New report from the GAO flags problems with the IRS whistleblower program

By Ken Berry
 
The Government Accountability Office (GAO) says that the revamped Internal Revenue Service (IRS) whistleblower program isn't doing its job. The program rewards people who turn in tax cheats in cases involving fraud of $2 million or more.
 
According to a new report from the GAO released on September 9, 2011, the IRS needs to improve its performance. In particular, the GAO cited the IRS' inability to manage claims in an efficient and timely manner. More than 1,300 whistleblower claims have been filed since 2007, with allegations of fraud levied against 9,540 taxpayers. The IRS is still investigating 8,254 of those taxpayers (86.5 percent).
 
The long-standing whistleblower program was upgraded in 2007 to encourage more tipsters to come forward. Here are some of the key changes:
 
  • If the IRS proceeds with any administrative or judicial action based on information provided by an informant, the informant must be rewarded based on the amount collected. This reduces the discretionary authority of the IRS. 
  • A whistleblower award must equal at least 15 percent, but no more than 30 percent, of the amount collected in the investigation. 
  • A prior prohibition against including interest amounts when calculating the size of the reward was eliminated. 
In its report, the GAO provided eight recommendations that may help alleviate the current problems, including redesigning the whistleblower form, revising procedures for tracking claims, and setting target dates for completing investigations.
 
For its part, the IRS said it "generally agrees" with the recommendations; however, IRS Deputy Commissioner Steven Miller noted that the agency must observe legalities relating to protection of privacy and due process, which can extend the time needed for investigations.
 
Related articles:

 

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.