The whistleblower program was enacted to help the government find tax evaders by offering a portion of the recovered taxes to people who report the illicit activities. Unfortunately, I doubt many people will be willing to blow the whistle after hearing this report.
According to reports, the IRS has not paid out rewards to any informants for the past three years. The federal agency has also delayed payments of awards from an older, less generous whistleblower program until the accused evaders have had ample time to appeal their cases.
The tax agency has come under pressure to pay rewards from lawmakers including Iowa Senator Charles Grassley, a Republican who championed the more generous rewards, and a growing industry of law firms that represent whistleblowers.
“Failure to provide whistleblowers awards is seriously jeopardizing the success of the program,” said Dean Zerbe, a former Grassley staffer who helped write the law and now helps people make claims. He also is a special counsel for the National Whistleblower Center, a Washington advocacy group. “The administration cannot be serious about fighting tax evasion and the tax gap if it doesn’t ensure the success of the whistleblower program.”
Congress changed the IRS whistleblower program in 2006 to make it easier for informants to collect rewards of 15 percent to 30 percent of taxes collected as a result of the information they provided.
Tips Pouring In
Since then, tips have poured in. Steve Whitlock, the director of the IRS’s Whistleblower Office, told an audience of about 200 lawyers, investigators and government officials at a Miami Beach conference on offshore banking in May that his office receives 40 to 50 tips a month alleging tax liability in excess of $2 million. Americans submit another 200 tips a month alleging smaller violations, he said.