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October 7, 2009
Li-Yun Chien
TIGTA-PAO@tigta.treas.gov
(202) 622-6500

TIGTA Finds Ineffective Controls and Procedures In IRS's Processing of Whistleblower Claims

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its audit of the Internal Revenue Service's (IRS) Whistleblower Office.

The IRS's Whistleblower Office was created in December 2006 as part of the Tax Relief and Health Care Act of 2006 (the Act). As described by the IRS, the Office was established to gather information from "whistleblowers" who spot tax problems in their workplace, while conducting day-to-day business or anywhere else they may be encountered. Whistleblowers can receive between 15 and 30 percent of collected proceeds if their information leads to additional tax assessments. The Whistleblower Office provides the IRS with an opportunity to recover potentially billions of dollars in taxes, penalties and interest.

TIGTA's review included assessing the Whistleblower Office and its controls for monitoring the disposition of new claims. TIGTA found that the IRS did not have an effective inventory control system with proper reporting and accurate information capture capabilities.

"The IRS has seen a significant growth in whistleblower claims," commented J. Russell George, the Treasury Inspector General for Tax Administration. "However, the Whistleblower Office continues to have problems with managing and tracking cases, resulting in inaccuracies and inconsistencies in the tracking of large dollar claims," Inspector General George added.

TIGTA also found that the Act does not include specific provisions for employee protection against retaliation by an employer, which can be a significant issue in some whistleblower claims.

TIGTA recommended that the IRS ensure that:

  1. Reporting capabilities are included in the inventory control system, allowing management to track the processing of claims and evaluate the success of the program;
  2. The information captured and input into the inventory control system is accurate;
  3. Written procedures are established with timeliness standards for processing whistleblower claims;
  4. A process is developed to monitor the timely processing of claims; and
  5. Legislation is proposed to ensure that informants are protected from retaliation by their employers.

The IRS agreed with four of TIGTA's recommendations and has taken corrective actions. However, the IRS did not take a position on the legislative recommendation, since it is outside the jurisdiction of the IRS.