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The IRS whistleblower program: an update on awards

It’s been awhile since we’ve updated you on the viability of the IRS whistleblower program.

A little over a year ago, in our April 11 post last year, we noted that the program was receiving criticism from a U.S. senator. Sen. Charles Grassley, of the architects of the legislation that created the current program, was complaining that the IRS was slow to pursue whistleblower claims.

In this post, we will update you on statistics showing how much the IRS is actually paying out to whistleblowers.

Whistleblowers are people who tell the IRS about tax evasion and whose tips help the government bring in revenue from previously uncollected taxes. Under the whistleblower program, people who tip off the IRS unpaid taxes by others can get financial award.

The size of the awards depends on the amount that is actually collected.

In Fiscal Year 2013, the amount paid out to whistleblowers by the IRS was $53 million. The amount of tax revenue brought in through the program was $367 million.

These total dollar amounts were down from 2012. But a comparison with 2012 must be put in context, because the 2012 data was skewed by one giant award of $104 million.

The giant award was to a whistleblower who told the IRS about undisclosed offshore accounts handled by the Swiss banking firm UBS. This was a particularly prominent battle in a larger-scale offshore enforcement offense against alleged tax evasion facilitated by foreign banks.

Overall, a look at the data shows that the number of whistleblower awards was quite similar in FY 2013 compared to FY 2013. There were 122 in FY 2013, down only slightly from 128 in FY 2012.

Source: The Wall Street Journal, "IRS Pays Awards to Whistleblowers," Laura Saunders, April 18, 2014

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