Feb. 5, 2007 -- The Senate Finance Committee held a roundtable discussion today on the new tax fraud whistleblower law and how it should be implemented. The Roundtable featured experts on whistleblower laws and tax fraud, as well as officials from the Treasury Department, the Justice Department, the Internal Revenue Service and the Senate Finance Committee.
John R. Phillips and Erika A. Kelton, partners at Phillips & Cohen, were among the invited participants. Phillips & Cohen represents a confidential IRS informant, known as Mr. ABC, who testified before the Senate Finance Committee about what happened to him when he went to the IRS to blow the whistle on tax fraud involving abusive tax shelters set up by Wall Street investment banks. The tax whistleblower’s testimony helped convince Congress of the need for a law that would encourage whistleblowers to step forward and report tax fraud and make it more likely that the IRS would act on that information.
The law, known as the Tax Relief and Health Care Act of 2006, increased IRS rewards to whistleblowers and created the IRS Whistleblower Office. Under the new law, whistleblowers get 15 percent to 30 percent of the proceeds collected as a result of the whistleblowers’ information provided to the IRS.
The IRS Whistleblower Office will investigate information about tax fraud and tax underpayments provided by whistleblowers or assign the matter to another IRS office to investigate. It will monitor follow-up actions by the IRS. The Whistleblower Office also will determine the exact amount of whistleblower rewards.