Reflecting on four years proudly working alongside IRS employees to serve our country November 10, 2022 We are on the brink of an exciting new era for the IRS, one that is desperately needed to transform the agency to improve taxpayer service and ensure fairness in tax compliance. Four years ago, I proudly took the oath of office to become the 49th Commissioner of the Internal Revenue Service. Throughout my term, I have been honored, privileged and most humbled by the opportunity to serve. I became Commissioner out of a deep appreciation for the IRS, its workforce and our country. Before coming to the IRS, I spent 36 years in private practice as a tax attorney, and I regularly worked with the employees of the IRS. I saw and appreciated the dedication and commitment that the IRS workforce has for the nation and the mission of the Service. The IRS employees are the reason I took this challenging position. My time as Commissioner has given me an even deeper appreciation of what our workforce is capable of achieving. I have been constantly amazed at the accomplishments of IRS employees during what has been a challenging and historic time for our nation. Time and again I have seen them deliver for taxpayers under tight timeframes and difficult circumstances – responding in a manner that demonstrates the importance of every American to the IRS and the IRS to every American. With the recent funding commitment to the IRS for the next decade, people should know that this important work to transform and improve the agency will be guided by employees dedicated to public service and delivering for our great country. The essential role the IRS plays in the life of our nation is something that I've tried, during my term as Commissioner, to make sure people understand. Each year, the IRS collects approximately $4.1 trillion in taxes and generates about 96 percent of the funding that supports the federal government's operations. IRS employees serve and interact with more Americans than any other public or private organization. The IRS is more than a tax administration agency. We make it possible for the government to perform its vital functions, helping fund the great work of our nation on everything from education and defense to our roads and other infrastructure. The importance of the IRS to the nation was most clearly illustrated over the last two-and-a-half years, which have been an unprecedented period for the IRS and for the nation. During the pandemic, the IRS successfully delivered more than $1.5 trillion to people across the nation through tax refunds and by implementing various relief measures to help Americans cope with the financial effects of COVID-19. This included issuing three rounds of more than 500 million Economic Impact Payments totaling more than $830 billion, all in record time. It also included more than 200 million advance payments of the Child Tax Credit totaling $93 billion that were made to eligible families between July and December of last year. It's important to remember the IRS faced unexpected factors in responding to a pandemic that affected wide segments of the U.S. economy – and created unique challenges for IRS employees and everyone involved in the tax system inside and outside government. Nonetheless, thanks to the agility and flexibility of our workforce, the IRS moved forward, using innovative approaches to make sure our employees could deliver on the agency's mission, such as significantly increasing our virtual and digital operations. It's also important to realize that, during this pandemic period, our employees faced the same health and safety concerns for themselves and their families as everyone else. Nonetheless, they went the extra mile in doing their jobs, and they also made a difference in their communities. Stepping up in times of national urgency is a proud tradition of our workforce; IRS employees have for years delivered in times of need for the nation when disasters strike. Over the past decade, thousands of IRS phone assistors have helped the Federal Emergency Management Agency's call centers in the aftermath of natural disasters, answering well over one million calls from survivors seeking help. We have also had many agents from our Criminal Investigation (CI) division provide their help and expertise during disasters — everything from wildfires to hurricanes. Most recently these teams stepped in to help Hurricane Ian victims. But as I have learned during my term as Commissioner, IRS employees don't wait for a disaster to pitch in. They routinely give back – by collecting food for the hungry, volunteering to help low-income people, older Americans or underserved people prepare their tax returns, and in so many other ways. IRS employees make a difference, they care, and they take pride in serving taxpayers, tax professionals, and our country, on and off the job. As our workforce has faced unprecedented challenges, they have continued the essential day-to-day work of the agency. This has included delivering two extended tax filing seasons, in 2020 and 2021. It also includes our ongoing efforts to improve service to taxpayers. I have told our employees that we cannot lose sight of the need to think about taxpayers and how to work with them – every day and in every interaction. The value of IRS services must be measured through the eyes of the taxpayer. Providing high-quality, personalized service is a critical component in helping taxpayers understand and comply with their filing and reporting obligations. This is an area where the agency needs to do more, and will be able to do more, with the 10-year funding provided by Congress. In addition, we have made a special point of improving service to diverse communities. An important way we serve these taxpayers is by communicating with them in the language they are most comfortable using. Along those lines, we have been taking important steps to further improve the amount of assistance the IRS provides in multiple languages. For the first time in the history of the IRS, we made the Form 1040 available in Spanish during the 2021 tax filing season. We also debuted Schedule LEP for taxpayers with limited English proficiency, giving them the opportunity