IRS whistleblower program needs changes, additional resources to improve, Phillips & Cohen attorney tells White House tax reform group

Nov. 2, 2009, WASHINGTON, DC -- Attorney John R. Phillips, a partner at Phillips & Cohen LLP, spoke today as an invited guest at a meeting of the President's Economic Recovery Advisory Board's Tax Reform Subcommittee to discuss problems with the Internal Revenue Service (IRS) whistleblower program and ways it could be improved.

Phillips & Cohen has filed numerous tax fraud cases on behalf of whistleblowers with the IRS Whistleblower Office and has advocated on their clients' behalf to convince the IRS to investigate these complex tax frauds. Phillips & Cohen is the nation's most successful law firm in representing whistleblowers in "qui tam" cases, with civil and criminal recoveries on behalf of the government totaling more than $5.3 billion.

Although the IRS Whistleblower Office is doing a great job, Phillips said, the IRS whistleblower program has some deficiencies that need to be fixed. Thousands of tax whistleblower cases are languishing at the IRS due to a combination of a lack of resources, an institutional culture that appears to be hostile to whistleblowers and the resistance of the IRS to use the expertise and resources of the whistleblowers and their counsel to investigate and pursue complicated tax fraud schemes.

"There is no action-forcing mechanism, which is absolutely killing this program," Phillips told the Tax Reform Subcommittee. He recommended amending the tax whistleblower law using the qui tam provisions of the False Claims Act as a model.

If the government decides not to join a "qui tam" case, whistleblowers and their lawyers can pursue a case on behalf of the government, with an increased reward if they recover funds. Whistleblowers in tax fraud cases should have the same option, Phillips said.

The Tax Reform Subcommittee is meeting with tax experts and practitioners to gather ideas for the Obama Administration on tax reform. A video of the subcommittee session that included the IRS whistleblower program is posted on the White House website. Discussion of the IRS whistleblower program and Phillips' comments begin at the 27-minute mark.