Today, the Internal Revenue Service (IRS) Whistleblower Office released its first-ever multi-year operating plan, “outlining guiding principles, strategic priorities, recent achievements and current initiatives to advance the IRS Whistleblower Program.”
“This is welcome news for IRS whistleblowers whose cases languish for years, sometimes up to a decade or more, before the whistleblower can be paid an award,” says David Colapinto.
“This is an important step forward,” adds Stephen M. Kohn. “This is a critical program that has been held back by antiquated regulations. It’s time to modernize the program and effectively prosecute tax evaders.”
The plan lays out six strategic priorities:
- Enhance the claim submission process to promote greater efficiency.
- Use high-value whistleblower information effectively.
- Award whistleblowers fairly and as soon as possible.
- Keep whistleblowers informed of the status of their claims and the basis for IRS decisions on claims.
- Safeguard whistleblower and taxpayer information.
- Ensure that our workforce is supported with effective tools, technology, training and other resources.
“Of particular interest to the whistleblower community is the IRS’ emphasis on increasing efficiencies to speed up the process and issuing whistleblower awards faster and as soon as possible,” Colapinto adds.
“While paying whistleblower awards can incentivize other whistleblowers to report major tax fraud by wealthy tax cheats, the failure to pay whistleblower awards timely by taking over a decade to make payments, can act as a disincentive to blowing the whistle,” Colapinto adds. “This is an important step towards making the IRS whistleblower program more effective. To date, the IRS reports that it has collected more than $7.4 billion in taxes attributable to whistleblowers reporting tax fraud and underpayments. The IRS Whistleblower Program has potential to collect even more if it improves its program to encourage more whistleblowers to come forward.”
Modernized in 2006, the IRS Whistleblower Program offers monetary awards to whistleblowers who voluntarily provide original information about tax noncompliance. While the program has resulted in the collection of billions of dollars, in recent years payouts to whistleblowers have dipped while the processing time for award payments have risen to over 11 years on average.
Since taking over as the Director of the IRS Whistleblower Office in 2022, John Hinman has overseen a number of administrative reforms aimed at making the program more efficient and effective, including increasing staffing at the office and disaggregating whistleblower claims to speed up award payouts.
While the newly released operating plan promises to make needed changes to the IRS Whistleblower Program, Congressional reforms are also needed. In January, Senators Ron Wyden (D-OR) and Mike Crapo (R-ID) unveiled a discussion draft of a bipartisan IRS reform bill which contains reforms to the IRS Whistleblower Program previously found in the IRS Whistleblower Improvement Act of 2023.
Geoff Schweller also contributed to this article.