Senator Ron Wyden, the current chairman of the Senate Finance Committee, and Senator Chuck Grassley, the former chairman, jointly wrote an article in Politico discussing an important issue to us, the prioritization of whistleblower claims by the IRS.  They said:

[W]e’ve been puzzled why the IRS often snubs whistleblowers who may provide invaluable evidence of wrongdoing, especially when the costs of inaction are only growing. Taxpayers who underpay what is legally owed are shifting the burden to others. And despite efforts by the IRS to narrow the tax gap, noncompliance looms large. IRS commissioners have routinely come to Congress asking for more money for the agency in the face of a $450 billion annual tax gap — the difference between taxes owed and taxes paid. So when Congress writes a legislative prescription to ramp up its whistleblower program, the IRS needs to prioritize programs to follow whistleblower leads.

This is the first time I’ve seen a specific call by Congress for the IRS to prioritize whistleblower claims when they select cases for enforcement action.  We couldn’t agree with these Senators more.  According to a June 2006 report by the Treasury Inspector General for Tax Administration (“TIGTA”), IRS examinations initiated based on whistleblower information are more effective and efficient than examinations initiated using the IRS’s primary method for selecting returns for examination.  It’s high time the IRS recognized this dollars & cents fact and used it to their advantage when deciding which non-compliant taxpayers they should go after.

Lynam Knott