New IRS Regulation is Good News for Whistleblowers
The Internal Revenue Service [IRS] recently issued a new regulation aimed at encouraging more whistleblowers to report tax fraud by allowing them to collect rewards on a broader range of claims.
In December 2006, Congress established the IRS Whistleblower Office and updated its procedures for collecting rewards that led to the collection of additional taxes. The new procedures were modeled after the successful federal False Claims Act [FCA].
However, archaic IRS regulations prevented the program from being as successful as the federal FCA. Under its old regulations, the IRS denied reward claims to whistleblowers who provided information that led to either preventing improper refunds or reducing the credit balance of a taxpayer.
In January 2011, the IRS issued a new regulation designed to fix the flaw in its regulations. The new rule provides that rewards may now be paid on “amounts collected prior to the receipt of information if the information provided results in the denial of a claim for refund that otherwise would have been paid; and a reduction of an overpayment credit balance used to satisfy a tax liability incurred because of the information provided.” In short, whereas the old rule permitted rewards only for information that led to the collection of additional taxes, the new rule allows rewards for reducing refunds or credit balances.
In a statement, Senator Charles Grassley (R-Iowa) proclaimed that the “regulations are good news for whistleblowers.” Senator Grassley, the Senate Finance Committee ranking member and architect of the federal FCA and the IRS whistleblower statute, added that “the Commissioner made the common-sense decision of ensuring that individuals who blow the whistle on improper refund claims will be rewarded, as I intended when I wrote the law.”
Kenney & McCafferty would like to help you assess whether you have a viable whistleblower claim. If you have knowledge of tax fraud, call K&M for a free consultation.
This entry was posted on Wednesday, February 9th, 2011 at 10:24 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.