At this past week’s third annual “IRS Whistleblower Boot Camp,” Deputy IRS Commissioner for Service and Enforcement Steven T. Miller spoke of his “desire for the whistleblower program to grow.” A major announcement was that he would “push for” the IRS to begin using the expertise of whistleblowers who can help the IRS interpret information obtained in its audits..
In his remarks, Deputy Commissioner Miller described “offshore” tax abuses as a key area. He commented that whistleblower submissions have a “unique place” in “breaking bank secrecy.”
With budget reductions, the IRS is looking for ways to “leverage” its efforts. According to Miller, whistleblower submissions in at least three areas can help:
1. Promotion of abusive tax shelters known to potential whistleblowers
2. Tax violations in which sophisticated information technology systems pose a barrier to the IRS, unless a whistleblower can explain them
3. Inadequate information reporting that is required of third parties, and that whistleblowers can address
When it “makes sense” for the IRS to use the whistleblower’s expertise, Miller said he would encourage use of disclosure agreements with whistleblowers authorized under section 6103(n) of the Internal Revenue Code, which governs disclosure of taxpayer information. Examples he gave include review of information received in response to the Service’s information document requests, or explanation of information technology issues known to the whistleblower.
Sen. Chuck Grassley recently urged the IRS to make better use of expertise and resources that whistleblowers and their lawyers can provide, as the Justice Department does in False Claims Act cases.
This year’s IRS Whistleblower Boot Camp also included many other senior IRS officials. Whistleblower Office Director Steve Whitlock and his office’s Special Counsel Debra Bowe were major participants.
Once again, the Office of Chief Counsel’s Senior Counsel Tom Kane participated and was again very generous with his time, both during and after the program. He addressed various litigation issues that arise in whistleblower matters. Senior Program Analysts Dawn Applebaum and Kathy Onken also provided a great deal of knowledge and insight into how the program is operating.
The most fascinating issues to me were those involving the international and offshore efforts of the IRS, the subject of the session I moderated. On this panel, joining IRS Whistleblower Office director Steve Whitlock and Senior Analyst Dawn Applebaum were Toni Weirauch, Deputy Director of International Crimes in the IRS Criminal Investigation Division; and Donna Prestia of the new Global High Wealth Division. The attendees gained an appreciation of the considerations of representing whistleblowers who may be foreign nationals gathering evidence in ways that comport with U.S. law, but that may be contrary to other countries’ bank secrecy laws.
My colleagues Erika Kelton, Paul Scott, Linda Stengle, and Margaret (Peggy) Finnerty deserve thanks for their excellent presentations as well.
Historically, tax whistleblower information has proven highly efficient and productive in recovering revenue lost to tax cheats. A 1999 Treasury report estimated the IRS collects a dollar in revenue for slightly over 4 cents in costs using informant information.
While IRS Deputy Commissioner Miller did not repeat these statistics, they prove that whistleblower information creates great “leverage” for the IRS in helping close the “tax gap” of more than $350 billion annually–the tax burden that dishonest taxpayers impose on honest citizens.
Ms. Onken and Ms. Bowe of the IRS were able to return for the second day of the two-day event sponsored by Taxpayers Against Fraud, the “SEC Whistleblower Boot Camp” featuring new Chief of the SEC’s Office of the Whistleblower Sean McKessy and Associate Director of the Division of Enforcement Stephen Cohen. (We will write separately about this very interesting exploration of the SEC Whistleblower process.)