How the IRS went soft on the ultrawealthy and corporations

A former IRS agent says the agency gives a pass to corporate tax cheats and the super-rich when investigating possible tax crimes.

Today, On Point: How the IRS went soft on the ultrawealthy and corporations.

Michael Welu, former fraud enforcement advisor at the IRS. He retired in 2022 after more than two decades with the agency.

Spencer Woodman, reporter with the International Consortium of Investigative Journalists. His most recent piece is called “How the IRS went soft on billionaires and corporate tax cheats.”

Laura Brown, tax attorney in Rockland, Massachusetts who works with small businesses and self-employed clients.

Part I

DEBORAH BECKER: Many of us probably might be fearful if we got a call from the Internal Revenue Service. Last year, the IRS processed some 271 million tax returns and other forms.

But the agency is also responsible for looking into tax crimes and fraud, that can include those committed on any taxpayer, small business owner, large corporation or the ultra-wealthy. Now, the White House has pledged tens of billions of dollars to the IRS, much of it to strengthen tax enforcement on wealthy people and large corporations.

A new investigative report suggests that more resources, though, may not be enough to ensure that those with the most money aren't cheating on their taxes. That report raises questions about a possible class bias within the IRS. We want to start our conversation today with Michael Welu, who spent more than two decades working at the IRS as a fraud enforcement advisor.

He retired in 2022, and he says the biggest, richest businesses may not get anxious about a call from the IRS as regular taxpayers do. Michael, welcome to On Point.

MICHAEL WELU: Thank you.

BECKER: I wonder if we can start by explaining what your role was at the IRS before you retired in 2022.

WELU: I took a position back in '96 and the title has changed.

The title you gave was the last one we were called, but my job was to work in a cross functional capacity helping agents identify and develop cases that had elements of fraud. And it may turn out to be a criminal case, it may turn out to be just a civil case where there'd be larger penalties, but that was the primary focus of my job.

And it involved training and communicating with all the operating divisions.

BECKER: And would you say that you aggressively or your unit aggressively went after fraud?

WELU: Oh, yes. I worked in the, when we left, when I left, it was the office of fraud enforcement. And I'm going to ring my bell here for where I work, but you won't find a more dedicated, resourceful group of people within the organization.

Their job is very focused on that mission. And I think we're very effective, at least on some level. And when the program was reorganized, it got a lot more attention and people were very glad. Even the managers were glad to have us in most places.

BECKER: But you notice discrepancies in the way smaller businesses might be audited or reviewed by the IRS, and looked at for potential tax crimes, as opposed to large corporations and the ultra wealthy.

Can you explain?

WELU: Absolutely. And it hasn't changed. It used to be called large case. It was the same thing. It's just that I don't know whether it's culture. I think in the beginning it was culture. Prior to the Enron fiasco, and the government having a joint task force, where they could share information with other law enforcement agencies, it was nearly impossible.

And after that, it got better and then time went on and it just seemed we were inundated with policies and procedures that made it extremely difficult from my end, and it was much harder to change that culture.

BECKER: Can you just, so for those of us, many of us, probably most of us who haven't worked in the fraud unit of the IRS, give me a real concrete example of a policy or a procedure that you felt really stood in the way of you being able to go after a wealthy corporation, and how that might be different for a smaller, less wealthy taxpayer.

WELU: There's so many. I think if I had to pick one, the biggest one was a policy on a law that was enacted as part of the Affordable Care Act, regarding the economic substance doctrine. These kinds of schemes that are engineered or cooked up in large accounting firms and sold and marketed to the wealthiest people in the country.

That law was put in place and in my opinion would have put a significant dent in what they call the tax shelter industry. It was delayed and I think just recently they rescinded their policy on approval levels and that sort of thing. So that's probably the policy that, in my view, would have had the biggest impact on shutting down that industry.

I believe it certainly was Congress's intent, but I can list other, there's other things. Just procedurally how we gather information through the IDR process, the summons process and just in my opinion, over at LB&I, just difficulty because of the connections people have and the fear people have of being called out for basically doing their job.

BECKER: So let's say, LB&I is large business and international division, right? And basically, what that does is that looks at the large corporations. And I wonder though, how much of it, you said at the top that it wasn't necessarily culture that may have prevented folks from being more aggressive when it came to these large businesses and corporations.

But I wonder, obviously we're talking about very complex tax rules and laws and codes and also very sophisticated folks who know how to get around those taxes and tax rules. Do you look at it and you say, this will just take so many resources of this office that we can't commit to doing that.

