According to the Internal Revenue Serviceâ€™s (IRS) most recent report to Congress, it paid $53 million in whistleblower awards during fiscal year 2013.
The IRS collected about $367 million on those cases, based on whistleblower information, the report indicated, according to The Wall Street Journal. In 2012, the total award amount included $104 million in one whistleblower case involving Swiss bank UBS. That involved a huge undertaking against undeclared offshore accounts held by United Statesâ€™ taxpayers located in Switzerland and elsewhere. The 2013 award figure also involved one large payment of $38 million over a domestic corporate tax case, the Journal added.
The IRS maintains two whistleblower programs. The original program, which, according to the Journal goes back decades, makes whistleblower awards of up to 15 percent of tax collected and currently applies to cases in which less than $2 million in tax is collected. The 2006, so-called â€ślarge awardâ€ť program makes payments of a maximum of 30 percent of collected tax and involves cases that involve $2 million or more in tax.
According to the IRSâ€™ report, it made nine payments under its large award program and indicated that it does have open cases, which are based on information submissions from a total of 1,320 whistleblowers concerning 12,192 taxpayers. Whistleblowers may be individuals, corporations, trusts, or estates, according to the Journal. Data analysis indicates that the IRS is likely in the early or middle stages of acting on some two-thirds of the submissions received. One-third of open whistleblower cases in the program are closer to the end of the process, and at least three whistleblower awards are expected soon.
In these cases, a whistleblower is typically an individual who has knowledge of a company or individual committing tax fraud by deliberately underreporting or omitting tax income, overstating deductions or abusing charitable deductions, maintaining two sets of financial records, making false record entries, claiming false tax credits or deductions, abusing or misusing trusts, neglecting to report income earned from investments, and hiding income or assets
The just-released IRS report contains recommendations to ease the whistleblower process and minimize backlog, according to RT.com.
Senator Charles Grassley (Republican-Iowa), who co-authored the 1989 Whistleblower Protection Act, seeks to put laws in place to better protect whistleblowers. â€śWhistleblowers are often treated like skunks at a picnic,â€ť the senator said. â€śIt takes guts to put your career on the line to expose waste and fraud.â€ť Among other things, Senator Grassley recently wrote to President Obama seeking to ban federal agencies from deeming jobs â€śnon-critical sensitiveâ€ť as a way in which to silence whistleblowers, according to The Washington Post.
The IRS maintains whistleblower confidentiality during the initial investigation phase; however, if testimony is required in a judicial proceeding, whistleblower identity may be revealed. Because some federal and local laws may provide tax fraud whistleblowers with protection, whistleblowers typically seek legal assistance to best understand their rights and protections.