WASHINGTON - The Internal Revenue Service (IRS) Whistleblower Program can be a powerful tool to assist the IRS in identifying violations of tax law and collecting funds that might otherwise be lost to tax evasion. However, improvements are needed to monitor the timeliness of whistleblower claims processing and ensure that program decisions are properly supported, according to a new report issued publicly today by the Treasury Inspector General for Tax Administration (TIGTA).
Internal Revenue Code Section 7623 authorizes the IRS to pay monetary awards to whistleblowers for information leading to detecting underpayments of tax or bringing to trial and punishment persons guilty of violating tax laws. However, whistleblowers and members of Congress continue to express concerns with the operation of this program.
In its review, TIGTA found that the Whistleblower Program has helped the IRS collect significant amounts of revenue by facilitating whistleblower claims reporting violations of the tax laws that may otherwise go unidentified. From Fiscal Year 2011 through February 2016, the IRS collected more than $2 billion because of information that whistleblowers provided. In addition, the Whistleblower Office has recently reduced inventory backlogs. However, the Whistleblower Office does not have appropriate controls in place to allow for sufficient oversight of claims processing, and whistleblowers are not always contacted to clarify allegations.
TIGTA recommended that the Director, Whistleblower Office, implement the Balanced Performance Measurement System for the Whistleblower Program and implement controls to ensure that whistleblower claims are appropriately and timely evaluated before being rejected, denied, or referred to operating divisions for investigation or examination. In response to the report, IRS management agreed with and plans to implement corrective actions for nine of TIGTA's 10 recommendations.
"The IRS Whistleblower Program plays an important role in reducing the Tax Gap by providing an avenue for reporting tax evasion," said J. Russell George, Treasury Inspector General for Tax Administration. "It is important for the IRS to make every effort to implement controls to ensure the consistent, appropriate, and expeditious processing of whistleblower claims."