, broken promises. The president promised the largest refund season in history, that's his quote, with increases of $1,000. But Republicans' own data now show that the gains for average Americans are much smaller than promised and are skewed once again to the wealthy, like their tax bill, and nonexistent for most households earning under $100,000. The filing season data is showing increases average just about $350, a far cry from what the majority guaranteed. And over half million people who have had their refunds delayed by the president are instead receiving an unknown quote letter that Treasury refused to provide to this committee. Not to mention that any modest increases are being wiped out by the tariffs that the president chaotically imposed, costing the American family an average of $1,700. When Democrats ran the show, we made overdue critical investments that made filing easier, cut wait times, saved Americans money, and recovered more than $1 billion from rich tax avoiders. Republicans have wasted no time reversing course in a campaign to dismantle the IRS's ability to function, leaving their friends at the very top and our president himself to be able to take advantage of these filings. This hearing and what we've watched unfold for the past year serves as a reminder of what Republicans made their permanent tax cuts to billionaires to mean, leaving families with temporary, gimmick-filled relief that won't combat soaring costs. People will understand this for what it is. Said time and again during my long tenure in this House, the IRS was, if a challenge, it was still a well-regarded referee in our tax filing system. All of a sudden it became the enemy of the Republican Party as it relates to tax collections. A fair, transparent tax collecting agency is essential to a functioning representative democracy. And with that, Mr. Chairman, I yield back my time.

Thank you, ranking member. Today's sole witness is the chief executive officer of the Internal Revenue Service, Frank Bisignano. The committee has received your written testimony, and it will be made part of the formal hearing record. CEO, you have five minutes to deliver your remarks, and you may begin when you're ready.

Thank you, Chairman Smith, Ranking Member Neal, and members of the committee. I appear before you today to discuss the tax filing season and IRS operations. It is an honor to be the first chief executive officer of the IRS, and it comes at a time of historic tax relief benefiting seniors, working families, and children across America. I am grateful to President Trump and Secretary Bessent for the opportunity to lead the transformational work at IRS. I am pleased to report to the American people that the 2026 filing season opens on schedule on January 26 and has gone smoothly so far. Through March second, the IRS received more than 55 million individual federal returns and issued about 37 million refunds totaling about $137 billion. I come from the private sector, having spent four decades leading some of the nation's largest financial institutions. In every job, we consistently served our customers and navigated challenging times with good processes and plans. I also have deep ties to the federal government. My father was a Treasury employee for 44 years. He did customs enforcement, boarding ships and making sure our ports were safe. I have great respect for Treasury's work and for the mission of the IRS. Since becoming CEO in October, I have worked with the management team to shape a clear, focused vision for the IRS. I recently put in place an organizational structure that created greater spans of control and eliminated layers of management to be closer to the excellent workforce. Now, more functions report directly to me. This structure will translate to better accountability, improved performance, and faster service delivery. To execute our vision, I have assembled an outstanding leadership team. I am confident they will help the agency deliver world-class service to the American people, a pristine control environment, all while driving a high-productivity agenda. As part of our efforts to ensure a successful filing season, the IRS has been implementing the tax benefits of the Working Families Tax Cuts Act. The tax relief enacted under this landmark legislation forms the cornerstone of the administration's growth agenda. The tax benefit to individuals provided under the Working Families Tax Cuts is estimated to be $220 billion. The average American family is already seeing greater benefits than ever before. This is in thanks to a few of the signature provisions of the Working Families Tax Cuts Act, including no tax on tip, no tax on overtime, no tax on car loan interest, and a special tax deduction for seniors. I applaud congressional Republicans for having a focus on a key element of the legislation, permanency. Thanks to your work, critical provisions of the Tax Cuts and Jobs Act were made permanent in the Working Families Tax Cuts, including doubling the standard deduction and increasing the child tax credit, domestic R and D expensing, expensing for capital investments, and the 199A pass-through deductions. These provisions are leading to an economic boom for American businesses, which directly impacts American workers. Another major provision we're implementing is the Trump Accounts, a new type of individual retirement account that will provide families a financial head start for their children. The IRS is focused on making it as easy as possible to open and contribute to an account. Demand has been very strong. The IRS has received over two million Forms 4547 already, with more on its way. Along with filing season and other day-to-day operations, we are transforming the agency. We are laser-focused on creating a digital IRS. The transformation is not just an operational need, it's a modern-day responsibility. It allows us to better identify and address areas of significant non-compliance, provide taxpayers with 24/7 access to their information, and safeguard the sensitive financial data entrusted to us. To date, we have seen visits to IRS.gov increase 43 percent over last year, coinciding with decreased phone service demand because the American public can do it the way they do many things, online when they want to. Our goal for taxpayers is our transformational efforts to create a seamless customer experience where taxpayers can interact with the IRS with the same ease they expect from the private sector. We are building an IRS that leveraged advanced technology, empowers its workforce with better tools, and delivers secure and easily accessible services. Mr. Chairman, I'm happy to take questions.

Thank you. We will now proceed to the question and answer session. With birth rates near historic lows, Republicans on this committee wanted to do everything possible to make it more affordable to start a family in the Working Families Tax Cuts. The cost of adoption, for example, is estimated to be as high as 60,000 dollars, which which is more money than many Americans make in a year. We cannot accept that cost. It is a true barrier to giving a child their forever home. That's why Republicans gave more families access to the adoption tax credit in the Working Families Tax Cuts. Working-class families who sacrifice to adopt a child into their home can miss out on the full value of the credit. So the Working Families Tax Cuts made a portion of the adoption tax credit refundable to ensure adoption is accessible to every family, regardless of income. Mr. Bisignano, with refund season now in full swing, can you speak to how the IRS and Treasury Department are working to implement the refundability of the adoption tax credit for families welcoming a new child into their home? Thank you, we'll now proceed to the question and answer session. With birth rates near historic lows, Republicans on this committee wanted to do everything possible to make it more affordable to start a family in the

Thank you, Mr. Chairman, for the question and thank you for your leadership. After reviewing this issue, I am pleased to announce that for tax year 2025, carryforward amounts of the adoption credit for prior years are refundable up to 5,000 per qualifying child, and the IRS is implementing this policy as expeditiously as possible without disrupting the current filing season. The IRS will publish additional information on this very soon. Taxpayers should continue to claim the credit as directed by the current forms and instructions during tax season, since the IRS is pursuing post-filing remedies to resolve this issue, sir.

That's great to hear. We are currently in the midst of what is projected to be the largest tax refund season on record. Taxpayers are expected to see on average a 1,000 dollar boost in their tax refund. This is putting more money back in the pockets of working families. It is not just the fact that working families are going to see larger refund checks, with refunds already 10 percent higher than last year. We must also ensure that money gets into the hands of working families as soon as possible. What is your agency doing to make filing smoother for American taxpayers who are set to benefit from these historic tax refunds, and what, if any, additional efforts do you think are needed to ensure the working families of this country get the tax relief that they deserve?

I'm proud to update the committee on a set of financial metrics and performance metrics. Of 55 million returns received to date, 43 percent of them were with Schedule 1A. Schedule 1A are the four big provisions that we talked about. And if when you look at that, the largest filing were for no tax on overtime. Right? That's a statement about the Working Families Tax Cut Act. It's actually, when we look at the distribution of it, our research and analytics group, which does all the reporting for us, right now if you scheduled a Schedule 1A, on average the refund increase is 775 dollars. Now we had talked about a 1,000 dollars, but the analytics group has a scale that shows by the end of this it will be 1,000 dollars. Bigger refunds, faster. If there was a direct deposit, which is in the high 90 percents, right, and increasing, it's nine days on average for that refund to get to the taxpayer. So I think what you're finding is bigger refunds, quicker refunds, and an easier IRS to operate through right at this moment. We are statistically 40 percent through filing season. 40 percent. We statistically get 160 million 140 million during the season, and we have 55 million today. It is a very good indicator of how the filing season is going. Faster returns processed and bigger refunds distributed. That's where we are right now, Chairman.

Commissioner, your answer leads to my next question pretty pretty easily. To say the IRS is the least trusted agency in government would be a gross understatement when you talk to my constituents who I represent. If ever there was a part of the bureaucracy that could benefit from some private sector expertise, it is the IRS. The Ways and Means Committee has made it a priority to make the IRS more efficient to better serve and protect taxpayers. Can you please share how you're applying your extensive private sector experience managing global payment systems to the administration's efforts to modernize IRS systems and processes?

Yes, sir. I appreciate the question and I have many many years, 40 years, whether it was in 9/11 in lower Manhattan, whether it was during the financial crisis, or my major role in the recovery of the housing market with Housing Secretary Donovan. I went on to go run one of the largest fintechs out there and we did 850 million payments a day for two and a half trillion dollars a day. And it was all designed around a technology philosophy to make it easier for our customers. And what you're seeing right now with the 43 percent increase we talk about online usage is the technology being applied by a fabulous CIO who reports to me, who had been three levels down in this organization and promoted up and is doing an outstanding job. The career people in the agency are feeling highly motivated by something we like to call straight-through processing. Comes from the client, gets processed through the system, and ultimately gets an outcome for the client. The ability for our American taxpayers to go online and use a Where's My Refund function? That function's existing and live and well. We are creating right now, and we're doing it on a double-digit percentage of amended returns, a capability to take a process that took 16 weeks in amended return to less than one, and that will be fully implemented by the end of this tax season. And lastly, you would be proud and happy to know what's going on in the department because of all we are getting done is the planning for 2027's tax season right now.

Thank you, sir. I now recognize the ranking member for any questions he might have.

Thank you, Chairman. Mr. Bisignano, do you know when the IRS first entered into its union contract with the NTEU or its predecessor?

When?

Yes.

No, I don't know the initiation of it, sir, the date.

1938. So that means for 90 years the NTEU has protected hundreds of thousands of employees across the federal government. Without the NTEU, employees collectively lose their ability to negotiate, to take legal action, and to advocate for themselves. This administration certainly has declared the IRS to be a battle zone as it cut the workforce by 20 percent. By terminating the union contract, it makes it even easier to take apart the IRS. I think we differ over this termination, but I stand by my statement that the Trump administration cannot take away the hard-fought rights of IRS employees to unionize. We have always been and will continue to be an ally of the employees' right to organize. Do you wish to respond to that?

I do, sir. I treat our employees as they're our employees. I'm highly motivated by the work they do. And as I would like to remind you, my role model was a 44-year federal employee in the Treasury Department. He was an orphan and I grew up in a multi-generational household. He was a veteran as was my immigrant grandfather who lived with us, who joined the U.S. Army to become a citizen. So I understand better than most what it means to grow up in a federal household led by a federal employee. My mom was a working mom also. And what I'd like to tell you, having spent my career in the private sector, is that federal employees under statute, under law, have greater benefits than any union in the world can provide for their people. Their pay is under statute. Their employment is under statute. Their benefits is under statute. Their time off is under statute. Their promotions are under statute. I can go on and on. So I would say that our employees work for the federal government and they're proud to do it. They have these federal jobs and I can attest to this, being the son of a federal employee, because of the benefits provided to them that no private sector union can get for their people, sir. So they're losing nothing. They're losing nothing.

In fairness, I have the same experience with immigrant grandparents who came to a different conclusion. Fair enough.

God bless you, sir.

So since January of 2025, there have been numerous allegations that confidential taxpayer information has been leaked. We've had this discussion. It's substantial. What's the agency undertaking in terms of a response to the issues that have been raised by both sides of this committee?

When I talk about larger spans of control and being closer to the workforce, we have functions reporting to me that never had the light of day in the organization. And I'll start with a risk management function, which we have a weekly risk management meeting to go through all the issues inclusive of that cyber. So I think one, first and foremost, it's the first time in the history of the IRS that reporting into the office of the senior executive is a risk management function. Risk management's a primary job. It allows for preparedness. A thorough review of all cyber is undergoing right now and we are also doing outside, having outside reviews. We will, as I have my whole career, have private information, PII, as the foremost responsibility of this agency. It is a responsibility I take it seriously. I've taken it my whole career seriously for the largest financial institutions of the world.

Mr. Buchanan.

Thank you, Mr. Chairman, and Commissioner, thanks for being here. We have similar backgrounds in a sense that way as in business for 30 years. But I also chaired the Florida Chamber. We had 130,000 businesses that were in that chamber. And part of my job was to try to work with a lot of mid-size and small companies. That's always been my focus coming up here. And people said, why are you so focused that way? And I said, because they're the job creators. Most of those 130,000 businesses weren't big companies, there was quite a few that were, most of them 93 percent were pass-through entities. And that's why I'm so excited about what we've got done in the tax front. And I know you, you'd feel the same way. The corporate rates, what it is, it is what it is. But I'm excited about the idea of full expensing. It's a powerful tool whether you're buying or selling. And then also 199A is another powerful tool where you get some parity with corporate America in terms of reduction of 20 percent. Let me ask you, and you touched on it, but what I'm hearing back home in Florida is they're very excited about no tax on tips, no tax on overtime, no tax or minimal tax on social security, 80 percent reduction. And then no tax on interest on cars or whatever. But the point is, give me your thoughts just quickly because I've got another question after this I want to in terms of where that's at. I know you've hired quite a few people, but the big thing I, they want to make sure they get their benefit. A lot of them have, but some of them are a little bit nervous about getting it. And I just want if you could reassure them, that'd be great.

Well, daily, myself, as I've my whole career, and the Treasury Secretary review the stats of the IRS. And our most important stat is serving the American public. Both what comes in and how quickly it goes out. And you heard me talk about building new technology so items that took 16 weeks like an amended return would be down to a week. I applaud your passion for small business. Through my career, I was the largest technology provider to small businesses across America. And I understand, to me, it's the lifeblood of America, right? And many small businesses are owned by an entrepreneur that in fact really is a risk taker because they're risking their whole family's income on their ability to operate. Our ability to deliver for them is so darn important, sir. Let me just add to it, you know, because we always talk about the billionaires and all that. My wife's here today and we started a company together, two of us, and it's ended up being a billion dollars. So that's America that I believe in, that anything's possible.

Let me just add to it, you know, because we always talk about the billionaires and all that. My wife's here today and we started a company together, two of us, and it's ended up being a billion dollars. So that's America that I believe in, that anything's possible and exceptional from that standpoint. One of the questions I get a lot is in the past is in terms of dealing with the IRS, people have had struggles where they get, they have a challenge from the IRS. And many times that could go on three and four years. You got legal fees, you got accounting fees, you got everything else. What can we do to expedite or help push to expedite that so people can get back on their feet quicker in terms of small business people?

Yeah, I think I'd like to talk about the governance model, sir, that we're running the IRS under, which is a pretty consistent governance model and I'm going to hit on one element of it. Obviously, the staff and I get together every week, two hours, once a month all day to go through everything in the agency to ensure we're delivering. Once a week, we look at for two hours, hour and a half to two hours, the key operating indicators of the business. And we have two levels deep coming in representing their numbers. And we now implement aging. How old is the oldest item? And you know, we talk about beating whatever the best record ever had had and then beating it again. I talked about the weekly risk meeting and we look at every item we procure for over $300,000. It's a governance model designed to serve the American public. Most of the indicators are about how are we serving the American public. I look at them daily and so does the Treasury Secretary.

Commissioner, one more, one more question just in terms of, I think I read something about you looked at hiring 5,000 people or in terms of customer service, is that what I understand?

We seasonally bring in a few thousand people and that that is fundamentally what we do. Right now we feel great about the staffing levels. Wait times on the phone are single digits and that's really good performance. It'll compare with the commercial industry. And in fact, you know, like I said, 43 percent more transaction queries online, everything like where's my refund. So we've hired staff, built new technology, and deployed other staff in there to serve the American public.

Thanks for your leadership.

Thank you, sir.

I yield back.

Thank you. Mr. Thompson.

Thank you, Mr. Chairman. Mr. Secretary, thank you for being here and thank you for the work that you're doing. You know, the IRS holds immense power over the American people as you know. It can take your wages, it can freeze your bank account, ruin your credit. But that power only works in a free country if it's exercised fairly and lawfully. And you know that. Americans are told the law applies equally to everyone, but that's not what we see right now. They're seeing working families chased over the smallest discrepancies in regard to their taxes and they see wealthy interests with armies of lawyers slipping through the proverbial cracks. They see speed when the government is owed money and silence when the government owes them money. And they see an agency that demands total compliance while failing to comply with the law itself. A voluntary tax system depends on trust. And right now, I'm concerned that that trust is collapsing with many Americans. The federal law prohibits the disclosure of taxpayer information without statutory authorization. Is that correct, sir?

