In 2006, the IRS implemented a program to mutually benefit taxpayers and the U.S. government. The IRS whistler-blower program is intended to boost tax revenue by giving incentives to tipsters who are aware of illegal tax procedures by their company. Over the past year, more than 1,300 claims have been filed against nearly 10,000 companies and individuals, amounting up to $2 million a claim. So what is the problem? Three awards have been paid.
Alliantgroup LP is a politically connected advisory firm that assists companies in applying for beneficial tax credits. In July 2009, two former employees alleged Alliantgroup’s clients owed $712.5 million in refunds over wrongly claimed tax credits. With the 30% reward for whistle-blowing, these former employees were about to make $210 million. Despite all of the evidence from a 32 page submission filled with e-mails and documents, the IRS rejected the claim without even attempting to further an investigation.
“The IRS does not have a problem attracting whistle-blowers. The IRS’s current problem is processing and compensating whistle-blowers in a timely manner,” said Senator Charles Grassley (R-IA). “I am now concerned that whistle-blowers will stop coming forward.”
Whistle-blower claims could take years to go through the IRS review and award determination process. In addition, if a claim is rejected, the IRS does not provide sufficient information as to why, which essentially adds insult to injury to the whistle-blower. According to Steven T. Miller, overseer of the whistle-blower office, whistle-blowers should expect to wait as long as seven years for an award. He also said they hope to pay out another three to five awards this year.
The IRS is wary about speaking directly with the whistle-blowers because of fears of accidentally sharing confidential information. A non-communicative agency could potentially be the reason this process is unncessarily long.
Every whistle-blower should have a reputable attorney to defend their case and fight to get their reward. Despite the long and strenuous process of filing an illegal tax matter with the IRS, it is good to know you are doing a service for your country.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.