The IRS recently released its Annual Report to Congress on its whistleblower program and the results are discouraging even for an agency that has a questionable track record when it comes to dealing with whistleblowers. Despite having received more tips than ever – over nine thousand of them — the IRS paid only $53 million to whistleblowers in 2013. This is a sharp drop from the $125 million paid out in 2012, though they are far better than meager payouts before that ($8 million in 2011; and $18.7 million in 2010). Unfortunately, this year’s tally shows that, despite all the criticism directed towards the IRS whistleblower program, the agency remains sluggish in its whistleblower enforcement with no signs of picking up anytime soon.
Part of the problem seems to be that the agency is simply too slow to investigate tips. The report shows that the IRS Whistleblower Office has yet to close roughly 800 investigations that were prompted by whistleblower tips received more than seven years. And thousands of additional investigations remain open from whistleblower tips received since then: 1,373 from 2007; 1,060 from 2008; 2,025 from 2009; 6,253 from 2010; 2,308 from 2011, and 3,095 from 2012. The tips are flooding in – tips that could return to the IRS billions of dollars – and it appears that no one in the agency is listening.
With respect to the investigations that the agency has closed, the IRS acknowledged in the report that hundreds of them were done so only because there were insufficient resources to investigate them or because the statute of limitations was close to running out. With long processing times, dead claims, and whistleblower payouts that are too few and far between, the IRS Whistleblower Office risks losing credibility. To some, it already has. Senator Grassley, a longtime champion of whistleblowers, and one of the key architects of the 1986 amendments to the False Claims Act and other major whistleblower legislation, said that “[t]he bad news is the progress in making payouts is slow. My worry is that the slow progress will cause the tips to dry up.”
The IRS itself has done nothing to dissuade the widespread feelings of discouragement toward its office. In fact, it has done the opposite in trying to defend the latest figures. The IRS statement accompanying the report sheepishly predicted for next year that the number of [whistleblower] payments … is not projected to grow dramatically in fiscal 2014,” and that “it typically takes five to seven years to analyze, investigate and/or audit, and collect proceeds.” A dismal outlook for sure.
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