Yes, sir.

Yet the IRS transmitted taxpayer data to ICE without proper authorization. Is that correct?

I think honestly that's a matter of litigation right now, sir.

It is. And a federal court has already found that those disclosures were unlawful. Isn't that correct?

Actually believe that an appeals court actually rendered it operative.

I'll help you. It is. And I'd like to enter into the record this court order showing that the IRS violated the law 42,695 times.

Without objection.

That's not a typo. 42,695 times. And it's not a paperwork error, it's a breakdown in leadership. What did you do, sir, to stop it?

We don't, we're not going to comment on current litigation. I talked about the risk governance framework.

Okay, I'll move off from the litigation. Was anybody fired as a result of these 42,000 illegal disclosures?

No, sir.

Was anyone disciplined?

No, sir.

Was anyone held accountable?

I think everybody's held accountable.

Was anyone held accountable in regard to these 42,695 illegal actions?

I don't want to debate the numbers. I don't want to debate the item. It's a current litigation and I'm not going to comment.

Okay, so we won't debate it. But I just ask that you ask yourself, why should Americans trust an agency that broke the law tens of thousands of times?

Well, yesterday, yesterday, sir...

I just ask you to ask yourself. No, I'm not asking for a response. Just, you know, I want you to ponder that. The largest portion of the tax gap are the money that is owed versus what is actually paid comes from high income earners. Do you agree with that?

No, sir.

You don't?

No.

Well, you're in a minority because most experts do. And those audits require specialized agents because we know that from the past work that this committee is doing. So when you cut staffing, those complex audits seem to be the first to go. Isn't that correct?

We just settled a $2 billion one, sir, so I don't really think they're the first ones to go, but you could have your opinions.

Looks like we all have our opinions, sir. But fewer audits of wealthy tax cheats and more scrutiny of working families, I don't think that builds trust among the American taxpayers. And I want to enter into the record this New York University Tax Law Center report documenting the shift that I just mentioned.

Without objection.

Thank you. So the IRS violated federal law tens of thousands of times. Enforcement resources are moving away from the wealthy, yet the agency tells Americans, just trust us. Trust is not demanded, it's earned. Right now, the IRS needs to earn the trust of the American people. Credibility in tax administration starts at the top, and I think you have the ability to bring trust to the agency. I would hope that you would work with us to make sure that we can close that trust gap and that gap in money owed and money collected. And I yield back the balance of my time. Thank you.

Mr. Smith.

Thank you, Mr. Chairman. And thank you, Mr. Bisignano, for being here today. These are important issues that we are discussing. I think it's important to also note, as was indicated moments ago, that federal workers so often work hard to do their job. The most worker-friendly thing we can do is pay them for showing up. And when we have a significant number of federal employees going to work every day to keep us safe, incidentally, and we're telling them that we'll pay you later while we amass some political leverage here, I think those workers deserve better. The American people deserve better. And it makes me think about various federal workers who work hard to do the right thing and the bureaucracy stands in the way. I think we should pay very close attention to hearing from various messages, hearing the messages that can oftentimes come from a federal worker who is suggesting better ways of doing things. And that's why a categorical, call it an earmark of $80 billion that would have added more employees that would actually squeeze a lot of dollars, sometimes even without authorization, out of the middle class with more audits. At the same time when I think there's common agreement that we want taxpayers to have better access to better service and when the bureaucracy stands in the way, we should be concerned. I'm glad to have led the effort to put an end to the direct file pilot program, supposed pilot program. This program was launched without clear statutory authorization. It overran projected costs and created a concerning conflict of interest by placing the IRS in the role of both tax preparer and tax enforcer. We saw troubling indicators that the program was not serving taxpayers as intended. For example, individuals who used direct file receive refunds that average roughly $1,600 below the national average. We've even seen recently some Democrats acknowledge that the Biden administration launched direct file without the authorization of Congress that we know was required. I was proud to lead the effort to put an end to the pilot program and I certainly appreciate your team's work in helping bring that chapter to a close. Now moving forward, we know that free file, for example, is an option for the American people. That is an important distinction to make between free file and the direct file, previous direct file, as inefficient as it was. But looking at free file, I'm wondering if you can reflect a little bit how you view taxpayers having access to the free file program and what changes to various options you might suggest or are pursuing to expand eligibility or make these free file programs easier for taxpayers.

Free file, free file is used. It's well received. And I think what I am hearing across the board, I asked a question this morning to the national taxpayer advocate who actually, you know, publishes a report at tax season and asked a very direct question. How do you characterize many of the elements working right now? And the national taxpayer advocate, who does not report to me, said it's going smoothly across the board. The outliers will obviously show up in other people's offices and that's why we're here to help them through it. And when I talk to the head of taxpayer services, he talked about the free file, its utilization, its use, and more importantly, the amount of trust the American public has in the IRS and their ability to do the right thing for the American public. We may talk about difficult situations, but by and large, the American public does trust IRS in their matters by and large and free file and the elimination of direct file fall in that category, sir.

Well, thank you. I think millions of Americans would concur that your work is important, that collecting what is due is important, and that with today's technology, we should be able to see a future where taxpayers have more ease in paying their taxes across the board. But in the interest of time, I must cut my other question short. Thank you.

Thank you. Mr. Doggett.

Thank you. If you would, sir, just with a simple yes or no, tell us whether you have received either directly or indirectly any communication from anyone in the Trump regime suggesting that specific tax-exempt organizations should be scrutinized because of their political views.

No.

You have not. Good. And will you commit today that under your leadership the IRS will not initiate audits, investigations, or revocations of tax-exempt status based on political targeting?

100 percent. We're here to administer the law, uphold the law.

Thank you. Just to be clear what I'm talking about though in that regard, the Wall Street Journal reported, quote, "the Trump administration is preparing sweeping changes at the Internal Revenue Service that would allow the agency to pursue criminal inquiries of some groups more easily." So are they in error and no such sweeping changes or any changes are being prepared there to use the IRS?

I hope that you understand that every form of the daily news is not a Bible. It's not a Bible, sir.

Yeah, that's absolutely right. And that's why I'm asking you about this.

I've actually never heard that or seen that.

You've never heard that the Trump administration was trying to weaponize the IRS?

100 percent not.

Well, then you're not familiar with President Trump's tweet specifically attacking Citizens for Responsibility and Ethics in Washington or CREW, asking that its tax-exempt status should be reevaluated. You're not aware of that?

I don't track tweets, sir.

You don't track Truth Social. It doesn't have anything to do with your work.

You're not going to find my social media presence anywhere.

Well, this is the president, of course, not very interested in ethics, so I was concerned about that. Let me switch then to the question of audits. As you know, the audit rates for large corporations have fallen about 70 percent and of those making over $1 million have fallen by about 50 percent over the past decade. Can you assure us that you will restore the ability of the Internal Revenue Service to ensure that our tax laws are implemented and applied to those who have the most power in our society?

I've heard before a comment about the tax gap. I want to be very clear in general of the objectives that both the Treasury Secretary and myself have. First and foremost, higher service to the American public. Second, higher collections. And then third, privacy. Right? We are here and when I think about the tax gap and why it's been reported for years, the tax gap, right?

Yes, sir.

We're doing analysis right now to understand what the reality of the addressability of the tax gap is.

That's an important question, but it's not my question to you.

Well, it's all interrelated. It may not be your question, but...

It is interrelated because if you don't do your job on audits, then you have a tax gap. But my specific question...

Well, if you make compliance easier, we have countries that have higher compliance rates than us. My job is to increase compliance and increase collections.

I'm glad you recognize that job. And my question again, just so it will be clear and I think I may have the numbers just right. Over the last decade, the audits of large corporations have declined by 50 percent and those earning over a million dollars have declined by 70 percent. And I'm asking you if you're going to restore those audit rates to where they were over the past decade or those people will continue to be able to be assured...

We're going to increase compliance. We're going to increase compliance. We're going to have an easier way to operate with us. And we have 30,000 people working on compliance and enforcement.

So as a result of that, we'll be able to see that those audit rates rise to the level they were at and that people that are at the top...

There's nobody that told me ever, including yourself, that those were the audit rates that were the standard audit rates. Let us go do our work the right way and then we will get the right outcome.

Well, I hope you will.

You're asking for commitment to a number that's never been proven out to be the right number. It could be bigger, it could be smaller.

I'm asking you to treat those at the top the way you've treated those at the bottom. And we're not seeing audits of the powerful in this country.

We're going to have fairness. We believe in fairness.

And that's why we have a tax gap.

Fairness, fairness, equity, appropriate would require dealing with those at the top the same way as those at the bottom. And that's not happening now and I'm not assured from your answer that you're going to raise those audit rates to a level where we will see the powerful treated as everyone else is treated. Thank you very much.

Mr. Kelly.

That's just the way you wanted to hear my answer.

Thank you, Mr. Chairman. Mr. Bisignano, thanks for being here today. I can't imagine anybody wanting to head up the IRS and head up Social Security and as the old saying goes, the beatings...

It's an honor.

Yeah, well, the beatings will continue until morale improves. I can just tell you from coming from the private sector, the greatest fear we always had in our businesses was that we weren't in compliance with something or other and there's a lot of people in and out of the dealership that I don't pay, the taxpayers pay them to come in and do audits on us, so I understand the importance of audits. If you could, because in the beginning when you did your introductory piece, so for years we would have commissioners of the IRS come in, we never had anybody that had come from the private sector with the experience that you have. When you talk about Fiserv, the largest financial service and payment technology company, I am really glad that somebody like you decided to step out of the private sector that was much more comfortable and much more profitable, by the way, and to step into this and try to get it straightened out. There's nothing more feared in this country than not complying with the IRS because they can completely shut you down. In fact, I have a friend of mine who's spent over $3 million so far in defending an IRS investigation. These are legal fees, which he'll never recover, but we're still working on it with him and I will work with you on it because I'm glad to talk to somebody from the private sector. I really believe that nobody should be in public office unless you had experience in the private sector where you worked on commission only and you lost your job at least once through no fault of your own. That's the only thing that really matters and I get the idea that the rich don't pay their fair share, but when you look at the percentages of it, thank God for the rich because they pay an awful lot. During the financial crisis, which you talked about, if you could, I just want to go through this, so earlier this week the IRS published its Schedule 1-A and Form 1040 instructions for middle-class taxpayers that can utilize to deduct amounts for tips, overtime, car loans, and enhanced deductions for seniors. This is an incredible boost to the hardest working people in the nation. So this working families tax cut, it helped everybody, everybody. If you could, can you just maybe expand on that a little bit more and in the fact that what people, they get to keep more of their own money than they ever have before?

Yeah, I mean, landmark legislation and I give everybody a ton of credit, obviously the President, but, you know, obviously everybody here had a role in it. Let's just think about it, no tax on tips, no tax on overtime, no tax on car loan interest, new tax deductions for seniors, Trump accounts, we have over 2 million Forms 4547 and over 3 million dependents right now, right? Expensing for qualified factories and then I think the permanency matters a real lot. Domestic R and D expensing, expensing for capital investments, right? 199-A, you and I talked about small businesses, right? Pass-through, you know, EBITDA standard, double standard deductions, child tax credit expanded and permanent, opportunity zones, you know, protecting the 21 percent rate, it's fueling stimulus. What I think everybody has to recognize also is that $775 was dominantly $100,000 and under AGI, but they also have a lower withholding this year and are getting a double benefit, the benefit of a tax return that wouldn't have happened without the Working Families Tax Cut Act and the benefit of lower deductions right now. I think we're going to see the long-term effects of this and I commend you guys for your hard work.

Well, I will just cover this with you because I'm still in the private sector. A gentleman named Thad Gazzo runs our service departments and I was talking to him and I said, hey Thad, we've got to get the guys to come in on Saturdays so we can pay them time and a half or double time, we've got work in the back that needs to be done. And he said, Mike, are you kidding me? Because when they work overtime, they look at that and say, you know what, it was better for me if I didn't work overtime by the time I get done paying the other costs that are involved with my family at home, I can't afford to come to work and work overtime because I get taxed so heavily on it. We had the most upside down incentive for people working overtime and it comes down to the seniors that have worked their whole life, they get to keep more of their money. There's so many things in this bill, the family tax cut bill, this is an incredible boost to the morale of the American people and I will tell you this, I appreciate, I looked at your resume, what in the hell were you thinking to step out of that role and to come into this jungle? And you're going to get the living crap beat out of you no matter what you do, good or bad, and we'll go back and we'll drag up things that happened before and say, oh my God, this is horrible, and it depends who it is that's sitting in the White House. If we could work together on things that affect the American people and I'm talking about strong policy that allows hard-working American people to keep more money in their pocket for their families. So I want to thank you for stepping out of where you stepped out of, why in the world you would do that, Social Security and the IRS, my God, you're never going to be able to finish the complaints on that, but I appreciate what you're doing and I especially appreciate the staff that works every single day to get this done for the American people. Mr. Chairman, I'm sorry to go on, but I can tell you what, this has never in the life that I have as a private sector person seen the results of this in the incentive now for hard-working American people, they want to work overtime because they get to keep the money, they don't have to pay it to the government, they're able to actually put it back with their families, so thank you. Yes, sir.

Mr. Chairman, can I make one comment about our employees?

Yes, make your comment.

There was an executive order that gave the 24th and the 26th...

Mr. Chairman, regular order. We're in regular order, the Chairman has the floor.

24th and 26th off and given the fact that we had a shutdown and that that was a hardship for a lot of our people, we gave them the opportunity to volunteer and come in. And in fact, I believe because of what Congressman Kelly said, the change in tax status on overtime, we had volunteers come in and work on the 24th and 26th serving the American public when it never happened before. So that's about the morale of the people and the good work done here. So I just think it's important you recognize we have people volunteering to come in, get overtime, and serve the American public on days that were considered holidays.

Mr. Larson.

Well, thank you, Mr. Chairman, and Commissioner, thank you, and I always like to follow Mr. Kelly. I think a number of the things that he said have great relevance, including your integrity and resume, etcetera, and I appreciated the meeting that the Chairman organized with me and Mr. Neal and yourself. But I want to pick up where Mr. Neal was making earlier, before I do that, I'd like to submit for the record, Mr. Chairman, the Borjas whistleblower report, the DOJ amended court filing, and the IRS Fiscal Service defied judges terminated union contracts, which is where I want to go, starting with that and you seemed to in your answer to Mr. Neal say, well, they don't need this, it's in statute. So my question to you are should the Social Security Administration, their employees, expect that their union contracts will be terminated as well?

I'm the CEO of the IRS in this hearing and I'm not, if you want to have a meeting on SSA, you know, I'm always willing to have it with you.

All right, I get the answer. And well, my grandfather Nolan, as we get close to Saint Patrick's Day, would always say, you know, trust everyone but cut the cards. And so I would like...

I know you love that saying, sir, I appreciate it.

And we need a reshuffle and a new deal, as a matter of fact, and FDR would appreciate the reference. But also I wanted to ask you, will you turn over to this committee the DOGE information that they gave to an outside political source to alter elections? Now, I realize it might have happened before your watch, but Social Security has that information.

If you want to talk about Social Security, I come see you anytime you want to talk about Social Security, this is an IRS...

