WASHINGTON – Sen. Chuck Grassley of Iowa today outlined a series of shortcomings in the Internal Revenue Service’s long-awaited proposed regulations to implement the 2006 whistleblower improvements he authored. Grassley outlined his concerns in a letter to top IRS and Treasury Department officials.
“I was cautiously optimistic that the proposed regulations would make real strides in advancing the whistleblower program,” Grassley wrote. “I hoped they would provide some assurance to whistleblowers that they are seen as a valuable asset for addressing tax fraud. Unfortunately, these proposed regulations are likely to further concerns in the whistleblower community that the IRS and Treasury view whistleblowers with hostility.”
Grassley described a series of areas in which the proposed regulations, released in December, are disappointing. These include overly narrow definitions of what counts as “collected proceeds” for the purpose of issuing a whistleblower reward, making it harder for whistleblowers to receive awards; overly broad definitions of “planned and initiated,” discouraging knowledgeable insiders from coming forward; and too little to improve and expand on communications by the IRS with whistleblowers, one of the biggest sources of complaints to Grassley’s office from whistleblowers and their lawyers.
“Each of the concerns I have outlined needs to be addressed to ensure that the IRS whistleblower program functions as intended,” Grassley wrote. “I encourage you to address these matters immediately to ensure that good faith whistleblowers are not discouraged from coming forward, alerting the federal government to unpaid taxes or fraudulent tax returns. The American taxpayers deserve to know that this program is operating as efficiently and effectively as possible.”
Grassley said, “The IRS can still make changes before finalizing the regulations. The IRS should take all substantive comments into consideration, including those from whistleblowers, to improve the regulations and make the program work well for taxpayers.”
The text of Grassley’s letter is available here.