Tax Whistblowing on the Rise in US

October 2, 2009 Taxation in USA  No comments

Figures released by the Internal Revenue Service (IRS) show a significant increase in the number of American citizens providing information on underpaid taxes of other’s.

The IRS Whisltleblower Office, in its Annual Report to Congress, released October 1st, has stated that 1,246 individual cases have been brought forward throughout the 2008 fiscal year with information regarding tax evaders and individuals committing significant levels of tax fraud. Of the 1,246 cases brought forward, 994 made specific allegations regarding the amount of tax evaded, within these, 228 concern tax underpayments exceeding US$10 million, and 64 cases involve tax liabilities of over US$100 million.

The IRS has had provisions for whistleblowing since 1867. Although, reward and payment for those providing information has been subject to IRS discretion. Legislative change in 2006 saw the creation of mandatory payment of rewards to those providing significant information leading to conviction, and the creation of the IRS Whistleblowers Office. Payouts are now pegged at a minimum of 15%, rising to a maximum of 30% for high value cases. No awards have yet been paid for information provided following the law change, although the 2008 fiscal year saw payment of over $22 million in rewards for information provided prior to 2006.

Charles Grassley, Iowa Senator, said, “It’s good to see so many whistleblower submissions coming into the IRS,” and “The tax code improvements are still new, and I hope more whistleblowers will come forward as word gets out.”

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