The Congressional Research Service (“CRS”) updated a report on tax havens to reflect new revenue-raising estimates for proposals for reducing international tax evasion. The report, updated last week, noted that estimates of revenue losses from corporate profit shifting are as high as $90 billion per year and may even be higher. The report also said that corporate profit shifting “appears to have increased substantially in recent years” explaining further that “[e]vasion is often a problem of lack of information, and remedies may include resources for enforcement, along with incentives and sanctions designed to increase information sharing, and possibly a move towards greater withholding.” In many ways, the IRS starts behind the eight-ball in tax enforcement efforts. It is no secret that the information asymmetry that exists between the IRS and taxpayers is a major obstacle to collection efforts. Even though the IRS has broad authority to demand information from taxpayers, they don’t always know what to ask for or where to look for the information they need. This is precisely where whistleblowers can step in with key information that will level the tax enforcement playing field. As corporate tax evasion continues to be hot topic politically and internationally, pressure is building on the IRS to collect taxes owed by tax evaders using a reduced budget and scarce resources. Efficiently reducing the information gap between the IRS and tax evaders may just be a matter of the IRS turning to whistleblowers for enforcement help.
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