Academic journal article Journal of Accountancy

Most Whistleblower Awards Still under Pre-2006 Law

Academic journal article Journal of Accountancy

Most Whistleblower Awards Still under Pre-2006 Law

Article excerpt

In its latest annual report to Congress on the whistleblower program Feb. 13, the IRS said it received hundreds of submissions during the 2012 fiscal year (FY) that appeared to meet the higher underpayment threshold for enhanced awards, enacted in 2006. Nearly all of the awards paid during the fiscal year for such claims, however, were still under the previous law. The IRS is required to report to Congress each year on the program's results and legislative and administrative recommendations for improving it.

Under Sec. 7623(b), which was amended in 2006, the IRS is required to pay awards of specified percentages of collected proceeds if a whistleblower provides information that contributes substantially to the collection of tax, penalties, interest, and other amounts when the amounts in dispute are more than $2 million. The law also established an IRS Whistleblower Office to administer those awards. Before the law was amended, the whistleblower awards were determined at the IRS's discretion.

In the report, the IRS noted that, in FY 2012, it received 332 submissions involving 671 taxpayers that appeared to meet the $2 million threshold. It paid 128 claims in FY 2012, 12 of which were more than $2 million. Of those 12, however, most were under the pre-2006 law because, as the IRS explained, proceeds cannot be distributed to whistleblowers until the taxpayers involved have exhausted all of their administrative and judicial remedies, which can take many years to complete. …

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