Although the IRS whistleblower program has existed for many years, it was escalated dramatically in 2006 with enactment of a statute mandating awards of at least 15% but not more than 30% under certain conditions. The IRS proceeded to establish an office dedicated to the program in 2007, which has grown as more citizens came forward with allegations of wrongdoing by others (frequently their employers).
Awards have also been greatly expanded by the legislation in 2018 that made clear that the collected proceeds from which IRS must pay awards includes those from all programs the IRS is authorized to administer, enforce, or investigate, including criminal fines, civil forfeitures, and violations of reporting requirements. Indeed, the new report says that almost $810 million of the additional collections from which awards were paid in 2018 came from that change in the law.
The IRS reports that whistleblower claims increased by 2.9% over 2017. The $300 million of awards dwarfed the $34 million in 2017 and the $61 million in 2016. During 2018 some 915 new claims were referred to IRS field offices for examination. Sixty-five of the referred claims came from the IRS Large Business and International Division.
Private tax practitioners were pleased with the progress shown, and the National Whistleblower Center welcomed the new report.
Worldwide ERC® members need to be aware of the risk posed by possible internal whistleblowers under this expanded and active program, which may cause considerable trouble even if allegations made are doubtful or untrue. Possible targets of whistleblower claims could include tax protected relocation programs if not operated in accordance with IRS rules.