Tuesday, October 2, 2012

Former IRS employee outs whistleblower

The arrest last week of former IRS employee Dennis Lerner stands out for a particular reason to Taxfraudblog.com: The government said he had revealed the identity of an IRS whistleblower.

Such a breach of whistleblower confidentiality by a government employee is unprecedented.  As Special Agent Robert O’Malley of the Office of the Treasury Inspector General for Tax Administration (TIGTA) said, “Any allegation of corruption, self-dealing, or inappropriate disclosure of confidential information is a potential violation of the public trust and could erode the public’s confidence in the American system of tax administration.”

Lerner was charged with breaching conflict of interest laws and illegally divulging privileged IRS information. 

He worked as an international examiner for the New York IRS office from 2010 to 2011, during which time he headed the audit of an international bank that was launched on the basis of whistleblower information regarding nearly $1 billion in unreported income.  Lerner left the IRS in the fall of 2011 and went to work for the same bank he had audited while at the IRS, which the New York Times reported was German Commerzbank.

While working for the bank, Lerner continued to unethically seek out information regarding the IRS investigation, and revealed the identity of the whistleblower to his new employer, violating IRS whistleblower confidentiality, according to the government.  

For more information on whistleblower protection and IRS whistleblower rules, see here