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Q&A: Collecting Taxes Owed

February 3, 2017
Senator Chuck Grassley , Dysart Reporter

Q: What is the IRS Whistleblower Office?

A: With tax filing season under way, millions of U.S. taxpayers are getting their ducks in a row to complete their tax returns and sent in by April 15. Although most Americans dread the task, the vast majority of taxpayers uphold their obligations to pay what is owed on time and in full. Our system of voluntary tax compliance is rooted upon the fundamental covenants of citizenship and the rule of law. The tax code works because of the honor code of law-abiding taxpayers and the faithful, careful and full enforcement of the nation's tax laws. Although the lion's share of American taxpayers comply year after year, tax evasion, avoidance and underpayment keep growing the tax gap. And that forces law-abiding citizens to shoulder an even greater tax burden. What's even more damaging is that tax evasion contributes to an erosion of public trust that harms our system of voluntary compliance. As a senior member and former chairman of the tax-writing Senate Finance Committee, I have worked to enact legislative reforms and conduct robust oversight to help ensure hard-working American taxpayers pay only what is owed and are treated fair and square in the process. That includes rooting out tax cheats and improving compliance with better customer service at the IRS. There's a saying that "you don't know what you don't know." Apply that maxim to the federal bureaucracy and it helps explain why I advocate so strongly for whistleblower protections. We need more eyes and ears to uncover waste, fraud and abuse that's riddling the ledgers of the federal government and taking taxpayers for a ride. The same concept applies to our tax-collecting system. As then-chairman of the Senate Finance Committee, I wrote reforms a decade ago to create the IRS Whistleblower Office and strengthen incentives for those who come forward to report wrongdoing with particular emphasis on illegal tax shelters and high-dollar fraud. Modeled after my successful reforms to the False Claims Act which so far have restored $53 billion to the U.S. Treasury the updates to the federal whistleblower program have helped the IRS collect more than $3.4 billion in its first decade on the books. It requires ongoing work to ensure the IRS Whistleblower Office faithfully and fully administers the program to the fullest extent of the law. During my questioning of the nominee to serve as our next U.S. Treasury Secretary, I sought and secured assurances that he agrees with the important role whistleblowers provide and that the IRS Whistleblower Office needs to fully implement the provisions of the law, not narrowly interpret them. The IRS needs to leverage our anti-fraud tools for public benefit so that hard-working taxpayers who play by the rules and pay their share aren't penalized for their honesty.

Q: Why do you support private debt collection for unpaid taxes?

A: It's a tale as old as time. Collecting taxes doesn't rank high among public opinion. And the IRS hasn't done itself any good with a history of mismanagement, lavish conferences, questionable bonus payments, a political targeting scandal and inertia within the IRS bureaucracy to improve customer service. By any measure, the IRS has its work cut out to restore public confidence and fulfill its mission to serve taxpayers, especially during tax filing season. At the same time, the tax gap persists. And that calls for the IRS to use the anti-fraud tools Congress has provided. That includes making the most use of the private debt collection programfor unpaid taxes that are not in dispute by the taxpayer. According to the Government Accountability Office (GAO), the IRS has more than $130 billion of debt on its books. This so-called inactive debt is sitting in limbo until a ten-year window of enforcement closes the collection window for good. By refusing to release inactive debt for the private debt collection program, the IRS is kissing unpaid, overdue taxes goodbye. Instead of goingdeeper into debt to make up the difference, let's collect the taxes already owed under current law and without spending more tax dollars to collect it. Importantly, the private debt collection program upholds the integrity of taxpayer privacy and rights I have worked hard to maintain and strengthen throughout my years legislating tax policy. Firewalls are in place to protect taxpayers. First, taxpayers would be notified by mail that their outstanding debt has been turned over to a private debt collection company. Second, all payments are required to be processed directly by the IRS, not through third parties. The private debt collection program is another tool for the IRS to collect taxes that are owed and not in dispute. As of July 2015, unpaid taxes reached $380 billion, according to the GAO. What's more, the Joint Committee on Taxation estimates that private collection efforts would recoup $2.4 billion by 2025. What should be inconceivable to the taxpaying public is that the IRS is choosing to allow uncollected revenue to languish in perpetuity. I'm glad Treasury Secretary nominee Steven Mnuchin and I see eye to eye on these important tools to collect unpaid taxes.



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