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Whistleblowers pump up transparency

May 9, 2014

No matter how good the laws are written or how well-intentioned public policies are prescribed, Uncle Sam’s coffers have long been viewed as open season for bad operators who look to line their own......

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FCAaficionado

May-10-14 12:23 AM

Note the website cited in the previous post is:

www dot marketwatch dot com /story/tax-cheat-whistleblower-program-pays-few-returns

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FCAaficionado

May-10-14 12:20 AM

Part 13)

The failure of the WBO program (and this points directly to the dolts, where found and as appropriate, in the Commissioner’s Office, the Chief Counsel’s Office, the WB Office and the rest of the IRS’ bureaucracy in general) well reflects my mashed-up adage of:

“He who knows the price of everything but the value of nothing, Is destined to be both penny-wise and pound foolish”

This is the ethic that has killed the IRS WB Program.

p.s. For kicks, please read the following article from 2006 and see how little has changed: ****marketwatch****/story/tax-cheat-whistleblower-program-pays-few-returns

Thanks and regards, the erstwhile hopeful IRS whistleblower, FCA Aficionado

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FCAaficionado

May-10-14 12:17 AM

Part 12)

Whether the current situation is mostly due to bureaucratic sluggishness, institutional enmity, leadership malfeasance, incompetence, overwork, or congressional neglect is hard to say, but each of these disincentives are in play and being placed before WB’s by both the IRS AND the Congress.

Unless real reforms and further optimizations of the protections, rewards and procedures relating to the Service’s WB program are (again) forced upon it by Congress, nothing will change in terms of IRS commitment and involvement or in terms of recovery and deterrence.

Until something drastically changes, nothing can change for citizens such as myself that see the personal risks as too great to come forward. I am very disappointed in my government's administrative and legislative branches for practicing bait-and-switch and demolition via neglect respectively.

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FCAaficionado

May-10-14 12:16 AM

Part 11)

The WB system as it is is being abused and frustrated by the IRS culture from top to bottom and from input thru output. What kind of committed and competent enterprise fails to pick low-hanging fruit (or does) but just leaves it to rot? This is the result when the IRS closes WB files because of "lack of resources" or "too short statute of limitations" (despite having policies to extend the SOL with the TP's consent.

What should be a closed-loop virtuous cycle resulting in more and better WB submissions and less tax scofflawism, begins and ends with strong anti-retaliation remedies, fat incentives, seamless communication and expeditiously competent processing of WB’s tips, not the polar-opposite approach in use today.

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FCAaficionado

May-10-14 12:15 AM

Part 10)

h) revise the Victims of Crime statutes to allow WB’s a share of all fines, recoveries, restitution ordered due to a criminal prosecution in conjunction with a WB’s input; i) revise IRC to eliminate taxation of WB rewards (if we want to encourage a universal ethic that whistleblowing is socially beneficial, eliminating this 30% hit should apply to all government-sanctioned WB rewards.); j) enact legislation exempting WB rewards from the 7.2% Sequester Surcharge.

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FCAaficionado

May-10-14 12:13 AM

Part 9)

e) revise the tax code to name and shame those brought to justice as a result of a WB’s input. Such action should not be reserved to only those tax scofflaws who have been brought to justice under criminal statutes. Downstream benefits: 1) tax-fraudster deterrence, 2) WB encouragement, and 3) Improved WBO annual report due to less aggregation of data); f) building on e) above, require the WBO to write a synopsis of each recovery due to a WB tip and release these as a press release, then include these in a case-study manual for potential WB’s, such that individuals can be made aware of how schemes are perpetrated be in the lookout for such activity; g) limit the Service’s discretion for reducing or eliminating fines, fees, penalties and interest for tax scofflaws brought to justice due to a WB’s input;

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FCAaficionado

May-10-14 12:12 AM

Part 8)

4. Fix the code to: a) index all penalties for inflation (effective back to the date the penalty was enacted); b) increase the penalty for tax fraud from 75%, to parallel the civil treble damage fines used under the FCA; c) require the Service to amend WBO submission Form 211 to incorporate by reference the responsibility for each WB (and counsel) to be bound by the obligations of the Service’s 6103(n) non-disclosure agreement. Revise the “infrequent and unusual” language from the JCT to authorize “frequent and normal”, to eliminate this as a justification by the IRS for avoiding using 6103(n) NDA’s, and promote “frequent, normal and expected” as the IRS’ new rules for WB engagement; d) make deep engagement and utilization of the WB in investigations a part of each IRS employee’s compensation package.

