Tax whistleblower cases, often referred to as Qui Tam, have become increasingly important since their inception in 2006. The program has allowed the United States Government to recover a huge amount of money from those trying to defraud the Federal Government. In fact, The Obama Administration recently announced that Qui Tam is responsible for the recovery of over twenty billion dollars, but in addition, even more money has been generated from the fines attached to such cases.
The United States Congress thought the IRS would enjoy this program as well. They envisioned Qui Tam as being a very successful way of getting people to report those that were breaking tax laws by using a cash reward incentive based upon a percentage of the recovery. But in the five years since the law went into effect, the Internal Revenue Service has issued only one, yes one reward under the Qui Tam program.
One does have to scratch their head in wonder as to why the Internal Revenue Service is not taking full advantage of this lucrative program. One would think that the IRS would be jumping at the chance to recover billions of dollars from IRS fraud and other tax violations. It’s not for a lack of Qui Tam claims being filed. Many cases have been filed under the Qui Tam, and there is not a lack of validity in several of these cases. It is reported by the IRS itself that thousands of whistleblower filings have been issued. So why has only one payment been made to a whistleblower?
Why Is The IRS Not Qui Tam Friendly?
The hang-up is the reluctance of the IRS to be on board with the program. It was reflected in a recent interview with the former Internal Revenue Service Chief Counsel, "I believe it is unseemly in this country to encourage people to turn in their neighbors and employees to the IRS." This was a shocking comment to hear from a person whose sole responsibility was to implement the laws, such as Qui Tam.
Many road blocks have been initiated by segments of the IRS, specifically the IRS office of Chief Counsel, which discourages Qui Tam whistleblowers. They have set forth several rules that narrow the sources of recovery and imposed withholding requirements on Qui Tam rewards, to name a few.
It’s a frustrating matter, especially with our current economic condition. The Qui Tam program could potentially recover several billions of dollars which could be utilized for the gap in government funding, but instead, has been road blocked with bureaucratic red tape.