On October 4, Senator Ron Wyden (D-OR), Chair of the Senate Finance Committee, sent a letter to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig outlining his priorities for the increased funding for the Internal Revenue Service (IRS) offered by the Inflation Reduction Act.
Among his list of priorities, Wyden notes that “the IRS should develop a more robust whistleblower program. Whistleblowers have delivered a huge return on investment and can serve as effective partners for the federal government to unpack sophisticated schemes used by wealthy taxpayers and large corporations.”
Modernized in 2006, the IRS Whistleblower Program offers monetary awards and anti-retaliation protections to whistleblowers reporting large-scale tax fraud. Since 2007, the IRS has awarded whistleblowers over $1 billion based on the collection of over $6 billion in back taxes, interest, penalties, and criminal fines and sanctions.
However, the program has recently been plagued by a number of issues, including massive delays in the issuance of awards. The program’s 2021 Annual Report to Congress disclosed that the annual total of money recovered by the IRS Whistleblower Program fell from $1.44 billion in Fiscal Year 2018 to just $245 million in Fiscal Year 2021. Correspondingly, the total amount of money awarded to whistleblowers by the IRS fell from $312 million to $36 million over those same years.
Siri Nelson, the Executive Director of the National Whistleblower Center, stated that the data in the IRS’ report is “extremely disappointing. The low numbers are especially troubling when other whistleblower award programs have had banner years – the CFTC and SEC award programs as well as the False Claims Act. The only people celebrating these low numbers for the IRS whistleblower program are the millionaire and billionaire tax cheats.”
His recent letter to Yellen and Rettig is not the first time Wyden has called to strengthen the program. In an August report on the “shell bank” loophole in the Foreign Account Tax Compliance Act (FATCA), Wyden argued that a stronger IRS Whistleblower Program is necessary to better fight tax fraud.
Wyden is also the cosponsor, alongside Senator Chuck Grassley (R-IA) of the IRS Whistleblower Program Improvement Act of 2021, which offers seven reforms to bolster the effectiveness of the program. The bill is widely supported by whistleblower advocates.
Further Reading:
Wyden Outlines IRS Funding Priorities
The IRS Whistleblower Program is in Even Worse Shape than We Thought