So it's easier to focus on something that's much smaller and tends to be simpler.

WELU: That's a good point. And when it comes to resources, that definitely has an impact. I think it has more of an impact civilly. I believe when I look at some of these complex schemes, they're made complex intentionally.

They involve a series of steps that a business would never take. If it was just a normal business transaction, they're designed completely to evade tax. And no matter how you want to look at it, you can say it's technical and complex, but at the end of the day, it's got to pass the step transaction doctrine and the codification of the economic substance doctrine, is what we need to enforce. And it was prevented from being enforced for many years.

BECKER: And how was it prevented? Were you literally told you could not enforce this or what would happen if you did say, look, I think this is a problem.

There's a pattern here that shows that this is leading to or likely a crime.

WELU: It was much more subtle than that. When you put procedures in place that require levels of approval, basically at the top of the Office of Chief Counsel, makes it very difficult and it really sends a message. And if there's other ways of accomplishing things that make the case much more technical, that, in my opinion, protects the taxpayer, because we jumped down the rabbit hole exactly where they want us to go. They're prepared for arguments about things like transfer pricing issues and that sort of thing. That sends the message and the government has enough paperwork and approval levels for things. You don't have those kinds of approval levels in SPSC.

BECKER: Small business enforcement.

WELU: Correct. Issuing a summons is almost an everyday thing.

BECKER: For small businesses.

WELU: Yes, and large businesses. Everyone gets up on and everyone wants to know. Everyone wants their plate. And the larger the taxpayer, it seems the higher up the chain it goes.

BECKER: And would you literally, if you went to the top seeking approval to say, hey, look I think we need to really do more and investigate and enforce this. Would you literally not get that approval from the top so you couldn't go forward?

WELU: I wouldn't say directly from the top. It filters down. Sometimes we identify schemes that have already, will have a case that's participating in the scheme that's been identified at a high level, and they'll have what they used to call issue management teams.

And it is extremely difficult if you've got one case, that we really took the time to develop, and the agent did a great job. And these are things that typically don't get done when you have a issue management team involved, because they've already made a decision on how they're going to proceed. But you've got a case here that, in their view, may be viewed an outlier.

And they don't want you intervening in what they want to do, and they will not, they're not technically in the approval process, but if they're against it, it's very difficult to get a frontline manager to go up against that team and sign a referral.

BECKER: Do you think a lot of your colleagues felt the same way that you did, that it was difficult to go pursue some of these big cases for a variety of reasons?

WELU: Oh, absolutely. It's been a running joke in the organization that there's no fraud. It used to be called large case in large business. It's always been a running joke that there's no fraud up there and everyone laughs at it.

BECKER: And so — Go ahead.

Go ahead.

WELU: I don't even consider that part of the organization, the same place. It's a completely different set of rules, completely different culture. And it requires me to adapt and try to work with them in a way that you get cooperation, after 26 years of doing that job you lose your patience at some point.

BECKER: Is that why you retired?

WELU: It's not completely why I retired. I knew that someday I needed to retire and I planned for it my entire career. But I can tell you this, there were a few things in the hopper before I left that I just stuck around for, had we could have gone forward with. Because, if you do this job for 26 years and you almost feel you graduate to a level where, hey, we nearly need to go after the bigger and bigger stuff.

And I felt I was qualified to do that. I certainly was able to motivate agents to do it, the frontline agents to do it. But it was an exercise in frustration on nearly every case working with that operating division.

Part II

BECKER: I'd like to bring another voice into this conversation now. Spencer Woodman is a reporter with the International Consortium of Investigative Journalists. His most recent piece is titled, "How the IRS Went Soft on Billionaires and Corporate Tax Cheats." Spencer, welcome to On Point.

SPENCER WOODMAN: Thanks for having me.

BECKER: We heard a little bit from Michael about what he witnessed while working at the IRS. I'm wondering if you could put this in context for us and tell us, what you discovered in terms of the difference in the way the IRS treats smaller taxpayers, like small businesses, and large corporations and the ultra-wealthy.

WOODMAN: Sure. And just to put it in the greater context, Joe Biden, both as a candidate and as president, has repeatedly promised to use this new money for the IRS, these tens of billions of dollars, to go after high end tax evasion, that's tax crimes by billionaires and large corporations.

This story looks at what additional might need to be done in terms of getting the IRS to a point where it really can fulfill that pledge, in addition to just throwing this money at it. So as Mike noted, there's a series of additional things that might need to happen.

