The IRS is still not doing enough to attract whistleblowers and to move whistleblower cases along towards a resolution.
After the IRS awarded Bradley Birkenfeld $104 million for blowing the whistle on UBS last September, I wondered if there would be an increase in whistleblower cases, and there was. But it was short-lived. 2012 actually saw a total of only 332 tips, down from 472 in 2009. I also wondered if the Birkenfeld case represented a new era for the IRS Whistleblower Office and if we would continue to see handsome, timely payouts. Well, if there have been payouts, the IRS isn’t making them public. A private whistleblower award is almost pointless because it doesn’t spark the desire in others to come forward and it does nothing to deter would-be tax cheats. So if we’re not hearing about awards, chances are they aren’t happening.
The IRS is a revenue collecting machine and the idea that “you have to spend money to make money” applies just as much to the IRS as it does in the business world. The IRS understands this reality. When the IRS pleads for more money for staffing they tend to cite the statistic about how the IRS is able to collect something like $194 for every dollar spent. Why can’t they embrace this philosophy in other departments of the IRS? They will collect more in the long term through voluntary compliance if they would just fix what is wrong with the Whistleblower Office.