Qui Tam

Why Is The IRS Tying Its Own Hands In Tax Whistleblower Claims?

By Finch McCranie, Esq.

Yesterday we reported the final IRS regulations on sharing tax return information with tax whistleblowers.

In theory, that sharing of information should follow the highly successful model used by the Justice Department in leveraging its resources by using the knowledge and expertise of whistleblowers in pursuing whistleblower cases under the False Claims Act. When information is shared, the whistleblowers and their lawyers have often helped maximize the government's recovery.

In practice, however, this IRS rule is misguided and should be overhauled.

The regulation memorializes the position that sharing of return information will be "infrequent." In practice, however, ?infrequent? seems to have meant rarely, if ever. In fact, Tax Notes has confirmed that--four years into the new IRS Whistleblower Program--the IRS has not yet approved use of this procedure in any claim.

Senator Grassley, I hope you are listening. It seems the powers that be at the IRS (not the Whistleblower Office) do not wish to take advantage of the knowledge and expertise of whistleblowers and their lawyers.

The public will suffer as a result, as honest taxpayers continue to pick up the tab for tax cheats.

Full post as published by Whistleblower Lawyer Blog on March 15, 2011 (boomark / email).