The IRS Can't Keep Track - Another Reason We Need Whistleblowers

The Treasury Inspector of Tax Administration recently released a report that stated the Internal Revenue Service had difficulty keeping track of tax preparers and their compliance with tax laws. The Inspector recommended new, unique identification numbers for tax preparers to use when filing their clients' returns.

The problem highlights the Service's difficulties in managing its own management systems. Information about tax preparers is stored on 22 different computer systems, and those computer systems don't integrate with each other. The IRS can't even determine the number of tax preparers, let alone assure that they are adhering to professional standards or comply with their own federal tax filing requirements.

Whistleblowers with personal knowledge of tax fraud greatly assist the Service in situations like this. The government cannot rely on its own internal systems to ensure compliance with tax laws; whistleblowers who see tax preparers engaging in fraud need to step forward. Depending on the circumstances, the whistleblower could qualify for a percentage of the government's recovery.

The Tax Inspector sampled records for 139 tax preparers and found that 67% used multiple identifying numbers. 45% of the time, their names were inconsistent. Only ten of the 139 were attorneys; two of those were members of their state bar associations. Seven of the 139 listed themselves as both CPAs and lawyers, but the Inspector could only verify that one of the 139 held both designations.

Tax preparers have been the focus of tax fraud investigations over the last several years. In the last three years, the IRS launched more than 600 investigations of tax preparers for fraud. From 2006 through 2008, 356 tax preparers were criminally convicted.

Whistleblowers who have information about tax prepares engaging in tax fraud should call KEMY for a free consultation today.