IRS Annual Report Shows Whistleblower Program in Crisis

On June 10, the Inner Income Service (IRS) Whistleblower Workplace launched its Fiscal Year 2021 Annual Report. In Fiscal Yr 2021 (FY 2021), which ran from October 1, 2020 – September 31, 2021, the IRS Whistleblower Program collected $245 million due to whistleblower suggestions and paid out $36 million in whistleblower awards. These statistics, that are drastically decrease than these of latest years, in addition to the lengthy delays detailed in the report, spotlight the necessity for reforms to the whistleblower program.

The quantity awarded to whistleblowers by the IRS in FY 2021 was the bottom since FY 2017 and was solely about half of the common yearly whole for this system’s historical past. The $36 million whole can also be extraordinarily decrease than the quantity awarded in FY 2018. That yr, the IRS Whistleblower Program granted a report $312 million in whistleblower awards.

The full sum of money collected from fraudsters by this system correspondingly slumped in FY 2021. The $245 million is considerably decrease than the $1.44 billion collected simply three years in the past.

Moreover, the report reveals that the IRS Whistleblower Program at present takes over 11 years on common to course of award claims. Up to now, numerous IRS whistleblowers have died before being granted an award.

“The IRS whistleblower report should be a massive wakeup call to Congress that it needs to take action now and pass the bipartisan and bicameral reform legislation – the IRS Whistleblower Program Improvement Act,” mentioned Kohn, Kohn & Colapinto founding associate Stephen M. Kohn. “Passage of this legislation will send a strong signal of support for the program to the IRS and to whistleblowers. It isn’t a coincidence that the number of awards has gone down and down since the Tax Court changed the standard of review for tax whistleblower decisions to a rubber stamp. Whistleblowers need to have confidence – and IRS managers need to know — that whistleblowers will get a full independent review of any denial of a whistleblower award.”

The Whistleblower Program Enchancment Act was introduced by Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) on June 15, 2021. The invoice makes a number of reforms to the IRS Whistleblower Program in order to enhance this system’s operations and higher shield whistleblowers who expose tax fraud. These embody offering for de novo evaluate of whistleblower selections in Tax Courtroom, eradicating sequestration of whistleblower awards, and imposing curiosity on whistleblower awards which might be topic to important delay.

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