Okay, that's a no. So Mr. Chairman, would you commit to subpoenaing this information? I would think that everybody on this committee would want to know when your personal data and information is being poured over by outside groups that are unaccountable, have never been vetted, and are in these agencies currently and have this information that they have given to outside sources. I'd also like, Mr. Chairman, to get the whistleblower before us as well. My God, we were all upset and we made sure over Hillary Clinton's emails and Hunter Biden were top of the list, we had to make sure about that, but when it comes to the American people and the data and information that is gone through by DOGE employees and then distributed to outside people, does anyone on the other side want to investigate or get to that or is this just something we let fly? The Commissioner's not going to answer because he's going to say, well, look, I'm here to discuss the IRS and if you want to meet with me privately, aka that's called the TusCALOOSA two-step, he's not going to answer the question and I understand that, but hey, it's not about answering the question, it's about the integrity of this committee. I commend the Chairman, he brought them in to talk about these things that have been ignored by the committee, that have been ignored by the agency in not addressing this, but as members of this committee, we have a responsibility to the American people, especially as it regards to Social Security, the number one anti-poverty program for the elderly and for children. I get calls all the time in my district from people saying, what have they done with my information? Who has my information? Is it in a cloud? What does that mean, it's in a cloud? Is it unsecured? What happened and why is it that we can't get the names? This was the Trump Judicial Department that indicated that these people fraudulently gave information, private information of the citizens of the United States to an outside source who was using it to alter elections. That doesn't interest any of you on the other side? It sure does interest the American people and we need to continue the integrity of this committee by calling forward these individuals. Mr. Chairman, I hope you will subpoena them. I hope we will lift, you know, a resolution of inquiry, are you guys going to suspend that again so that we can't call witnesses before us? Thank God at least the Commissioner was here.

Mr. Schweikert.

Thank you, Mr. Chairman. Mr. Bisignano, okay, going back to 2017 when we were working on that, we actually had a data set that basically said simplification was the most powerful thing we could do for taxpayer compliance. In that since that time, I cannot tell you how many meetings I've had with your technical staff because I'd love to have the conversation where we're not going to argue tax economics right now, efficiency, I just want to talk management with you. You know, you have this actually pretty impressive resume of technology, moving money, those things. How do I get, how do I help you get the IRS off of its own servers? It's absurd when you actually still have that audit from a few years ago that your server farm in, what is it, West Virginia, the floor is sinking in. Get, if the Pentagon can use encrypted cloud, why can't you? The technology that Grandma can call a phone number, it's actually an AI, but it is beautiful and smooth and stays on the phone with you and will help you fill out your paperwork and text you the YouTube video of how you do it, the PDF of the form, will stay on the phone with you all night. That's not cutting-edge technology, that's three, four years ago now. I appreciate all the statements in the written testimony of you actually for the first time use the word AI and things like that. We're in a time of revolution. If my brothers and sisters up here want compliance from the wealthy all the way down, why can't I have my taxes on my app? Why can't I have something that interacts with me? This isn't cutting-edge technology. Help me, help me understand what I have to do as a policymaker to stop having more meetings with your people that tell me, well, that would be hard, our union doesn't like that. Tell me what do I do.

I like hard. Right? I think our job is to make hard look easy. Right? Great athletes make hard look easy, great leaders make hard look easy. I'm happy to come visit you because I'm sorry that you spend so much time with people that told you you couldn't and I will tell you we will. We're five months into me being in the job and you're seeing 43 percent more queries online. We're talking about 40 million more.

I understand.

Right? And so that's the beginning. And I'm happy to partner with you. I'm happy to do anything in the world to make it easier for the American public to file their taxes and to get served by us and to increase compliance. And the only answer to that that I know through my whole life is technology is the great enabler.

It look, you just nailed the language. Now we need the execution because I've been making an argument to our fellow members here, it wasn't about sticking bodies in chairs. It was the adoption of the technology that makes taxpayers, every American's life easier. And you know, I'm tired of the references saying, you know, we have technology going back to the '50s and '60s. You don't need to go find a FORTRAN coder anymore. You have this things, you know, the translational bolt-ons of AI can just take the code and put it into whatever the hell you're using. And you run them in parallel for tax season and you know you're safe. It's not like it was just two years ago. Go hire some data scientists that are revolutionaries and bring us into this century. And there's a handful of us up here that believe that's both moral, incredibly efficient, and actually would dramatically raise compliance. And if coming and having another meeting with our team, great. But maybe I should set up meetings with, you know, AI coders for you. What do I do?

Sir, I've overseen the largest technology organizations in the world. JPMorgan, Citigroup, both in times of change. Number one function we had in my last company was a software developer. Which is what we were, we were a third of our employees were software developers. And we had thousands of employees. If you want to give me some resumes, I'm happy to have them, but I know how to recruit technology talent, sir.

But my point is, but my point is you and I grew up in a time where we hired a team to...

Not anymore. I'm still, I'm not done growing up, okay? Because I'm transforming. We're not modernizing, we're not modernizing the IRS, it's not a word I use. We're transforming the IRS. And we can only do it through advanced technology and that will increase compliance and increase simplification. And you should expect '27 to be far better than '26, and '26 is far better than '25 and '24 by a boatload.

Look, I'm a big fan of everything I know about you. Let's let the revolution of making people's lives easier and better and do this better, faster, cheaper, and more accurate. Thank you, Mr. Chairman.

I'm in. Mr. Davis.

Thank you, Mr. Chairman. And thank you, Mr. Bisignano. I thank you for confirming that the pre-2025 carryforwards qualify as refundable in 2025, so thank you. I also want to thank Paulette Low with Taxpayer Services, the Office of Tax Policy, and Robert Chapman in Leg Affairs for their careful implementation of the partially refundable adoption tax credit, and also the amazing experts at the Joint Committee for all working to make this possible. I'm also deeply concerned, though, that the Internal Revenue Service has delayed over 530,000 refunds this year to date by requiring a bank account, especially knowing that these taxpayers are likely the individuals who need their refunds the most. So first, could you please provide me and the members of this committee a copy of the CP53E notice being sent to tax filers who do not provide bank account information?

Yes, sir.

Thank you for that. Finally, on the IRS website, it states, if you don't respond to the notice, we will issue a paper check after six weeks. So for taxpayers who don't respond to the letter, their paper refunds are delayed at least two and a half months, which is 30 days for the letter plus six weeks according to the website. So for individuals who do respond, when does the six-week clock begin to tick for them to receive their paper check?

Well, I will go back and look at the whole process, sir. Right now, if you have direct deposit, which is, you know, fundamentally more than 98 percent, we are doing that within nine days. I'm positive that the six week was decided quite some time ago and we will go look at the whole process.

Thank you very much. Could I also would like to receive the state-by-state data because that helps me and I think it might help other members know where these people are located and how they can be more effective trying to do outreach to them. So could we get that state-by-state?

I'll go find out. I'll go take a look at it, sir, and I'll come back to you.

All right. Thank you very much. And also before closing, I want to praise the work of the Chicago office of the Taxpayer Advocate Service under the leadership of Bisi Olumbarumimo, Katrina Britt, and Fred Tavares, who have professionally helped two of my PEO constituents on their ERC claims for three and two years respectively. I also want to thank Richard Jones, Andrea Dunlap, Nicole Nandabua, James Griswas, and Anna Alvarez, who've all done great work for us in the Chicago region. And Mr. Chairman, I would ask unanimous consent to enter into the record the Tax Notes article, which is an excerpt from the IRS website about the delayed refund.

Without objection.

I thank you, Mr. Chairman, and yield back.

Thank you. Mr. LaHood.

Thank you, Mr. Chairman, for having this hearing today. Mr. Bisignano, great to have you here. I've said this before when we've had conversations, grateful for your private sector experience, your business experience for a lot of years and bringing that to this job I think is immensely beneficial. And I would just continue to advocate to you to not shy away from your experience in the private sector. There are plenty of things you could be doing in your career besides being the CEO of the IRS. And so we're grateful, and I'm sure your wife probably wonders that too on why you're doing this job, but we are grateful that you have stepped up and taken on this role and want to compliment you on that in a very, very difficult job that you have. Before I get into my questions, I just want to acknowledge obviously the importance of constituent service and the role the IRS plays for my office, but for every member of Congress. And one area particular for my office is the work with on IRS casework. Over the last year, we've helped 108 constituents recover over $13 million owed back from the IRS. One specific example was the recovery of $3.7 million from the IRS to one of our service agencies in my district that provides direct care payments to persons with developmental disabilities. Again, proud of that work and working with the IRS to do that. The title of today's hearing, Mr. CEO, is 2026 Filing Season: Implementation of the Working Families Tax Cuts and the Trump Administration's Priorities for the IRS. For most Americans, the clearest sign the system is working for them is the size of their refund. And as of February 14th of the 2026 filing season, the average refund amount is up by an impressive 14.2 percent over the same point as last year. And the average direct deposit refund is up 13.1 percent, meaning families are seeing noticeably higher and larger deposits hit their bank accounts compared to 2025. From your vantage point, what factors are driving these double-digit increases in average refund and average direct deposit refund amounts so early in the 2026 filing season? And what does that signal about how the Working Families Tax Cut and other reforms are reaching middle-class households?

Well, today with 55 million, almost 56 million returns already submitted, and when we calculate tax filing season and we decide that's close on the 15th, we're 40 percent through the volume. And really, the systems have held up extraordinarily well and the people are doing an outstanding job servicing the American public. 43 percent of those returns have a Schedule 1A. And therein lies the answer. Right? Senior deductibility, no tax on car loans. You know, what I find so encouraging, and many of you have talked about this already, is the fact that the largest filing category is no tax on overtime, right? Congressman Kelly talked about it, I talked about it for our federal workforce. We're encouraging hard work here also. And then, you know, I think, you know, probably the largest economic benefit at the moment is the senior deduction, right, the ability for them to have that deduction. But all of this is putting more money into the system, more money in people's pockets. I like to say higher refunds, quicker refunds, and future deductibility. So they're also seeing the benefit right now in lower deductions because of these benefits. So I think you guys have done an outstanding job in in getting what is landmark and cornerstone legislation, American public are feeling it really deeply. And we're really surprised, Presidents' Day weekend is supposed to be this huge call volume weekend and it didn't amount to itself because we have 40 million more online queries. We have the ability for everybody to go online to my where's my refund and find out where it is. So the American public is getting served better while they're having quicker refunds and bigger refunds. And I will tell you at 100k and below, you know, that's fundamentally today, you know, performing at a level of putting hundreds of dollars into their pocket and at 775 as the current increase in refund, $775. And like I said earlier, our research and analytics group trended it out from where it started to where it is and it holds up to a thousand per refund going to be higher this year.

Thank you for your service. I yield back.

Ms. Sánchez.

Thank you, Mr. Chairman. Mr. Bisignano, as you sit before us today, President Trump's understaffed, underfunded, and corrupt IRS is already backing down on its promises. Americans won't see the thousand dollar refunds that they were promised. They can no longer use Direct File and they risk having their sensitive data shared illegally with other agencies. A United States district judge found last week that the Internal Revenue Service violated federal law 42,695 times when it shared confidential taxpayer addresses with immigration enforcement officials last summer. There have been two injunctions by federal courts ruling that the IRS illegally shared private taxpayer information. And I would like to ask you how the IRS is handling this issue. Is the IRS currently sharing or planning to share any taxpayer data with DHS or ICE?

First and foremost, as I said before, we have current litigation going on and we're not going to comment on current litigation. I also have law that says we have mandatory responsibilities on some of these issues to share data and those are legal statute responsibilities.

Mr. Bisignano, are you an attorney? Are you an attorney?

No, but we have 2,000 attorneys.

No, then then let me share some information with you because there are three court cases concerning the unlawful sharing of sensitive data from the IRS with DHS and ICE. One of them said facially about a memorandum of understanding that you could share, but only in specific cases, not a broad-based grant of power for the IRS to share that sensitive information. And in fact, two courts have upheld injunctions saying that the IRS cannot share in a broad-based manner sensitive taxpayer information. So my question to you is, has any taxpayer data been shared with DHS or ICE since November 21st of 2025?

I don't know of any and once again, we are in the midst of a litigation which you keep referring to and we're not going to comment on litigation.

I understand that you're in the midst of litigation, but two court injunctions have been upheld because Section 6103 permits data sharing only with law enforcement officers who are directly engaged in a specific criminal investigation. Again, as I've stated, it is not a broad grant of authority to share thousands of people's sensitive information. The Fitzgerald declaration filed in CDC versus Bessent in the Massachusetts District Court showed that multiple different ICE employees had access to this data and that they compared addresses against those individuals with removal orders. And last month, the Massachusetts District Court enjoined ICE from acting or even viewing any of this illegal data. So can you identify, since this data has been shared and the courts have found that it should not have been, can you identify even one individual criminal investigation that was being conducted by the officers who received that data?

I think I was pretty clear, ma'am, that we have litigation going on and we're not going to comment on litigation.

What about this, has a single criminal prosecution resulted from the 47,000 records that were shared illegally? Any prosecutions? I think the answer is probably no. A few weeks ago, I led my Democratic colleagues in requesting an investigation into this issue by the Inspector General of Tax Administration and they are now in the final stages of their investigation. So I guess we will find the answers to these questions and those who are responsible for illegally sharing this data hopefully will be held accountable. Because when taxpayers file their tax returns, they don't expect the IRS to take that information and share it with people that they're not authorized to share it with. And with that, I yield back the balance of my time.

Mr. Estes.

Well, thank you, Chairman Smith, and welcome, Mr. Bisignano. As Chairman of Social Security Subcommittee, I appreciate our work together on Social Security side of your portfolio. But, you know, currently we're in the middle of the tax season, which is the first one since the Working Families Tax Cuts, which is a monumental shift for American taxpayers. In Kansas, folks in my district are finally seeing the benefits we fought for: no tax on tips, no tax on overtime, the $6,000 senior tax deduction and so much more. Thanks to the Working Families Tax Cuts, 94 percent of my constituents in the Fourth District of Kansas are having an easier time ever filling out their taxes due to the boosted standard deduction. Average refunds are expected to rise nearly $1,000 compared to last year, with the middle class getting the largest relief of any income group. And the AARP estimates that seniors will get an average refund of $1,320 from the senior tax deduction. You know, not too long ago, my Democrat colleagues funded acres of IRS agents through their Inflation Act. This bottled up tax returns with audits and errors, harming working families in Kansas and across the country. You know, I continue to get questions about why individuals' 2022 or 2023 or 2024 returns were so slow in getting back and being processed, which was hampering individuals and businesses in what they were doing. But now under President Trump, the IRS is focused on what matters most to American families: quick and accurate returns compared with reliable customer service. Critical component of improved service is modernizing the agency to provide taxpayers with better experience with IRS. Specifically, the IRS is enhancing taxpayer services by upgrading technology to modernize systems with AI integration to do more for taxpayers and by helping staff be more efficient. These changes already shown significant improvements in IRS operations. In 2025 tax year filing statistics, the IRS has been able to process 2.3 million more returns when compared to 2024 under the previous administration's bloated budget. Early 2026 tax filing data showed that President Trump's IRS is building on last year's success and continuing to improve the taxpayer experience. The provisions in the Working Families Tax Cuts have and will continue to provide so many benefits to the American taxpayers and it will be extraordinary for years to come. I'm honored to be part of the committee and to join in on this important conversation of how to celebrate our successes and look at what we can do more in the future to bring affordability back to the kitchen table for so many Americans. CEO Bisignano, for years GAO and others have warned that the IRS has been running the tax system on outdated technology dating back to the 60s and 70s. Maintaining this patchwork is expensive. Independent analysis noted that in 2024, the Biden IRS wasted over $39 million just to keep 34 legacy systems on life support. GAO has repeatedly cautioned such legacy environments drive security risks, staffing problems and higher long-term costs. In sharp contrast, under President Trump, the IRS has cut roughly $2 billion from its 2025 IT budget without operational disruptions, just signaling how bloated the prior spending has become. Can you walk us through the process for retiring these decades-old legacy system and how are you prioritizing modernizing systems so that the biggest risks and most taxpayer-visible systems are addressed first?

I've had the benefit of spending a fair amount of my career overseeing financial services technology and, you know, I've spent a lot of time converting systems. I could honestly say and my family would attest to it, I never had a three-day weekend because back in the day, three-day weekends were times to convert systems and retire systems. And I will tell you our technology leadership, our CIO is very, very strong and we've moved from this concept of modernizing to transformation because modernizing will just get us the next legacy system. And so you can think about it in a set of components. The most important thing is for our clients, our overseers, not to actually know this is going on, but get the benefits, the benefits of what today's technology can afford, which is much better than three years ago. So there's a 10-part plan, the plan's being executed against, that we will be retiring systems and we will be running more modern modularized systems. The client-facing elements of this to me are the most important things and those are the ones that we're getting the benefit now of and that's why you hear me talking about our ability to do an amended return, which took 16 weeks and do it in a week. To be able to do 43 percent more volume and actually have it cost us less. And that's why you hear me focused on procurement because we buy a lot of technology and we need to be smart, we need better partners. I also and I was surprised by this, for the first time someone called the heads of the tax preparers and said, we need you to do a better job for us. And they said, love to. And this is this is really the our taxpayers deserve a seamless experience from whether they're doing it themselves on Free File, whether they're using one of the preparers and there are many preparers out there, straight through to us and everybody having the same communication. So I think that's what you'll see as we talk about preparing for the 2017 tax season, a completely different approach.

