July 6, 2012

The IRS Whistleblower Office — A New Beginning or Just a Lot of Lip Service

By Gordon Schnell 

Since its inception in 2007, the IRS Whistleblower Office has been subject to some fairly withering attacks.  And for good reason.  It was supposed to revamp the IRS whistleblower system, encouraging tipsters to flood in and help the government identify all of those tax cheats and their billions of dollars in unpaid taxes each year.  The whistleblowers have certainly done their part.  They have submitted to the IRS thousands of claims of tax fraud since the office was opened.  But for the most part, the agency has ignored them.  It has become in the minds of so many a wasteland where whistleblower claims go to die.

No one has been more critical of the IRS than Senator Chuck Grassley himself.  He is the modern day champion of the whistleblower movement and one of the key architects behind the increased rewards and protections recently afforded whistleblowers.  He also is responsible for creating the IRS Whistleblower Office as an independent unit within the IRS with the authority and resources to revamp what has historically been an agency hostile to whistleblowers.  He has not been happy with what appears to be the agency’s continued hostility toward whistleblowers.  For the past two years Senator Grassley has been on a rampage to get the agency to change its tune and take full advantage of the whistleblower system he helped put in place.  Perhaps his efforts are paying off.

In a memo the IRS widely released last month, the agency proclaims it is turning over a new leaf in its work with whistleblowers.  Among the new directives outlined in the memo are strict timelines for acting on whistleblower information and rewards, and a commitment to deal directly and personally with each whistleblower.  The memo also evinces a newfound recognition that whistleblowers should be an important part of the IRS enforcement scheme —  they “can provide valuable leads, and often offer unique insights into taxpayer activity.”  This is quite a turnaround for an agency that, in the words of Senator Grassley, is used to treating whistleblowers “like skunks at a picnic.”

So the question remains, is the IRS really getting its act together, or is it just paying lip service to Senator Grassley and the army of critics who have questioned what is going on with the IRS today?  Only time will tell.  But one thing seems pretty clear.  If the IRS is not serious in its newly laid out approach and continues on its historic course, the number of whistleblowers who come knocking will diminish to the point where the IRS will forever be excluded from the whistleblower enforcement scheme.

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