Treasury Releases Their Report On The IRS Whistleblower Program

On  September 25, 2015 we posted Five- to Seven-Year Turnaround on Whistle-Blower Awards - Get Your Whistles Ready! where we discussed that it can take from five to seven years, or more, for  the IRS Whistleblower Office to make a decision about whether to pay an informant for information about individuals or businesses that don't pay all of the tax they owe.

Currently, the whistleblower office is processing roughly 1000 claims a month and it has has helped the IRS collect significant amounts of revenue by facilitating whistleblower claims reporting violations of the tax laws that may otherwise go unidentified.
 
Now the Treasury Inspector General released a Report dated August 30, 2016 titled "The Whistleblower Program Helps Identify Tax Noncomplicane; However, Improvements Are Needed to Ensure That Claims Are Processed Appropriately and Expeditiously" about the IRS Whistleblower Program. 

From Fiscal Year 2011 through February 2016, the IRS collected more than $2 billion because of information provided by whistleblowers. In addition, the Whistleblower Office has recently reduced inventory backlogs.

The report contained some interesting statistical analysis of various processes relating to the workings of the Program including a quote from page 7 of the Report which states that:

A majority of claim closures in FYs 2015 and 2016 (83 and 85 percent, respectively) are rejected or denied before going to an operating division field group for an investigation or examination, with only a small portion (2 percent each year) resulting in an award. Most claims were rejected because the allegations were not specific enough for the IRS to take action or denied because the allegation was below the threshold to justify resources for compliance action.  

About 85% of the submissions that the IRS Whistleblower Office receives are pro se filings, and the problem is that often those claims are speculative or are not developed enough for the IRS to use them as a basis for taking action. 

Of the remaining 15% on which the IRS does take action and passes the whistleblower’s information to the field agents for examination, approximately 2 out of every 15 are getting an award.



 

Figure 4: Closure Reasons for Claims Closed in FYs 2015 and 2016 (*as of February 2016) Closure Reason		Number of Claims
		FY 2015		FY 2016*12
Before Field Group		8,801 (83%)		11,045 (85%)
Rejected: Ineligible Whistleblower	7		6
Rejected: Incomplete Submission	170		288
Rejected: Allegations Unclear/Nonspecific	5,633		8,145
Denied: Below Threshold	1,116		1,348
Denied: Short Statute	240		213
Denied: Statute Expired	470		419
Denied: Lack of Resources	89		37
Denied: Information Already Known	74		63
Denied: Not Selected for Field	1,002		526
After Field Group		345 (3%)		675 (5%)
Denied: Tax Noncompliance Not Found	287		534
Denied: No Collected Proceeds	58		141
Award Paid		204 (2%)		322 (2%)
Other		1,265 (12%)		942 (7%)
Error Creating Claim	36		***1***
Specific Reason Not Listed Above13	1,229		***1***
Total	10,615		12,984

 Whistleblower’s odds of getting an award can be significantly higher than 13% for a thoroughly vetted submission with good facts and good law that are clearly laid out.  The hurdle of getting the IRS to take action in the first place is certainly a high one but then you have to deliver your information in a way that helps them win their case. 

TIGTA made a total of 10 recommendations to improve the whistleblower program, nine of which IRS management agreed to.

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Want a Reward of Between 15- 30% 
of Underpaid IRS Tax Liabilities for

Blowing the Whistle on a Tax Cheat?

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