Well, thank you very much for being here. I yield back, Chairman.

Ms. Sewell.

Well, congratulations, sir. I understand that you're before this committee as the Chief Executive Officer of the Internal Revenue Service, which is a newly created position by President Trump. Sir, do you believe that the American people deserve a leader of the IRS who has been confirmed with the full trust and confidence of the Senate? Yes or no? Simple yes or no.

Well, the Treasury Secretary...

Yes or no?

...is fully confirmed. He's the acting commissioner, and in fact, I am honored to serve.

I'm reclaiming my time, sir. I'm reclaiming my time. I believe that this is very important, the confirmation by the Senate is very important, which is why I asked the question. You know, it's important because I believe that it goes to the legitimacy, oversight of the role, of a very important role that you play. And so my concern, a role that has been duly created by the President, is whether or not that new role is, has authority and is constitutional. And so I think it's really important, sir, that you be confirmed. Now, having said that, I'm going to move on. The White House celebrated the one big bill and said that taxpayers could expect refunds to rise by an average of $1,000 or more this year. While we know billionaires and millionaires are very happy with their tax breaks, I've heard from my constituents and they're getting back much, much less. Right now, the average refund is only up by $350, and that's the 14 percent that my colleague referenced. If you also consider the fact that Trump has illegal tariffs, and those are taxes on the American people, my constituents have cost that, and the average American family has costs that are around $1,700 just because of the tariffs alone. Now, when you add on that many of my constituents are on the ACA and we did not extend the ACA tax credits, that's even more money out of their pocket. While Trump and his family are expecting a $10 billion windfall from the IRS from their lawsuit, if Trump is successful in his lawsuit, he will take 10 million, no, billion with a B, from taxpayer funds. Sir, do you know how many times larger that number is over the average American person who gets a refund of $350? Well, good, I can tell you. Trump and his family will take home 28.5 million times more than the average American family will get back from the IRS this year. This corruption is what we are talking about when we tell the American people that this President is on a power trip to achieve more personal wealth than to help the American people. I also serve as the ranking member of the subcommittee on oversight, and I take that duty very seriously. The level of quality assistance and the degree of service that my constituents and our American public deserve from the IRS is incredibly important. While costs continue to rise and massive staff cuts are occurring at the IRS, I am incredibly concerned by the report that President Trump and his allies are using an already limited resource to weaponize the IRS criminal investigative division and to intimidate American taxpayers. I wanted to follow up on what my colleague Lloyd Doggett initially started. I really am going to ask the question again because I think it's important. Has the President or anyone from the White House asked the IRS to audit, investigate, prosecute any taxpayer or organization?

No, ma'am.

Has Secretary Bessent or his staff made any similar requests?

Never. No, ma'am.

Has Secretary Mnuchin or his staff made any similar requests?

Never.

I know that the IRS has procedures in place to help ensure that politics doesn't improperly influence criminal probes, and the Internal Revenue Manual specifically states that the Chief Counsel's office should be involved in these cases to reduce the possibility of political influence. Since President Trump was sworn into office, have there been any attempts at the IRS to change the Internal Revenue Manual to reduce the power of the Chief Counsel's involvement in criminal cases? Yes or no?

None I know of.

Sir, you have a very, very important role that you play, and it does concern me that you not only have that role, but you're also a commissioner of the Social Security Administration. Both are critical roles that so many taxpayers, especially my constituents, depend upon. Whether that's managing the tax code or that is providing benefits for seniors so they can live in dignity, these are important jobs. I want you to be successful. I want you to hear me say that. But I am concerned that the refunds and the delays on these refunds and the myriad of questions that people get regarding their bank accounts has been quite confusing. I can say that the call volume in my office has increased exponentially because of it, and therefore delays have increased. And so I hope that you can do something about that, and as I again, I wish you much luck in your role. It does concern me that your role has not been Senate confirmed. Thanks. I yield back the balance of my time.

Mr. Smucker.

Thank you, Mr. Chairman, for holding this hearing. Thank you, Mr. Bisignano, for testifying today. Thank you for being willing to take on this role, and I know others have mentioned it as well. I think you bring exactly the kind of experience we need to an agency that badly was in need of an overhaul, an improvement, and of transformation, as you put it. You know, I think every member here has constituent service individuals, and basically, I have several on my staff whose sole job is to step in when agencies are not doing the work that they should do serving our constituents, and IRS has always been one of our top agencies. And this will be individuals who've been waiting for a refund for years, sometimes thousands of dollars waiting for years. And I somehow believe that under your leadership, we're going to see a big reduction in that. I think we're seeing improvement already, and so I'm very grateful for your work. I do want to mention, just highlight, and Mr. Estes covered some of what I had intended to say in regards to the one big beautiful bill that we passed, and I just want to remind folks of some of the benefits. But the most important was it would have prevented what would have been the largest tax increase in American history. Roughly 22 percent tax increase for the average American family would have been the equivalent of on average about two months' worth of groceries. The child tax credit would have been cut in half, and draining dollars from budgets and wallets when households were still feeling the impacts of the tremendously high inflation we saw under the previous administration. I also want to remind folks that not one Democrat voted for this bill. And I appreciate so much the leadership of Chairman Smith in bringing this bill, keeping Republicans together and passing this bill. I find it really interesting today, Democrats are complaining that the increase in refunds that we're seeing, I heard Ms. Sewell just say is averages about $350. They're complaining that it's not as high as maybe we think it is, but I want to remind folks that had they had their way, had we not passed this bill, the refunds would have been much, much less. Individuals, families would have seen a 22 percent increase if Democrats had accomplished what they wanted to accomplish in killing this bill, resulting in the largest tax increase in history. So tax refunds up nearly 9 percent, and your figures I think are showing around $3,800 as of on average as of last week. I think your point, Mr. Bisignano, about the importance of small business to the health of our communities, and so specifically the provisions in the tax bill that affected small businesses like the 20 percent deduction on the for 401(k). That would have gone, or I'm sorry, on the K-1, that would have gone away. And then we brought back growth provisions like expensing of research and development, really important to a lot of businesses in my area. The full expensing for capital expenditures, the full expensing for structures for manufacturing. These were already seeing the impact, but I guess I was wondering what are you seeing specifically in regards to the reaction to some of those growth provisions in the bill? Wonder if you could talk about that just briefly.

Well, as I said, I called the largest tax preparers' CEOs who run them. I wanted to know two things. You know, one, how are we performing? Right? And interestingly enough, they said to a person that we get a lot of phone calls and we're telling them this is going as good as anyone could have expected. Remember, there was a lot of pundits out there saying IRS is going to fail. There's a large implementation, there's the Trump accounts, there's less staffing, and they have old technology. Well, we're 40 percent through the tax season and we hear in every corner that it's going well. But the second thing they say is how beneficial the new enactment was and the permanency was. And they say it especially for small businesses, and they say it especially for people making under 100k. So I use the taxpayer advocate as a form of input, I use the organization as a form of input, and I use external constituents who are embedded in the daily business of preparing tax returns. And I think, I think we've done a good job across the board, this committee and the execution.

I'm running out of time and I know I talked for a while, but I'm just excited to see the impact on investment on businesses over the next few years as a result of the bill. I'm excited to see how the IRS is going to transform. I know already last year, $2 billion, I think it was $2 billion less in your budget because you're leveraging technology and you're going to continue to do that. So again, thanks for stepping up. Thank you, Mr. Chairman.

Ms. DelBene.

Thank you, Mr. Chairman. Thank you, Mr. Bisignano, for joining us today. I'm deeply concerned that you don't take the responsibility to protect Americans' taxpayers, their sensitive information, seriously. Under your leadership, you allowed the IRS to violate taxpayers' privacy tens of thousands of times, as has been mentioned before. This is a catastrophic leadership failure, and it also really is a huge hit on the public's confidence in your agency's integrity. You told Ranking Member Neal earlier today that you have implemented a risk management function that includes risk management meetings that discuss cyber policy. Unfortunately, this issue wasn't caused by a cyberattack. It was caused by your department illegally handing over taxpayer information to the Department of Homeland Security. So again, what are you doing to rectify this misconduct, ensure that this doesn't happen again, and attempt to earn back the trust of taxpayers?

Probably never said this, so I'll say it now. Obviously, all these events occurred before my tenure. So, but I take, I oversee the organization and it's my responsibility to get it right. And I don't know how often you all have overseen a risk management function and understand the depth of a risk management function in what is really a large organization protecting Americans' privacy, increasing collections, and driving higher service.

But does your risk management do something to make sure that people internal to the agency are not providing illegal information to other agencies? You haven't clearly stated that you're making sure that that does not happen.

One, there's an ongoing litigation on this matter.

So you are not, you are not prepared to say that you are going to make sure that...

No, I'm going to make sure. I'm just trying to make a point that your words are not gospel. Right? The words you're using, the numbers you're using, there's a litigation and I'm not going to comment on it. I am oversee the agency.

So if, you know, there's kind of an, there's a, there's a kind of old axiom that you can't fix something if you don't know it's broken. Do you acknowledge that this has been broken and needs to be fixed at the IRS to protect taxpayer information?

I'm fixing more things than you want to think about in the IRS.

So you don't acknowledge that. And we also need to hear from Homeland Security and the President about this infringement on Americans' privacy protections, and I am co-leading a resolution of inquiry with Representatives Gomez and Sánchez that would require the Executive Office of the President, Treasury, and DHS to provide information to Congress regarding the IRS's improper disclosure of confidential taxpayer data to ICE. Normally we'd be able to debate this kind of privileged resolution rule in committee, but earlier this year Republicans snuck a provision into a House rule that prevents these kinds of resolutions from receiving any consideration in committee or on the floor. And it really is a cowardly attempt to undermine transparency for the American people, and one of our jobs in Congress is to conduct oversight. In late January, the Treasury Inspector General for Tax Administration, TIGTA, released a memo outlining concerns about the IRS's readiness for the 2026 filing season. Similar to the National Taxpayer Advocate's report, they cited concerns related to staffing reductions, growing inventories, and incomplete modernization efforts, whatever you want to call that. And they also highlighted potential customer service delivery challenges related to closed Taxpayer Assistance Centers. These centers are responsible for assisting taxpayers in person and during last year's filing season supported about a million taxpayers. So Mr. Bisignano, are you taking any steps to reopen these centers?

I spent a lot of time on the Taxpayer Advocate letter and on the Inspector General's letter. And I think the results you're seeing in performance today show the mitigation factors that went into.

Are you going to reopen these centers?

Show the mitigation factors that went into. We are serving more Americans across the board right now.

So you are not going to, you're not going to reopen centers? Because in person is incredibly important. We get the feedback in our offices.

This weekend, this weekend, we serviced in, had a Taxpayer Experience Day and saw twice as many people as we did last weekend in our taxpayer centers. There were taxpayer centers closed before I came on board. I have not closed a taxpayer center since I've been here, and we are serving more Americans than we ever have.

You are not going to reopen these, and we hear from constituents across all of us do, folks struggling to get information from the IRS. So we also know that...

40 more million, 40 more million Americans accessed information to be served.

Thank you, Mr. Bisignano. I yield back.

Thank you. Thank you very much. I'd call on Mr. Hern.

Thank you, Madam Chair. Mr. Bisignano, thank you so much for being here today. You inherited quite a mess from the Biden administration on the ERTC program. Can you inform this committee on specific steps IRS is taking right now to expedite review and issuance of refunds to legitimate, legitimate, law-abiding claimants who properly qualified for the credit, are not involved in fraud or promoter schemes, and how is this being done while protecting the program against improper claims so that compliant small businesses and their employees do not continue to suffer cash flow harm from the unnecessary delays?

We had what I would consider a backlog of over a million items. And we deployed the appropriate resource both from the compliance enforcement and Taxpayer Services Org. It was a weekly brief to myself and the Treasury Secretary. And as that million and change, it was over a million, is less than 29,000 items today, and they are all in the compliance arm being worked on right now, sir.

Thank you. And I have significant concerns about third-party financing of litigation in the United States, particularly regarding the tax treatment of the profits derived from it. Currently, these financiers are claiming capital gains treatment, and I think it's highly questionable at best that the unadjudicated assertions of harm constitute capital assets. Would you be willing, your team, to look into how the IRS can work with us on this and on the tax treatment of this practice? You know, it's one thing to participate in our court system, it's another thing to abuse our court system by outside funds that manipulate the system, create partnerships and other forward derivatives to take this on as a capital tax situation when it should be ordinary income.

I'll ensure my staff gets with your staff and we'll report back to you, sir.

I appreciate that. And then one last thing. In a testimony to your predecessor in the prior administration, everybody on this dais agreed that their offices were basically a part of the IRS because our offices were being pinged so many times that we might as well have been working for the IRS because there were so many complaints about the organization. I want to applaud you because I have had zero, zero people reach out to me during this tax season about the IRS. We've come to know you both in this committee and elsewhere that you're sincere about this, you bring your business acumen to this. If anybody on this dais thinks that you don't care about the American people, they don't know who you are. And I just want to say thank you. I want to say thank you on behalf of the American people. As you've adequately said, you're not about passing the buck or casting blame on anybody else, you're here to fix a problem. If we had more people like you in the administration, in the past and in the current future, this would be an important thing. We need more people in Washington, D.C. who want to solve problems, not create problems. That's all the American people want. They just want problems solved. They don't need more problems created, problems solved. Really appreciate all the work you're doing. Madam Chair, I yield back.

Thank you, sir.

Thank you. And it is getting a little loud in the audience area, so if you could please keep your conversations outside, we would really appreciate it. Thank you very much. Ms. Chu.

Mr. Bisignano, affordability is the number one issue of Americans. As hundreds of millions of Americans are in the midst of the tax filing season, it's imperative that we focus on common sense solutions to improve this process for all Americans. And I think we can all agree that taxpayers deserve an efficient, clear, and affordable system to file their taxes. And that's exactly why Democrats and President Biden established Direct File, a pilot program allowing taxpayers in certain states with simple tax returns to file directly and for free with the IRS. And it worked. In just two filing seasons, Direct File handed back $90 million in refunds to taxpayers and saved $5.6 million in tax preparation fees for just federal returns, lowering the cost of tax filing for hundreds of thousands of Americans. Unfortunately, this progress was totally squashed when President Trump, the Treasury Department, and your agency eliminated Direct File last year, leaving taxpayers with the so-called Free File program, where the IRS partners with private tax preparer companies to purportedly provide free services. And the biggest winners from that decision were not taxpayers, they were the giant tax preparation companies like Intuit and H&R Block that have spent years and millions of dollars lobbying to keep the IRS from offering a true free filing option. So I want to be very clear, Free File is not free. Because what happens is this: a taxpayer logs onto file their taxes thinking it will be free because that's what the program is called. So they start entering their information, clicking through page after page, and it's only after they've invested time and effort that they are suddenly told they must pay a fee to continue. At that point, many people feel they have no choice but to pull out their credit card just to finish filing their fees. The private industries that control Free File have repeatedly been caught steering eligible taxpayers away from free services and toward paid products. Intuit even paid $141 million to settle allegations that it charged taxpayers who should have been able to file for free. So when Direct File began proving that the government could offer a simple and actually free alternative, it threatened a very lucrative status quo, and the Trump administration pulled the plug. So Mr. Bisignano, I only want a yes or no answer. Will you commit to restoring Direct File so that Americans are not forced to pay private companies just to file their taxes?

This is the report from October 2nd.

I said yes or no. Yes or no.

It's not a yes or no question.

