Today the Treasury Inspector General released a Report titled “The Whistleblower Program Helps Identify Tax Noncomplicane; However, Improvements Are Needed to Ensure That Claims Are Processed Appropriately and Expeditiously” about the IRS Whistleblower Program.  It contained some interesting statistical analysis of various processes relating to the inner workings of the Program but a quote from page 7 of the Report stuck out:

[A] majority of claim closures in FYs 2015 and 2016 (83 and 85 percent, respectively) are rejected or denied before going to an operating division field group for an investigation or examination, with only a small portion (2 percent each year) resulting in an award. Most claims were rejected because the allegations were not specific enough for the IRS to take action or denied because the allegation was below the threshold to justify resources for compliance action.

We understand that about 85% of the submissions that the IRS Whistleblower Office receives are pro se filings, and the problem is that often those claims are speculative or are not developed enough for the IRS to use them as a basis for taking action.  Of the remaining 15% on which the IRS does take action and passes the whistleblower’s information to the field agents for examination, approximately 2 out of every 15 are getting an award.   We believe a whistleblower’s odds of getting an award can be significantly higher [than 13.333%] for a thoroughly vetted submission with good facts and good law that are clearly laid out.  The hurdle of getting the IRS to take action in the first place is certainly a high one but then you have to deliver your information in a way that helps them win their case.

The TIGTA Report spent a lot of time looking at the procedures for the debriefing intake and the claim rejection processes, but in our view that is not the most material weakness of the IRS Whistleblower Program.  The biggest weakness is that under the current claim processing system it is still far too easy for the IRS field examination divisions to simply walk away from a good case even when the facts and the law are on their side.  Often people have a difficult time convincing the IRS to take even a slam dunk case, no matter how much it costs taxpayers if they give it up.  Our mission is to set forth a whistleblower’s information in such a way that it not only convinces the IRS to take action, but it forms the solid foundation of a winning case once they do decide to take action.

  • Disappointed Whistleblower

    This just gets me sick to my stomach. Take the case of Whistleblower 26876-15W.(147 TC 12) At first glance it seems like just a relatively simple screw up by the Whistleblower’s Office that failed to send the denial notice to the right place. However, if you read the opinion closely the IRS used the Whistleblower’s information and made a proposed adjustment. All good so far for the Whistleblower—Right?
    Wrong! You would be terribly mistaken because the issue went to Appeals and all issues related to the Whistleblower were coincided by the IRS. Sorry Whistleblower you get nothing! The problem is that the Statute pays ANY SETTLEMENT it’s not surprising that they coincide the Whistleblower’s issues so they do not have to pay. If there was any collection on appeals the Whistleblower should be entitled to some amount. I doubt this guy stands a chance because he is Pro se. The most disturbing part is how many other times has this happened? We will never know because in 75% of the cases they cannot even get the correct reason code into the system because they have no documentation to support the denial according to the audit..

  • Whistleblower A

    Management’s Response indicates the preliminary award package to a claimant has been moved up to after proceeds have been collected as opposed to waiting for the 2 year statute to lapse effective as of August 1st (assume this is 8/1/2016 as the letter is dated July 28th). Have you seen directly, or heard of indirectly, the service reaching out to any claimants before the statute has lapsed? This is undoubtedly great news and supports the flow chart that was produced on the process, just curious how steep the backlog is and if the service is chewing through it fast enough to get any communications out prior to the 2 year statute.