Archive for November 2011

The IRS Must Withhold on Tax Whistleblower Award Payments

Although many Tax Whistleblower Attorneys complain about the IRS’ recent decision to withhold tax on an award/reward paid under IRC 7623, it is perhaps that they do not understand withholding tax prevents the viability of the program from being at stake.  The IRS, as well as the Director of the Whistleblower Office, has many very difficult decisions to make with respect to the implementation of the IRS Tax Whistleblower program in order to ensure its success…including whether or not to withhhold tax on potentially hundreds of millions of dollars of reward. 

IRS to Withhold Tax

A tough decision that was made recently was whether or not to withhold federal income tax on a tax Whistleblower award/reward.  There is no dispute that under I.R.C. section 61, the Award/Reward is taxable.  As all tax whistleblower attorneys/lawyers are aware, the costs associated with a tax whistleblower receiving an Award/reward (i.e. attorney fees, etc.) is deductible…above the line for awards/rewards paid pursuant to IRC section 7623(b).  Congress made sure of that back in 2006 when the new Tax Whistleblower law was enacted.  See I.R.C. 62(a)(21).  So what is the big deal?

The big deal is simply that the IRS, not knowing the amount of the attorney fees to be paid will withhold tax based upon a fixed percentage of the entire award.  Since the normal “contingent” attorney fee is one third of the award, the IRS will withhold on that too.  Therefore, if the tax rate is 33.33%  the IRS will keep (i.e. withhold) a third, while the Whistleblower gets a third and the attorney working on a contingent basis gets a third.  The reality is that in less than 12 months the Whistleblower will file a tax return and receive a refund with respect to any over withholdings by the IRS of the tax withheld due to the costs/attorney fees paid and deducted by the Whistleblower when filing the return.  It is a small matter of timing …nothing more.  Therefore, no harm no foul.

Many attorneys/lawyers representing Whistleblowers are up in arms that the IRS in the Chief Counsel memorandum from the Procedural & Administration Branch recommended withholding tax on the Award.  Perhaps it is because the attorney may not have properly explained to their client that the award is taxable or they continue to talk of the gross reward, when in reality the reward, like any other income, should be viewed as after expenses and taxes. 

Can you imagine if the IRS paid out millions (perhaps hundreds of millions) of dollars to a Whistleblower that gambles the award away or simply puts the money out of reach of the IRS.  The American taxpayers, as well as Congress, would be furious.  The IRS Tax Whistleblower Program would unlikely survive such an ordeal.  Again, there are many tough decisions that have to be made.  The Tax Whistleblower Program should be viewed as a “public-private partnership” and everyone involved in this program should want to reach the right result for the taxpayer as well as the right result for the Whistleblower.

Tax Whistleblower Attorneys should choose their battles with the IRS and this is not a battle worth fighting.  Any litigation of this issue would be moot by the time the court would hear the case as the Whistleblower would have filed the return and received the refund.

However, in an effort to minimize concerns, Director Stephen Whitlock recently mentioned that the Whistleblower Office is considering offering the Whistleblower a “Withholding Agreement” whereby the parties acknowledge what the costs (including attorney fees) are to the Whistleblower and simply withhold on the net amount after the expenses.  The IRS is also considering withholding at a 28% rate rather than the maximum individual tax rate.

The Tax Whistleblower Law Firm, established by former IRS Attorneys, are experienced tax attorneys and experienced whistleblower attorneys.  The firm has submitted hundreds of cases since the program was begun and to date has had every claim submitted accepted into the progrram.  The Tax Whistleblower Program can assist in the litigation/appeal of an Award/Reward as well as in the negotiations of a Withholdings Agreement.

This is clearly the right answer all around.  Always feel free to contact a tax whistleblower attorney at the Tax Whistleblower Law Firm at 1-877-404-1040 or email at tom@rewardtax.com.

 

 

Tax Whistleblower Law Firm Letter #2 to Senator Grassley

In a continuing effort to help clarify the law and make the IRS Tax Whistleblower Program more efficient, and thereby ensuring its success, the Tax Whistleblower Law Firm has sent Senator Grassley a list of specific suggestions (See Letter 2 of 6) on how the IRS may shorten the time from the time a whistleblower submits a Claim for an Award to the IRS and the time for which the IRS can pay the award. 

