To the Editor:
Re “How I.R.S. Can Tighten the Tax Gap” (Business, Dec. 24):
Not only would stronger enforcement of the tax code generate much-needed funds for the Treasury, but so would greater use of an important tax enforcement tool: the I.R.S. whistle-blower program.
Whistle-blowers who report detailed information about tax fraud or other tax violations can do so confidentially and be rewarded. The amount of the award is based on the amount of taxes and penalties collected as a result of the whistle-blower’s information and assistance.
Thousands of individuals have filed whistle-blower reports with the I.R.S., but the agency has acted on only a tiny percentage of them. This is partly because of the longstanding cultural resistance within the I.R.S. to whistle-blowers. Yet whistle-blowers can stretch the I.R.S.’s enforcement budget by exposing tax avoidance schemes that it might not uncover even with more audits.
If the budget for tax enforcement were increased, as the article suggests, the I.R.S. would have more resources to conduct audits. But even without those funds, the I.R.S. already has an effective resource that could help close the tax gap.
Edward H. Arens
The writer is a lawyer who represents whistle-blowers.
Read the original letter published in New York Times’ Opinion section.