Whistleblower Lawyer Blog

Earlier this week we wrote about our urging the IRS to remain true to Congress's plain intent to attract a greater number and variety of tax whistleblower claims. Our written comments on changes needed to the IRS Whistleblower regulation were published in today's Tax Notes.

We will be in Washington on May 11 to address the IRS in person. In the meantime, here is some additional discussion of why these changes are so important.

As the annual deadline for filing state and federal income tax returns has passed, honest taxpayers might be shocked to learn that the government will experience an estimated $350 billion shortfall between what is owed and what is collected, thanks to those who cheat on their taxes. To help plug the multi-billion-dollar tax gap, the IRS has instituted new whistleblower rules, but Michael A. Sullivan, a leading whistleblower lawyer, says the IRS needs to revamp its rules dramatically to encourage participation by the public to help the government recoup what is owed. Sullivan and Richard Rubin, an Atlanta-based federal and international tax attorney, plan to address the IRS in Washington, D.C. May 11 on how the rules can be revised to accomplish the law’s intended goals.

“The new rules are supposed to help citizens participate in closing the almost $350 billion tax gap by removing roadblocks to whistleblowers making claims, and by facilitating reward payments from those claims”

.Earlier this year, the Internal Revenue Service responded to sharp criticism of its existing rules by Senator Chuck Grassley (R-Iowa) by announcing new rules to broaden the kind of claims that will merit rewards to whistleblowers who alert the authorities to fraudulent taxpayers. However, Sullivan, attorney with Atlanta-based Finch McCranie, LLP, and author of the leading whistleblower blog, www.whistleblowerlawyerblog.com, says the new rules do not address key obstacles and create pointless delays for whistleblowers, which ultimately discourage citizens from reporting fraudulent taxpayers to the IRS. According to Sullivan, the new rules actually limit payment of whistleblower rewards in certain types of cases and thwart the intent of Congress to expand those rewards.

Continue reading "Tax Whistleblower Rules to "Expand" Whistleblower Program Actually Restrict and Discourage Participation, Say Whistleblower Lawyers " »

Since tax returns were due today, it was fitting that today was the deadline for comments on an important proposed new regulation for tax whistleblower claims.

We have submitted formal comments today to the IRS excerpted below, and have asked to speak to the IRS to urge important changes on May 11 in Washington. We thought it important to explain the history of Congress's 2006 changes to the IRS whistleblower law--and emphasize that its clear intent was to attract a greater number and variety of tax whistleblower claims.

We believe the IRS needs to remain true to that principle, and thus amend its proposed regulation to reward any whistleblower who creates a financial benefit to the Treasury. That principle will dramatically simplify--and enhance--the IRS Whistleblwoer rules. We have also advocated to end needless delays in the program.

Exceprpts of our formal comments to the IRS are reprinted below:

Continue reading "New IRS Whistleblower Rules Still Need Substantial Changes" »

The floodgates may be opening for the IRS Whistleblower program for tax whistleblowers, which we have written about since its birth in late 2006.Today, a law firm announced that its client received yesterday a $4.5 million award after filing a Form 211 reporting tax violations by a financial services firm.

The IRS Whistleblower Office cannot comment, as whistleblower information is protected by section 6103 of the the Internal Revenue Code. The whistleblower has elected to remain confidential, as the IRS rules allow.

The first announced award comes four years, three months, and eighteen days after Congress created the first meaningful rewards to tax whistleblowers in December 2006.

Although whistleblowers (and whistleblower attorneys) have grown impatient, many cases will take at least that long, as the IRS must screen the claims, assign them to the appropriate IRS operating division (such as Large Business & International), conduct the audit or examination from start to finish, and return the file to the IRS Whistleblower Office for an award determination.

(You can read about the process in our prior postings here. Avoidable delays caused by counterproductive rules are another question that we will be addressing very soon, in public comments on the IRS Whistleblower rules.)

Overall, the IRS Whistleblower Program is an example of smart government, at its best, thanks in large part to Senator Charles Grassley. It was inspired by the dramatic successes of the nation's major fraud-fighting whistleblower law, the False Claims Act, which has recovered more than $25 billion for U.S. taxpayers since 1986, and has paid more than $2.7 billion to whistleblowers.

Ironically, this announcement comes on the eve of the federal government "shutdown" that seems imminent. Those who wish to promote honest taxpayers' interests--and minimize the tax burden on all of us--would be wise to give the IRS Whistleblower Program all of the resources it needs to stop tax cheats.

Coincidentally, this threatened shutdown has forced postponement of the 3rd Annual "IRS Whistleblower Boot Camp" in Washington this coming week, about which we have written. The Boot Camp will return--bigger and better--now that whistleblowers are being rewarded.

Congratulations to Eric Young on this result for his client!