IRS Whistleblower Program Lacks Vital Resources
Twenty-three died before they received whistleblower rewards due to the lengthy process.
Washington, D.C. April 10, 2019. Yesterday, the IRS released an update to its Whistleblower Process Timeline. The timeline reveals that the process can take over 10 years from start to finish for a whistleblower to obtain a reward.
“I applaud the IRS Whistleblower Office for being transparent. However, what the timeline tells us is disheartening and indicates the program lacks vital resources,” said whistleblower attorney Stephen M. Kohn, a partner at Kohn, Kohn & Colapinto, a law firm that represents IRS whistleblowers. “The lengthy delays in adjudicating whistleblower cases hurt the program and demonstrates beyond any doubt that the program needs more resources and should be a high priority with the Department of Treasury,” Kohn added.
The impact of the long delays was brought home in the IRS Whistleblower Office’s most recent report to Congress. The Whistleblower Office reported that 23 whistleblowers died waiting for decisions on their reward claims. Those who died had claims pending for an average of 9.5 years.
The IRS Whistleblower Program launched in 2006 to incentivize whistleblowers to help the IRS detect and deter tax noncompliance and avoidance. The program is highly effective with information submitted by whistleblowers assisting the IRS in collecting billions of dollars in revenue and deterring would be tax cheats. The program recovered $1.4 billion for the U.S. taxpayers in 2018.
“The failure of the Department of Treasury to understand the importance of the IRS Whistleblower program has endangered its success and let tax cheats run rampant with little accountability,” Kohn said. “The employees of the Whistleblower Office are doing a Herculean job helping whistleblowers, but they lack the minimum resources necessary to make the program fully effective,” Kohn added.
In the “Whistleblower Process Timeline” published by the IRS on April 9, 2019, the Whistleblower Office was transparent as to the long delays that are harming the program. As explained by the IRS:
- Field examinations can take 1-3 years to complete.
- Tax Court adjudication can take 3-6 years.
- Monitoring for payment takes up to 10 years.
Despite these delays, the Department of Treasury has reduced the size of the Whistleblower Office staff. At the start of 2016, the IRS Whistleblower Office had 61 full-time staff members, that number was reduced to the current level of 36. These reductions were approved despite the record number of IRS whistleblower cases being filed. Whistleblowers filed 12,000 reward claims in 2018, bringing the number of open cases to over 29,000.
According to Kohn, who is also Chairman of the National Whistleblower Center, “Urgent Congressional action is needed. An immediate legislative fix is necessary to ensure whistleblowers are timely compensated. Congress should require the IRS to pay interest to whistleblowers when the IRS has collected proceeds and set mandatory deadlines for finalizing cases.”
“I commend the staff of the IRS Whistleblower Office for the incredible job they are performing with such limited resources. Congress must support this program so that major tax frauds can be detected and stopped,” Kohn added.