Phillips & Cohen partner Erika Kelton wrote an op-ed in The Hill looking at why the IRS’s decision to once again hire private debt collectors to go after small overdue tax bills is misguided.
What is overlooked in the debate, however, is that the IRS has failed to take advantage of an existing enforcement tool that is cheaper, more effective and would collect much more money than private contractors ever will. The IRS whistleblower program is the most powerful tool that the IRS has for closing the massive tax gap, yet despite its enormous promise, it has never been allowed to flourish because of institutional resistance and hostility.
Now, as ordered by Congress, the IRS has to turn to private collections agencies to pursue about 140,000 individuals for amounts of $50,000 or less. The difference in magnitude between the cases the IRS is chasing and the matters that whistleblowers are bringing is staggering and raises serious questions about the IRS’s enforcement priorities.
It is obvious that if the IRS were to embrace, rather than ignore and resist, its whistleblower program, there would be much more returned to the U.S. Treasury than the amounts private companies can ever collect by targeting relatively small underpayments.