Over the past few years, it has become clear that the Internal Revenue Service (IRS) Whistleblower Program. Declining award payments and increasingly long delays reveal that the whistleblower program, which revolutionized tax fraud enforcement, is not functioning as intended. While the program’s struggles were already evident, the agency’s recently released annual report shows how deeply in crisis the program has fallen.
The report 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. These rapidly declining figures show a program in dire need of reform.
Furthermore, the massive delays in award processing continued to grow in 2021. Over the years, multiple whistleblowers have died before being granted their IRS awards. The statistics are particularly troubling given that other whistleblower award programs, including the SEC and CFTC’s, had record years in 2021.
The IRS’s report has raised concern from the very people behind the establishment of the program. Senator Chuck Grassley (R-IA), who authored the provisions that created the IRS Whistleblower Office in 2006, sent a letter to the Director of the program expressing concern and calling for action to reverse the downward trends in award payouts. Tax whistleblower attorney Dean Zerbe, who worked with Grassley on the 2006 law, stated that “there is no way to make these outrageous numbers look good. It is extremely dispiriting to see these results.”
The issues plaguing the IRS Whistleblower Program are fixable. For example, common-sense reforms can address the lack of de novo review for award claims, inadequate funding for the Whistleblower Office, and massive delays in award processing.
Luckily a bipartisan bill has already been introduced which offers these fixes. Senators Grassley and Ron Wyden (D-OR) introduced the IRS Whistleblower Program Improvement Act of 2021, which offers seven simple reforms to the program in order to reestablish its efficacy and get it back on track.
An effective IRS Whistleblower Program is essential to closing the tax gap and recovering funds from fraudulent corporations and billionaires. The National Whistleblower Center has issued an action alert calling on Congress to act immediately to pass the IRS Whistleblower Program Improvement Act and save the program from its current crisis.