IRS Whistleblower Program Pays $315 Million in Awards!
The National Whistleblowers Center issued a press release yesterday extolling the virtues of the IRS’ Whistleblower Program. According to a just released GAO report, the IRS program has paid over 500 awards since 2011. Those awards exceed $315 million. On the same day, Accounting Today’s headline read, “Problems Widespread in IRS Whistleblower Program.” Their story opens with this quote, “The Internal Revenue Service’s whistleblower program is plagued by delays, vague procedures, overpayments and underpayments, according to a new government report.”
So who is right? Is the IRS whistleblower program a smashing success or disappointing failure?
Both are correct. I hate “splitting the baby,” but in this case, a mixed review is warranted.
As I have written before, the IRS whistleblower program got off to a very slow start. People within the agency hated in. I suspect many still do.
In our opinion, the blame falls on the doorstep of the IRS Chief Counsel’s Office. Although Congress breathed new life into the program almost a decade ago, in 2010 top managers within the Service were still publicly taking shots at the program.
Former IRS Chief Counsel Donald Korb said,
“The new whistleblower provisions Congress enacted a couple of years ago have the potential to be a real disaster for the tax system. I believe that it is unseemly in this country to encourage people to turn in their neighbors and employers to the IRS as contemplated by this particular program. The IRS didn’t ask for these rules; they were forced on it by Congress. What’s going to happen is at some point, there will be some huge scandal with the program that becomes front-page news. For example, a tax director of a big company becomes dissatisfied with the company and during the course of an audit feeds the IRS information on the side. It’s a ticking time bomb.”
Luckily, the head of the IRS Whistleblower Office is a true believer and his efforts are starting to gain traction. Folks in the Criminal Investigations Division have also been supporters.
The good news is that awards are finally starting to come out of the program. For the first several years there were thousands of tips but no rewards. That is changing. $315 million in awards over 4 years is a very good start. (Last year the Justice Department handed out $435 million in awards under the False Claims Act, a different whistleblower award program.)
The bad news is the program appears badly managed according to the Government Accountability Office report. Inadequate tracking, poor communication and excessive delays in getting awards out. The problems are magnified because of IRS confidentiality rules.
Because tax return information is protected by law, whistleblowers are already limited in what information they can receive. Couple that with poor claims tracking and internal communication issues and whistleblowers feel like the program is a giant black hole. A one way street where information enters but there is seemingly no feedback or money coming back.
A key element of the GAO report is the lack of anti-retaliation provisions. That fault lies with Congress and the administration, not with the IRS. Both the SEC whistleblower program and the False Claims Act have robust anti-retaliation provisions. The IRS program has none.
Overall, we are happy with the progress made by the IRS since 2011 and certainly since the program was launched in 2007. In the words of Senator Chuck Grassley, the patron saint of whistleblowers, “We all need to make sure the IRS puts out a welcome mat for whistleblowers.”
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Thinking about becoming a whistleblower? We have helped our clients receive over $100 million in awards. For more information about the IRS whistleblower program, visit our information page or contact us directly. The author of this post, attorney Brian Mahany can be reached at or by telephone at (414) 704-6731 (direct).
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