First Reported IRS Whistleblower Award Is Made–Finally!

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!