The IRS whistleblower program, part 2: proposals for change

In part one of this post, we noted that criticism of the IRS’s whistleblower program is heating up again. Not surprisingly, one of most vocal critics is long-time IRS gadfly Charles Grassley, a U.S. senator from Iowa.

In this part of the post, let’s look in more detail at what Grassley and others contend are shortcomings in the program.

Sen. Grassley and his Senate colleague Ron Wyden of Oregon recently asserted in an opinion piece that the “tax gap’ – the amount by which revenue taken in the IRS falls short of taxes owed – is $450 billion a year. Obviously that is a huge amount.

But is it true that a more effective whistleblower program would close the gap significantly?

Grassley and Wyden believe so. They would like to see the IRS make it a priority to reduce delays in the resolution of cases involving whistleblowers. When a whistleblower tells the IRS about unpaid taxes, it sometimes takes years for the cases to be resolved.

To be sure, investigations cannot be concluded overnight. Sometimes there are complications that take a lot of time to sort out. But one proposal for reform of the whistleblower program is for the IRS to at least provide regular updates to whistleblowers about the status of their claims.

For its part, the IRS says it is committed to making the program more effective. This includes expanding the whistleblower program and communicating more clearly with those who participate in it or are considering doing so.

It remains to be seen how this will all play out. But we will continue to follow the story going forward as one of the threads in this blog.

Source: IRS.gov “Whistleblower – Informant Award”