The IRS Whistleblower Office has released its annual report to Congress on the state of the program in Fiscal Year 2014. In total, the agency awarded more than $52 million to tax whistleblowers in FY2014.
Since 2010, the Internal Revenue Service has awarded more than $250 million under Section 7623. The majority of claims paid out continue to be under the old tax whistleblower law, now codified in § 7623(a), rather than the new mandatory reward law passed as part of the Tax Relief and Health Care Act of 2006 and codified in § 7623(b).
The whistleblower office has paid out eleven claims under section 7623(b) between FY 2011 (when the first claims were paid) and the end of FY 2014, including two separate payments to one whistleblower. This law requires the IRS to pay a mandatory award to eligible individuals that substantially contributes to the collection of tax, penalties and interest when the amounts in dispute are more than $2 million. Our own Eric Young represented the whistleblower in the first reported mandatory reward under the new law, an accountant that received $4.5 million for the tip.
Given the thousands of tips that are pouring into the agency every year, one would expect that there would be more awards. However, the agency continues to reiterate that it takes five to seven years to proceed through its internal system. The criticism of the tax program has not been limited to the amount of the rewards, however. The program has also received criticism from Senator Grassley for its lack of communication with the individuals providing it information. The agency defends itself to this criticism with the regulations requiring it to keep information about taxpayer returns private.
Despite the problems with the program, more claims were submitted during FY 2014 then ever before. The 14,365 claims were an increase of 3,845 over FY 2013. The annual report also reviewed the final regulations of the program published in August 2014. These regulations provided additional guidance and clarification regarding
The awarded amounts in FY 2014 have to be reduced by almost $4 million because of sequestration. This is required by the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. In FY 2015, the reduction in awards for sequestration will be 7.3 percent. The reduction is applied after the applicable award percentage is determined by the Whistleblower Office.
If you have questions about this or another aspect of the tax whistleblower program, feel free to contact one of our IRS whistleblower attorneys via our contact form or by calling 1-800-590-4116. Our law firm offers a free, confidential initial legal consultation with a lawyer for whistleblowers.