to indicate whether they wanted to be contacted by the IRS in a language other than English. Using Schedule LEP, they can choose from 20 different languages! We've been overhauling our major publications, too. For example, in 2021 we issued a new, streamlined version of Publication 17, Your Federal Income Tax, that is easier to navigate and faster to download than previous versions, and is now accessible on most personal electronic devices. I'm especially pleased that the new Publication 17 is available in English, Spanish, Chinese (Traditional and Simplified), Vietnamese, Russian and Korean. We have also been providing certain information in Spanish braille and large print. These and many other steps we've taken are important ones, but there are more steps to come. The IRS will continue to do more in this area, and people who interact with us who are not comfortable communicating in English deserve more. We have greatly expanded our important relationships with more than 15,000 community organizations and 13,000 public school districts allowing us the ability to quickly and effectively distribute meaningful guidance. Our "Lifting Communities Up" initiative is focused on rebuilding underserved communities by creating important IRS jobs and careers for people in these communities. We have already made significant progress in both Puerto Rico and the Mississippi Delta. To further improve service to all taxpayers, one of my highest priorities as Commissioner has been to ensure the agency's information technology (IT) infrastructure remains on a path toward modernization. Modernization is vital to all our core functions -- successfully delivering the annual tax filing season, ensuring the health of the nation's tax system and supporting the federal government's financial strength. Toward that end, we released the IRS Integrated Modernization Business Plan in 2019. With this plan to guide us, the agency is continuing to upgrade its IT infrastructure and to develop secure and sustainable solutions to improve the taxpayer experience and narrow the tax gap, building on significant achievements and reflecting an expanded view of what is required for modernization. An important part of our modernization strategy involves expanding our digital services, to give everyone a seamless experience when they interact with the IRS online. A great example is the IRS Online Account. We are continually working to expand the transactions that individuals can conduct through this account. Last year, for example, we launched a new feature allowing people to authorize their tax practitioner to represent them before the IRS with a Power of Attorney, and to view their tax accounts with a Tax Information Authorization. The IRS will continue building functionality so that more transactions can be completed online in a secure digital environment. During the pandemic, we launched customer call-back on select toll-free phone lines, and provided meaningful services through chat bots, voice bots and online live assistors. But this is not just about digital services. We have continued to make improvements across our service channels, for customers who want or need to interact with us without going online. At the same time, we realize that there is still much for us to improve on to help taxpayers and the tax system. Our employees know we need to do more. The IRS continues to focus on reducing paper correspondence inventory and processing paper tax returns from 2021 as well as work on our response to an unprecedented level of phone demand — situations that have been compounded by the pandemic and related issues. Actions we've taken to address the inventory include surge teams, mandatory overtime, innovating to expedite case closures and suspending various notices. We are continuing to work hard on this area, and the efforts of our hard-working employees are enabling significant progress. Everything we do to enhance the experience of taxpayers and tax professionals is essential to maintaining the tax system. That system works because most people voluntarily pay what they owe. To ensure fairness, enforcement of the tax laws is just as critical as the services we provide. The IRS remains committed to having a strong, visible, robust tax enforcement presence to support voluntary compliance. When taxpayers file their returns, they should feel confident others are doing the right thing too. In support of compliant taxpayers, we must pursue meaningful enforcement efforts, appropriately balanced with our support of taxpayer service, taxpayer rights and privacy rights. This commitment to fairness will continue with the funding recently approved by Congress. During my term, we've continued to develop innovative approaches to understanding, detecting and resolving potential noncompliance to maintain taxpayer confidence in the tax system. We have expanded use of data, analytics and artificial intelligence across all lanes from selection to examination. And we have taken additional steps to improve coordination of enforcement efforts across the agency. Along those lines, we created an Office of Fraud Enforcement as well as an Office of Promoter Investigations. We also now have a Joint Strategic Emerging Issues Team providing a Servicewide collaborative effort in identifying and responding to emerging issues in real time. Our advanced Collaboration Data Center will coordinate government-wide investigative techniques from high-profile cyber investigations bringing together data, technology and specialized personnel. These and other steps are helping the IRS do a better job of rooting out tax fraud, especially shutting down abusive tax avoidance transactions, including syndicated conservation easements and micro-captive insurance arrangements, as well as abusive transactions involving virtual currencies. For example, over the past several years we've developed a comprehensive, coordinated enforcement strategy to address abusive syndicated conservation easement transactions, and we have worked closely with the U.S. Department of Justice to shut down the promotion of them. We've also had success with settlement offers made to certain taxpayers who have engaged in these transactions