The Internal Revenue Service’s Whistleblower Program Office has still not addressed several problems that were brought to its attention several years ago, according to a new government report.
The report, by the Treasury Inspector General for Tax Administration, noted that it had identified the internal problems at the whistleblower office in an earlier report in August 2009. In that earlier report, TIGTA discovered deficiencies in the IRS's internal controls and timely resolution of whistleblower claims.
The IRS has the authority to pay awards to whistleblowers for credible information relating to violations of the tax laws that result in the federal government's recovery of taxes, penalties, interest and additional amounts collected as a result of information whistleblowers provide, TIGTA noted in the new report it issued Thursday. The IRS's Whistleblower Program Office was created in 2007 to manage and track whistleblower claims from initial receipt to final closure, including determining appropriate award amounts.
The objective of the new report was to follow up on the adequacy of the corrective actions the IRS agreed to take on the internal control weaknesses that were reported in 2009. TIGTA nevertheless auditors determined that the IRS did not fully and adequately address the prior reported internal control weaknesses on the processing of whistleblower claims. In the prior report, TIGTA found that information captured on three inventory systems was inaccurate.
In the latest report, TIGTA auditors determined that employees manually transferred claim information from the three systems into a single inventory control system, Entellitrak. However, IRS officials did not ensure steps were taken to reconcile and correct the inaccurate information that was reported in our Fiscal Year 2009 review.
TIGTA also determined that Whistleblower Program officials did implement a quality review process to ensure claims are accurately controlled in the Entellitrak system. However, guidance to employees did not specify that employees review the received date of a claim, which is critical when reporting business results to internal and external stakeholders.
During the latest review of the whistleblower office, TIGTA also determined that the timeliness standards for processing of whistleblower claims have not been fully established, and the existing monitoring process was not fully developed to improve efficiencies with processing whistleblower claims in the IRS operating divisions.
"Without adequate oversight of whistleblower claims, the IRS is not as effective as it could be in responding timely to tax noncompliance issues," said TIGTA Inspector General J. Russell George in a statement. "The IRS's effort to improve compliance is critical to reducing the tax gap and maintaining the integrity of the voluntary tax compliance system."
Last August 2011, the Government Accountability Office issued a report on the IRS's Whistleblower Program that included eight recommendations. These recommendations focused on the IRS collecting more information in its claim tracking system and case processing activities, and incorporating more data when reporting on the effectiveness of the Whistleblower Program.
TIGTA made no recommendations in this report because the IRS Whistleblower Office is addressing the GAO’s August 2011 report recommendations. The IRS plans to fully implement its corrective actions to the GAO report by October 15, 2012.
Last week, Sen. Charles Grassley, R-Iowa, a former chairman of the Senate Finance Committee, wrote a letter to IRS Commissioner Doug Shulman and Treasury Secretary Tim Geithner calling for changes in the IRS’s Whistleblower Office. He noted that the program has processed few whistleblower claims so far and paid few rewards (see Grassley Faults Slowness of IRS Whistleblower Office).
In response to the TIGTA report, Stephen A. Whitlock, director of the IRS Whistleblower Office, acknowledged the need for improvements in the program. “We recognize that improvements can be made in collection and use of data in our management information system and that more can be done to oversee evaluation of whistleblower claims,” he wrote. “We are taking a number of steps in this regard.”
These include changes in the data recorded in the Entellitrak system so that additional performance-related information can be captured and reported, along with an increased focus on monitoring and oversight of the evaluation of whistleblower submissions.
However, Grassley has pointed out that there seems to be institutional resistance at the IRS to paying whistleblower claims. He wrote the 2006 law improving the whistelblower office and pointed to the TIGTA report as confirmation of his concerns about the delays at the office.
“This report confirms my concern that the IRS isn’t serious about processing whistleblower claims in a timely way," Grassley said in a statement. "Open-ended timeframes don’t get the job done. Ironically, taxpayers are subject to strict deadlines and stiff penalties for foot-dragging with the IRS. The accountability is one-sided. Meanwhile, while the grass grows at the IRS, big-dollar tax cheating continues. Whistleblowers who are trying to expose the wrongdoing are left twisting in the wind. If the IRS and the Treasury Department really want to close the tax gap, they need to focus on cleaning up the processing of claims and issuing awards. Instead of going to conferences in Miami and San Diego, they should process whistleblower claims and make these payments. For example, the whistleblower office director’s approval of an award apparently has to be reviewed by an executive committee before a whistleblower can be paid. As I said in my letter last week, the IRS needs to get the process moving. President Obama should make this a priority. While he promotes higher taxes on millionaires, his own administration is allowing big-dollar tax cheating to continue by letting whistleblower cases sit on the shelf. He could do a lot for tax compliance by lighting a fire under the IRS on whistleblowers.”
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