So there are different rules. There are literally different rules for the agents at the IRS who audit billionaires and large corporations, that are friendlier to that tier of taxpayer getting audited.

BECKER: But I wonder if you could just explain the problem in context first, so our listeners understand.

We heard from Michael. We heard him say that he noticed a real discrepancy here between small businesses and large corporations. And he talked about some of the reasons for that. But when you look at data, what does it suggest? What do these discrepancies suggest in terms of different tiers of taxpayers?

And how much money is at stake here? How much might the country be losing out on potential tax dollars, because this fraud is not addressed?

WOODMAN: Yeah. So by the Treasury Department, which is the IRS's parent agency, by that agency's own estimate, the wealthiest people and the largest corporations commit an outsized share of tax evasion. The Treasury Department, for instance, estimates that the top 1% of taxpayers commit something like 28% of all tax evasion. That amounts annually to $163 billion of lost revenue for the government.

BECKER: And so what about this agency where Michael works, the Large Business and International Division, and it's charge to go after some of this money and why it's not being done. Can you tell us what you discovered and what you think, what are some of the reasons why it isn't being pursued as aggressively as it might be?

WOODMAN: Sure. Maybe at the biggest level we can talk a little bit about culture. I had various people familiar with that operating division tell me that there is a belief among high ranks at the IRS that large corporations and billionaires just don't really commit tax crimes.

BECKER: They don't commit them at all?

WOODMAN: That they don't commit them to nearly any scale that small businesses do. And I said, huh, that's a really interesting perspective. So I spent a few months learning more about it. And when I actually reached out to the IRS to ask them for a statement, they confirmed it to some extent.

They said that because of the kind of checks and balances and the independent accountants that audit their books, large corporations, in the IRS's own words, have a limited ability to commit crimes. I'm not sure if the IRS has ever said that publicly before.

I think that may have been the first time, and that was really interesting for me to see. Because at least the IRS's position on this is publicly stated now, so it can start the conversation. Also, from just a purely kind of office culture standpoint, that apparent belief at the IRS has manifested itself in agents telling me that they don't feel supported in flagging possible crimes among the wealthiest taxpayers.

There's an attitude that all of this stuff can be worked out civilly. That means, if you're a billionaire or a large corporation and you've evaded or avoided tons of tax, you can be audited. And the worst that happens in almost every case is that you're forced to pay back the amount you were supposed to pay in the first place, plus a civil fine.

That all happens behind closed doors. So there's no reputational issue. And then you're done. And you can go back to repeat offending, because you have near certainty that your case is not going to be elevated to criminal investigators by the people auditing you. And this is if you're a billionaire or a large corporation.

So the cost of evading taxes massively is perceived by these taxpayers as just not that great. Whereas small businesses, and we can see this in the data that we reported in this story, small businesses get referred to criminal investigators all the time. So just to run through the statistics, we saw that in the past five years, large corporations and billionaires, the auditors that audit that class of taxpayer, sent their criminal investigators at the IRS no more than 22 reports of possible crimes.

Whereas the small business division at the IRS sent their criminal investigators 8 reports of possible crimes to investigate further.

BECKER: 22, as opposed to 848 and that's an accurate comparison, you would say, between these two offices and what we're talking about, you could make that comparison to show that there's a huge discrepancy in the number of small businesses, as opposed to the number of large businesses that the IRS is actually reviewing.

WOODMAN: The IRS pushed back against us highlighting this number, saying that it was misleading partially because large corporations, they say, have these independent auditors and stuff like that, that reduces their ability to commit crimes. From our perspective, it's interesting because the ICIJ, the International Consortium of Investigative Journalists, where I work, we report on white collar crime. And we've been reporting on accounting scandals for many years at this point.

And we have seen many instances of large corporations committing crimes, and in many cases, these external auditors getting them in trouble. And those auditors committing crimes and drawing their clients into criminal proceedings. And in some cases, over tax evasion and stuff like that.

I think the most important kind of metric is that 22 criminal referrals over five years. By any standard, it's a low number. According to almost everyone I spoke with, the small business division does deal with easier cases, but their cases are involving much, much smaller dollars. That, in many cases, criminal investigators don't really want to mess with a three-person restaurant that maybe has been dealing inappropriately in cash or whatever. Because the government actually doesn't get much out of that case.

There are some legitimate reasons for that discrepancy in numbers. But, according to quite a number of people close to this division, it's also pointing to some concerning, both kind of cultural and procedural elements.