Chuck Grassley, the sponsor of the Tax Whistleblower Program

Many whistleblowers are concerned that it can take what is anticipated to be five (5) to seven (7) years before payment of an award is made.  However, that length of time is simply an estimate and is the deemed to be the average amount of time for payment of the Award.  The time could be as low as three years if the taxpayer settles with the IRS at the completion of the examination  (Stage 2), signs a closing agreement waiving its right to claim a refund (i.e. 2 year rule), immediately pays the tax, and does not appeal the award.  The high side could be twenty plus (20+) years if the taxpayer uses all avenues to fight the determination of tax as well as the payment of tax.  In any case, for the program to be successful, both Congress and the IRS recognize that the program should be run efficiently from the inside out.

The specific suggestions are with respect to the various stages of a Tax Whistleblower Claim.  The stages are:

Stage 1 – Processing of Claims.

Stage 2 – Examination Function.

Stage 3 – Appeal Function.

Stage 4 – Litigation Function.

Stage 5 – Collection Function.

Stage 6 – Payment of the Award.

Stage 7 – Appeal of the Award.

The Tax Whistleblower Law Firm provided a number of suggestions including IRS immediate contact with the Whistleblower, allowing the whistleblower to waive procedural requirements to protect his/her identity as well as waiving the prohibition of using the Whistleblower documents, establish deadlines and accountability with the IRS, expediting a whistleblower case internally, etc.

 To the extent there are other specific suggestions not covered in Letter #2 from the Tax Whistleblower Law Firm, it is recommended that such suggestions be provided in the comments to this blog and that the commentator also send those suggestions to the Senator.  Senator Grassley remains interested and concerned that the IRS Tax Whistleblower Program be successful.

 The topics of the remaining letters to be sent to Senator Grassley are

 Letter 3 of 6 – Better communications between Whistleblower and IRS

Letter 4 of 6 – Evaluation/calculation of the Award

Letter 5 of 6 – Appeal of the Awards

Letter 6 of 6 – Miscellaneous suggestions of the Program

Readers are encouraged to provide additional comments to be included in the subsequent letters that will be sent to Senator Grassley.  Also, the reader should consider putting such comments on www.taxwhistleblowerforum.com.   In the end the success of this program may require Commissioner Schulman to allocate more resources to the Program.

With Tax Knowledge Comes Power for the Tax Whistleblower

The Whistleblower participating in the IRS Tax Whistleblower Program has knowedge and power to receive a substantial tax reward/award under IRC 7623

Confidentiality of Tax Whistleblower

As was made clear by the recent article, U.S. Billionaires Avoid Reporting Cash to IRS by Jesse Drucker of Bloomberg News, there is no shortage as to the underpayment of tax in the United States and therefore the potential for a tax reward.  Some say that the tax gap (the difference of what should be reported and paid versus that which is reported and paid) in the United States is now in excess of $400,000,000,000 per year.  Todaymany attorneys/lawyers, including the Tax Whistleblower Law Firm (former IRS attorneys) assist Whistleblowers in filing and supplementing tax whistleblower claims with the IRS for purposes of claiming a reward, as well as representing the whistlblower before the IRS, attending conferences, and appealing the claim before the U.S. Tax Court.  However, many attorneys/lawyers will not guarantee the confidentiaility of the Whistleblower’s identity as the former IRS attorneys of the Tax Whislblower Law Firm will do.

In the case of Billy Joe “Red” McCombs one must question how many accountants, attorneys/lawyers secretaries and others knew about McComb underreporting of his tax liability and could have filed a 211 Claim for a reward.  Perhaps without the assistance of a tax whistleblower attorney/lawyer these individuals were likely aware of the facts but simply unaware that the tax issue (i.e. a de facto sale of stock) existed or that there existed a Whistleblower Program for which they could have reported the facts and ultimately receive a reward of $3.3 million to $6.6 million (15% to 30% of the amount ultimately collected by the IRS).  Again, with Knowledge comes…a Tax Whistleblower Reward.

