The IRS Whistleblower program has recovered more than $1 billion since the Internal Revenue Service expanded its tax whistleblower program in 2007, according to Gene L. Dodaro, the Comptroller General of the United States in prepared testimony before the Senate Finance Committee.
However, that amount is a drop in the bucket compared to the annual net tax gap, which is estimated to be $385 billion. The tax gap is the difference between the amount that should be collected by the IRS and what is actually taken in by the U.S. Government.
The IRS has taken a number of initiatives in recent years in order to reduce the tax gap. Many of these relate to offshore tax evasion, where there has been extensive focus. Most recently, the IRS has been implementing FATCA, the law which requires reporting of offshore assets and incomes of American citizens. We think that this could potentially be a big area for whistleblowing in the future – similar to the Foreign Corrupt Practices Act for the Securities and Exchange Commission.
On that note, there have been some signs that the IRS program for whistleblowers is picking up recently, as two law firms have announced rewards for clients recently. However, the office had been heavily criticized last year due to the lack of communication with individuals submitting tips and a perception of insufficient numbers of awards based on .
Part of that blame may lay with Congress. Lower funding of the agency has reportedly led to less resources for collecting money owed and pursuing enforcement actions. The IRS budget was cut more than $1.2 billion between fiscal years 2010 and 2015.
The $1 billion collected from whistleblowers is still a great accomplishment. Yet, the figure reveals just how much larger the False Claims Act is then the IRS program. Every year recently, whistleblowers have helped the federal government recover more than a billion dollars under the False Claims Act. The law did get a substantial head start with its amendment by Congress in 1986, nearly 20 years before the IRS program was expanded in 2006-2007.
If you have questions about the whistleblower law, or have evidence of corporate wrongdoing that you wish to report, feel free to contact one of our IRS whistleblower attorneys via our contact form or by calling 1-800-590-4116.