WEBVTT 00:02.566 --> 00:05.000 align:left position:10% line:71% size:80% JUDY WOODRUFF: There is a $1 trillion gap between what Americans owe in taxes and what the federal 00:07.066 --> 00:11.300 align:left position:20% line:71% size:70% government collects. The Democrats budget bill that is expected to win final approval in the 00:13.266 --> 00:16.333 align:left position:10% line:77% size:80% House this week would unleash funds that could help round up all that missing money. 00:17.766 --> 00:19.700 align:left position:10% line:83% size:80% Congressional correspondent Lisa Desjardins has more. 00:19.700 --> 00:23.900 align:left position:10% line:77% size:80% LISA DESJARDINS: Judy, the so-called Inflation Reduction Act would dramatically 00:23.900 --> 00:28.900 align:left position:20% line:71% size:70% increase funding for the IRS some $80 billion over the next 10 years. Democrats say that gets 00:30.966 --> 00:34.900 align:left position:10% line:77% size:80% the agency back on its feet, able to find more tax cheats after years of budget cuts. 00:36.766 --> 00:39.533 align:left position:10% line:77% size:80% Republicans say it's dangerous and will target American families for audits. 00:39.533 --> 00:43.300 align:left position:10% line:77% size:80% Joining me now to understand more is former IRS Commissioner John Koskinen. 00:43.300 --> 00:45.400 align:left position:20% line:83% size:70% Thank you so much for joining us. 00:45.400 --> 00:50.033 align:left position:10% line:77% size:80% I want to start with some baseline facts here about the IRS. First of all, since 2010, 00:52.066 --> 00:55.400 align:left position:10% line:77% size:80% the IRS has seen significant budget cuts, nearly 20 percent, and their staff numbers are down 00:57.533 --> 01:01.700 align:left position:20% line:71% size:70% about that same amount. The agency currently has about 80,000 full-time staffers, for reference. 01:03.733 --> 01:07.333 align:left position:10% line:77% size:80% John Koskinen, this bill could double that amount, adding another 80,000 plus 01:07.333 --> 01:12.233 align:left position:10% line:77% size:80% staffers over 10 years. Does the IRS really need that many? Is the problem that large? 01:12.233 --> 01:15.733 align:left position:10% line:71% size:80% JOHN KOSKINEN, Former IRS Commissioner: Well, I'm not sure how they came up with the 80,000 number. 01:17.333 --> 01:21.333 align:left position:20% line:77% size:70% Between now and 2031, when the bill expires and the funding expires, 01:21.333 --> 01:25.833 align:left position:10% line:77% size:80% anywhere from 35,000 to as many as 50,000 employees will retire because 01:25.833 --> 01:29.200 align:left position:10% line:77% size:80% they're eligible to retire. So a lot of - - they will have a lot to be replaced. 01:30.633 --> 01:32.933 align:left position:10% line:83% size:80% But in terms of the growth of the IRS, I always thought that, 01:32.933 --> 01:37.933 align:left position:20% line:71% size:70% if I could get back the 20,000 that I lost while I was there, that would be a major step forward. 01:39.900 --> 01:41.733 align:left position:10% line:77% size:80% LISA DESJARDINS: What is the need, then? What have the budget cuts done? 01:41.733 --> 01:44.433 align:left position:10% line:77% size:80% What did you see them doing? And what's your understanding now of the agency? 01:44.433 --> 01:48.500 align:left position:20% line:71% size:70% JOHN KOSKINEN: Well, I think this funding is going to be a sea change for the IRS. Obviously, 01:48.500 --> 01:51.766 align:left position:20% line:77% size:70% it's a lot more fun to try to figure out how to spend money effectively 01:51.766 --> 01:56.666 align:left position:10% line:71% size:80% than to deal with ongoing budget cuts, which has been the situation for the last 10 or 12 years. 01:56.666 --> 02:01.633 align:left position:10% line:71% size:80% The IRS won't be starting from scratch. It has a lot of plans in place to improve taxpayer service, 02:02.966 --> 02:05.433 align:left position:10% line:83% size:80% to modernize its information technology systems, 02:05.433 --> 02:10.433 align:left position:10% line:77% size:80% and to catch up in its enforcement. The audit rate is down by over 50 percent. 