The IRS Tax Whistleblower Program is now reaching its 5 year anniversary (i.e. December 20, 2011).  IRS Director Stephen Whitlock, an attorney, has been charged with the duty to implement the law.  An experienced and knowledgable IRS staff of some of the most senior agents has been gathered to evaluate and process the many 211 claims that have been submitted to the IRS.  Currently the IRS Whistleblower Office has maintained its budget for 2011 and will not be losing any employees due to budget constraints or attrition (2 IRS Whistleblower Analysts retired on September 30, 2011), thereby reflecting IRS Commissioner Schulman’s view of the importance of this Tax Whistleblower Program.  The many issues that have arisen under the program are being addressed fairly and methodically by Director Whitlock. 

The Tax Whistleblower Law Firm’s experience in filing claims with the IRS Tax Whistleblower Office over the last four years reflects that our clients are above average intelligence as they are able to apply the facts to the law recognizing the existence of a potential tax issue as well as being aware of the tax whistleblower program.  Despite popular thought, Whistleblowers are largely ethical and are motivated by doing the right thing as opposed to simply chasing the reward.  The reward is simply the bonus.

Tax Reward (IRS Whistleblower Form) versus No Tax Reward

Claim a Reward

Tax Whistleblowers under the IRS Tax Whistleblower Reward Program can report tax fraud or any under payment of tax to the IRS on the proper IRS Whistleblower Form (i.e. Form 211, Application for Award for Original Information).  The Claimant/Whistleblower should follow the procedures in Notice 2008-4 when completing the IRS Whistleblower Form.  In order to prepare the claim for the highest potential reward, the Claimant should try to meet the positive factors stated in IRM 25.2.2.  The 211 Claim is submitted to the IRS Whistleblower Office under 26 U.S.C. Section 7623.  The IRS has created a Whistleblower Office that ultimately reports to the IRS Commissioner.  See Whistleblower/Informant Award.  Many Tax Whistleblower Law Firms can assist the whistleblower in completing the IRS Whistleblower Form, Form 211.  However, make sure the tax whistleblower attorney/lawyer is experienced in the substantive tax law as well.  An experienced tax whistleblower attorney/lawyer will not only assist in the preparation and filing of the IRS Whistleblower Claim Form (Form 211), but will be there for you to supplement the Claim with new information, attend meetings with you and the IRS and appeal your claim administratively as well as judicially to the U.S. Tax Court, if necessary.  The Tax Whistleblower Law Firm will guarantee the confidentiality of the tax whistleblower’s identity.

Tax Reward

Tax Reward v. Risk

Since inception of the program, a cottage industryof tax whistleblower attorneys/lawyers has sprung up to assist tax whistleblowers in these matters.  There are few “tax” attorneys/lawyers that have gotten aboard with this program.  Tax Attorneys/Lawyers know the substantive tax law as well as IRS and Tax Court procedures.  Therefore, most tax attorneys/lawyers recognize that this is a long process that may take years to reach completion, and taking such cases on a contingency basis means it will be years before they get paid, if at all.  The attorneys/lawyers that have gravitated in this new cottage industry are largely non-tax attorneys….personal injury law firms and qui tam law firms, as they are aware that contingency type cases could involve a long wait for payment. 

However, now that the first tax whistleblower award has been paid, there is a renewed interest in this area of the law.  

 Do Not Claim a Reward

Q. Why give up the reward?

A. To remain anonymous your cannot complete an IRS whistleblower form (Form 211).  By claiming the reward the IRS needs to know your identity.  In either situation, the same type of infomration must be provided to the IRS….”specific and credible information.”

  • Form 14242, “Report Suspected Abusive Tax Promotions or Preparers….do not complete IRS whistleblower form (Form 211). 

The IRS has recently posted new Form 14242, “Report Suspected Abusive Tax Promotions or Preparers,” on its website.  The IRS is also concerned about tax preparers and promoters of tax scams.  This new form is to be used to report tax avoidance schemes or tax return preparers who promote them.  Bottom line, Form 14242 is simply another form the IRS has to combat abusive tax practices and tax shelters. 

