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.
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.