A consequence of several years of budget cuts at the IRS is a decline in their enforcement efforts. The Wall Street Journal has recently run several stories detailing these statistics, noting new data that shows an overall decline in IRS audit rates for individuals as well as a decline in the number of large corporate tax audits. The context for all the press releases and news stories on this topic is the current debate on Capitol Hill regarding the future budget of the IRS. Commissioner Koskinen has been asking for a budget that at least brings the IRS back to where it was in 2010.
Where does this leave prospective whistleblowers? There is no doubt that a climate of reduced IRS enforcement leads to a lack of accurate self-reporting and more aggressive tax return positions being taken by individuals and even by large corporations, even in a post SarBox world. While this means that there will be even more fodder for potential whistleblowers to blow the whistle on, it also means that the IRS has less resources to pursue claims. In such a case, we believe it is more important than ever before that your submission to the IRS be concise, that your allegations be factually and legally accurate, and most of all your submission must compel the IRS to act. The IRS considers itself fully busy, especially now, and your submission must convince them that it is worth acting on instead of doing something else. That’s a tough challenge to face when considering making an IRS whistleblower submission… but we like challenges.