  • Abusive CPAs, Attorneys or Enrolled Agents:

Submit suspicious actions by tax professionals or inappropriate professionals to the email address of the IRS Office of Professional Responsibility.   All professionals representing taxpayers before the IRS should comply with Circular 230.  Do not complete IRS whistleblower form (Form 211) if you wish to remain anonymous.

  •  Form 3949-A, Information Referral.  Do not complete IRS whistleblower form (Form 211) if you wish to remain anonymous. 

The purpose of this form is simply to report the underpayment/underreporting of tax by a taxpayer.  Again the same type of information is required as if claiming a reward.  However, according to the instructions, you need not give your name and contact information.

For purposes of reporting Fraudulent IRS e-Mails and Websites contact the IRS at phishing@irs.gov if you receive an e-mail claiming to be from the IRS. 

Not only are we all potentially a victim of identity theft, but this is one of the newest hotspots for tax crimes.  Yes, all of the criminals that steal a person’s identity for financial gain fail to report such illegal income.  Be alert for your protection as well as a potential source for claiming a reward.

The Tax Whistleblower Law Firm (former IRS attorney) has been assisting tax whistleblowers in excess of 4 years in the filing of IRS tax whistleblower claim forms (Form 211), attending conferences with the IRS, and appealing Whistleblower Claims to the US Tax Court, etc.

 

Tax Whistleblower Law Firm Letter #1 to Senator Grassley

Like Senator Grassley, the IRS, and whistleblowers in general, the Tax Whistleblower Law Firm is very interested in the success of the IRS Tax Whistleblower Program. 

Whistleblower Law Firm

Senator Grassley, the sponsor of the IRS Tax Whistleblower Program

This tax whistleblower program will reach its fifth anniversary on December 20, 2011.  However, there is still a long way to go.  The GAO just completed its audit of the program and published the results in an August 2011 Report at the request of Senator Grassley.  On September 14, 2011,  Senator Grassley immediately responded by sending a letter to IRS Commissioner Schulman  both praising the IRS for its dedication to the program but also commenting on the program and making suggestions on how the program can be better improved.

The Tax Whistleblower Law Firm, established by Former IRS Attorneys, is also interested in improvement in the program.  In the last four years we have submitted billions of dollars worth of claims to the IRS with respect to hundreds of taxpayers.  We attempt to improve on every claim we submit both in presentation and content.  To date, every case we have submitted has been accepted into the IRS Tax Whistleblower Program.  We are interested in maximizing the claim and shortening the time for payment of the reward.  In the past year, we have taken the following actions:

Litigation - we believe that much needs to be done to clarify the law and procedures.  We have likely filed/appealed more Whistleblower Cases in the U.S. Tax Court than any other law firm.  Our goal is to simply make the program more workable to the genera public.

Administrative - We have provided comments to the IRS proposed regulations and spoke at a public hearing held on May 11, 2011.  We have participated in bar associationseminars to educate other attorneys as to the IRS Tax Whistleblower Program.

Legislative - We are in the process of sending a series of six letters to Senator Grassley addressing his comments and concerns with the program.  We will be providing specific suggestions on the the program can work better.  The first letter in the Series was sent November 1, 2011. 

The remainder of the letters will be posted in the future as they are sent.

Offshore Accounts Remain Focus of the IRS as well as Tax Whistleblowers

Many tax whistleblower (those seeking tax rewards) cases involve aspects of offshore accounts.  In the past, embezzlements, as well as unreported income, in the millions of dollars were safely hidden in foreign bank accounts.  This alone increased the tax and fraud penalty in these situations unless the taxpayer properly disclosed this on their tax returns and complied with the FBAR requirements.

Credit Suisse-the next target of the IRS Tax Whistleblower Program

As of November 8, 2011, Credit Suisse AG, Switzerland’s second-largest bank, began notifying certain U.S. clients suspected of offshore tax evasion that it intends to turn over their names to the Internal Revenue Service, with the help of Swiss tax authorities.

 The move by Credit Suisse to disclose American client names and account information is the latest twist in a showdown between Switzerland and the United States over the battered tradition of Swiss bank secrecy.

U.S. authorities, who suspect tens of thousands of wealthy Americans of evading billions of dollars in taxes through Swiss private banks in recent years, are conducting a widening criminal investigation into scores of Swiss banks, including Credit Suisse.