Well, as I expected, you didn't answer. And that's why I just led over 100 members and senators in introducing the Direct File Act to restore free tax filing so taxpayers don't waste their savings while corporations profit. So let me say again, Free File is not free. And we will do what your administration refuses to, which is actually lower costs for working-class Americans by bringing back Free File. And Mr. Bisignano, last year Commerce Secretary Lutnick appeared on Fox News and proudly proclaimed that President Trump planned to abolish the IRS and replace it with an external revenue service. Well, the external revenue service never materialized and Trump's illegal regime certainly did not replace income taxes. Instead, it functioned as a national sales tax ripping $1,700 out of every American's pocket. And when that rebranding failed, then the Trump fired 28,000 IRS employees. That's 27 percent of the entire agency. So your agency is under attack by the President tasked with overseeing it. The result is exactly what you'd expect, worse service for everyday taxpayers and more opportunities for wealthy tax cheats to game the system. That is not right. The pattern here is unmistakable, and that is increasing costs for the American taxpayer. And I yield back.

Thank you. I recognize Mrs. Miller, West Virginia.

Thank you, Madam Chairwoman. And thank you so much for being here, Mr. Bisignano, so that people can hear what you have accomplished in the short period of time you've been here and what a great job you've been doing. The Working Families Tax Cuts is a major win for gig workers who support local economies through their products and services. And I was so pleased that my legislation, which reverts the 1099-K reporting threshold back to the $20,000 and 200 transactions, it was finally signed into law through the Working Families Tax Cuts. This will keep the gig workers, like hairdressers, Uber drivers, and craftsmen who sell products online, from being harassed by the IRS for taxes that they really don't owe. Mr. Bisignano, for taxpayers who may not have traditional wage incomes, such as those gig workers or small business owners, what guidance and tools is the IRS providing so that they can fully benefit from the Working Families Tax Cuts?

I appreciate your hard work and I appreciate the question. Thank you, thank you for having me here. Obviously, the gig economy over the past 10 years has turned into something that Americans rely on. And I'm proud to say that during the course of this year, we put out more than 900 pieces of policy and guidance. And we will continue doing that. I applaud the work that you do. I will ensure that we continue the work on the gig economy communication of guidance and policy. We've ensured that tax preparers understood it as well as we communicated it to the American public. And we'll go back and ensure that it's as good as humanly possible and any recommendations your office may have to improve it, we're happy to hear it.

Thank you so much. For most Americans, the clearest sign that the system is working for them is the size of their refund. As of February 14 in the 2026 filing season, the average refund amount is up by an impressive 14.2 percent over the same period last year. And the average direct deposit refund is up 13.1 percent, meaning that families are seeing noticeably larger deposits hit their bank accounts compared to this time in 2025. This provides Americans with well-deserved financial flexibility and is particularly important in my home state of West Virginia. What exactly is driving these double-digit increases in the average refund and average direct deposit refund amounts so early in the 2026 filing season? And what is this signal about how the Working Families Tax Cuts and other reforms are reaching middle-class households?

You know, fact that we have 56 as of the second, we have 56 million returns. And 23 million, 43 percent, have Schedule 1As. And Schedule 1A, when I think about it, is all the hard work that you did for the American public. Right? If you look at the 1As, you know, I like saying overtime filers are the largest individual category. There's no harder working Americans than overtime people who work overtime. Right? And then you think about the senior deduction, which I know many of you were very, very interested in having happen. And I think that'll probably be the largest form of it. We also see that people under 100,000 are fundamentally the largest beneficiaries on a percentage basis. And when you look at it, I just think it's important to think about no tax on tips, no tax on overtime, no tax on car loan interest, new tax deductions for seniors. Let's not forget 4547, which has 2 million forms, that's the Trump accounts, and 3 million dependents already enrolled. Right? And then expensing qualified factories. On top of that, you have domestic R&D expensing, you have expense for capital investments, full expensing, 199A pass-through, and I hesitate because I think about the small businesses, the lifeblood of America. You know, double standard deduction, double debt tax exemption, child tax credit expanded and permanency. These are all permanencies. And then opportunity zone. So, you know, and the SALT extension until 2030. So the power of it, and we talk about fundamentally 1,000 and I think that's what our research group shows, 775 today and it will trend upward as time goes on. Powerful, powerful legislature, great adherence and the hard work by the American public in getting their tax returns in at the rate they are and we count on closing strong.

The gentlelady's time is you need to wind up.

Thank you, I yield back my time.

Thank you. Just exciting. I recognize Ms. Moore.

Thank you, Madam Chair, and I just want to thank our CEO for appearing today. You are the CEO, you're the first one as you mentioned, and I'm wondering how your duties or your perception of your duties have changed with being the CEO. Is it because of your tremendous and impressive background in data or is it or has it expanded in other areas that you want to share with the committee?

Well, first of all, I take the responsibilities with the utmost respect for what the job is. And the job is administering the tax code, overseeing the agency that has 5.3 trillion of revenue, the 70 plus thousand employees providing...

Okay, thank you, that's a that's a that's a good answer. And the reason I'm asking that question is because Treasury is planning to issue regulations limiting who qualifies for the refundable portion of certain tax credits. And I just wanted to be clear that you don't perceive your duties or responsibilities or authority to write tax law. I mean, do you agree with my assertion that you do not write tax law?

I agree so much you heard me define my responsibilities and one of them was not writing policy, exactly, tax law.

So why is it that the Treasury Department, so first of all, in the 2026 election cycle, have you implemented your plans to limit who qualifies for the refundable portion of certain tax credits? Currently, non-citizens with work-authorized Social Security numbers who meet other eligibility rules can claim several refundable credits, the Earned Income Tax Credit, the additional Child Tax Credit, the American Opportunity Tax Credit, the Saver's Match Credit, as examples. Now, the implementing legislation to implement the welfare reform, the PRWORA, the PRWORA limits eligibility for federal public benefits to non-citizens. But have you overlaid those exclusions from PRWORA onto tax credits? I mean, federal public benefits are not tax credits. Have you done that in this cycle?

No, ma'am.

Okay, thank you. I'm pointing out to the committee here that the Treasury Department is attempting to issue guidance that would would disqualify non-citizens, even those who are legally in the country with Social Security numbers, from receiving refundable tax credits, even though they and you know, they're working here, they have work permits and Social Security numbers and they are not illegal aliens. They have they're people with temporary protected statuses, DACA recipients, pending asylum applications, including those people who have are legitimately working. Can you share with us just briefly because I don't want you to consume all my time, why you are trying to promulgate these rules?

I'm not involved in that at all, ma'am. I implement, I implement...

You're you're the CEO and...

I implement the law as written. I don't create...

Okay, so there is no law. It says so. So you so so it's so it's not true then that Treasury plans to issue regulations to limit who qualifies for the refundable portions of certain tax credits.

I don't have one item in my office telling me of that.

Okay, well that's good to hear that you're not going to do it.

I say I I I just want to be very clear, I do not write law, I implement law and uphold law and ensure law is obliged by.

Well, that's very that's very good to hear. I'm going to yield back my time and I just want the committee to the record to reflect that the CEO has said he has no intention of writing tax law and he has no intention of asking us to write law that would limit tax credits to eligible non-citizens. Thank you, Madam Chair, and I yield back.

Gentlewoman has yielded. Pursuant to committee practice, we will now proceed with two-to-one questioning. I recognize the gentleman from North Carolina, Dr. Murphy.

Thank you, Madam Chairman, and thank you for coming and talking with us today and thank you for helping clarify that we write the law and you enforce the law. That's just what agencies are supposed to do. Thankfully, we have an administration that does that. I want to turn back a little bit just to artificial intelligence. I'm a physician surgeon by trade and the world of artificial intelligence is exploding in the field of medicine and it will explode in every every other field. I wondered if you could talk a little bit about how the agency is dealing with this. You know, there's there's a great crack on the IRS and the quote people quote pay their fair share and all this all this stuff. I want you to if you can talk about how AI is helping go after people who are cheating as this that's a I think a 100 percent bipartisan something that should be anyway. And not be able to affect average Americans, how we're able to use data correctly, not let it misguide things as far as policy and interventions within the IRS, but how you're able to craft this new technology to root out fraud and all the other things that the American people want.

I'm I'm delighted to hear the question and thank you. And I'm also delighted to hear you call it new technology because I like to remind everybody all the time, you know, AI is technology. Right? It's not some foreign object and of course all technologies that are going to get the desired outcomes also have humans ultimately responding to it. And you know, I've been heard publicly saying and before I was in the government, I was I was using AI before it was called AI. You know, and and I think I think, you know, right now we are heads down on implementing things that make it easier for our workforce to get to the answers. I believe AI will be part of increasing the compliance rate, 100 percent. I believe AI will be part of speeding up everything we're doing. The stuff I talked about taking 16 weeks to less than one week on amended returns is AI. But AI has technology around it also and it has people around it. So I have high expectations. I don't see a world where an organization cannot use enough AI and be in and be responsible with AI and responsible has to be that we have overseers of it, we have governance model for it, and we also have people that are actually reacting to it. It will change the way our workforce works in a better way, in a better way.

All right, well thank you. I appreciate that because I was over at HHS yesterday and speaking with the Secretary, it was mind-boggling how the systems that they have in place there are literally 1970s technology and nobody has heretofore addressed any of these things. And so I'm thankful that the administration, very business-minded, very efficiency-oriented, is going after the processes that have made government so inefficient in the past. We want this to be a program that works for taxpayers and for the people who are not abiding by the law be able to go after them. So I appreciate the effort being put in by the IRS. I will just say real quickly one new implementation. I have a bill passed into law, Disaster Related Extension of Deadlines Act. I live in Eastern North Carolina, we get a lot of hurricanes, we have a lot of these issues and sadly enough people have a lot of difficulties coming out of these periods. I just wondered with new implementation of laws how you're able to quickly, if I can get a quick answer, assimilate that into the tax code to make it something that is applicable very quickly.

Well, you know, we've already responded to that and you know, it's enacted and we actually have cases that we've responded to already, sir.

Great. Well thank you for being so nimble and making sure that's good for my constituents. Thank you, Madam Chairman, I'll yield back.

Gentleman yields back. I recognize the gentleman from Tennessee, Mr. Kustoff.

Thank you, Madam Chair. Thank you, sir, for appearing today. If I could going back to the one big beautiful bill, one thing that we worked hard on was restoring the R and D tax credit. I've been hearing from manufacturers back in my district that it's not working the way that we intended it to work. When they do research on the factory floor, whether that's improving products or refining processes, that the IRS, what I'm hearing is that the IRS is increasingly treating that work as just manufacturing and that they are disallowing the related cost. And they tell me that that posture is being driven largely by case law rather than anything that we wrote into the statute. So we want American manufacturers to be competitive, to stay top competitive. We want them to integrate new technologies, Dr. Murphy was just asking you about AI, and we want them to incorporate that into production. Is that something that you and the IRS can take a look at to applying that so that it's not being pushed out of the R and D credit?

Yeah, first I'm hearing of it, sir. And we will talk to your office and we will have a rapid response to what may be a misunderstanding or why things are happening the way they are.

Thank you very much. I appreciate you getting back to me on that. If I can also from accountants back in my district in West Tennessee and small businesses, I'd like to ask you about audits. Because I think I hear and I know and I think we all know that sometimes these audits can drag on even when the taxpayer or the small business is cooperating and sometimes they feel like the goalposts get moved by the IRS. And I think we know the approach of the prior administration. We know that President Trump has adopted a taxpayer-first vision, which I appreciate and I think we all appreciate. Can you address what the IRS is doing or can do to make these audits more focused, maybe more timely, maybe more predictable for families and for small businesses?

Well, you know, in a spirit of productivity, efficiency, and quality, we are measuring everything. And that means how long things take. It's not just how many you have, but how long they took and why they took. You know, we talk a bunch about AI, but process engineering matters a lot. And it matters in audits. And so you should expect closure over the next year to be at greater rates than we've ever seen before because of the President's attitude of taxpayer first, ours of delivering customer service, and even in audit, there's a customer. And we need to treat it with the highest dignity and treat all taxpayers fairly across the board. You have a commitment on that, sir.

Thank you. So you can see those audits being more streamlined, if you will?

Yeah, I think we could just see them closing out faster. Right? I can't force a taxpayer to do something, but I can ensure we're managing to a set of standards to close items out in a period of time and understanding the outliers and then we'll build process for the outliers. Thank you. As opposed to think of it as just one big pile. We've got to have standards of operating on time.

We do hear from, I think we all hear from our constituents about when they reach out to the IRS that it's difficult to talk to somebody, that they get passed from representative to representative. Can you talk about your vision and how maybe we can work on addressing and correcting those deficiencies?

Yeah, I like it. You know, April 15th will be a declaration of the closing of tax season. Obviously that goes on a lot longer, there's probably 20 plus million returns that come in after that. And I'd like to take a status check with you on what people are saying then. You know, there's, I know I keep pontificating at some level, 43 percent more online inquiries, 40 million more online, more online users than ever before. And then, you know, the fact that we're answering the phone in a single digit which is equal to commercial business. So I think we're in the transformation process. There's no victory laps going on here. We'll have a whole another year of doing better and improving, but you know, I'll be happy to come back and have my staff and your staff spend time on a recap at the end of the season.

Thank you, I yield back.

Gentleman yields. I recognize the gentleman from Virginia, Mr. Beyer.

Madam Chairman, thank you very much. And Mr. Bisignano, CEO, thank you for being with us. Congresswoman Chu was trying to get a yes or no question out of you on direct file and I'd like to go a little deeper just because it was overwhelmingly popular. In fact, 94 percent of the users described their experience as excellent or above average. More than 70 percent said they'd use direct file if it were eligible. If the program were fully implemented, it was projected to save families up to $23 billion every year in fees, time, and tax credits. And there were recommendations from both the independent government, the GAO, and the Treasury's Inspector General that the administration, despite those recommendations, the administration chose to end direct file. And basically as Ms. Chu pointed out, directly into the arms of the for-profit tax preparers. So Mr. Bisignano, other than making life more difficult, what did that accomplish? And if your goal is to provide world-class service to the American people when they file their taxes, why not support a program that was free, overwhelmingly popular, and easy to use? So why the opposition? And why end it?

Well, as I was trying to say before, I've read this report inside and out that was handed to Congress before I was in the job. And I think the most stark important details can be easily summarized. Right? Less than half of one percent of the filers used it. Its cost was far above anything we see anywhere else. And there was 41 million extended to this without all the overhead that went around the organization itself. So that's why the Treasury Department suspended it. And I've heard more than once about the overwhelming percentage of successful filers or complimentary. What we haven't actually articulated is how small that absolute number actually is, sir.

So let's, you're a businessman, I am too. And one of the things we know is when a program just begins, you get relatively small thing. For example, in Virginia, our governor would not let us use it. There would have been many people in Virginia would have picked it up. If that one half percent would have certainly grown to 2 percent, to 10 percent, to 20 percent if it were allowed to go. And by the way, the cost per person would have fallen dramatically as it expanded. Let me move on though because the tax cut, there's a group of us Democrats and Republicans who are very worried about the budget gap. We're at 101 percent right now, $2 trillion more this year, spending to grow to $3 trillion per year by 2036. The long-term risk to the stability of this nation. And we have a massive tax gap. 650 billion, 750, 500 depending on who you listen to. And we know that almost all that is from wealthy taxpayers underreporting. If you get a 1099 or W-2, 99 percent of the people are paying their appropriate taxes. But what's greatly concerning to me is how much we are dialing back on that. You know, we just had the $11 billion tax cut or $11 billion cut to the IRS and the CBO estimated that's going to cost $40 billion in government revenue. The IRS's own tax data shows that investigations into abuse of tax schemes dropped by staggering 63 percent in the last year. So how can we justify constant cuts to the agency's own budget when we know that cutting the IRS will cost three times that in lost revenue? And I know you want to use AI to do that, and we're very much supportive of that. But AI alone, without the resources, without the sophisticated auditors, without the attention to that huge tax gap.

