Statistics in the Internal Revenue Service’s annual
report to Congress on the IRS whistleblower program for fiscal year 2012 reflect
whistleblowers’ frustration with the IRS.
In FY 2012, only 332 whistleblowers submitted information
about tax violations exceeding $2 million – the threshold for the reward
program. That is down from a high of 472 in FY 2009. As Sen. Chuck Grassley(R-IA) noted, “. . . the delay in awards and the way the IRS treats
whistleblowers might be contributing to the leveling off of whistleblower cases.”
Only five claims have been paid under the tax
whistleblower program Congress created in 2006, the report said. The program
promises whistleblowers rewards of 15 percent to 25 percent of what the IRS
collects based on their information when recoveries exceed $2 million. A Phillips
& Cohen client received one of the few tax whistleblower rewards made in FY2012 under the previous IRS whistleblower program, which limited rewards to a maximum of
$2 million.
By creating obstacles to whistleblower rewards and failing
to embrace the whistleblower program, the IRS is missing out on an opportunity
to narrow the $450 billion gap between what is owed in taxes every year, and
what is actually paid.
It is ultimately the taxpayers and the federal treasury
that will pay for this failure to foster a successful whistleblower
program. If the IRS would do more to give whistleblowers the confidence
to come forward, rather than make it increasingly difficult to receive rewards or
even information about their claims, then the IRS would make substantial
recoveries.