“The I.R.S. is seeking information with regard to accounts of certain U.S. persons owned through a domiciliary company (as beneficial owners) that have been maintained with Credit Suisse AG.

“In connection with the IRS treaty request, the SFTA has issued an order directing Credit Suisse to submit responsive account information to the SFTA,” the letter said. “This order is immediately executable and Credit Suisse as an information holder has no right to appeal.”

It was unclear how many U.S. clients had been sent the letter.  Many Americans have voluntarily disclosed their foreign bank accounts for this reason as well as the recently enacted IRS Tax Whistleblower Program that was established for tax whistleblowers seeking a tax reward by providing specific and credible information to the IRS as to the underpayment of tax.

 The letter says that the IRS request covers accounts maintained at any time over the period from January 1, 2002, through December 31, 2010.

Credit Suisse in July received a target letter from the U.S. Justice Department notifying it that it was the subject of a federal criminal investigation into its offshore private banking services.

Switzerland is trying to craft a deal with the United States that would cover its entire banking industry of some 355 banks.

It is unclear how many American clients of Credit Suisse hold private banking accounts that have gone undeclared to U.S. tax authorities; however, with the IRS new Tax Whistleblower Program, there could be significant tax rewards payable to the individual with knowledge.

 The Tax Whistleblower Law Firm, established and run by former IRS Attorneys/Lawyers use their knowledge and experience to submit valid whistleblower claims to the IRS as well as represent their clients in conferences, and appeals before the U.S. Tax Court in an effort to obtain the highest tax reward based upon the facts and circumstances.

Litigation of IRS Tax Whistleblower Cases

Litigation of Rejected Tax Whistleblower Reward Cases »

Most lawyers and attorneys law claim that they are a “tax whistleblower law firm” and will simply file a claim (Form 211) and simply aovid the litigation associated with the tax whistleblower program.  However, there is so much more to it than filing the simple one page form.  Quite frankly, one does not need an attorney to fill out the Form 211.  After the filing of the Claim (Form 211) the process goes on.  The claim should US Tax Court Litigationbe constantly supplemented with new facts or new law as long as it is relevant and material to the IRS and its examination.  If the IRS wishes to hold a conference with our clients, we will be there in person advising our clients ahead of time of the anticipated questions and how to best handle the questions. 

However that is only the beginning and the middle of the process when a whistleblower participates in the tax whistleblower program.  In the end, comes the appeal.  The appealing/litigation process of the IRS’ “final determination” is a new process that was enacted on December 20, 2006 as I.R.C. 7623(b)(4), as follows:

Appeal of award determination . Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).

 The Tax Whistleblower Law Firm has probably now appealed more rejected Tax Whistleblower Cases than any other law firm.  These are rejected cases that have been filed pro se (by the individual) or by other attorneys.  In four years, after submitting billions of dollars worth of claims with respect to hundreds of taxpayers, we have yet to have a claim rejected.

 However, we believe that any law firm that claims it is a tax whistleblower law firm should be a full service law firm and handle the Claim from the initial filing of the Claim to the Appeal of the Claim to the U.S. Tax Court.  Despite our vast experience before the U.S. Tax Court we recognize this area of the law involves new procedures and the interpretation of new law.  Much will be a matter of first impression for the Court. We are interested in learning all we can learn so that we can continue to best represent our clients now and in the future.

For instance, in anticipation of future decisions by the IRS, we want to know

1.  Can we find out why a tax WB case was rejected by the IRS if we file suit and engage in discovery?

2.  Can we protect our client’s identity if we file suit and request that the case be sealed?  If not, what do we need to do to protect our client’s identity?

3. What records can we discover in litigation?  Will the IRS claim privilege to many of the documents that are valuable to our case?

4.  The IRS moves for Summary Judgment in these whistleblower matters.  What do we need to do to best represent our clients in such situations?

The Tax Whistleblower Law is new and ambiguous.  It is important that we define and clarify as much of the law early into the program in an effort make the program successful.  This can be done through regulations or litigation.

We would be interested in hearing views from anyone else that has litigated these cases or that has received a rejection of their claim from the IRS.  Please post any comments or questions to this blog or to www.taxwhistleblowerforum.com.