Yeah, I think first of all, you know, there was fundamentally 100,000 people in IRS. And I've yet to find one piece of paper that explained why that was the right number. So I understand that we have less people, but I'm not sure that there's anything that ever said what the right staffing level was ever. The fact of the matter is we are measuring more than we ever had, we're delivering more than we ever had, and in fact, we have a talented workforce that's highly motivated. Right? The tax gap, the last document produced was on 22, 2022. And it talks about $650 billion. I am deep with the team in research of understanding every element of that. Right? And in fact, I'm not sure we're ever going to find out that more research is going to go on and I'm happy to come in front of you when I'm done with that or come visit you and talk to you about it. I want to understand what the direct addressable market is. How much of that is actually and how much of that is in our non-compliance rate. And part of streamlining the organization is having a better way for simplicity and higher compliance and I'm happy to come see you, sir.

Thank you very much.

Gentleman yields back?

Yes, I yield back.

I recognize the gentleman from Pennsylvania, Mr. Fitzpatrick.

Thank you, Madam Chair. Mr. Bisignano, thank you for joining us today. It goes without saying that for too long, outdated technology at the IRS has created delays and frustration for so many American taxpayers. Our offices across America are oftentimes the go-between between those very frustrated taxpayers and the agency. Paper returns could sit for weeks without being processed, which slow refunds, create errors that oftentimes require very time-consuming corrections that many of our constituent service staff have to help our constituents navigate. With paper filings also being indispensable for many Americans, ensuring technology is up to date to reduce those inefficiencies obviously is very, very critical. Upgrading systems to securely and accurately handle filings will reduce errors, accelerate refunds, and deliver the high-quality service that our taxpayers and our constituents deserve. Sir, the IRS in the past has relied heavily on what most would agree are outdated processing systems, scanning only a small fraction of paper returns and requiring employees to manually key in millions of pieces of information, even as backlogs and errors risks mounted. The Taxpayer Advocate Service has described how the IRS only recently began scaling up scanning technology. Your modernization agenda at the IRS is aimed at streamlining paper processing, with a plan to cut paper handling costs from roughly $450 million in 2024 to about $20 million in 2029, freeing up hundreds of millions of dollars to improve service and reduce waste. So if you could just take a minute, sir, to number one, how many paper returns does the IRS estimate it will receive this filing season, if you do have that information?

You know, it'll be less than 2 percent and if you think about 160 million, so you're going to get, call it 8 million. I think the way we think, you know, we have the zero paper initiative. And I know there's a lot of concerns about that because that includes checks and that includes a whole but by the way, if you think about it, it's on the small tail of what's being done and why the cost is so absorbent is because, you know, we had house infrastructure to handle all of this. What you're seeing going on right now, I think my anticipation is those numbers are completely accurate, but maybe their timeframe could be quicker. And I think it's better for the American public. I think the issue of a lumbering organization is really about not only technology, it's about process engineering. If you think about the zero paper initiative, it is scanning technology, but it's also process engineering. And when you have a 75,000-person organization, processing engineering everything to get better outcomes may be as big a payback as anything. And when you add technology on top of it, you get hyper-good outcomes. So we're maniacally focused on it. It is in our mainstream set of objectives. You hear us talk about it every week in the staff meeting and you should expect those outcomes for the American public.

And what are the specific investments in scanning technology and automation that are being implemented that hopefully will drive down paper costs, also deliver faster refunds, and improve accuracy for the taxpayers who do rely on paper filings?

Well, I think you go across the board, you know, it's the back end is the scanning part. Our ability to help that small percentage that is not electronically filing now is part of really what is our taxpayer experience group that are focused on changing their ability to interact with us. I also believe that all that we've built to give people tools to go online and a large amount of Americans access their data online and would prefer to do that. We've invested a lot, we're seeing the returns this year. I think we'll see much better returns in 2027. That means an experience. I look forward to the time when you and I are talking about maybe the way one of the other congressional leaders said, they're not getting the phone calls anymore because we're getting the job done. Happy to come to your office and talk about any of it.

Thank you, sir. Madam Chair, I yield back.

Gentleman yields. I recognize the gentleman from Florida, Mr. Steube.

Thanks, Madam Chair. On December 12, 2024, my Federal Disaster Tax Relief Act of 2023 became law. My bill delivered long-overdue tax relief to victims of federally declared disasters, especially to Floridians who were impacted by the destructive of Hurricanes Ian, Debby, Helene, and Milton. Casualty loss and disaster relief have traditionally been retroactive subsets of our tax code. Likewise, hurricane victims must file amended returns to reflect a casualty loss the year of the disaster to claim relief. Some taxpayers have faced administrative challenges in claiming this relief. Some upon filing the amended return, the IRS indicated that the adjustment didn't change their taxes or their credits and that no further action was required. Other examples of calls that we've gotten to my office from people all over the country, not just my district, was that the claims were being flagged as fraudulent by the IRS. Survivors are being told their physical addresses were not in designated zones. Claims are being incorrectly routed to the international department. Tax filings are being labeled as frivolous, receiving letters that it's been paid when it's not been paid, being told that there are errors but not giving specifics on what those errors are, extremely long all-day hold times on the phone. Some victims are still waiting for all of those three years, 2021, 2022, and 2023. Our office has received a number of complaints about IRS's inability to adjust its procedures to reflect this newly designated law for qualified disasters and tax-exempt wildfire settlements. How is your office committed to working with Congress to ensure that amended filers receive their legally entitled relief?

This matters a boatload to us and getting it right is of the utmost importance and I would love for us to come down and sit down with your staff and seeing where our failures are and fixing them immediately.

So have you been made aware of any of these failures?

Not at the level you're talking about at all, sir.

Well, I've seen it personally, so...

I'm not disputing it, I'm prepared to go work on it.

Okay. So you haven't, the IRS as you're aware hasn't made any changes to ensure that filers that have been affected by disasters are ensured that they can get amended returns?

I mean, we're completely committed to the Disaster Relief Act and you know, I don't have the information you're giving me is honestly the first time I'm hearing it, sir.

Okay.

The only thing I could actually do is say I'm happy to come and go work on it.

Okay.

And do a deep dive analysis so we understand it doesn't happen to anybody else.

So you're not aware of anything internally that's changed to ensure that these people that have been affected by disasters aren't getting these type of responses from the IRS?

Well, what I'm aware of is that we implemented change to execute it, but it's obviously not working right as I'm hearing firsthand from you and my only desire is to go fix it.

Okay. How does your office plan to work with preparer services and accountants to provide them with the necessary information that would minimize the need for Taxpayer Advocate Services?

I mean, as I said earlier, I talked to the four largest preparers and it's the first time they've ever heard of someone from the IRS at the senior level calling them and we committed to help them do their job better to help us do our job better for the American public.

What is the IRS's current estimate of the scale of the problem of ghost preparation, a practice where paid tax preparers do not sign returns or otherwise follow the rules for preparing returns and what data gaps could be filled to support a more accurate assessment?

Yeah, I mean, there is a fair amount of work going on to eliminate and actually, you know, appropriately deal with when that ghost preparer occurs. I mean, it is a real issue and it needs to get stamped out.

Okay. I only have a little bit of time left. I would just, I would encourage whoever in the back bench or whoever needs to contact us to provide you with that information that my office has received and I would highly encourage the IRS to ensure that these people that have been affected by these disasters over these period of years, I can speak to Florida, we've had six hurricanes in two years in my district, all of them major hurricanes. We passed this bill because it was important not just to my district, but to California and the wildfires and worked bipartisan to get this done. And so when you're hearing from filers that they're being told that this isn't legitimate and their claims are being rejected when they file the amended returns, it's obviously a significant problem. So whatever I can do to assist you guys to ensure that that's not a problem, I would love to work with that because this is a huge issue to districts like mine that have been annihilated by hurricanes and this is the least that we can do as the American people to ensure that the people that have been affected by this have the ability to at least deduct their expenses from their taxes. I yield back.

Gentleman yields. I recognize the gentleman from Pennsylvania, Mr. Evans.

Thank you, Mr. Chairman, for calling this hearing today to highlight the President's failure to protect the American taxpayer. The President and his billion-dollar buddies have continued to make it harder for working families to get tax credits and refunds. Instead, the President has been making it easier for billionaires to cheat our tax code and to make themselves richer. This administration is for the rich and against American workers and families. In my city of Philadelphia, we have an IRS center that does great work to assist American workers. And it's important that they continue to have that ability. Unfortunately, the President has been making it harder for IRS employees to do their job. Just last week, he terminated the union contract for IRS employees for no reason. The President is continued to make it harder for the federal government to serve the average American. Democrats will continue to fight against these attacks. Taxpayers depend on efficiency and well-managed government and does not that does not serve the rich. So it is important that we have this opportunity and we make it clear. And the reason I don't specifically point to you because I understand you're not really in charge. The President is in charge. And the fact of the matter is you work for him. And it's very clear to me that you obviously are not doing what is necessary in the in the benefit for the American public. And I say this, these comments today to express to you that at least this representative, this congressman from the city of Philadelphia where it all started is not satisfied with what is happening. So I share with you, sir, that it's clear to me that you're not protecting the American taxpayers. We work for the American taxpayers. It is important that we be very guarded about the American taxpayers and their dollars in this very difficult time. So we don't want to take that lightly. So I only have the opportunity to voice my opinion to you since the President is not sitting in front of me. And I want to express to and hoping that you hear what I say and you will say to the President that you need to do a better job for the benefit of the workers and the people of the state. So as a real matter, Madam Chairman, I'd like to yield back my time. Thank you very much.

Gentleman yields. I recognize the gentleman from Ohio, Mr. Carey.

Thank you, Madam Chair. Thank you, Mr. Bisignano, for being here this morning and I want to thank obviously your staff for preparation for this hearing. First off, I'm going to have a couple questions. I'm going to lay them out so you can have the mindset. The first, I'm going to talk a little bit about crypto as it relates to the staking rewards. Secondly, if we have some time, I'd like to talk a little bit about some of the AI tools kind of build upon what some of the other with the other members have talked about. As you know, when the taxpayer stakes their crypto, the taxpayer produces new tokens through their own computation activity of validating the network's transactions. Similar to a farmer who is harvesting crops or a miner who's who's actually extracting some type of mineral or manufacturer producing products. Now in 2023, the Biden IRS issued guidance treating newly created tokens as actual income taxed at the time of creation, unlike any other newly created property. I think you and I have talked about this before, but the White House Working Group of 2025 Digital Assets Report explicitly recommended to the Treasury and the IRS to review previously issued guidance on the timing of the income from staking and mining and considered whether to clarify or whether to modernize or to reverse it. So a few months ago, along me along with several of my colleagues, I think 18 in total, including five of us that actually sit on this committee, inquired about this this guidance. What is the IRS's current timeline for completing that review and is the agency prepared to reverse the previous administration's error guidance if it is found to be inconsistent with how other self-created property is taxed?

Yeah, thank you very much and it's a timely question. We're in deep review on it. I'm happy to come have my staff come and brief your staff on on our progress and talk about next steps forward if that works for you, sir.

That works works great. And let me just one other thing is if we're going to get our get the teams together here, one other thing is many of the digital asset foundations that steward blockchain protocols are based outside of the United States and because due to the regulatory uncertainty. I firmly believe that the tax policy should I mean I think we all we all want to, you know, make sure that we continue to grow, but this tax page this tax policy should, you know, we should encourage the onshoring of these digital assets. So it's something that I'd like to work with your team on as we get together, we'd like to do that. The next topic I'll quickly discuss is the IRS implementation of certain AI tools. I know that you talked a little bit about that, there was a lot of back and forth. I just want to ask you the question and let you expound upon it in the minute and 40-some seconds. How are the AI-driven tools currently helping taxpayers during the 2026 filing season, for example, by answering those routine questions, guiding people through common issues, or easing pressure on call centers? And with that, floor is yours.

Thank you. I think first of all, the natural place I started with AI probably over 10 years ago was in call centers. And we weren't calling it AI then, but it was really how not only to assist the caller, but to assist the operator. So our ability now to put the information in front of our service representatives so they can get to it faster where they used to have to traverse multiple systems or try to to go figure out the answer, we're prompting that in a manner. So that's taking both calls out of the queue and also allowing our representatives to answer more calls in a day with more timely information. That would be a very simple application. The second set of applications you hear us talking about, you know, is an example of taking everything it took in 16 weeks to get an amended return back to to the taxpayer and taking it down to single-digit days because it's one of the great tools that we have here throughout the whole process and, you know, it will affect the compliance positively over time here also is the ability to gather information, bring it together, give answers that need to be reviewed by a human, give them categorical opportunities or tell them where to search for more. So I'm excited for it.

Thank you for that and with that, Madam Chair, yield back.

Gentleman yields. I recognize the gentleman from Iowa, Mr. Feenstra.

Thank you, Chairman Fischbach and Ranking Member Neal. I just want to thank Mr. Bisignano for all that you do and how you've really transformed the IRS in less than six to eight months. I mean, it's just truly, truly incredible. I think of Iowans and Americans, farmers, families, seniors that are filing. I mean, you made the process easier, you modernized it, and it's more responsive. I mean, this is what customer service is all about. This is what government should stand for. So I truly applaud you for this. We continue to work with President Trump. I think of the the Working Family Tax Cut Act that, you know, was passed and and all the dollars that you noted that are coming back in refunds. You noted that this is the largest tax refund year that we've ever had in US history. That's incredible. You noted that you modernized the IRS system for 43 percent increase in those using online services. You've taken it down from 16 weeks to nine days for returns, right? That's well done. So I want to just talk a little bit about I've got a bill that was introduced, it's called the IRS MATH Act, which requires the IRS to provide clear itemized explanations because over the last decades, math errors were never, you know, obviously we're human, people make errors. And the IRS never really told people, you know, hey, how the error was done or whatever. Can you address how are you working with the taxpayer when they make an error, how do you identify it and what do you do to give notice to them that says, hey, heads up, we got a concern here?

Well, sometimes it happens right in the online submission that we're advising, you know, we can see something fundamentally wrong in the math. And I would say that happens, you know, on the simple stuff all the time. Our technical skills capability gives them a prompt or gives the preparer a prompt and says we see a error. Right? Oddly enough, not 100 percent of the time do they correct it. But we'll work on that. But I think and we're building deeper tools that gets back to why I like the idea of thinking about the extension from the taxpayer to the tax preparer or to directly to us as turning into what I would call straight-through processing and a seamlessness. We are in business to help the taxpayer. I know if you stood here and listened, you might not believe that, but that is our job to help them. And, you know, everything we're doing is trying to get it right for them so they could they could get on with their life, get their refunds as we've sent out, you know, you heard over 130 billion already and prepare for next year.

Well, I applaud that and and I thank you for what you're doing. And I know a system, a computer system that's, you know, updated and stuff like that can do a lot of these things. Again, more customer service. I got one more thing, you know, of the American workers, we want to protect them. And government, I'm worried about foreign governments and illegal immigrants siphoning off US tax benefits. The Working Families Tax Cut stopped foreign governments from grabbing US tax revenues and closed loopholes that allowed taxpayer-funded benefits to flow to not flow to illegal immigrants, including Social Security number protections. Can you just address this a little bit? To me, you know, I think we're always concerned about I've got this big refund coming, I don't want it stolen, I don't want it taken, I don't want foreign adversaries, you know, coming after me and things like that. Can you address that just a little bit?

Well, I think I think, you know, what we built in where's my refund is actually a defense mechanism and an offense mechanism. You know, it wouldn't be uncommon, we see it, people get up every day and check that. And then they know if their direct deposit's going to be there. It's why direct deposit is so powerful. Yes, I understand I believe there will always be people who need a check. But that is a larger form of fraud occurring. Right? We've done a great job across this government with the President's leadership and everybody else's leadership to be able to reduce fraud. And I think one of the most important things we have to do is protect the refunds and make sure they get to their destination. We're putting tools in the taxpayer's hands to know it, then they have the tool in seeing it in their account. And that's the best defense is a good offense.

Absolutely. Thank you, thanks for all you do. I greatly appreciate all your work and I yield back.

Mr. Panetta.

