IRS Whistleblower Report to Congress Signals a Brighter Future
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The most important piece is a retaliation protection. Hopefully, Grassley, and others in DC who support whistleblowers as a force against corruption, can get some legislation passed to protect IRS whistleblowers.
No disrespect intended, but well-meaning and optimistic folks have been forecasting the light at the end of the IRS WBO tunnel for a long time now.
Despite chatter related to the last WBO report to Congress (much improved but still not very meaty or first drawer), there is no proof that the Service is truly, sustainably, embracing WB's.
Even booting the ineffectual and fake-WB-advocate Whitlock and replacing him with the reportedly process and results oriented Lee Martin (a man with a genuinely impressive resume) is not enough to comfort and incentivize current and potential future WBs.
Replace Dir. Martin's Legal Counsel with an individual biased toward incentivizing WB's and realign IRS Counsel from promoting, and defending in Tax Court, decisions that minimize WB reward payouts.
It is painful to see Sen. Grassley's failure to care for and reform the 7623(b) crop he planted; it is dying in the field due to his neglect. He crows about how much 7623 returns, but if he listened to this County Agent, he could vastly increase his yield rate to Blue Ribbon proportions.
7623(b)* needs to be fertilized and weeded by:
1. Requiring the IRS to investigate all claims;
1a. Require the IRS to reasonably pursue recoveries and penalties under all applicable statutes, regulations and codes (0-tolerance for any investigation prompted or aided by a WB submission);
2. Eliminating the IRS' discretion in rewards by making 30% the starting point with only reasonable deductions for bad acting in the part of a WB;
3. Specifying that regardless of title (26, 18, 31, etc.) all government (not only IRS) recoveries accruing to WB input are part of the reward calculation (I.e. in the event IRS provides WB info to DOJ for FCA prosecution);
3a. In title 31, exempt WB reward portion from being deposited into Victims of Crime Fund;
3b. Prohibit the IRS from ignoring or reducing penalties in any category, or negotiating reductions in any category in trade for increases in any other category (i.e. prevent transferring fines to non-Title 26 categories.);
4. Eliminating sequester penalty and tax obligation on WB rewards (many modest WB's are scared off by a unpalatable risk v reward relationship);
5. Enact anti-retaliation provision as seen in FCA but with unlimited SOL for fraud related retaliation. Consider allowing IRS to collect this directly or on behalf of NLRB;
6. Incentivize the IRS to devote best resources to prosecuting recoveries based on WB tips by allowing IRS to keep a portion of recoveries as an offset for budget cuts;
7. In the event that any of the current or past crop of WB submissions suffered due to any of the above defects, review and award those WB's as if the legislative rectifications were active when 7623 came in to force in 2007. Allow plaintiffs or their heirs to refile in USTC for de novo review;
8. For God's sake, once the WBP and WBO are reformed, prominently display a "WBO is Open for Business" sign on IRS homepage.
*7623(a) needs to be subject to all of the above except point 1.
Only in this way will those far away flowers of good intention bloom and grow into the cash crop to be harvested from those that dare to cheat, and place their share of fiscal burden on, honest citizens by denying what is owed to the public fisc.