In 2006 Congress created a whistleblower program in order to incentivize people to blow the whistle on companies who evade taxes. If the tipsters claims are warranted by the IRS, the whistle blowers are awarded a percentage of what the IRS collects from the company. Unfortunately, this program has become a graveyard for allegations of tax avoidance.
More than 1300 claims have been filed over the past 5 years, and only three awards have been paid out. It’s clear that the IRS has no problem attracting whistle blowers, rather it has a problem with processing and handling the claims. The investigations can take years and the current underfunding that the IRS is faced with does not contribute to the productivity of the program. It is feared that the programs unsuccessful track record will eventually deter tipsters from coming forward. The IRS is also concerned with being perceived by Congress as heavy handedly enforcing itself.
IRS officials haven’t denied that the program is failing to meet expectations. Rather, it is admittedly “working hard” to make improvements in order to see the program be as effective as possible. IRS officials have said that they are reluctant to follow up with whistle blowers as often as they’d like for fear of violating strict laws that attempt to protect taxpayer privacy. The IRS has also let it be known that successful whistle blowers can wait up to seven years before receiving their reward.
There are only 35 members in the IRS whistleblower office and a lot of the work is handed off to IRS auditors, 500 of whom were laid off over the past year. There are also sentiments amongst IRS officials that perusing every whistle blower case is an inefficient use of IRS resources.
The money collected from successful whistle blower investigations could be used to lessen the national debt, increase the IRS budget and even refund other taxpayers. It’s clear that the IRS needs to find a solution in order to bring this program to its intended potential.
If you or your company is being investigated by the IRS, contact JG Tax Group today to discuss your rights as a U.S. Taxpayer.
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