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IRS changes rules for whistleblowers
by Joseph Ernest July4, 2010
Newscast Media -- In yet another endeavor to discourage the practice, the Internal Revenue Service has changed the rules regarding whistleblowing. When whistleblowers furnish the IRS with information that enables them to recover tax funds, the whistleblower is entitled to up to 30 percent of the money. However, some whistleblowers have complained that even after the IRS recovers these monies, they are given the cold shoulder by the agency.
Congress has called on the agency to reward whistleblowers on the premise that this is their greatest hope of infiltrating tax-evasion schemes, but a new change in the IRS manual may do more to discourage informants than encourage them. It was whistleblowers who helped the U.S. government get a $780 million settlement from Switzerland's largest bank UBS, which admitted to helping U.S. citizens hide money from the IRS.
The updated manual says that a whistleblower gets nothing if instead of yielding a payment to the IRS, the tip stops a refund or reduces a credit. This has prompted Sen. Charles E. Grassley (Iowa), the ranking Republican on the Finance Committee, to call on the Treasury Department to delay implementation of the updated manual.
In a June 21, letter to Treasury Secretary Tim Geithner, whose department includes the IRS, Grassley said, "I have serious concerns that the new Internal Revenue Manual provisions will deter whistleblowers from filing claims. The decision to overrule the independent whistleblower office was contrary to law."
The IRS refuses to answer questions about the updated manual, but in a two sentence response said, "The senior leadership of the Internal Revenue Service believes that the Whistleblower provisions are an important and valuable tax administration tool that can help to improve tax compliance. We are fully committed to using these provisions for the benefit of all taxpayers in this country who pay the taxes they owe." Add comments>>
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