 

Senator Grassley Letter to Commissioner Schulman regarding Tax Whistleblower Program

On September 13, 2011 Senator Grassley responded to the GAO Report that was issued pursuant to his request to audit the IRS Tax Whistleblower ProgramSenator Grassley’s letter praised the IRS for its progress and yet pointed out the downfall of the program and what he hoped that the IRS would do better in the future.

“While the IRS has made great progress, there is still room for improvements.”

                                                                                       Senator Grassley (September 13, 2011)

Senator Grassley

Senator Grassley continues to monitor IRS Tax Whistleblower Program

It is clear the IRS has a ways to go in properly implementing the IRS Tax Whistleblower Program as it was intended by the Congress.   The Federal False Claims Act has been around for over 150 years.

Clearly the IRS does not need to reinvent the wheel on how to make partial payments or to define certain terms as the tax whistleblower program grows.  Senator Grassley noted this and much much more.  As Senator Grassley pointed out, Tax Whistleblowers are experts sometimes as to the facts and sometimes as to the law.  The IRS must begin communication with the tax whistleblower as a cost saving measure if for no other reason.

Senator Grassley noted the great initial success of the tax whistleblower program by noting the multiple claims that have been submitted for millions of dollars.  In fact the first claim paid under the program was for over $20,000,000 and goes a long way in justifying the cost of properly implementing the program.

We note that Senator Grassley brought to the IRS Commissioner’s attention a number of items for whichhe hope would be changes in the future to better implement the tax whistleblower program.

  • Whistleblower Advocates v. Whistleblower Analyst – Congress intended that the whistleblower office would advocate for the whistleblower as opposed to simply processing paper.
  • Whistleblower Office Independence – The office should be independent of the other branches of the IRS (SBSE, LB&I, CI, TEGE, Etc.) and should not simply follow their lead in denying a reward (claim did not substantially contribute to the determination of tax) or refusing to engage in an examination.
  • Whistleblower Counsel -  The IRS Whistleblower Office should have its own legal counsel separate and apart from the Office of Chief Counsel attorneys which advise the examination divisions of the IRS.  Independent tax whistleblower attorneys could provide advice faster to the IRS Whistleblower Office if it was within house.
  • Time period of Payment of the Award - The IRS should work on shortening the period of payment of the award.
  • Better Communication between IRS and Whistleblower – The IRS should state with specificity the reason of rejection if it is rejecting a Claim thereby saving unnecessary litigation time and costs.

The Tax Whistleblower Law Firm will send a series of six (6) letters to Senator Grassley commenting on his recommendations and providing specific suggestions as to his recommended changes.

GAO Report to Senator Grassley on the IRS Tax Whistleblower Program

The GAO issues report to Senator Grassley with respect to its audit of the IRS Tax Whistleblower Program (i.e. claiming a tax reward).  Although, somewhat critical of the tax whistleblower program, there were no surprises as our firm fully anticipated these shortfalls.  The enactment of the IRS Tax Whistleblower Program is a process and is steadily improving overtime.  As Tax Whistlelbower attorneys are beginning to litigate cases to clarify the law, this audit was done at the request of Senator Grassley which to deal with the internal procedures of the IRS shows Senator Grassley’s continued support of the the IRS Tax Whistleblower Program.  See Senator Grassley’s letter dated September 13, 2011 in response to this Report

Tax WhistleblowerGAO-11-683 August 10, 2011
Highlights Page (PDF)   Full Report (PDF, 39 pages)   Accessible Text   Recommendations (HTML)

Summary

The Tax Relief and Health Care Act of 2006 expanded the Internal Revenue Service’s (IRS) tax whistleblower program,  increasing tax rewards for submitting information on others’ tax underpayments to up to 30 percent of collected proceeds. The expanded program targets tax underpayments over $2 million and could reduce the gap between taxes owed and taxes paid. IRS’s Whistleblower Office has received over 1,300 submissions qualifying for this new program since 2007. GAO was asked to assess (1) how IRS manages the expanded tax reward program, (2) how IRS communicates with tax whistleblowers and the public, and (3) any lessons from IRS’s or other government whistleblower programs that could improve IRS’s expanded tax whistleblower program. GAO analyzed IRS documents and data and interviewed IRS officials, whistleblower attorneys, and federal and state whistleblower program officials.