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FCAaficionado

May-10-14 12:10 AM

Part 7)

2. Force the Service to utilize an expansive reward compensation and Related Proceeds calculation scheme, rather than the stingy and disincentivizing scheme that seems sure to drop any day now; 3. Communications outreach plan? From the organization that seems so adept at hiding its lamp under a bushel? (Go to the IRS’ homepage, where is the link to the WBO?). Best communications outreach are strong protections and incentives for potential WB’s as well as delivering on these in a very generous and timely way. Good would be for Mr. Whitlock to start by hanging out his shingle on the IRS’s homepage (as per SEC’s example) and 1040's, and to robustly declare the WBO as “Open For Business”;

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FCAaficionado

May-10-14 12:09 AM

Part 6)

Much rhetoric is devoted to the importance of the WB programs, but over the last 4 years, there are so few successes and no real actions to optimize legislation to improve protections and incentives and to remove barriers. Sure, Sen. G. has coerced commitments from IRS honchos by putting holds on nominees, but such tactual action is non-sustainable opportunism and can't replace strong strategic legislation. (Nor does it obviate the growing impression that the Service is engaged in a form of malicious compliance while the Congress has run out of gas.)

Suggestions for Improvement: 1. Anti-retaliation remedy for any WB making a new submission to the WBO. As under FCA allow WB to be made whole if WB acted in good faith to prevent fraud and suffered as a result of this (regardless of whether there are collected proceeds). Don’t subject this provision to a shorter statute of limitations than the crime it is related to.

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FCAaficionado

May-10-14 12:07 AM

Part 5)

Despite the ascension of self-avowed "whistleblower fan" Koskinen to the Commissioner's chair, is difficult to detect new institutional enthusiasm for, or a desire to cooperate with, a resource that solely benefits the public fisc. Rather, it feels as if slow-walking and deliberate barriers are intended to discourage that resource from embarrassing the Service by reminding the public that some frauds are not possible to discover, contour or prosecute without the help of a WB.

Even that grand old man, the congressional patron of WB’s everywhere, Sen. Grassley, released a very mild statement on the WBO's lackluster 2013 report. It seems as if the Service (in a strategy of frustration, fatigue and waiting-out biological inevitability, or maybe just plain bungling and dumb luck) has finally bested this old warhorse and he is giving up.

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FCAaficionado

May-10-14 12:04 AM

Part 4)

Anybody who has ever had a conversation with the WBO like I had, would be forgiven for thinking they had called into an ADD-affected college surf or pizza shop for the lack of professionalism and knowledge displayed by the folks that I spoke to. (This in severe contrast to my previous calls into competent helpful folks at the IRS’ general 800-number.)

Despite the departures of former Chief Counsel Korb (who famously said “The IRS didn’t ask for these rules; they were forced on it by the Congress”), former Commissioner Schulman and former Director of Enforcement and disgraced Commissioner Miller, it is hard to see any kind of sea change in the institutional resistance or the bureaucrats' apparent viewpoint that, sans whistleblowers, they already possess all the tools necessary (and given infinite time) to find all non-compliances.

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FCAaficionado

May-10-14 12:03 AM

Part 3)

Potential WB’s, like myself, who have taken an analytical wait and see approach to the development of the IRS’ WB program, can not be encouraged by the WBO’s 2013 Report (which itself runs less than 30 pages, a vast portion of which is copy/paste from last year’s report, is still wonderfully opaque and took 6 months to produce – talk about a prime indicator of the lack of vigor, attention and priority given to this program.)

Suffering retaliation from my employer, damage to my career and professional relationships, and my family’s well-being, by trying to prevent my management from perpetrating fraud, with no subsequent remedy available (as under FCA), has made me loath (translation: afraid) to approach the WB office given their track-record and that the IRS Chief Counsel’s proposed reward regulations seem to codify a game rigged against an expansive view of calculating WB rewards (adding insult & injury, the IRS claws back massive portions of any reward.)

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FCAaficionado

May-09-14 11:58 PM

Part 2

No potential WB who's seen what has happened to those who blew the whistle before can be blamed for deciding it is better to hang one's head and move on than to try and right a wrong. There are just too many disincentives, enforcement-fails, or corrupted initiatives (like the IRS WB program, which with every annual report to Congress, increasingly reveals itself as a pernicious pretentious charade.)

I am probably the poster child of what Sen. Grassley has feared coming to pass: The IRS WB initiative dying the death of a thousand disincentivising cuts by driving off that which it was established to leverage.

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FCAaficionado

May-09-14 11:55 PM

Part 1)

The IRS Whistleblower program is moribund. It would almost be more productive to submit a WB tip into a black hole.

The IRS complains about a shortage of personnel resources but instead of leveraging WB's tips, it instead handicaps this potential source through sluggishness, incompetence and disincentivising policies.

If good enforcement is efficient enforcement, then why does the IRS systematically disincentivize one of the largest potential sources of information that will help them target large scale tax cheats?

Doing the right thing is essential to the orderly operation of a free and law-abiding society. Studies repeatedly show most white collar fraud investigations start with a WB's tip.

(Continued)

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