BECKER: I want to say that the IRS did decline On Point's request to talk about this.

But I want to go back to Michael for a moment. And Michael, when you hear these numbers, and maybe you knew them already, but when you hear 22 instances of possible tax crimes flagged by your division in five years and that compared to 848 for small businesses. What's your initial reaction to those numbers?

WELU: The idea that they have internal control procedures to prevent the company for committing tax crimes, I think is an outrageous one. And there's examples of where audit committees have shut those procedures down, because they didn't like what they hear. That's in public record.

As far as the numbers go, I'd be curious to know the size of the companies that relate to those referrals. I suspect they're still relatively small with respect to large business and international. They could be officers or shareholders that didn't file the tax return, that sort of thing. I, like I said, I believe that the numbers should be much higher. And if they need to focus on the companies that sold them these schemes, cause that's where the impact comes, right?

If you've got a large accounting firm marketing a scheme, they're going to impact many large businesses. So of course, the numbers are small. No one believes that, and if the person that wrote it does believe it, they're just not paying attention.

BECKER: I wonder how much of this is having enough expertise in the office to deal with really complicated tax cases like this. I wonder, Michael what would you say?

Because I would imagine that the private sector is going to want to recruit a lot of IRS agents who will know the tax code and know how these things work and have them work on their side to try to prevent that from happening. I wonder how much of that might be going on here.

And what's the result of that? Michael, I'd like to ask you that first and then Spencer, I wonder what you found out about that in a larger context.

WELU: I don't, as far as they wanting to recruit our people, if that's happening, it's probably at the executive level. Expertise is one thing and there are technical issues.

There are lots of that, right? Because that's how the scheme is designed, to be very complex, lots of paperwork, lots of usually self-serving documents, signed by the parent company and the subsidiary company, but when you boil it all down in the end, it makes no economic sense. Most of these make no economic sense, and there's laws against that.

And, we've had a good period of time now with the law on the books that we've really not pursued and gotten the experience through court filings. So our attorneys are, I believe at some point, they're going to get up to speed on this stuff, but a lot of road behind us where we could have went forward.

BECKER: Spencer, what do you say?

WOODMAN: In terms of the recruitment question, the IRS is in a difficult position right now because it has been underfunded for now, and it has lost a lot of staff and a lot of important staff through attrition. So a lot of its institutional knowledge has walked out the door over the past decade.

It is also competing against the big four accounting firms and the major tax law firms, and the tax law divisions in the major corporate law firms around the country. These firms offer their employees some of the best salaries imaginable. And the IRS has to follow federal pay schedules.

So the IRS is actually trying to recruit from these companies, and it's not easy. It also, and experts basically agree, the IRS needs to bring in this talent from the private sector in order to stand up to the private sector. But then it creates this issue, this kind of additional issue of ethics and propriety around what's known as the revolving door, where you know a person will come in from a big accounting firm or a big law firm to the IRS.

And then all of a sudden, that person is working on cases that may be related to their private sector work, which brings in questions of impartiality and potentially, they're going up against, at the IRS, they're going up against their former friends, at a big accounting firm or a big law firm.

So that's where people like Elizabeth Warren are coming in and saying, we need stronger ethics, rules to ensure that conflicts of interest don't exist, both in the IRS and across the government.

So there's a section in our story from last week about this revolving door issue.

There are lots of concerns about high level executives at the IRS who have cycled in and out of major accounting firms and major law firms, who are making really important decisions in some cases on the sort of tax shelter activity by large corporations, of a kind that they actually worked on in the private sector.

And it's really hard to be able to sort out, are those people talking to folks on the other side who they know well, who they're friends with? So there's a lot of concern about that, and there's also this kind of inevitability to the problem right now, given the IRS's hiring spree, which is absolutely necessary for it to fulfill its function.

Part III

BECKER: Laura Brown is a tax attorney in Rockland, Massachusetts. She says she's seeing an increase in IRS audits of small businesses. Her phone is ringing off the hook.

LAURA BROWN: Sometimes small business owners take on more than they should and they fail to delegate, because they can be controlling freaks and that's why they're very successful.

For example, manufacturing, a plumber, an electrician, marketing, they're excellent at their job. They make a lot of money at it, but they are terrible at paperwork.

BECKER: Laura has been a tax attorney for 30 years. She says many clients come to her after they get a letter from the IRS saying that they are being audited.

