Thank you Senator Chuck Grassley.
Finally the grinding slow wheels of the IRS are moving on qui tam tax cases. We have recently filed a large (not enormous) tax whistleblower (also called a qui Tam). We expected a call and letter from an IRS intake attorney within about 6 months. We got that call in 3 weeks! That was a surprise. I can tell you, unequivocally, that Marcie Dodson in our office prepared that case as if she were a top notch Forensic CPA instead of a Cornell University lawyer. Initially that is what I thought caused the quick turnaround. Sure the numbers are pretty large – but a super fast turnaround by the IRS - What gives?
When we called the agent in charge we made an off-hand comment about the speed they reviewed the case. We actually made a self laudatory statement which said something like: “Boy you guys must have loved how organized our package was when it came in. It took you literally no time to complete your review and call us!”. In response to our comment we heard the words I spoke initially; “Say thank you to Senator Grassely. He is pushing us to turn around our qui tam/whistleblower cases quicker.” So, that is what I am doing publicly. Thank you Senator Grassley. It is about time someone with commonsense sees how important tax whistleblower cases are to the government.
If this is the first you have ever heard of the IRS Tax Whistleblower program here is your quick primer:
The law provides many different ways you can “blow the whistle” on anyone who is ripping off the government. That means, ripping off the government by submitting anything false to the government and getting them to pay you unnecessarily. So, in a contract for selling them paper clips to the government, or a contract to fix or build roads, or even taking government subsidized tuition dollars and not providing the education. In each of those examples there is a way to report the fraud and as the whistleblower you get a reward when the government gets paid!
The problem was that historically, prior to 2006, the IRS didn’t have a set law that fixed the amount the IRS would pay to the whistleblower. The “award” was discretionary or rather, was based on whatever the IRS decided was equitable. Obviously the IRS had a different feeling about what was equitable compared to the person who risked so much to report the tax fraud. We have worked on these types of whistleblower cases (called qui tam cases) for a long time. Prior to 2006 when a person called for a consultation regarding being a tax whistleblower we would have to explain that there was no right to enforce any award to them. As soon as we explained that they would say ”No thanks” and hang up. You know what? I don’t blame them, without a reward why take the risk and get involved?
However, in 2006 the whistleblower office and the new Federal Tax Whistleblower statute were enacted. Now the IRS has the obligation to pay the whistleblower an award when the government collects unpaid taxes after someone turns in a tax cheat. However, the qualification is that the tax cheat must be a significant tax cheat not a small time tax cheat. What is “substantial”? Under the federal law a substantial tax cheat is anyone who underpaid $2 million or more. They needed to limit it to big time tax cheats so the IRS isn’t crushed by everybody turning in their neighbors. The IRS doesn’t have the man power to investigate anything unless the cases are large.
Since 2006 the IRS has recovered huge sums though whistleblower information. But, they have been both slow and stingy in giving out the awards. Last year the IRS broke the ice in a big way and awarded a $104,000,000 award (that is right, $104 Million!) to a tax whistleblower. The tax cheating bank paid $780 million in that case in back in taxes to the government and the guy who reported the bank got $104 million of it!
Our office has designed a group just for large qui tam/whistleblower tax matters. We have partnered with forensic CPAs and have attorney who have worked their whole career in financial fraud detection. We can figure out your tax situation even with minimal paperwork. Don’t let anyone get in the way of your tax qui tam matter. Use attorneys who have experience dealing with the US government and make sure your whistleblower case comes to fruition.