AP reports jump in tax whistleblowing


The Associated Press reports that since Congress beefed up the rewards for tax whistleblowers late in 2006, the number of big money tips coming to the IRS has jumped from 116 in 2007 to 1,246 last year. "The tax code improvements are still new, and I hope more whistleblowers will come forward as word gets out," Sen. Chuck Grassley (R-Iowa) told the AP.  The Tax Relief and Health Care Act of 2006 guarantees a reward to tipsters who point the IRS to big tax cheats.  If the recovery is over $2 million, and the cheater has an income of over $200,000, then the tipster is entitled to a reward of between 15 and 30 percent of the recovery. The IRS may also reward tipsters in cases where the recovery is less, but those rewards are not guaranteed.

Stephen M. Kohn, executive director of the National Whistleblowers Center, raised a concern about this program in light of the government’s prosecution of UBS whistleblower Brad Birkenfeld. Coming forward poses "a high level of risk and most people won’t do it," Kohn told the AP. "You have to protect them if they are retaliated against and you have to reward them for coming forward." Kohn added that the best way to encourage more people to come forward is for the IRS to move faster and start rewarding those who already have.

A Reuters story reports that the IRS has still not paid any rewards under the program. "The real concern is that there has not been a single award… the wind is beginning to come out of the sails of this program," attorney Dean Zerbe told Reuters.

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