The Internal Revenue Service views enforcement of the tax laws as a means of fostering public confidence in the federal tax system, and publicity of its enforcement efforts as “provid[ing] a deterrent effect that enhances voluntary compliance.”1 In light of the importance of deterrence to tax enforcement, it is not surprising that, in the weeks leading up to April 15 each year, the IRS issues a disproportionately large number of press releases describing its enforcement successes, the “top ten” or “dirty dozen”2 tax scams of which taxpayers should beware, and its statistical analysis for the prior tax year. The IRS’s timing has long been perceived as an attempt to leverage its enforcement successes to enhance tax compliance.3
During the 2008 presidential campaign, candidate Barack Obama promised not to raise taxes on people making less than $250,000 a year. As President Obama struggles to keep this promise amidst a delicate economic recovery, increased enforcement has become a focal point of tax policy. Increasing pursuit of offshore tax havens and the country’s wealthiest individuals and corporations is not just smart politics. History suggests it is also good policy. Thus, while the Internal Revenue Service may be unpopular with the public at large, the maxim “you need to spend money to make money” has added significance in the area of tax enforcement.
Statistics for Fiscal Year 2009
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