BROWN: Everyone asks, Am I gonna go to jail? IRS wants two things always, paper or money. They don't want you to go to jail. If you're in jail, you're not making money and you're not paying taxes. If you're really bad, of course, they're going to toss you in jail. But typically an audit is a civil audit. Now, the thing that can get bad is if your tax return does not match your deposits. If there is a deviation of more than 25%, the IRS can call that civil fraud and they can audit you going back six years.

And an audit can be stressful and time consuming.

BECKER: Laura says a business owner might have to get bank records or track down old receipts, among other things. And in Laura's view, some IRS auditors are fair, but others, not so much. She'd like to see the IRS go a little easier on small businesses.

BROWN: I think they think all small business owners are constantly cheating, lying, writing off things they're not supposed to be writing off, and they don't appreciate how hard small business owners work.

I'm a small business owner myself. It's a lot of work. And they think that all you can do is don't claim income, write off everything and laugh all the way to the bank, and that's not true. A lot of small business owners don't have retirement funds, are robbing Peter to pay Paul, enjoying not having a boss, but, it can be a cost not having a boss too.

BECKER: That's Laura Brown, a tax attorney in Massachusetts who represents small businesses owners audited by the IRS. We're talking about this alleged class bias with Michael Welu, who's a former fraud enforcement advisor at the IRS and Spencer Woodman, who's a reporter with the International Consortium of Investigative Journalists.

And I wonder, Michael, I'd like to start with you, when you hear those comments from Laura, who says she really feels that there's a level of distrust almost of small businesses, and that's why they are being targeted more often than large businesses and the wealthy. What do you say to that?

WELU: I grew up in a family business, so I can appreciate the things she has to say.

And she's right. People are bad with paperwork. But if it's a case that rises to the level of where I would have gotten involved, I always consider it an extremely serious matter. And that's why we have specialists that help agents and train agents to determine whether we have a case or not.

As far as a bias, the data probably speaks for itself. I'm not aware, I'm not involved in how cases get assigned. But historically, agents are people too. They, if you work a tax intensive business, there's going to be audit techniques that are different than if it's not a cash intensive business, agents have a lot of work to do.

To be biased or have an agenda, I can't say that I've seen that, at least on any wide scale basis. You may have individuals that need to be kept in check. And I think we have systems in place to do that. But --

BECKER: Yeah. So this class bias, though, that we're talking about this seeming reluctance to go after wealthier taxpayers and large corporations.

You're not suggesting that it's something nefarious here, really, there's a lot of factors contributing to these numbers that we heard from Spencer, that there are far fewer reviews of wealthy taxpayers than there are of some of these small businesses.

WELU: Regarding whether I think it's nefarious.

Let's put it this way. I have a certain level of professional skepticism that I feel is warranted. And when I see policies put in place that prevent us from doing things that I believe Congress wanted us to do, I have to raise my eyebrow at that. And if you think it's either, I guess it could be nefarious.

I have no direct evidence of that, but it sure is suspicious to me. And I think it should be suspicious to everybody. We're a regulator. We're supposed to be independent. And I have to wonder why we have such egregious policies. And I do think on some level it's fear and intimidation. And we've got so many new agents and we've lost so much institutional knowledge.

We've got people that just don't have the spine to do the job sometimes. I helped with that. And I've been very fortunate in that I've come across people that just get out of training out of LB&I and their case crosses my desk and they're completely changed. But I have practically 35 years of experience and I've seen everything happen, good and bad.

BECKER: So I wanna talk about the $80 billion that was added in funding to the IRS. This was part of the Inflation Reduction Act. It passed in 2022, focused really on, according to President Biden, on enforcing tax compliance by the wealthy. And we actually have a piece of tape from President Biden speaking about the act at the bill signing.

Let's listen.

JOE BIDEN: We're gonna cut the deficit point out by another $300 billion with the inflation Reduction Act over the next decade. We're cutting deficits to fight inflation by having the wealthy and big corporations finally begin to pay part of their fair share. Big corporations will now pay a minimum of 15% tax instead of five, 55 of them got away with paying $0 in federal income tax on $40 billion dollars in profits.

BECKER: Spencer Woodman, I wonder, this $80 billion that's going to the IRS, ostensibly to focus on enforcing tax compliance by the wealthy, what are we seeing from this so far? And, Michael, I'm going to ask you, too, if you think that's going to help, but is money enough here to deal with some of these issues?

What are you finding?