02:12.900 --> 02:15.500 align:left position:10% line:71% size:80% So that means a lot of people who should be audited, who are cutting corners or even cheating, 02:15.500 --> 02:19.666 align:left position:10% line:77% size:80% are getting away with it because there aren't enough revenue officers and revenue agents. 02:21.700 --> 02:24.700 align:left position:10% line:77% size:80% I think, basically, though, the people who are going to benefit most from this are taxpayers. 02:24.700 --> 02:27.600 align:left position:10% line:77% size:80% LISA DESJARDINS: It's interesting, because that's Republicans' criticism. 02:27.600 --> 02:31.433 align:left position:10% line:77% size:80% They say that all of these new IRS workers, especially the new auditors, 02:31.433 --> 02:35.033 align:left position:20% line:77% size:70% could target American families. And I want to play one of the critics. 02:35.033 --> 02:39.100 align:left position:10% line:77% size:80% This was Senator Marco Rubio speaking in the Senate chamber over the weekend. 02:39.100 --> 02:42.133 align:left position:10% line:77% size:80% SEN. MARCO RUBIO (R-FL): They're going to go after them. They're going to go after the people 02:42.133 --> 02:47.033 align:left position:10% line:77% size:80% that cannot afford to hire an army of lawyers and accountants to fight off the IRS agents, 02:48.700 --> 02:52.666 align:left position:20% line:77% size:70% thousands of IRS agents, but not police officers to go after criminals, 02:52.666 --> 02:56.566 align:left position:10% line:77% size:80% IRS agents to go after the American taxpayer. That's who they're going to go after. 02:56.566 --> 03:00.800 align:left position:10% line:71% size:80% I promise you -- and I regret to say it -- that a lot of hardworking people are going to be getting 03:00.800 --> 03:04.466 align:left position:10% line:71% size:80% letters in the mail, saying, hey, we want to talk to you about your taxes from five years ago, 03:04.466 --> 03:07.200 align:left position:10% line:83% size:80% from three years ago, because we think you might have messed up. 03:07.200 --> 03:11.833 align:left position:10% line:71% size:80% LISA DESJARDINS: This will mean more audits. Do we know who those audits are likely to hit? How 03:11.833 --> 03:16.533 align:left position:10% line:71% size:80% does the IRS approach who it chooses? Hardworking Americans is who Senator Rubio is worried about. 03:16.533 --> 03:20.400 align:left position:10% line:77% size:80% JOHN KOSKINEN: Yes, Senator Rubio is off-base. It's really a silly argument 03:20.400 --> 03:23.733 align:left position:20% line:77% size:70% to say that the IRS is now going to go after hardworking Americans. 03:23.733 --> 03:28.700 align:left position:10% line:71% size:80% The vast majority of taxpayers never hear from the IRS. They have simple, straightforward returns 03:30.666 --> 03:34.500 align:left position:10% line:77% size:80% with W-2s and maybe a 1099 thrown in. And the IRS' goal is not to audit anybody where 03:37.600 --> 03:42.000 align:left position:20% line:71% size:70% there is not going to be a change. They keep track of what's called the no-change rate. 03:42.000 --> 03:46.233 align:left position:10% line:77% size:80% And the goal is to keep that as minimal as possible, because if there's no change in an 03:46.233 --> 03:51.200 align:left position:10% line:77% size:80% audit, not only is it a waste of the taxpayers' time; it's a waste of the IRS' time. 03:51.200 --> 03:56.200 align:left position:10% line:71% size:80% So what will happen with the information technology modernization and its increased ability 03:58.800 --> 04:01.633 align:left position:10% line:71% size:80% to do data analytics is, the IRS will be actually better able to target the people who really should 04:04.066 --> 04:07.233 align:left position:10% line:71% size:80% be audited. So I think the vast majority of taxpayers are actually going to benefit by this, 04:09.200 --> 04:12.400 align:left position:10% line:77% size:80% because the taxpayer -- level of taxpayer service is going to increase significantly. 