Dec 20, 2007

Your Tax Debt- the IRS is getting more informants

The tax system is based on voluntary compliance. If everyone decided that paying taxes was a bad think, ultimately the tax system would deteriorate. Hence, similar to the changes in the tax preparer due diligence (and corresponding penalties) that is made to deputize tax preparers for the IRS, the IRS has issued a recent press release highlighting "whistleblower" efforts.

The IRS encourages taxpayers to inform on others about tax evasion. Per the IRS in the Press Release:

"Since the Whistleblower Office was created in December 2006, the IRS has received about 80 claims, half of those submitted in just the last two and a half months. To make a claim, an informant must file new Form 211, Application for Award for Original Information, which asks informants to provide an estimate of the tax owed, the pertinent facts in the case and an explanation of how the informant obtained the information"

This new IRS Whistleblower Office is clearly an attempt to deputize taxpayers against taxpayers- increasing the voluntary compliance rate among all taxpayers.

Watch for this in the future. The IRS will do two things this Spring:

1. Indict a high profile person for tax fraud (remember the Girls Gone Wild founder in 2007)
2. Continue to press tax preparers via the new penalties on tax preparer due diligence

The best way to avoid this looking over the shoulder is to comply with the tax law and stay in the system. If you are currently outside of the tax system and need to come back in, please contact you information will be kept confidential.

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