Thank you, Mr. Chairman. Thank you, Mr. Bisignano, for being here today, second time you're in front of this committee, appreciate your time. Appreciate the information that you have to offer and giving us an update on the operations, especially being in the middle of tax season. So thank you. I think as you've heard here and there, if you see through some of the some of the words and emotions, we do share the same goal of ensuring that the IRS fulfills its mandate to provide top quality service to our taxpayers, to our constituents, to all of us. Obviously that requires an agency that acts, as I think you'll admit, non-partisanly, efficiently, and is accessible when our constituents need the help that they deserve, especially when it comes to their taxes. However, it seems that many of the steps that this administration has taken can undermine some of those shared goals. The very structure of your role, for instance, requires you to oversee the operations of both the IRS and Social Security. With all due respect of your background, that divides your attention, and I think it could lead to shortchanging these two very, very important agencies. Meanwhile, you got the IRS staffing that's been reduced to roughly by by roughly 20 percent with some of the deepest cuts hitting frontline roles in accounts management and field assistance. And those are the important positions responsible for processing returns, resolving errors, and assisting taxpayers. And it seems that that's a recipe for pretty overworked staff, including yourself, based on your roles, but also what I'm seeing and hearing from my constituents, a lot of long lines for assistance, rushed and some very slow work. And I think you'll agree that the American public, our constituents, deserve much better. Now we've already seen some results since this administration took over in my district, the 19th Congressional District on the Central Coast of California. It's seen a 45 percent increase in IRS-related casework. None of the tax policy and the surge has been driven by a lot of refund delays, unfortunately, missing returns, and the inability of constituents to reach an IRS representative. Now look, don't get me wrong, that is our job to make bureaucracies work. I always tell my constituents that, it's kind of one of the three main things we do besides legislation and federal funding for the district, is casework, especially when it comes to the IRS. And let me tell you, my constituents don't have good things to say about the IRS because of a lot of the delays they're dealing with, unfortunately. And so it is nice, I admit that, and I'm sure my colleagues will say the same thing, that we can come in and you have been responsive, responsive to us. And I appreciate that, in that we've been actually able to get people the refunds that they deserved and been waiting on. And so I do appreciate that, that you've been able to do that, but it shouldn't take us to call you and to get that stuff going. I think you would agree to that, but don't get me wrong, we'll be happy to do that and we'll continue to do that when necessary. Now, I think you'll agree, we need a fully functional, supported IRS to serve the taxpayers and collect revenue that funds government operations and implements the laws that Congress passed. Now, I'm going to go on to one bill that I got I want to talk to you about, and I think we might have talked with your staff about this as well. Look, many taxpayers turn to paid preparers to help file for the tax season. But I wanted to raise the issue of error rates among paid preparers. The GAO recently found that paid preparers have an error rate as high as 60 percent and in some cases performing worse than taxpayers filing on their own. Under current law, the IRS cannot revoke preparer tax identification numbers, PTINs, as you're aware of, even when the preparer has shown clear incompetence or misconduct. Now, I have the bipartisan Taxpayer Protection and Preparer Proficiency Act with Representative Steube across the way, that would address the problem by allowing you, allowing IRS to revoke the PTINs of preparers that engage in misconduct or fail to meet pretty straightforward professional standards. My questions to you in the last 30 seconds. Do you think you should be able that you should be able to obtain a PTIN and continue preparing returns despite repeated errors that cost taxpayers money, one? And two, will you commit to working with me and Mr. Steube on tax on the Taxpayer Protection and Preparer Proficiency Act, one of the most difficult names to say fast, and give IRS the ability to revoke PTINs from preparers who harm taxpayers and undermine the tax administration?

Yes. Yes.

Thank you. I'm going to leave it at that. I yield back.

I I would like to have us come visit your open items and work on them jointly. And I know you said it shouldn't come to that, but we use that as a form of root cause analysis.

Thank you. I'm going to leave it at that. I yield back.

I would like to have us come visit your open items and work on them jointly. And I know you said it shouldn't come to that, but we use that as a form of root cause analysis. There are no one-offs. And so it'll be usually helpful if we could come do that with you.

Absolutely, I'd love for that and love to connect with you subsequent to this hearing. Thank you again for being here. Thank you, Mr. Chairman, I yield back.

Ms. Malliotakis.

Thank you very much. Good to be here with you again. And I want to first thank you for coming to visit my district. We visited the Social Security office on Staten Island. And you know, first of all, I commend you in the time that you've been there, the way that we've seen wait times at our call centers drop, they were nearly cut in half. Disability claims backlog has declined by more than 25 percent. Americans now have 24/7 online access to Social Security. You've done such a good job that the president gave you a second role. And now you're doing the same things at the IRS, we're seeing call time go down, call centers are better staffed, you had I think 2,200 more employees now working the call centers and giving that customer service that is so needed. And of course, improving the IT so people can do a lot of this stuff online. All fantastic things and I appreciate your efforts. I would love to talk to you today about some of the provisions in the Working Families Tax Cut package that we passed. Obviously, the big news is that the returns, tax returns are higher this year, about 10.2 percent increase over last year. Can you can you specifically talk about what is attributing to that, what specific provisions are most Americans taking advantage of? Personally to me, obviously, the state and local tax deduction was huge for my high-taxed New Yorkers. And the we'll talk about Social Security as well shortly, but I just want to get your sense on where you think the benefits are most being received.

Well, you know, I like saying we're 40 percent through tax season. So that's a that's a fair amount and we're kind of got a good trajectory. That means 55 million Americans have filed their returns. 24 million Americans, 43 percent, have had a Schedule 1A, and Schedule 1A is where the provisions are: no tax on tip, no tax on overtime, no tax on car loan interest, and a new deduction, as you well know better than anybody, for seniors. We also have the Trump accounts, 45, 47, and we have three million dependents who are enrolled in that already. I think it's important when you take a look at this and we sat yesterday with the research analytics group who produces all the all the data that gets consumed by the public, that if you looked at the refunds for Schedule 1A as of now, they have a $775 increase. And so the logical question is, I thought you guys said it was going to be $1,000. The curve shows that it's grown to 775 and will continue getting to $1,000. And remember, that's on right now 23 million tax returns. So that's a a big benefit. We see the largest percentage benefit, the largest percentage benefit in the 100k and under category, and we see the largest dollar benefit, and I know you're going to like this answer, to the seniors.

On that on that point...

...and and that was their hard work their hard-earned money. So I think it's I think it's performing as many of our calculations have laid out. I think the American public also, if they have a direct deposit, are getting it in an average of nine days from filing.

That's fantastic. Well, first of all, let me say again, thank you for your work to make things more efficient. We have in the past had serious concerns about bureaucratic errors, poor interagency communication, delays in refunds, as well as stolen checks, which my colleague had brought up. And I see that this administration is really paying attention to those issues and trying to correct them so we don't have some of those those issues that we had in years past. With that said, I do want to point out again that the SALT relief for my constituents increased to $40,000, which is significant. Sadly, my mayor now is talking about increasing property taxes even more, which is, you know, unfortunate. We're giving tax relief on the federal level, they're looking to take it with the other hand away from my constituents. And but that will benefit 98 percent of my households in my district. The other big provision, which I was proud to author that was included in the Working Families Tax Cut package, was for senior citizens. 88 percent of seniors across America, 51 million seniors across America, will benefit, and the deduction is large enough where they're basically getting whatever they paid in Social Security taxes refunded to them, right, if they are of income 75,000 for individuals or 150,000 for married couple?

Yeah, and I think a couple things. You know, you brought up SALT, which is out till 2030. We also have permanency that occurred, right? Domestic R&D expensing, expensing for capital investments, 199A pass-through, double standard deduction, double death tax exemption, child tax credit expanded and permanent opportunity zones. And I bring that up because we're seeing the benefit in people with faster payments and bigger checks, but we're also seeing the double benefit going forward of lower deductions, and it's going to affect American families.

Great, well thank you for your work and thank you to make sure that they get it timely and that their checks aren't being stolen in the mail. We appreciate your efforts.

Thank you. I don't know.

You do not know. Okay. The answer is no they do not. Three million workers who typically work overtime are currently ineligible for no tax on overtime.

Mr. Yakym.

Thank you, Mr. Chairman, for holding this important hearing. And thank you to Mr. Bisignano for being here today. It's certainly no secret that Democrats' American Rescue Plan was an absolute and total disaster. It certainly supercharged President Biden's generational inflation that saw prices go up by more than 20 percent by the time he left office. It forced the Fed to dramatically hike interest rates, which led to record lows in home affordability and car affordability. And it was certainly prone to waste, fraud, and abuse that was so typical during the Biden administration. We were reminded of this in a report from the Treasury Inspector General for Tax Administration, or TIGTA. In December of 2024, weeks before the Trump administration took office, the Biden IRS pushed out American Rescue Plan stimulus checks to 1.2 million people who had over three years to claim those checks but hadn't yet done so. Then IRS Commissioner Danny Werfel said the IRS had looked through the internal data and, quote, "we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible." So they decided to just pay them out automatically. These payments, quote, "are an example of our commitment to go the extra miles for taxpayer," Werfel added. One problem: a quarter of those people who were paid were actually not eligible. $317 million went to non-resident aliens. $117 million went to people who had already received a check. The Biden administration and the IRS went the extra mile in the wrong direction. All told, 301,000 improper payments totaling nearly $450 million taxpayer dollars were given to people who weren't eligible. And the IRS has only been able to recover 29,000 of them. Mr. Bisignano, can you please provide an update as to how the IRS plans to recover this money, particularly from non-resident aliens who may not still be in the United States?

Well, uh, that was not a very good set of facts. And, you know, when we talk about stamping out fraud, waste, and abuse, uh, there's a prime, prime example of things that we maniacally check and double check to ensure. Uh, we have a powerful collections arm, and that powerful collections arm's engaged in this set of efforts. Uh, I'm happy to give you updates over time on what's going on there. Uh, but clearly, you know, in the in the category of getting back what we're owed, those errors clearly sit at the top of the list.

Thank you, Mr. Bisignano. I certainly appreciate the follow-up because the Biden administration improperly cut checks to foreign workers in the United States on temporary visas, and we don't, it appears, have a great way of recovering that money. So your continued follow-up and engagement on that would certainly be appreciated. Over and over again, the Biden administration promised the moon but delivered boondoggles. A $42 billion broadband program that connected zero people. A $7.5 billion electric vehicle charging program that only connected 50 vehicle charging stations. There were splashy press releases announcing infrastructure grants that immediately got knee-capped by red tape. And we also had an IRS with billions at its disposal for an IT modernization program that continued to blow past deadlines. Both the Treasury Inspector General for Tax Administration, or TIGTA, and the Government Accountability Office have warned that IRS modernization efforts are behind schedule and over budget while the agency relies on outdated legacy systems. Mr. Bisignano, Democrats gave the IRS billions of dollars to spend on modernization. Can you walk through how much of that was obligated and spent before your arrival on true modernization work as opposed to day-to-day operations, as well as other unrelated priorities? And will you provide this committee with a detailed breakdown?

Yeah. I think first of all, I have a philosophy which is going backwards is not what my job is about. It's about going forwards. As you know, we rescinded a fair amount of that money. A lot of that money was originally allocated to increase staffing to proportions that were unimaginable. But the more important thing right now is all runners on base are ours. They're all charged to our earned run average, as I'd like to say. And we are committed to the modernization program, and you see it happen during this tax season. Any further breakdowns you want, we're happy to give to your office. But I'm maniacally focused on having a great tax season this year, and we're in the process of it in a manner that we're already planning '27s, and we know the technology map that will be delivered in '27.

Thank you, sir. And finally, a simple yes or no would suffice. Would you call the Biden administration's IRS IT modernization effort a success?

I didn't really see much happen.

Thank you, sir. I think that gave you a yes or no. Mr. Chairman, I yield back.

Mr. Horsford.

Thank you, Chairman Smith, and to the ranking member. Mr. Bisignano, it's a pleasure to have you here today. I appreciate you taking some time off from your other job as Social Security Administrator to talk to us about the operations of the Internal Revenue Service. This weekend, I met with just over 100 members of the Culinary Workers Union Local 226 to discuss the implications of no tax on tips. While there, I had a chance to talk with Leslie, who's a bartender on the Las Vegas Strip. Her husband also works in hospitality. Like many couples who work in Nevada's hospitality and tourism sector, they both earn tips for a living and they file their taxes jointly. And when they heard no tax on tips, they thought, great, Washington is finally listening. But then they read the details and learned that the deduction is temporary, married couples face a filing penalty, and automatic gratuities may not qualify. And Leslie asked me a question that cuts right to the heart of this hearing. If this was supposed to help workers like us, why wasn't it written with workers like us in mind? So with Leslie's story top of mind, I'm going to ask you just a few yes or no questions. The promise of no tax on tips should apply to every worker who earns tips and pays taxes, right? Yes or no?

No tax on tips.

Yes or no, sir?

No tax on tips.

Can you please answer my question? Is the promise of no tax on tips, should it apply to every worker who earns tips and pays taxes? Yes or no?

I think it should.

Thank you. As the deduction is currently structured, some married tip workers face a marriage penalty. Is that correct?

I'm sorry?

As the deduction is currently structured, some married tip workers face a marriage penalty. Is that correct?

I don't know that fact.

It is. Unlike the tax breaks provided for billionaires and corporations, the relief provided to working families via the no tax on tips deduction is temporary. Is that correct? Yes or no?

That's a temporary deduction, yes.

If an employer shifts from tips to service charges or automatic gratuities, that income may not qualify under the deduction. Is that correct? Yes or no?

It may not.

So under federal law, tip workers can still be paid as little as $2.13 for their work. Is that correct?

I don't know that number.

That is the current sub-minimum wage, as sad as it is. So what I'm hearing is that the promise of no tax on tips and frankly, the other so-called working family tax cuts that are in the so-called one big betrayal of a bill, does not fully match or respond to the realities that workers and their families are experiencing. The promise of no tax on tips does not fully work for workers like Leslie and her husband. That's exactly why I've introduced the TIPS Improvement Act to make tip tax relief permanent, inclusive for all workers, and protected from employer manipulation. Because if we're going to say no tax on tips, it should actually work for the people who live on tips. And that includes workers like Leslie in Las Vegas. Congress also passed the no tax on overtime last year. But like no tax on tips, the devil is always in the details. So again, yes or no, do airline employees, railroad workers, and school bus drivers qualify for no tax on overtime? Yes or no?

I don't know.

You do not know. Okay, the answer is no, they do not. Three million workers who typically work overtime are currently ineligible for no tax on overtime. That's why I've worked with Representative Malliotakis to introduce the No Tax on Overtime for All Workers Act to ensure that this program is expanded to include these essential workers. Would you be willing to work with my colleague and I to support this no tax on overtime for the three million workers who are missing out on that provision?

I'm more than happy to.

Great. I look forward to working with you on that as well. Let me conclude by touching on the issue you didn't want to talk about at the beginning of the hearing, but it does fall within the IRS. As you know, the IRS holds the most sensitive financial data in the federal government. We're talking about Social Security numbers, banking information, and income records for over 160 million taxpayers. The expectation for the American people is that the IRS will protect their personal information. And as you also know, under President Trump's watch, DOJ shared the Social Security data without agency officials' knowledge and in violation of security protocols. So with your IRS hat on, why should the taxpayer trust you to protect their most sensitive information when you weren't able to do it over the SSA?

First and foremost, I've spent my career protecting PII and I've protected it in any job I've ever had, including my current responsibilities. I don't think your facts are accurate.

So it's not accurate that millions of Americans' personal identifiable information, including Social Security information and other vital information, was leaked by DOJ? Yes or no?

No.

It was not. Despite the fact that the Trump administration's own counsel in court records had to admit to that fact. You still won't take responsibility for that information on behalf of millions of Americans? It's the biggest data breach in U.S. history, in my estimation.

Your estimation's inaccurate, but thank you.

Well, what's not inaccurate is that people do not feel that their information is being protected by this administration. And it is something that you in both of your hats, as IRS CEO and as the Administrator of Social Security, should take more seriously. With that, I yield back.

The SSA takes it way more seriously than you can imagine.

Mr. Miller.

Thank you, Mr. Chairman. Right now, and thanks for coming, I want to focus on the tax modernization and really want to focus on digital assets. I believe digital assets represent one of the most significant economic opportunities in the global economy right now. The United States can lead in this space, but leadership requires clear, workable tax rules that promote compliance without stifling innovation. The IRS plays a critical role in getting this right. Clear rules, smart reporting thresholds, and administrable standards will strengthen compliance while ensuring that innovation and capital it attracts remains here in the United States. CEO Bisignano, the IRS recently issued Revenue Procedure 2025-31 allowing digital asset ETPs structured as grantor trusts to participate in staking. This updated guidance provided a first step toward meaningful certainty and demonstrated that IRS can adapt as markets evolve. However, important interpretive questions remain about the scope and mechanics of safe harbor. Will the IRS issue additional clarifying guidance such as FAQs or informational guidance to ensure taxpayers can comply with confidence? And what support from Congress would help you deliver that clarity efficiently?

