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Proposals to Boost IRS Whistleblower Program Get a Hard Look By: Keller Grover LLP via PR Newswire Like


Posted on May 09, 2013 at 17:57 PM EDT

Crit ics cont end t hat delays and inadequat e rules have hindered what could be a powerf ul way t o f ight t ax f raud SAN FRANCISCO, May 9, 2013 /PRNewswire/ -- Whistleblower programs have proven a remarkably successf ul approach to f ighting f raud in recent years. But as of f icials at the Internal Revenue Service are learning, that success can be boosted, or hindered, by how the program is implemented. Indeed, as

the IRS now craf ts rules f or its whistleblower initiative, the lawmaker who spurred the program is charging that the agency is not doing enough, or acting swif tly enough, to reward those who blow the whistle on f raud. In 2006, Senator Chuck Grassley, a Republican f rom Iowa, spearheaded legislation that would enable whistleblowers to sound the alarm on tax improprieties. For their ef f orts, they would be awarded part of any recovery ultimately obtained by the IRS. In that respect, the law f ollowed the basic outline of the False Claims Act -- the gold standard of U.S. whistleblower laws -- which has led to the recovery of more than $30 billion since it was signif icantly modif ied in the mid-1980s.

Other f ederal agencies, such as the Securities and Exchange Commission, have also launched whistleblower programs with great success. In 2012, f or example, the SEC program received more than 3,000 tips alleging securities and other types of f raud. And between 2008 and 2012, whistleblowerinitiated cases at the Justice Department rose 71 percent, f rom 379 to 647. But critics such as Grassley charge that the IRS has been slower to reap the rewards of whistleblowers because it has not had adequate rules in place. For one thing, critics contend, the lack of deadlines by which to bring whistleblower cases has resulted in long delays in processing potentially valuable tips. In contrast to the increase of tips at other agencies, IRS whistleblower tips have actually f allen -- f rom a high of 472 in 2009 to 332 last year. "Whistleblower laws are an extremely potent tool with which to f ight f raud, but that tool has to be wielded wisely," says veteran whistleblower lawyer Jeffrey F. Keller, a f ounding partner at Keller Grover, a nationally recognized labor and employment law f irm. "T he IRS, as Grassley and others rightly point out, risks alienating inf ormants by taking years to pursue claims and keeping them in the dark on how their claims are proceeding. T his is a process they need to get right." T he IRS has draf ted new regulations f or implementing the 2006 law, and on April 10, the agency held a public hearing on its proposals. But Grassley and others contend that even these proposals -- which detail rules f or submitting inf ormation to the IRS and the criteria f or determining the size of a whistleblower award -- do not go f ar enough. T he 2006 law provided that whistleblowers receive 15 to 30 percent of any ultimate recovery when their inf ormation led to additional tax collection on disputes involving $2 million or more. Prior to the legislation, whistleblower awards were granted, but at the IRS's discretion. And even when they were granted, the awards were typically small. In 2012, whistleblower tips led to $592 million in additional IRS tax collection -- but whistleblower lawyers say that given the delays in processing those tips, the agency is merely scratching the surf ace of

possible recoveries. "T he April hearing was important because it gives the IRS f eedback on their proposals and lets them see how they can be improved," says Keller, whose Whistleblower Law Firm has of f ices in Los Angeles and San Francisco. "Whistleblowers can bring huge dividends by helping to uncover, and reverse tax evasion. T hat's an opportunity the IRS -- and every taxpayer in the country -- can't af f ord to miss." Media Contact: Jef f rey F. Keller 866.486.1537 SOURCE Keller Grover LLP Like


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As the IRS now crafts rules for its whistleblower initiative, the lawmaker who spurred the program is charging that the agency is not doing...

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