IRS Whisteblowers Have Roughly 0.2 Percent Chance Of Getting Money (UPDATE)

The IRS Ignores Whistleblowers

Every year, the Internal Revenue Service misses out on roughly $385 billion in tax revenue it is owed, according to the agency. It is a burden for an agency already facing potentially "serious problems" in the face of budget cuts and new responsibilities.

In spite of that strain, at best, whistleblowers that tip off the IRS about tax evasion have a 0.2 percent chance of ever seeing any money for their risk. The IRS has handed out only three tax evasion-related whistleblower awards since instituting the whistleblower program in 2006. It's not that there's no one out there willing to talk. Whistleblowers have filed more than 1,300 claims alleging that nearly 10,000 people and companies have underpaid millions of dollars in taxes, Bloomberg News reports.

This article has been updated to include information from an IRS statement.

Other agencies are leaving whisleblowers out in the cold too. Roughly 80 percent of whistleblower claims filed under the False Claims Act end with the whistleblowers walking away with nothing, Patrick Burns, a spokesman for Taxpayers Against Fraud, told The Huffington Post earlier this month.

If a whistleblower's information leads the IRS to collect hoarded taxes, the IRS is supposed to pay out between 15 to 30 percent of those taxes to the whistleblower. That hasn't always happened. A former executive at Rabobank, to take an example, recently sued the IRS for not receiving his share of the money, though it is unclear whether the IRS ever acted on his information.

Some agencies do appear better to treat whistleblowers better than others. Tipping off the FBI, for one, often leads to no money at all, whistleblower lawyer David Colapinto told the Washington Post in February. He said a whistleblower would likely do better tipping off the Securities and Exchange Commission.

Even the IRS watchdog recently said that the agency's whistleblower database is prone to errors and that the "timeliness standards for processing claims have not been fully established."

Steven Miller, a deputy commissioner at the IRS, himself admitted to Bloomberg News that "the whistleblower program isn't where we would like it yet," but added that they are "working hard on it" and expect to pay out 3 to 5 more whistleblower awards this year.

Senator Charles Grassley (R-IA) is not pleased. In April, he wrote a letter to Treasury Secretary Timothy Geithner and IRS Commissioner Douglas Shulman to convey his "extreme disappointment" with the whistleblower program. "The lack of progress is demoralizing whistleblowers," Grassley wrote. "I am now concerned that whistleblowers will stop coming forward."

Grassley also claimed that the director of the IRS whistleblower program and 18 other IRS employees were at that moment -- and on the taxpayers' dime -- attending a conference that advised rich people on how to park their money offshore.


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