04:12.400 --> 04:17.266 align:left position:10% line:71% size:80% LISA DESJARDINS: Part of this gets to the power of the office which you held, the IRS commissioner. 04:17.266 --> 04:19.900 align:left position:10% line:77% size:80% The commissioner has said himself, the current commissioner, that 04:21.700 --> 04:25.033 align:left position:10% line:77% size:80% they are going to hold that they are going to be responsible for making sure that 04:25.033 --> 04:29.733 align:left position:10% line:77% size:80% folks who earn under $400,000 will not see any increase in their audit rate. 04:29.733 --> 04:31.833 align:left position:10% line:83% size:80% What's to say another commissioner couldn't change 04:31.833 --> 04:34.700 align:left position:10% line:83% size:80% that and change and decide who they want to target? 04:34.700 --> 04:38.700 align:left position:10% line:77% size:80% JOHN KOSKINEN: Well, you have to remember, there are only two political appointees in the IRS, 04:38.700 --> 04:43.266 align:left position:10% line:77% size:80% the commissioner and the chief counsel. Everyone else is a dedicated career employee. 04:43.266 --> 04:47.266 align:left position:10% line:77% size:80% And I have a lot of confidence in them. And no one wants to waste time 04:49.233 --> 04:50.933 align:left position:10% line:77% size:80% chasing taxpayers who don't hold owe money than they have already paid, 04:52.966 --> 04:55.833 align:left position:10% line:77% size:80% so that I think it's fair to say that the vast majority of people earning under $400,000 04:57.366 --> 05:00.500 align:left position:20% line:77% size:70% already file appropriate income taxes and never hear from the IRS. 05:00.500 --> 05:04.533 align:left position:10% line:77% size:80% Those who are cheating are going to be a little more nervous. I have always said that, 05:04.533 --> 05:08.400 align:left position:10% line:77% size:80% when you underfund the IRS, it's really a tax cut for tax cheats, because they're 05:08.400 --> 05:12.800 align:left position:10% line:77% size:80% the ones who benefit by the lowered rate of enforcements and lower audit rates. 05:12.800 --> 05:17.433 align:left position:10% line:77% size:80% So the IRS with this funding is going to be able to be more focused on the people who 05:17.433 --> 05:22.433 align:left position:10% line:71% size:80% are actually noncompliant. So, the hardworking Americans who are filing appropriate tax returns 05:24.400 --> 05:26.466 align:left position:10% line:77% size:80% aren't going to hear any more from the IRS in the future than they have heard in the past. 05:26.466 --> 05:30.466 align:left position:10% line:77% size:80% LISA DESJARDINS: Democrats are counting on this idea of expanded IRS enforcement 05:30.466 --> 05:35.466 align:left position:10% line:77% size:80% to bring in hundreds of billions of dollars. Do you think there is that much money out there in 05:36.666 --> 05:39.300 align:left position:20% line:83% size:70% tax cheats that the IRS can get at now? 05:39.300 --> 05:43.666 align:left position:10% line:71% size:80% JOHN KOSKINEN: When I was there, looking at the audits that were selected to be done that couldn't 05:43.666 --> 05:48.666 align:left position:10% line:71% size:80% be done because we didn't have enough people, my estimate was we were leaving $8 to $10 billion a 05:50.666 --> 05:53.600 align:left position:10% line:77% size:80% year on the table. That wasn't guessing. That wasn't saying, let's go find some people. 05:53.600 --> 05:58.000 align:left position:10% line:71% size:80% Those were people who had returns that had serious questions in them, and we just didn't have enough 05:58.000 --> 06:03.000 align:left position:10% line:77% size:80% revenue agents and officers. So I think the revenue projected to be raised by this bill 06:05.533 --> 06:08.533 align:left position:10% line:71% size:80% is reasonable. And I think it's probably going to be exceeded over the course of the eight years. 06:08.533 --> 06:11.333 align:left position:10% line:77% size:80% LISA DESJARDINS: John Koskinen, thank you so much for talking with us. 06:11.333 --> 06:16.333 align:left position:10% line:89% size:80% JOHN KOSKINEN: My pleasure.