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What is the status of the IRS whistleblower program?

One of the means used by the IRS to go after tax evasion is the use of whistleblowers. The idea is to use financial incentives to encourage people who know of suspected tax compliance problems to report those problems to the government.

In Texas and across the country, these people - known as whistleblowers - can play an important role in helping the IRS collect unpaid taxes.

At least one U.S. senator, however, is concerned that the IRS whistleblower program isn't working well enough in practice. Sen. Charles Grassley of Iowa was the chief sponsor of the 2006 legislation that authorized the current configuration of the program. But now Sen. Grassley is complaining that the IRS is not acting quickly enough on the whistleblower claims it receives.

Sen. Grassley is not the only one concerned about the operation of the program. In June, the U.S. Tax Court will hear a case in which a would-be participant in the whistleblower program contends that the IRS has failed to communicate properly with him about the status of his claims. The case involves a former banker who says he has been waiting six years for the IRS to respond to his whistleblower claim against a former employer.

For its part, the IRS says it is making progress in implementing the 2006 whistleblower law. The acting head of the agency sent a letter to Sen. Grassley, saying that the number of whistleblower awards is expected to increase.

Before the 2006 law took effect, awards to whistleblowers were made only by discretionary choice of the IRS. The new law is supposed to pay rewards to informants based on a percentage of the additional taxes collected due to their cooperation.

Source: "Hearing to expose IRS information program to scrutiny," Reuters, 4-9-13

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