When Pres. Obama presented his 2014 budget proposal to Congress, he included a provision that would offer protections for those who report tax fraud under the Internal Revenue Service’s Whistleblower Program. People should be aware of the program and the changes that may arise to offer more protections for those who use the program.
IRS Whistleblower Program
In 2006 Congress enacted the Tax Relief and Health Care Act of 2006, which included changes to the payments that whistleblowers who report others’ tax fraud receive. The act also established an Office of the Whistleblower in the IRS to administer the program. People can submit information about suspected tax fraud to the Office of the Whistleblower. If the information leads to judicial or administrative action resulting in collection of tax proceeds, the person who supplied the information can recover up to 15 percent of the amount the IRS recovered. The IRS caps awards at $10 million.
Increasing protection for whistleblowers
The IRS Whistleblower Program does not have provisions that protect those who report tax fraud to the IRS. In contrast, the False Claims Act, federal legislation that sets up channels for people to report when businesses are making false claims for federal funds, includes protections for whistleblowers. The False Claims Act prevents employers from retaliating against employees who report wrongdoing, and provides remedies for whistleblowers such as reinstatement in jobs, back pay, attorney’s fees and other special damages. The Dodd-Frank Act has similar protections for those who report securities fraud.
Pres. Obama’s 2014 budget would amend the Tax Relief and Health Care Act so that it included anti-retaliation measures similar to those in the False Claims Act. Many believe that the lack of protections in the IRS Whistleblower Program discourages people from reporting tax fraud. The president’s proposed budget would increase the IRS enforcement budget by $360 million, and analysts estimate that each $1 increase will return $4 in recovered revenue. Many believe that the anti-retaliatory measures will encourage more people to report employers who engage in illegal activities like concealing money in offshore accounts or falsifying financial records.
Speak with an attorney
Anti-retaliation measures are crucial to the success of whistleblower programs. Such laws prevent employers from intimidating employees into silence when employees witness wrongdoing. If you are aware of illegal activities at work, talk to an experienced employment law attorney who can help protect your interests.