Since the passage of the Tax Relief and Health Care Act in 2006, the IRS Whistleblower Program has been highly successful. It has incentivized whistleblowing, allowing the IRS to recover billions of dollars. However, one major issue continues to plague the program: on average, it takes the IRS over 10 years to process a whistleblower award claim.
In a new article, leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto takes aim at this “repeal by delay” of the IRS Whistleblower Program. Kohn, who is also the Chairman of the Board of the National Whistleblower Center, explains that these delays are undermining the program and argues for the need for immediate Congressional action on the matter.
Kohn points to the particularly jarring fact that numerous whistleblowers have died before their award claims could be paid. Overall, Kohn notes that “[t]he IRS Office of the Whistleblower simply does not have the resources to administer its potentially highly effective anti-fraud whistleblower program.”
As a solution to the delays and other issues with the IRS Whistleblower Program, Kohn calls for the passage of the IRS Whistleblower Program Improvement Act. The legislation was introduced on June 15 by Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) and makes several reforms to the IRS Whistleblower Program in order to improve the program’s operations and better protect whistleblowers who expose tax fraud. The IRS Whistleblower Program Improvement Act is widely supported by whistleblower advocacy groups, including the National Whistleblower Center (NWC), Taxpayers Against Fraud (TAF), Government Accountability Project (GAP), and the Project on Government Oversight (POGO). NWC has issued an “action alert” to help gather support for the bill.
According to Kohn, the IRS Whistleblower Program Improvement Act “includes seven provisions necessary to ensure that the tax whistleblower law works. These include:
- Measures to prevent delays and incentivize the IRS to promptly pay whistleblower rewards;
- De novo judicial review of the decisions of the IRS denying qualified whistleblowers any reward whatsoever;
- Establishes a “presumption of anonymity” for whistleblowers filing their whistleblower cases in court;
- Stops the unprecedented practice of significantly reducing whistleblower rewards below the 15% mandatory minimum reward through the use of “budget sequestration;”
- If the IRS Office of the Whistleblower fails to pay a qualified whistleblower his or her reward within one year of collecting the sanctions from the fraudster, the IRS must pay interest on the amount owed. This is one of the ways the IRS is forced to address the intolerable delays that are strangling the program.
- Permits the IRS Office of the Whistleblower to use a small percentage of sanctions obtained in whistleblower cases to cover the costs of administration. This will solve the numerous problems caused by the Department of Treasury’s failure to adequately fund the whistleblower office.”
Kohn ends his article by writing that “[g]iven the massive ‘tax gap’ (estimated at $441 billion in uncollected taxes each year), the need for this legislation is obvious and compelling. The only persons who will benefit if these amendments are not approved are the tax cheats and fraudsters who are currently pocketing hundreds of billions of dollars every year. Given the rising federal debt, and the need for tax income to support the critical infrastructure programs now being endorsed by Congress, making sure the tax whistleblower law is working well should be a high priority for every American, every Member of Congress, the IRS and the Department of Treasury.”