Thursday, June 21, 2012
Six years after Congress authorized a new incentive program for tax whistleblowers, the Internal Revenue Service (IRS) has paid less than a handful of awards to those exposing tax cheats. The result has been demoralizing for whistleblowers, according to one U.S. senator.
Lawmakers approved the IRS whistleblower program in 2006, providing informers with rewards that can be as much as 30% of what the government recovers from their tips.
More than 1,300 claims have been filed in the last five years against almost 10,000 companies and individuals. But the IRS has paid only three awards.
Senator Charles Grassley (R-Iowa), who sponsored the whistleblower law, said the IRS is “demoralizing whistle-blowers.” He told Treasury Secretary Timothy Geithner in a letter: “The IRS does not have a problem attracting whistle-blowers. The IRS’s current problem is processing and compensating whistle-blowers in a timely manner,” adding that he’s “concerned that whistle-blowers will stop coming forward.”
One tax expert, Bryan Skarlatos, a tax-litigation lawyer at Kostelanetz & Fink LLP, told Bloomberg News that the IRS may be reluctant to aggressively pursue whistleblower tips because it’s afraid lawmakers will accuse the agency of heavy-handed enforcement.
Meanwhile, the IRS whistleblower unit contains only 35 staff members, who are forced to rely on already overworked auditors to pursue the leads. Because of budget cuts, the number of IRS agents and revenue officers actually declined last year.
-Noel Brinkerhoff
To Learn More:
IRS Resists Whistle-Blowers Despite Wide U.S. Tax Gap (By Jesse Drucker and Peter S. Green, Bloomberg News)
Whistleblower - Informant Award (Internal Revenue Service)
Whistleblower Sues IRS for Non-Payment (by Noel Brinkerhoff, AllGov)
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