Office of Audit
THE WHISTLEBLOWER PROGRAM HELPS
IDENTIFY TAX NONCOMPLIANCE; HOWEVER, IMPROVEMENTS ARE NEEDED
TO ENSURE THAT CLAIMS ARE PROCESSED APPROPRIATELY AND EXPEDITIOUSLY
Final Report issued on August 30, 2016
Highlights of Reference Number: 2016-30-059 to the Internal Revenue Service Director for the Whistleblower Office.
IMPACT ON TAXPAYERS
Internal Revenue Code Section 7623 authorizes the IRS to pay monetary awards to whistleblowers for information leading to detecting underpayments of tax or bringing to trial and punishment persons guilty of violating tax laws. The IRS Whistleblower Program plays an important role in reducing the Tax Gap by providing an avenue for reporting tax evasion. However, whistleblowers and members of Congress continue to express concerns with the operation of this program.
WHY TIGTA DID THE AUDIT
This audit was initiated to determine whether whistleblower claims are appropriately and timely processed before referral for investigation or examination. The Government Accountability Office recently reviewed other portions of the IRS Whistleblower Program in response to a request from the Chairman and Ranking Member of the Senate Committee on Finance.
WHAT TIGTA FOUND
The Whistleblower Program has helped the IRS collect significant amounts of revenue by facilitating whistleblower claims reporting violations of the tax laws that may otherwise go unidentified. From Fiscal Year 2011 through February 2016, the IRS collected more than $2 billion because of information provided by whistleblowers. In addition, the Whistleblower Office has recently reduced inventory backlogs. However, whistleblowers are not always contacted to clarify allegations. Improvements are needed to monitor the timeliness of claim processing and ensure that rejection/denial decisions are properly supported. Furthermore, the Whistleblower Office does not have appropriate controls in place to allow for sufficient oversight of claim processing. Specifically:
· A lack of performance measurement and quality review impedes program evaluation.
· Computerized tracking data are not always accurate.
· Coding of claims on the Audit Information Management System is inconsistent.
· Guidance for claim processing can be improved.
In addition, claims made by ineligible persons are not always identified.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the Director, Whistleblower Office, implement the Balanced Performance Measurement System for the Whistleblower Program and implement controls to ensure the consistent, appropriate, and expeditious processing of whistleblower claims.
In response to the report, IRS management agreed with and plans to implement corrective actions for nine of our 10 recommendations. IRS management believes that existing guidance is sufficient for the storage of supporting documentation for claim determinations. TIGTA maintains that existing guidance only requires documentation of the decision and not the support for the decision.
READ THE FULL REPORT
To view the report, including the scope, methodology, and full IRS response, go to:
Phone Number / 202-622-6500
E-mail Address / TIGTACommunications@tigta.treas.gov
Website / https://www.treasury.gov/tigta