IRS resists using whistleblowers
Whistleblower disclosures have helped the federal government make some of its biggest recoveries from fraudsters. In the Obama administration alone, the government recovered over $21 billion thanks to whistleblowers using the “qui tam” procedure under the False Claims Act (FCA). The government also recovered many additional billions through criminal fines and penalties.
Erika Kelton, an attorney in the Washington, DC, whistleblower law firm of Phillips & Cohen, wrote an article in last week's Forbes magazine that explains how the Internal Revenue Service (IRS) is losing out on the opportunity to develop its own income stream from whistleblower tips. In December 2006 Congress enacted a law similar to the FCA to reward whistleblower who informed the IRS of tax frauds and violations. Many whistleblowers have filed claims under the new IRS whistleblower program.
Kelton says the IRS however, has squandered opportunities to recover billions of dollars in revenue with the information submitted by whistleblowers. Dozens of whistleblower submissions concerning losses over $100 million in tax fraud were reportedly received by the IRS Whistleblowers Office. Another thousand concerning tax underpayments over $2 million were also reported. However, the IRS has paid only one whistleblower reward during the program's first five years.
Clearly, there is a problem here. The problem, according to Kelton, does not lie within the laws implemented by the program in 2006, but with the IRS itself and institutional resistance within the IRS to rewarding whistleblowers.
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