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GAO Releases Report on IRS Whistleblower Office |
Washington, D.C. September 9, 2011. Today, the Government Accountability Office (GAO) released a report on the IRS whistleblower program. The IRS whistleblower program was created to help the IRS collect an estimated $345 billion yearly in unpaid taxes. Since 2007, over 1,300 whistleblowers have filed claims with the IRS Whistleblower Office alleging tax fraud (in excess of $2 million) against 9,540 "taxpayers." The IRS is still investigating 8,254 (86.5%) "taxpayers" for tax fraud.
The GAO found that whistleblower claims take years to go through
the IRS review and award determination process. For example,
approximately 66% of claims submitted during 2007 and 2008 are still in
process. The GAO also concluded that the IRS lacks the data necessary to
"assess the efficiency of current processes and evaluate potential
improvements."
The GAO explains that the goal of the IRS whistleblower program is "to
encourage whistleblowers to come forward with information on substantial
tax underreporting that, collectively, could help IRS reduce the tax
gap and encourage greater voluntary compliance" and in order for the IRS
to reach that goal "whistleblowers need to have confidence in the
program's processes and outcomes."
The GAO recommended the IRS take eight actions to improve the
effectiveness of the whistleblower program including, redesigning the
whistleblower form, properly tracking claims, and developing targets for
how long reviews should take.
Dean Zerbe, Special Counsel of the National Whistleblowers Center (NWC) issued the following statement:
The GAO report makes it official: the IRS whistleblower program is a
winner. The GAO numbers and analysis show clearly that the IRS is
getting in a host of claims from whistleblowers that are well-grounded
and have already led to significant recovery of taxes. It was good to
see, although not surprising, that the vast number of whistleblower
claims being submitted are receiving active consideration by the IRS.
The IRS whistleblower program is the skeleton key that the IRS needs for
unlocking the door on tax fraud. It is a credit to the IRS senior
leadership and the IRS Whistleblower office that good progress has been
made with the new law - but more can be done to make the program even
better. GAO has done a good job of highlighting a number of issues that
are holding the whistleblower program back. For the benefit of everyone
who dutifully pays their taxes, leaders at IRS and Treasury need to make
certain that the whistleblower office has the resources to do the job
and that the IRS makes the changes put forward by GAO.
It is very concerning that the GAO report highlights about a dozen times
during the process when an IRS employee can deny a whistleblower claim
and not once in the process can the IRS whistleblower office appeal that
denial when it disagrees. The IRS will do a better job of going after
tax cheats if good whistleblower claims are given open and full
consideration - and not subject to a rubber stamp denial. The GAO report
is exactly right when it highlights the need for the IRS to find a path
to improving communication with whistleblowers. The failure to
communicate with the whistleblower is putting sand in the gears and
discouraging good whistleblowers. The GAO report showcases many best
practices from other federal and state agencies that the IRS should look
hard at adopting. It is readily apparent from looking at best practices
of other federal and state agencies that much more can be done by the
IRS to harness the knowledge and energy of whistleblowers and their
attorneys in going after large dollar tax fraud and tax shelters. The
good news from the GAO report is that the IRS whistleblower program is a
success, and the better news is that there are many steps the IRS can
take today to make it an even bigger success.
Stephen M. Kohn, NWC Executive Director, issued the following statement:
Justice delayed is justice denied. The GAO is absolutely correct that in
order for the IRS whistleblower program to be successful,
whistleblowers need to have confidence that their claim will be handled
properly and in a timely manner.
The U.S. government cannot recover $345 billion a year in unpaid taxes
without the help of whistleblowers. Expeditiously adjudicating
whistleblower cases and paying the maximum awards is key to
demonstrating that the federal government is serious about cracking down
on large scale tax cheats who are bankrupting the U.S. treasury.
We support each of the eight GAO recommendations and hope that the IRS makes these changes its highest priority.
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