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The IRS is facing tougher scrutiny than ever from Congress. Last week, lawmakers repeatedly pressed IRS Commissioner John Koskinen on why the agency wasn't moving faster to improve cybersecurity, after hackers were able to breach its computers last year. Koskinen joins Judy Woodruff to discuss their challenges.
This is the day that the tax man cometh, or, more accurately, the day when millions of Americans will finish filing their taxes.
The Internal Revenue Service is never popular again. But this year, it's facing ever tougher scrutiny, especially from Republicans in Congress. Last week, lawmakers repeatedly pressed IRS Commissioner John Koskinen on why the agency wasn't moving faster to improve cyber-security. The IRS has acknowledged hackers were able to breach its computers last year and swipe sensitive information about hundreds of thousands of taxpayers.
John Koskinen joins me now.
Mr. Koskinen, thank you for being with us.
JOHN KOSKINEN, IRS Commissioner:
Delighted to be here.
What is it going to take to restore the confidence of the American people in the IRS?
Well, I think what we have to do is first demonstrate to them that it's a fair system, that, if you hear from us, it's because of something in your return, not because who you voted for, what party you belong to, what church you go to.
Also, I think they have to understand that security of our data is a high priority. Our systems are secure. The problem has been that criminals organized around the world have a vast amount of personal information available to them. And so they are increasingly successful as masquerading as taxpayers.
So, when they have gotten into some of our applications, it's because they had already stolen the information somewhere else and could in fact pretend very effectively that they were the taxpayer.
So, when members of Congress after the IRS, come after you and say, why aren't you able to prevent this kind of thing, do you say it is just not doable?
No, I say that we need to and are continuing to increase the levels of security, the authentication we require of taxpayers before they have access to significant applications that we're developing and continuing to roll out.
And that's it?
And that's it.
Well, and I think we have taken down the applications — two applications that were accessed by criminals masquerading as taxpayers. And we will bring them back up with higher levels of authentication. But, unfortunately, while it makes it more difficult, if not possible for the criminals to get through, it will be a little more difficult for the taxpayers to get through as well.
There are some who look at your — well, many look at your agency and say it feels it's been dogged by one thing after another. There was a controversy a few years ago over the appearance that the IRS was holding up approval of tax-exempt status for these conservative nonprofit groups.
There was then this breach of security. And I will ask you in a minute about the Panama Papers. Question, is the IRS, is it really in a situation where it can't win, where there's just perpetually going to be one problem after another that is gripping this agency?
Well, I think there are always challenges in this day and age for agencies.
I think, ultimately, the IRS does a remarkable job of processing tax returns efficiently and effectively and promptly, dealing with taxpayers. If we have the funding, we provide very good levels of service for taxpayers.
But we continue, like all financial institutions, to have challenges, as I say, particularly with the organized crime syndicates we're dealing with all around the world. Our systems are attacked over a million times a day by people trying to get access, which, fortunately, thus far, they haven't been able to get as far as our basic systems.
You mentioned adequate funding. It's something, I think, many Americans look at the IRS and they say, well, why do you need more money? You already have so much. And, you know, why can't you make do with what you have?
Well, our budget was cut for five years in a row from 2010 to 2015 by over $1 billion, which meant that we have lost 15,000 to 17,000 employees over that time frame.
So, while we need to be more efficient and are working to do that, at some point — we have 10 million more taxpayers than we had — at some point, you actually begin to destroy the effectiveness of the agency. So whether it's taxpayer service, taxpayer enforcement, or even protection of the database, as we continue to struggle for funding, we continue to be at risk.
And what does that mean for the American people?
Well, it means that we estimate we are collecting $4 billion or $5 billion a year less than we would if we had 5,000 revenue agents, officers and criminal investigators we used to have five years ago.
It means that, as we demonstrated this year — Congress gave us additional funding for 2016 for taxpayer service, and the level of taxpayer service on the phones doubled. Instead of only 37 percent getting through, over 70 percent got through. It's a direct line of, if you give us the money, and we can hire people, they will be able to answer the phone. If you don't give us money, we can't hire the people during filling season, and it will be much harder to get an answer on the phone.
Would it be easier if — we know some of the Republican candidates for president are saying, what needs to be done is, we just need a one-postcard-sized filing form for every American or virtually every American.
Could something like that be an answer for the IRS?
Well, clearly, life would be simpler for taxpayers and simpler for us if the tax code were simpler. It doesn't — not even necessarily to a postcard, but it is obviously overly complicated for everyone at this point in time.
So, we have been great supporters of tax simplification. The policy issues are the domain of the Congress and the administration. We do tax administration, but I have made it clear that tax administration would be a lot easier and more effective and efficient if the code were simpler. And so whatever we can do to support that, we're happy to do.
Let me ask you finally, John Koskinen, about the Panama Papers, this blockbuster news report that came out a few weeks ago about thousands of wealthy people around the world, including some Americans, who put their money in offshore bank accounts in an effort to avoid paying tax.
Is this something the IRS knew about ahead of time, or did you only learn about it because of this really over a year of very complex reporting that was done by a number of news organizations working together?
We didn't know about this particular set of data until we heard about it through the press.
We obviously had had a full-court press for the last four or five years on offshore tax evasion. We have had agreements with numerous Swiss banks that have revealed untold numbers of accounts. We have created a voluntary disclosure program that over six or seven million Americans have taken advantage of.
So, hiding your assets and avoiding taxes anywhere in the world is getting a lot more difficult.
Do you find that it's now much easier to go after these individuals because of this kind of reporting, or does this — how much difference does this make?
Well, I think this reporting will help. We're working with a number of tax administrations around the world to collect this particular data and cooperate on following through with it.
But I think what's happening for compliance generally is, increasingly, I think, wealthy investors and taxpayers around the world are discovering that there is a growing global coalition focused on ending tax evasion through foreign accounts.
On that note, we will leave it.
John Koskinen, the commissioner of the Internal Revenue Service, on Tax Day, thank you for joining us.
Thanks for inviting me.
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