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Improvements Needed To IRS Whistleblower Program

by Scott Hamilton, Tax-News.com, Washington

26 October 2016


The US Internal Revenue Service (IRS) Whistleblower Program can be a powerful tool for producing additional tax revenue, but needs improvements, according to a new report issued by the Treasury Inspector General for Tax Administration (TIGTA).

The US tax code authorizes the IRS to pay monetary awards to whistleblowers for information leading to the detection of underpayments of tax or bringing to trial and punishment persons guilty of violating tax laws. However, TIGTA has noted that whistleblowers and members of the US Congress continue to express concerns with the operation of the program.

In its review, TIGTA found that the Whistleblower Program has helped the IRS collect significant amounts of revenue by facilitating the reporting of violations of the tax laws that may otherwise go unidentified. From Fiscal Year 2011 through February 2016, the IRS collected more than USD2bn because of information that whistleblowers provided.

However, TIGTA found that the Whistleblower Office does not have appropriate controls in place to allow for sufficient oversight of claims processing, and whistleblowers are not always contacted to clarify allegations. Improvements are needed to monitor the timeliness of whistleblower claims processing and ensure that program decisions are properly supported.

"The IRS Whistleblower Program plays an important role in reducing the Tax Gap by providing an avenue for reporting tax evasion," said Russell George, the Inspector General. "It is important for the IRS to make every effort to implement controls to ensure the consistent, appropriate, and expeditious processing of whistleblower claims."

Chuck Grassley (R – Iowa), Chairman of the US Senate Judiciary Committee and former Finance Committee Chairman, praised the improvements to the Whistleblower Program, but confirmed that "the IRS should implement all of the recommendations" in the TIGTA report.

He noted that "the report said the whistleblower office helps reduce the estimated USD406bn tax gap between taxes owed and paid on time, … [but] the IRS sometimes isn't getting in touch with whistleblowers for clarification, and that could leave valuable information off the table."

TAGS: compliance | tax | tax compliance | law | Internal Revenue Service (IRS) | tax authority | United States | Tax | Tax Evasion

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