Federal Manager's Daily Report

An IRS program that encourages the public to disclose information regarding underpayments of taxes by others produced more than $2 billion over five years in collections but the program itself suffers from management problems, an IG report has said.

The program resulted in payments to whistleblowers over that time of more than $360 million, about 18 percent of the amount collected. Only about 2 percent of claims are approved, though, largely because allegations were not specific enough for the IRS to take action or denied because the allegation was below the threshold to justify resources for compliance action.

Whistleblowers are not always contacted to clarify allegations, and improvements are needed to monitor the timeliness of claim processing and ensure that rejection/denial decisions are properly supported, it said.

It further found problems in controls over payments to whistleblowers, including a lack of performance measures, errors in data, and vulnerability to paying claims made by ineligible persons.

IRS management agreed with all of the report’s recommendations except one involving policies for the storage of documents to support whistleblowers’ claims. The IG said the current guidance requires documenting only the decision itself, and not the reasons for that decision.