In the news lately, the IRS has been criticized for not doing its job. Specifically, the Speaker of the House (Paul Ryan) has stated “The IRS is not doing its job. It is looking out for itself instead of looking out for our taxpayers,” when introducing the House Republican agenda for #ConfidentAmerica. Speaker Ryan’s comments relate to IRS’ alleged inability to protect taxpayer payer information. See Forbes or Tax Analysts articles re IRS online transcript service hacked by criminals.
News disclosed of IRS inability to protect taxpayer sensitive data, along with recent IRS headlines (including: Lois Lerner and the IRS targeting fiasco, etc. (See TaxProfBlog’s ongoing coverage of the “IRS Scandal and other IRS related news)) continues to undermine the IRS and continues to fuel Congress’ attacks of IRS especially through recent House bills passed aimed at shutting down the IRS.
Given this context, one would assume that news of another taxing authority not doing its job would just be a re-tread of another example of the IRS failing to do its job. Instead, the recent news from Bloomberg BNA, actually highlights the U.K.’s tax collecting agency’s ((Her Majesty’s Revenue & Customs) HMRC) failure to prosecute tax evaders connected to the HSBC bank leak. The Bloomberg BNA blog highlights that only one of 3,600 alleged tax evaders has been prosecuted by HMRC, which is costing the U.K. approximately 16 billion pounds ($23 billion) in tax revenue each year. See the U.K. Public Accounts Committee (PAC) Report criticizing HMRC and its November 2015 Report also criticizing HMRC for its failures. PAC recommended increasing investigations and prosecutions of wealth individuals, especially given the recent release of the Panama Papers.
With all these attacks on taxing authorities, it begs the question whether the attacks are justified, or whether the people attacking the taxing authorities are providing enough guidance and/or resources to permit the taxing authority to properly do its job. One such advocate is the editorial board at the Washington Post. The Washington Post commentary suggests that the source for the IRS’ lack of customer service is the House Republicans (the same group that just passed measures to underfund and restrict the IRS’ authority). The Washington post article relies on the following facts:
- IRS budget is $500 million below the 2010 budget level;
- IRS has had to shed 17,000 workers
- IRS has increased responsibilities including Obamacare (Affordable Care Act), FACTA (Foreign Account Tax Compliance Act), and the passport law (Fixing America’s Surface Transportation Act, or “FAST Act.”).
The Washington Post commentary concludes that House Republicans are rewarding tax cheats by de-funding the IRS, as the IRS will just conduct fewer audits and cost the U.S. government $8 billion. The commentary also concludes that Congress should adequately fund the IRS instead of attacking the IRS.
While the Washington Post article makes several key points, the Washington Post article fails to address one area where IRS and IRS management can help in to minimize House Republicans’ attacks against the IRS. The IRS and IRS management specifically, can utilize one tool Congress has provided the IRS to close the tax gap, namely the IRS whistleblower program. IRS management could make a priority in taking whistleblower tips and utilizing whistleblowers to track down the tax evaders and collect the delinquent taxes. Instead, as the GAO has reported in 2015 and as blogged here by Thomas C. Pliske, the IRS has vastly under-utilized the whistleblower program.
Perhaps if the IRS were to feature the whistleblower program, it could increase revenue collected despite the budget constraints, and also turn the tide against the “bash the IRS” movement, by demonstrating that it is doing its job, collecting taxes of the United States.
If you have specific or credible evidence of an individual or corporate taxpayer not paying its tax liabilities, please contact us, to discuss filing a claim for an award with the IRS. IRS pays between 15-30% of the collected proceeds (in excess of $2,000,000) to a whistleblower.