Qui Tam

IRS Whistleblower Program: Inspector General Urges Whistleblower Protection from Retaliation and Administrative Changes

By Finch McCranie, Esq.

Today the Treasury Inspector General for Tax Administration ("TIGTA") released a Report on the IRS Whistleblower Program that urges Congress to protect IRS whistleblowers from retaliation by employers, and recommends various administrative changes to the Program.

The Report's title, "Deficiencies Exist in the Control and Timely Resolution of Whistleblower Claims," is misleading to this writer, who has followed the progress of the new Program since its inception. Before Congress created the new IRS Whistleblower program in December 2006, the Inspector General had observed that the IRS had no centralized approach to dealing with "informant" claims under the "old" program." The new legislation was designed to create a "Whistleblower Office" for the first time ever--with brand new staff hired to "invent" the various procedures and systems needed to fulfill Congress' intent.

To illustrate, when we submitted a substantial IRS whistleblower claim in early January 2007 through the IRS Criminal Investigative Division, the new IRS Whistleblower Office had no Director or staff. Director Steve Whitlock was not appointed until several weeks later, and he promptly set out to hire highly qualified professionals within the IRS to help establish the new Whistleblower Program. The same professionals simultaneously had to keep up with submissions of new claims from all over the country, as well as capture older submissions to the IRS.

Perhaps the IG means that the Whistleblower Office still has not worked out all of the kinks in this new program. Director Whitlock agreed with the recommendations for continuing to improve the claims process.

The most significant part of the Report may be its strong recommendation that Congress authorize protecting IRS whistleblowers from retaliation, as whistleblowers who file qui tam cases under the False Claims Act are protected:

The False Claims Act covers false claims by government contractors but specifically excludes tax fraud. The Whistleblower provisions in the Tax Relief and Health Care Act of 2006 cover actions in the area of tax compliance and provide a structure that is similar in certain respects to the False Claims Act. However, unlike the False Claims Act, Whistleblower law related to tax fraud does not include specific provisions for employee protection against retaliation by an employer. Our discussions with representatives within the operating divisions who work with whistleblowers identified that whistleblowers are concerned regarding possible retaliation from employers and that their confidentiality is their utmost concern.

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Legislative Recommendation
Legislation is needed to ensure that informants are protected against retaliation by their employers and to provide specific relief to informants who are retaliated against.

One note of caution: the Report refers to $65 billion in "alleged income unreported" in 2008. There is no way to verify this number now, given that informants may be wrong in their estimates.

The full Report is here.

Full post as published by Whistleblower Lawyer Blog on October 08, 2009 (boomark / email).