First of all, 100 percent, we're deep in it. It would be good to come talk to you about it and make sure that for everything you're thinking about, we understand it and have it covered in that guidance. And I'd say that'd be fabulous support.

Thank you. In regard to digital asset reporting, we expect Form 1099-DA implementation will generate a significant volume of information returns. Many of these may involve regulated payment stablecoins that are designed to maintain a stable value, often resulting in minimal or no economic gain on routine transactions. Compliance is crucial, but it must be practical and strategically focused. Has the IRS evaluated whether processing extremely high volumes of low-dollar digital asset transactions will materially improve compliance relative to the administrative burden? And what legislative solutions will help the IRS concentrate resources where they deliver the greatest ROI?

That analysis is in process right now with some preliminary, but I think we probably got a little more time to really have directly where the sweet spots are and where the issues are, sir.

I really appreciate your time here today and I know I haven't been in my seat for that long, but I have to say I am disappointed. I really wish you guys and his team, you need to do a better job of educating the IRS Commissioner about the questions that he's coming here to answer. I mean, I am very embarrassed right now for my side and you're doing the best you can, sir. I know you're coming into this with an amazing background. And what I'm saying is going to get me in a lot of trouble, but this is unacceptable. You really need to come in here and answer the questions that these members ask you directly and saying I'll come see you in your office, even to me on very basic questions that I'm asking you, is really upsetting. And I don't actually think it's you who's letting us down. I'm going to look at your team right behind you. Because if I was working for a principal, I would never let them walk into a hearing like this if they worked for me. Mr. Chairman, I yield back.

Ms. Plaskett.

Thank you very much, Mr. Chairman, and good afternoon, Mr. Bisignano. Was that correct?

Yes, ma'am.

Okay, great. Thank you. Wanted to have a I represent the Virgin Islands, and we have a very unique tax system, as you're well aware, where we have a mirror code of tax administration. Our residents, of course, as you know, pay income taxes to the Virgin Islands Bureau of Internal Revenue, not the IRS, but their liability is calculated using federal tax rates. And this distinction is foundational on how our territory functions. In 2025, many Virgin Islanders received notices from the IRS claiming non-payment of federal taxes. And these notices were alarming and confusing to a lot of constituents who had dutifully paid their taxes through the territorial system as they always had were legally required to do so. Our office contacted the IRS about the problem, and your team responded promptly and effectively, and we're really grateful to that. I learned that before the recent restructuring, the IRS system automatically generated notice letters for all non-filers, and then previously you had employees who would manually review and then remove letters scheduled for Virgin Islanders because they recognize the mirror tax system. However, with the restructuring, this led to this disruption and letters went out when they should not. I understand that your team is working with the Virgin Islands Bureau of Internal Revenue to address the problem, and just wanted to make sure that I have your assurance that they will continue to do that as we come into the new tax season.

100 percent, and any other help you need, we're 100 percent available.

Thank you. The other issue I wanted to raise to you is one that is a fundamental inequity affecting territorial residents, not just Virgin Islanders, but all of the U.S. territories. In your role as Commissioner of Social Security, you oversee federal benefits intended to provide a safety net for elderly, blind, and disabled Americans. I want to direct the committee's attention to a significant gap in this safety net: the exclusion of United States citizens residing in U.S. territories from Supplemental Security Income eligibility. Now, this committee has looked at this issue previously and has tried to make congressional fixes to it in previous legislation, which went through the committee, passed in the House, but was not taken up in the Senate. I wanted to know, sir, if you would commit to working with my office to seek a solution to the problem that would provide SSI eligibility to people living in the territories.

Although I've answered multiple times, this is not an SSA hearing. Yes, ma'am, I will.

Okay, I appreciate that. And I want to thank you again for working with us in the unique tax structure that we have with a mirror code that means that additional attention needs to be paid sometimes to how we are paying into the Virgin Islands system rather than the federal system. And of course, want to thank you again and hopeful that yourself or someone from your team would work with us on the SSI issue. I recognize that the Supreme Court has said that this is a congressional issue, but I'm sure that having the support of your office would go a long way in convincing other Americans that, in fact, there is benefit to this rather than keeping these individuals out and then in some ways becoming a greater financial burden because of illness and other issues that they may have by not having this support of SSI that, in fact, something can be done to fix it. And with that, I'm going to yield back the balance of my time, which I do have, and thank you for the opportunity to speak with you.

That is truly yielding time. So thank you. Mr. Moran.

Thank you, Mr. Chairman. CEO Bisignano, thank you for being here this morning. I'm really excited that we're getting to talk about how your work at the IRS is making lasting impact for the good of the American taxpayer. We talk a lot in this committee about the amount of money that the taxpayers are getting back because of the substantive decisions that we've made, but I think it's also important for us to talk about a lot of the process-oriented matters that your office is taking advantage of to make the process better for taxpayers and to provide better service for them. So thank you for that. As you know, congressional Republicans are working to modernize all of the tax enforcement and dispute resolution matters, but I'd like to specifically talk about the latter part of that process. My bill with Ms. Sewell, HR 5349, the Tax Court Improvement Act, passed out of the House last December, and it gives the Tax Court clearer authority to sign subpoenas, obtain discovery and evidence before a hearing, streamline judicial review, and hold Tax Court judges to the same disqualification standards as other federal judges, all whilst improving security and civility in court proceedings. From your vantage point, here's my question as IRS CEO: how can these improvements in Tax Court procedures and standards help the IRS conduct more efficient, fair, and timely enforcement and audit operations? And are you aligning your modernization efforts, such as case management systems and litigation support tools, to take full advantage of these needed changes?

Thank you for the question. And you know, I think the Tax Court changes are a big deal for us. I think, you know, this is all end-to-end process. And our ability to in every step of the end-to-end process make improvement, both with your help and technically, we'll get better outcomes. You know, we're maniacally focused on taking time down. You know, and I appreciate your comments earlier because the fact of the matter is we've been able to give the American public time back with all the modernization we talked about or transformation of allowing them to do 40 million more queries online this year than last year. And it all it's all part of the same equation helping the American taxpayer.

Yeah, there's lots of improvements to be made and your office under your leadership is doing that. So thank you. I want to shift focus to a more specific tax enforcement issue that has plagued the IRS the last five years: the Employee Retention Tax Credit. A recent report from the GAO published this month confirms the massive scale of the crisis that you inherited, noting that the IRS has processed nearly 5 million ERTC claims totaling approximately 283 billion as of June 2025. Shockingly, the GAO found that 83 percent of those refunds, roughly 235 billion, were not even issued until years after the pandemic ended, primarily because the Biden administration was so unprepared to assess improper payment risks or process the surge in claims. Here's my question: the GAO report specifically criticized the IRS back then for not allowing key risk management principles and for failing to even produce an estimate of improper payments as required by law. As CEO, how are you using your new staff redirection and modernization tools to finally quantify these improper payments and claw back the billions of dollars that the GAO suggests were paid out to bad actors and ineligible claimants?

Yeah, you know, we had about 1.5 million outstanding. That's down to 29,000. So that was the ability to clear it all out and accurately. Earlier I talked about a risk management meeting, and that discipline is to go at all GAO comments, all IG comments, and solve the problem. And so, you know, as we get together on Fridays, this is on the to-do list of things that have to look back and there's fraud, waste, and abuse in here and our job's to deal with it.

One other thing I'd like for you to put on the to-do list to end my time today. I want to reiterate on behalf of a number of the companies in my district the importance of the factory floor research that's routinely excluded from qualifying for the R&D tax credit. Something that my colleague Congressman Kustoff raised with you. This, along with the compliance burdens companies face due to inconsistent interpretations each year, are stifling innovation. And that's not what we want. It's not what you want, it's not what I want, I know it's not what this committee wants. So I would just urge you to look into that matter, that factory floor research and its inclusion into the R&D tax credit. So thank you for your time. Thank you again for being service-oriented and oriented towards the taxpayer, bringing more value and efficiency to the taxpayer themselves through everything that you're doing. So thank you, I yield back.

Mr. Suozzi.

Thank you, Mr. Chairman. Mr. Bisignano, thank you so much for being here today. I know it's been a long hearing and I appreciate your service to the country. We're grateful to you for the hard work that you put in on behalf of the American people. We got a big problem in our country with massive deficits. It's a major, major problem. And there's only two things you can do: you can either increase revenues or decrease expenses. That's the only choices you have: increase revenues or decrease expenses. And that's a very big part of where your job comes in. When it comes to the decrease expenses, they tried earlier on before you were in this position to use DOGE to try and cut expenses in different departments. And DOGE, especially at the time that Mr. Musk was running the whole thing, I don't think they did a very effective job. In fact, I think it may have cost us money in the process. And we've heard today about the release of some private information. Do you think that DOGE when it was under Mr. Musk did a good job here for the country?

You know, I'd like to say when I came in, really Mr. Musk was gone. And so I said earlier about looking back, it's not really where I spend my time. I spend my time looking forward. I think we're driving a client service agenda...

No, no, I know that. I was just saying because this whole thing about the release of people's private data, and I know privacy is a very big issue for you, both in your private sector career before this and now as you've said many times today, I've been listening to you, how important it is to you. But they did release private data back then. And so I'm just asking, do you think that they did a good job under Mr. Musk in their efforts to try and reduce expenses and also releasing this information? Did they do a good job?

They covered a whole government.

Okay, let's not talk about it then. Okay, so you said earlier that there are three things that are your priorities. Number one is service, number two is collections, and number three is privacy. Privacy we're not going to discuss any further because we think there's some been some real privacy violations that took place under the DOGE leadership that was there before you took this position. Number two is service. I know service is really important to you, it was important to you in your private sector career before you came here, you're trying to work on service, but we've heard a lot of complaints about delays and things like that today, which have always existed at the IRS, but there's some concerns that it's gotten worse. One of the things that happened before you got there, before the Trump administration took over, is they increased the size of the number of employees in the IRS dramatically. They increased it to 100,000 employees. And then at the beginning of this year, it was down to like 80,000 employees. So that's where that 20 percent reduction comes from. Has there been, what do you think is the right number of employees for the IRS?

Well, you know, I've committed to have the right number of employees.

What do you think that is?

Well, I think right now, you know, I heard your comments about delays, but if you look at the data, it's getting the, we're getting the best performance for our client base ever.

Okay, let's say you're doing a better job. I just want to say, what do you think the number of employees for the IRS, you know this number, I'm sure you have a chart.

I feel good about the number of employees that I have right now.

So it's about 80,000 right now?

It's 70, call it 70, a little less than 75.

So there's been a 25,000 person reduction in the number of employees. How does it stand as far as the customer service employees? How many employees do you have in customer service?

You know, I mean, that's the largest component of the place. And in fact, you know, right now we're answering the phones in single digits, which is commercial grade.

Okay, I just want to try and get the actual numbers of employees. Okay, let me move on to the last part because I'm running out of time, is collections. Collections is really the big, big thing. Do you think that the idea of the tax gap is a real thing? A bunch of people out there that are not paying their taxes that should be paying their taxes. They're not, you know, there's been testimony before this committee by previous IRS commissioners and others about how big the tax gap is. Do you think the tax gap is a real thing, that there's money out there that we could be collecting that we're not collecting? And number two, how big do you think the tax gap is?

That's a, it's like a really great question. And I've talked a couple times today about it. The last report out says the tax gap is $650 billion. That's 2022. Historically, it appears that the tax gap was not an attacked item, if you look at it, right?

Not attacked?

Not. I mean...

Yeah, so we need to attack the tax gap and try and get that $650 billion.

The work going on right now is to understand what's the real addressable market of the tax gap. And I think, and I said I'd be happy to come back when you think appropriate, right, after that analysis is done to understand it better.

Well, I'd like to meet with you personally because my impression right now...

I'll come to Long Island whenever you want.

No, we'll meet here in Washington, that's fine, but Long Island we'd love to have you too. But I think that right now the tax gap is the result of some of the, you said before you didn't think this was the case, I still think it's the case, I'm willing to be educated by you, but I think it's wealthier people and corporations that have had less audits than they've had like, it's I think it's something like 30 percent less than they used to be 10 years ago. And so we need to figure out how we can collect the money from the people that owe us money that are not paying their taxes to make sure we're getting what the U.S. government deserves pursuant to the existing tax code.

Happy to work on it with you.

Thank you, Mr. Bisignano. I yield back.

Mr. Moore.

Thank you, Chairman. Mr. Bisignano, like sir, really appreciate you today. Appreciated our closed door meetings, anytime you're in public, one of the most forthright officials that I've had a chance to interact with. You communicate reality, you're about the numbers, and it's very much appreciated. I'm lucky representing the Ogden, Utah, to represent over 7,000 IRS employees in Ogden. It's clear to me these employees are hardworking, dedicated people who they're excited to be part of the technological innovation that you want to bring to ultimately increase their efficiency and their ability to do their job. And I love that we're seeing good numbers on this and it's something that, you know, we'll always be willing to work closely with you. Happy that the IRS is prioritizing customer service and timeliness in the process of returns to this season. Can you speak to how you are simultaneously incentivizing the number of claims processed and ensuring the accuracy of those claims being processed?

Well, the only way to do more is with technology, right? And I mean, obviously, direct deposit, which we're huge advocates for for both eliminating fraud and also improving timeliness, is really allowing us to get more more money in Americans' pockets better. And then, you know, the accuracy is the job, right? There's nothing more important than timeliness and accuracy. And you know, we continue to build systems that allow us to be able to react quickly to the data in front of us. Like I said earlier, simple math errors a lot of times are immediately prompted to the filer to know. So I think, you know, we implemented a pretty big set of rules that, you know, there was lots of reports out, whether it be the Inspector General or GAO, you know, or the National Taxpayer Advocate wondering how we could get this done. But the good hardworking people of IRS were highly motivated to execute on this, and I can't say enough about having a good dedicated workforce and career leadership that's getting the job done.

Yeah, and we see it too in my district.

I knew you saw them in Ogden.

Yeah, well you're welcome out to Ogden anytime. The working families tax cuts last summer, we prioritized setting families up for success with larger and permanent child tax credit, increased standard deduction, and of course one of my priorities was making investment accounts available to every American child. Over the next four years every every baby born will have a seeded account in Trump accounts, plus you have philanthropy stepping in and doing an just like ut- mind-boggling amount of of contribution to enabling children under 10 basically to be able to start this concept of investing for their future at the youngest age possible. I think it's a game changer, I know you're aware of it. These are you've done IRS has done a great job of making this easy to sign up for, we've already had I believe 3 million, 3 million children have already signed up for this. And so making form 4547 available is huge and it's in it's an operational goal as well as an aspirational one as well. You've had an extensive background in financial services. Can you share how you would approach this new opportunity in, you know, in one of your say former roles in that sector, how would these accounts set up a new generation of Americans for success?

Well, I mean, you know, you've seen the math on it. You see what it's worth. I think it's innovative, creative, and I think it's being well received. I think it will become explosive. You know, it's obviously it's July of 26 where it's fully enacted, but the fact we have 3 million enrolled, one and a half per family, almost a million newborns getting the thousand deduct- the thousand benefit. And I think, you know, we're going to have what I call plenty of distribution partners, right? All types of financial advisors are going to advise families. It will be it will be a natural adjunct as the IRA was, it's just a different form of IRA. It's innovative, creative, I give everybody a ton of credit for what they've done and I think I think we've only just begun on it.

And I can't express my appreciation as simple as we can make this for people to recognize this was a good program, they get signed up, and they get set up for success, companies can consider contributing, grandparents as well as philanthropy. It's going to be an awesome opportunity. So thank you so much, sir, appreciate and thank you to your team.

Thanks for having me.

I want to thank you CEO Bisignano for appearing before our committee this afternoon. Please be advised that members have two weeks to submit written questions to be answered later in writing, those questions and your answers will be made part of the formal hearing record. And with that, the committee stands adjourned.