Informant Program Spurs IRS Whistleblower Tips

The IRS’s paid informant program yielded 476 tips last fiscal year about 1,246 tax evaders after Congress substantially revamped the program in 2006.

The change in the law boosted whistleblower payments from a maximum of 15 percent to a maximum of 30 percent of the proceeds recovered. Last year, of the 994 claims in which an individual made a specific allegation about the amount of the underpayment, 228 alleged an underpayment of $10 million or more, and 64 alleged an underpayment of $100 million or more, according to a report to Congress by the IRS Whistleblower Office.

The IRS does not yet know how much will be collected from the whistleblower reports, but in contrast to the 476 tips it received last year, the office received just 116 tips the previous year.

Only eight of the 198 fully paid claims in 2008 involved collections of more than $2 million, and only three involved collections of more than $10 million, but most of those claims had been made under the old informant program.

“I hope the IRS will work faster to process the whistleblower submissions, try not to accumulate a backlog, and stop as many big-dollar fraud operations as possible,” said Senate Finance Committee ranking member Charles Grassley, R-Iowa.

Many of the individuals who told the IRS about the tax evasion claimed to have inside knowledge of the transactions they were reporting and often provided extensive documentation to support their claims, according to the IRS. Earlier this year, Girls Gone Wild video producer Joe Francis accused his accountant of turning him in for tax evasion under the IRS whistleblower program in order to collect a reward while simultaneously defrauding the production company as its CFO.

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