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IRS Considers Lowering Financial Incentives for Whistleblowers
Author: Scarinci Hollenbeck, LLC
Date: March 20, 2013
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The Internal Revenue Service has encouraged Americans to help it detect and prosecute tax law violations by offering financial incentives for those who alert the agency to tax-related crimes. However, the agency is considering lowering these incentives in the future, which may affect how many people come forward.
Acting IRS commissioner Steven Miller recently proposed to shrink the existing provisions of the IRS Whistleblower program, and suggested a number of changes in regards to which types of money qualify for rewards. Under the existing program, those who alert the IRS to tax evasion can collect a reward that ranges between 15 and 30 percent of any proceeds brought in as a direct result of a tip. However, the tax evasion must involve at least $2 million in funds or apply to an individual making at least $200,000 per year, the New York Times reports.
Under the new proposals, whistleblowers would face difficulties obtaining rewards that stem from a corporation’s inflation of losses, the Times notes. In addition, informants would be wholly excluded from rewards related to money from Foreign Bank and Financial Accounts (FBARs) violations, the newspaper added.
However, many lawmakers say the proposal – if implemented – may deter Americans from coming forward with knowledge of tax violations. Further, many analysts noted that the IRS has failed to make good on several of the previous assistance they have received from informants. For example, the IRS has received more than 1,960 claims since 2006, but paid its first claim in 2011, the Times reports.
The IRS has not yet gone through with any of its proposals and has not yet announced when or if it will decide to pursue a stricter whistleblower policy. Currently, it has not let up on its efforts to use various resources to detect tax law violations, including new agreements with several countries across the globe for more transparency and reporting on Americans’ foreign accounts.
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IRS Considers Lowering Financial Incentives for Whistleblowers
Author: Scarinci Hollenbeck, LLC
The Internal Revenue Service has encouraged Americans to help it detect and prosecute tax law violations by offering financial incentives for those who alert the agency to tax-related crimes. However, the agency is considering lowering these incentives in the future, which may affect how many people come forward.
Acting IRS commissioner Steven Miller recently proposed to shrink the existing provisions of the IRS Whistleblower program, and suggested a number of changes in regards to which types of money qualify for rewards. Under the existing program, those who alert the IRS to tax evasion can collect a reward that ranges between 15 and 30 percent of any proceeds brought in as a direct result of a tip. However, the tax evasion must involve at least $2 million in funds or apply to an individual making at least $200,000 per year, the New York Times reports.
Under the new proposals, whistleblowers would face difficulties obtaining rewards that stem from a corporation’s inflation of losses, the Times notes. In addition, informants would be wholly excluded from rewards related to money from Foreign Bank and Financial Accounts (FBARs) violations, the newspaper added.
However, many lawmakers say the proposal – if implemented – may deter Americans from coming forward with knowledge of tax violations. Further, many analysts noted that the IRS has failed to make good on several of the previous assistance they have received from informants. For example, the IRS has received more than 1,960 claims since 2006, but paid its first claim in 2011, the Times reports.
The IRS has not yet gone through with any of its proposals and has not yet announced when or if it will decide to pursue a stricter whistleblower policy. Currently, it has not let up on its efforts to use various resources to detect tax law violations, including new agreements with several countries across the globe for more transparency and reporting on Americans’ foreign accounts.