IRS Stingy With Whistleblower Payouts, Slow to Follow Up on Tip

By Andrew Zajac and David Voreacos
Bloomberg
Oct. 09, 2011

The IRS took more than four years to reward a whistleblower through a new program to encourage tipsters and has drawn criticism from the Government Accountability Office for failing to move faster.

A recent GAO study found that the program, which has attracted tips from more than 1,300 whistleblowers, doesn’t collect data that could speed up evaluation of information that started to pour in after Congress authorized the Internal Revenue Service to establish the office in late 2006.

“Five years later, they have to start paying rewards,” Stephen Kohn, executive director of the National Whistleblower Center, a Washington-based non-profit group that advocates for government informants, told Bloomberg Government.

The 2006 law was designed to help the IRS narrow the tax gap, which is the difference between taxes owed and taxes paid. The gross amount of the gap is estimated to be $345 billion.

Senator Charles Grassley, an Iowa Republican who pushed for the law, noted that by comparison the U.S. Justice Department has collected more than $27 billion under the False Claims Act, the law upon which the IRS whistleblower statute is modeled. The figure cited by Grassley reflects recoveries since 1986 changes to the law and includes at least $7.8 billion collected since 2009, according to Justice Department figures.

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