and want to come into compliance. In other matters we have been pursuing fraud penalties, where appropriate. Another great example involves abusive micro-captive insurance transactions. We've been aggressively challenging these transactions in court, and in May of this year, an Appeals Court upheld our contention that these abusive arrangements are taxable. This is the first time an Appeals Court has recognized that these transactions are shams. But promoters are still peddling these schemes, and we want taxpayers to be aware of the abusive nature of these transactions. In noting accomplishments on enforcement, I also want to mention how proud I am of the investigative work done by CI, which continues to make great strides investigating tax and financial fraud in all its forms. There are many examples, but one I'd like to highlight involves agents from CI's Cyber Crimes Unit. These agents played a key role in the largest cryptocurrency seizure ever recorded for the federal government, valued at more than $3.6 billion. This involved an alleged conspiracy to launder cryptocurrency stolen from a virtual currency exchange called Bitfinex. This was also the largest single financial seizure recorded by the federal government. Helping us with our tax administration efforts are partnerships inside and outside the tax community. Just one example is the Security Summit, an unprecedented partnership created in 2015 that includes the IRS, the states and the private sector tax community. Seven years into this partnership, Summit partners continue working together to find new ways to safeguard taxpayers and tax professionals. And yet, there are still challenges ahead. The fact that, years later, the IRS and its partners are still working to find ways to thwart identity thieves, illustrates how much we still have to do. Even now, there are too many individuals, businesses and tax professionals who are victimized by scams and schemes related to identity theft. Beyond our day-to-day efforts to help taxpayers and enforce the tax laws, the IRS is also committed to delivering on the promise of a new IRS. We have been developing an innovative approach to the future of tax administration that will better serve everyone, including those in underserved communities. A key driver of our efforts is our Taxpayer Experience Office, launched last year to unify and expand the work being done across the agency to serve taxpayers. The Taxpayer Experience Office is setting the strategic direction for improving the taxpayer experience and identifying opportunities to make continuous improvements in real time for taxpayers and the tax professional community. For the IRS to continue to deliver on its mission, sufficient resources are essential. Unfortunately, over the past decade the agency saw its funding decline by more than 15 percent in real terms. For that reason, during my tenure as Commissioner I continued to make the case for adequate resources for the agency. I repeatedly urged Congress to provide sustained, consistent multiyear funding, which is critical to ensuring the IRS can deliver meaningful services to taxpayers, conduct critical enforcement initiatives and support long-term modernization efforts to improve both service and compliance for the nation. I'm excited and proud that Congress recently provided major funding help to the IRS by passing the Inflation Reduction Act of 2022. The Act allocates approximately $80 billion to the IRS over the next 10 years. This significant funding increase was achieved with the help of so many of our partners in the tax community, as well as former Commissioners of the IRS, who over the years continued to make the case to Congress that the IRS could not do its job without the proper level of resources. I'm deeply grateful for their support. Enactment of this legislation is a transformational moment for our agency – and an opportunity for the future of tax administration as well as for IRS employees. These new funds will help the IRS in many areas, including adding important resources for tax enforcement, taxpayer service and technology. This legislation is not about auditing or pursuing hardworking people who pay their taxes. It's an investment in the future of our country to make the IRS serve taxpayers, through improved technology and fair enforcement of the tax code. Ultimately, these investments will make it easier for people to interact with the IRS and improve our audit tools – making it even less likely for honest taxpayers to hear from the IRS or receive an audit letter. Make no mistake, the IRS has a great deal of hard work ahead to deliver on the high expectations this historic funding will provide. But I have great confidence IRS employees are up to the task – and will deliver for the nation as they have countless times before in the history of our agency. Throughout all the challenges and changes of the last four years, our workforce has never lost sight of its core mission. That mission is best described in IRS Revenue Procedure 1964-22 issued by the Commissioner at the time, Mortimer Caplin. Commissioner Caplin, who passed away in 2019, remains a legend in the tax community. In part, the guidance notes that "... it is the duty of the Service to … correctly [apply] the laws enacted by Congress … and to perform this work in a fair and impartial manner, with neither a government nor a taxpayer point of view." These are important words for us to remember. Although the IRS is a large government institution, it's an institution run by people –people who care. The IRS has made great strides over the last four years, but as always, IRS employees want to do more, and I know they will continue moving forward in every area, in service to our great nation. Throughout these last four years as IRS Commissioner, I have always been extremely proud to be able to say, "I'm Chuck Rettig and I work with the Internal Revenue Service." I've been hugely honored to be on this journey with the dedicated and talented public servants of this agency. They are the heart and absolute strength of the IRS, and they will continue to ensure the agency can fulfill its mission in the years to come. Charles Rettig Commissioner of the IRS
