Consumer Fraud

IRS Whistleblower Program Shows Signs of Dramatic Improvement in 2016

IRS tax law whistleblower Flickr 315x210 IRS Whistleblower Program Shows Signs of Dramatic Improvement in 2016The IRS Whistleblower Office has never enjoyed the reputation of being an efficient, effective, and productive operation, but its 2016 Annual Report to Congress shows some encouraging signs that things may be getting more whistleblower friendly in the nation’s least-loved federal agency.

According to the report, the IRS’s Whistleblower Office paid out 418 awards to whistleblowers last year. That means fiscal year 2016 ended with a 322 percent increase in the number of whistleblower awards from 2015, in which only 99 awards were paid out. The number of claims also went up 6.4 percent since 2015 and the number of case closures increased 99 percent.

Awards paid by the IRS to whistleblowers in 2016 totaled $61 million – a drop in 2015’s total awards, but not a significant enough decline to keep IRS Whistleblower Office director Lee Martin from sounding upbeat about the value of whistleblowers to U.S. taxpayers.

“Whistleblowers have helped the IRS detect and deter tax noncompliance and avoidance, helping to protect both the nation’s revenue collection and the integrity of our voluntary compliance tax system. Indeed, since 2007, information submitted by whistleblowers has assisted the IRS in collecting $3.4 billion in revenue, and, in turn, the IRS has approved more than $465 million in monetary awards to whistleblowers.”

2016’s figures indicate the IRS’s whistleblower program is getting healthier and growing more teeth, thanks in part to pressure from other federal authorities.

Prodded by the Government Accountability Office and Treasury Inspector General for Tax Administration to tighten its act, the IRS has successfully eliminated its notorious backlog of whistleblower claims and implemented a more streamlined process that will help it avoid a future logjam of tips – an improvement that gives whistleblowers more incentive to report tax fraud.

“Whistleblowers have helped the IRS recover $3.4 billion that otherwise would have been lost to fraud. Cracking down on big-dollar tax fraud is a matter of fairness to the vast majority of taxpayers who pay what they owe,” Sen. Chuck Grassley, a whistleblower advocate, said in a Jan. 12 statement.

“Still, the IRS and Congress can’t rest on our laurels. The IRS still is not as fast it could be in considering whistleblower information,” Sen. Grassley added. “Whistleblowers often have put their livelihoods on the line to come forward, and they deserve timely answers from the IRS. Another challenge is making sure the IRS interprets the whistleblower statute in a favorable light toward whistleblowers, which it doesn’t always do.”

A more responsive and cooperative IRS whistleblower office will likely boost incentives for whistleblowers, who often put their careers and reputations on the line, to step forward, and that is bad news to tax cheaters.

Internal Revenue Service’s 2016 Annual Report to Congress