The Treasury Inspector General for Tax Administration (TIGTA) issued a report that criticizes the Internal Revenue Service (IRS) for dragging its feet in processing whistleblower claims. The report follows up on TIGTA’s 2009 report and found, “deficiencies in the IRS’s internal controls and timely resolution of whistleblower claims.” Now, three years later, the IRS still has “not fully and adequately” addressed those concerns. Meanwhile, last August the General Accounting Office (GAO) issued a report making recommendations for improvements at the IRS Whistleblower Office. IRS management has promised to implement those recommendations and make a report by October 12, 2012.
In 2009, TIGTA found that the Whistleblower Office was tracking its inventory on three different systems. In response, the IRS had employees manually transfer the data to a single system. However, the IRS did not audit the data to discover and reconcile errors. IRS management responds that no errors have been identified. Readers may wonder, though, if that is because no one looked for errors. IRS management did not allow the TIGTA direct access to the information system, even though the 1978 law creating the TIGTA gives it “authority to access all records, reports, audits, reviews, documents, papers, recommendations, or other material . . ..” The 2009 report identified 1,973 claims for which TIGTA wanted to review the tracking data. Without direct access to management’s database, TIGTA could not determine how many of these claims are correctly logged into the information system.
Also, TIGTA found that the Whistleblower Office has not yet fully developed standards for timeliness in processing claims. When management trained the staff at the Whistleblower Office, it did not instruct them to check the date a claim was received. According to TIGTA, this point “is critical when reporting business results to internal and external stakeholders.”
I find it interesting that the report’s chart on page 8 shows that the IRS has no standards for how long it should take to acknowledge receipt of a claim, or for issuing rejection letters to whistleblowers. Under “Steps in the Claims Process,” the chart does not even have a line for actual issuance of awards. This blog editor is aware of only one award the IRS has actually made.
The Tax Relief and Health Care Act of 2006 created the mandatory IRS whistleblower award program for tips that lead to recoveries of over $2 million. As a result of the program deficiencies at the Whistleblower Office, the program “is not as effective as it could be” in assisting tax enforcement, reducing the gap between the taxes due and the taxes collected, and in “maintaining the integrity of the voluntary tax compliance system.”
The new report is called, Improved Oversight Is Needed to Effectively Process Whistleblower Claims.