Tax whistleblower claims can take years to go through the IRS review and award determination process. As of April 2011, about 66 percent of claims submitted in the first 2 years of the program, fiscal years 2007 and 2008, were still in process. According to IRS officials, claims can take years to process because IRS must take various steps to ensure the integrity of claim reviews and resulting taxpayer examinations. Further, taxpayers subject to examination can exercise rights that can add years to the process. IRS does not collect complete data on the time each step takes or the reasons claims are rejected. Without such data, IRS may be unable to identify potential improvements to claim processing efficiency. Furthermore, not all the IRS divisions that review whistleblower claims have time targets for their subject matter expert reviews. Nor does the IRS Whistleblower Office have a systematic process to check in with the divisions about the time taken for their initial reviews. IRS is limited in what information it can share with whistleblowers about the status of claims because of statutes protecting the privacy of tax information. For example, because IRS cannot disclose if it is examining a taxpayer, it cannot inform whistleblowers on the progress of their claims or the reasons their claims are rejected. One mechanism through which the IRS Whistleblower Office can communicate program results is its mandated annual report to Congress. However, the most recently released report, for fiscal year 2010, did not contain information on case processing times or specific data on why IRS rejected claims. Collecting additional data and including it in the report could improve the transparency of the program and Congress’s ability to oversee it. Federal and state whistleblower programs have features with potential benefits that could improve IRS’s expanded tax whistleblower program, including options that increase interaction or information shared with whistleblowers and options that attempt to improve the accountability for claim processing. While there are potential advantages to all identified options, it is difficult to determine if the advantages outweigh the disadvantages for many options. Furthermore, IRS would be limited by taxpayer data protections in implementing some of the options. GAO recommends that IRS collect more information–including data on the time each step takes for all claims and reasons for claim rejection–in its claim tracking system, establish a process to follow up on claims that exceed review time targets, and include more information on these issues in its annual reports to Congress. In written comments on a draft of this report, IRS generally agreed with our recommendations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from “In process” to “Open,” “Closed – implemented,” or “Closed – not implemented” based on our follow up work.

In the end, the GAO report simply pointed out some of the shortfalls of the IRS Tax Whistleblower Program.  These were not major problems and concerned with shortening the time for the tax whistleblower from the time the 211 Claim is filed until the reward is paid.  Click here for Confidentiality and finding the right Tax Whistleblower Law Firm for you.

If you have any questions call the tax whistleblower attorneys/lawyers at the Tax Whistleblower Law Firm at 1-877-404-1040 or email us at tom@rewardtax.com .

Tax Whistleblower Forum to Answer Questions or Post Comments/Complaints

The Tax Whistleblower Law Firm has created the Tax Whistleblower Forum for the general public to ask questions and to post comments.  Having received thousands of telephone calls and emails each year and having attempted to answer as many questions as presented, the Tax Whistleblower Law Firm has created another avenue of communication for the tax whistleblower, the would be tax whistleblower, the general public and reporters. 

Taxwhistleblowerforum.com

Taxwhistleblowerforum.com

Of course questions will still be answered and advice will still be given to anyone who wishes to call the Tax Whistleblower Law Firm at 1-877-404-1040 or email Tom@rewardtax.com.  Normally such questions are about 1) the IRS whistleblower program, 2) the Tax Whistleblower Law Firm, and /or 3) the general/specific situation that the individual may be call about.  All phone calls are answered by a former IRS attorney and are kept confidential.

However, the newly created tax whistleblower forum is opened to everyone, attorneys and whistleblowers so as to contribute their knowledge, opinion and experience to in order to enhance the IRS Tax Whistleblower Program.

Former IRS Attorney Thomas C. Pliske believes that comments about the program and the IRS could contribute to the success of the IRS in the implementation of the tax whistleblower program.  Many tax whistleblowers that have had their claims rejected may wish to make comments and share their frustrations with others.  Others may just wish to ask questions to expereinced and knowlegable tax whistleblower attorneys/lawyers with respect to the IRS Tax Whistleblower Program.

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