My chronicle of how the IRS and Tax Court affect taxpayers' daily lives.

See below for important disclosures.

Thursday, October 8, 2009

IRS Whistleblower Office Sees Jump in Reports of High-Dollar Tax Evasion

If you have knowledge about a tax evader, there are rewards for turning them in.  Under the Tax Relief and Health Care Act of 2006, you can receive between 15% and 30% of the tax, interest, and penalties recovered, if that amount exceeds $2,000,000.  Smaller cases are also subject to smaller rewards.

During the fiscal year 2008, the Whistleblower office received 476 referrals relating to nearly 1,500 taxpayers, with 64 alleging evasion of more than $100 million in tax. 

The identity of the whistleblower must be revealed to the IRS, but is kept completely confidential and is sealed in separate files.  The protection of the whistleblower is a priority for the IRS.

Aaron's Take:  Knowledge of tax evasion is a serious ethical dilemna for employees.  Additionally, a company employee may not have all of the information necessary to substantiate the claim of tax evasion (a very high bar).  The availability and protection of a whistleblower is necessary for the proper function of our voluntary tax system.  The term voluntary refers to the fact that we voluntarially file our tax returns, and it is important to direct our enforcement to those that refuse to participate in the process honestly.
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Aaron Blau, E.A. is the Vice President of the Central Arizona Chapter of Enrolled Agents and a member of the Government Relations Committee of the National Association of Enrolled Agents. The opinions and ideas expressed here are in no way representative of the official position of the National Association of Enrolled Agents, Arizona Society of Enrolled Agents or the Central Arizona Chapter of Enrolled Agents.

For official comments, please e-mail NAEA Director of Communications at mlockwood@naea.org or Arizona Society president stefaniecampbell@aztaxpros.org.

IRS CIRCULAR 230 DISCLOSURE:
"To ensure compliance with the requirements imposed by the IRS, we inform you that, to the extent this communication (or any attachment) addresses any tax matter, it was not written to be (and may not be) relied upon to (i) avoid tax-related penalties imposed under the Internal Revenue Code, or (ii) promote, market or recommend to another party any transaction or matter addressed herein (or in any such attachment). In addition, nothing herein is intended to convey an expression of an opinion as to the likelihood a tax position would ultimately prevail if challenged by the IRS. This communication is intended solely for the person to whom it is addressed; no one else should rely on the tax advice provided herein. The person to whom this advice is addressed is under no obligation to keep the advice or matters related to the advice confidential."