TIGTA Cites Deficiencies in Resolution of Whistleblower Claims

The Treasury Inspector General For Tax Administration (TIGTA) issued a report entitled, "Deficiencies Exist in the Control and Timely Resolution of Whistleblower Claims." TIGTA assessed the IRS's implementation of the Whistleblower Office and the controls monitoring whistleblower claims. The report identified three general areas of problems:

1. Multiple inventory systems and inadequate procedures and processes result in ineffective control over Whistleblower claims;

2. Whistleblower claims are not resolved in a timely manner; and

3. The law's lack of employee protection against retaliation places whistleblowers at risk for reporting tax fraud.

The life of a whistleblower claim can be extraordinarily long when compared to most any other kind of agency action. TIGTA noted that the Whistleblower Office recently paid an award on a claim 15 years after the claim was received. Generally, the Whistleblower Office will tell claimants that payments could take 10 years, assuming the claim is successful at all.

TIGTA identified improper delays in notifying claimants when their claims were rejected. The most common reason for rejecting a whistleblower claims was that the targeted taxpayer was already under investigation by the Service. TIGTA estimated that once the IRS made a decision to deny a claim, it took 6.5 months to notify a claimant that his or her request for reward had been rejected. Twelve claimants had not been notified by the time of the TIGTA review, though the Service had rejected the claim 290 days before.

A significant obstacle to timely resolution has been the Service's multiple inventory systems for tracking claims. The Whistleblower Office uses three inventory systems to track rewards claims currently. The systems did not accurately track information about claims, and it was frequently inconsistent in its reports of claims. One problem has been incorrect claim receipt dates. The Service has been working on a single inventory system, called E-TRAK, and hopes that it can capture claim information accurately from the multiple systems currently in place and transfer them to one inventory mechanism for all 7623(b) claims. The Whistleblower Office expects this single inventory system to be fully in place sometime in 2010.

TIGTA made a number of recommendations, including one to add retaliation protection to the statute. Several IRS analysts had reported that whistleblowers requested protection from the targeted taxpayers but the IRS had no way to respond. TIGTA recommends that the legislation be amended to provide specific relief to whistleblowers who become victims of retaliation.