WOODMAN: Experts agree that it's going to take quite a few years for the IRS to implement the changes it needs to make now that it has enough money to make these changes. It's also worth noting that the IRS and Democrats on Capitol Hill are fighting to keep this money, that there have been yearly fights in the House and the Senate between Democrats and Republicans, the latter of which want to take, claw back this $80 billion. So there are a lot of, because this money is under threat, it's kind of a sensitive topic on Capitol Hill. To your question about what else might need to happen, again, we all know that just throwing money at a problem doesn't always fix it.

People I've spoken with say, look, this money is necessary. The agency was starved, but there needs to be more than just the money. Michael was just speaking to some cultural factors. And I could, quickly just drill down on some of the actual differences in rules, between the large business division and the small business division, that I think are really striking. Because in a lot of cases, people will talk about the wealthy playing by a different set of rules in an unlevel playing field.

And this is, and that's often-figurative speech. This is actual literal different rules that the wealthy play by in IRS audits. As Mike alluded to earlier, there is, one of the most important things IRS agents do is collect information about the people under audit.

That information is collected through either voluntary, these kind of more voluntary requests for information, and then there are things called summonses, which you can think of as the civil equivalent of a subpoena, where you get a legally bind, you get served a legally binding demand for information.

For the small business division, sends summonses out constantly. They do it without thinking twice. And this is according to both people within the IRS and people and attorneys in the private bar who represent both people in proceedings with the large business division and the small business division.

The large business division much more rarely sends out summonses. There is both from the reporting I did, a cultural kind of aversion to sending out summonses. Getting a summons, a legally binding demand for information upsets corporations and billionaires.

And it upsets anyone. There is this kind of what's been described as a fear of upsetting these people, by sending them a summons. In one case, an agent was forced by management to apologize to the lawyers representing a billionaire for even mentioning that agent might send that person a summons, because they weren't compliant.

And just to very quickly describe the rules behind this. In the small business division, there are fewer constraints on sending summons is than in the large business division. In the large business division, you have to take a number of steps and essentially, run your request to send a summons up the flagpole to a level of management that a lot of agents consider stratospherically high.

BECKER: I wonder though, isn't that because if you're going to serve a summons to a large corporation, they likely have a very strong legal team, right? Michael, I wonder if you could weigh in on this. Is that a factor when you're saying, this summons could be a big headache.

We better make sure everything is ready to go here and try to anticipate any challenges so we can defend it. I would assume.

WELU: Oh, I would agree. And, yeah, when you got someone that's lawyered up, no matter who they are, you want to make sure you dot your I's and cross your T's. And if they're complex issues, I frequently would bring in some LB&I attorney.

For a number of reasons, but I would bring them in if I was giving advice or at least run the summons by them for the proper wording and that sort of thing. But the biggest hindrance were procedural and cultural.

BECKER: So what do you say about this $80 billion from the Inflation Reduction Act that passed in 2022?

Is that more resources going to help or not really?

WELU: Look, resources always going to help. I can give an example. There was a large case team of 35 people, full time, on one case, for years. They're down to one, one agent on that case. It's not even their only case.

That's where we're at. So obviously you need resources. And, when you're doing a fraud case, one of the things I used to tell at all my talks, a fraud case is going to interfere. It's going to interfere and upset every program goal we have, time on case, cycle time, all that stuff.

It's going to take more time. It's just the nature of the game, but it's something that needs to be done. And Spencer, what do you think that this influx of billions of dollars is going to do to help address this problem, particularly if you do have a culture and a fear and certain apprehension that you're going up against a huge adversary here and you got to make sure that you know exactly how you're going to prepare for that fight. What's the money going to do for the IRS?

WOODMAN: I think the money is going to do a lot. It's going to give them the resources to pursue more cases. And these are time intensive, fact intensive, difficult cases to make.

You need attorneys, you need accountants, you need economists. You need to begin to match the firepower of the other side, which is very considerable. You also, you need a willingness to, in some cases, when a taxpayer becomes noncompliant, really play hardball and maybe have the backing from management to send a summons and do things like that.

The new money, it's being allocated to a bunch of different pretty, what could be pretty groundbreaking initiatives, including a new unit that is going to start examining and ramping up enforcement in what are called large partnerships, which are essentially the structure of big Wall Street investment firms that have become very complex and opaque, and that the IRS is going to begin to crack.

BECKER: Last 20 seconds. I want to give the last word to Michael here. Michael, do you think that this will help with the culture problem that you witnessed while you were at the IRS?

WELU: I think it will help, provided they give more authority to the Office of Fraud Enforcement. That's what I'm going to say. I think they need to be involved more in these schemes.

It really depends, that's the division that keeps the fraud program alive.