Grassley to I.R.S. –Can You Hear Me Now?
By Patrick Carmody, Esq.

Senator Grassley is upset with what he perceives as lack of progress with the I.R.S. Whistleblower Tax Reward Program. So upset was the fiery Iowan with Commissioner Shulman’s failure to respond meaningfully to his letters that he took two hapless senior Treasury appointees hostages. Senator Grassley just isn’t feeling the love he feels he needs.

The tactic worked and earlier this week he withdrew his objection released his hostages after I.R.S. Commissioner Shulman wrote to him … finally, finally. In fairness, Commissioner Shulman provided a lot of information about the I.R.S. Reward Program that suggests it is making progress, albeit at a slower pace and with less intensity than Senator Grassley would like. Commissioner Shulman’s letter also claimed that legislative fixes were needed for certain elements of the program such as paying rewards on criminal fines and offshore financial account fines, writing loosely. I expect we will see legislation within the next few months to correct these structural problems. The tone of Senator Grassley’s response suggests we may also see that legislation giving Federal courts more supervision of the I.R.S.’s handling of whistleblower cases, I suspect.

Uniformly, the private bar has criticized the I.R.S.’s lack of progress with tax whistleblower claims, and many have claimed that elements within the I.R.S. were trying to capsize a disliked program. Certainly, the long delay in finalizing regulations that accurately reflect the spirit and intent of the law is baffling, as I have written about before, but, overall, the I.R.S. seems to be doing its job. My experience with Mr. Whitlock and the staff of the I.R.S. Whistleblower Office has been very positive. However, it’s equally true the process can be improved a lot.

The bottom lines are we need a strong and effective I.R.S. to go after large-scale tax cheats, and that the I.R.S. needs the help of whistleblowers to enable it to do so. When one reads on the front page of the New York Times that Apple, a company that has become an important projection of American power and prestige internationally, may have a 2011 U.S. effective tax rate of less than 10% on profits of over $34 Billion, for a “tax gap” delta of $8.5 Billion, I think we can all agree that something needs to be done, and done soon. Hardly chump change! That’s a lot of teachers, firemen, schools, job training for school leavers, etc., etc.

Now that Commissioner Shulman has emerged from a dead zone (his hearing also seems to have improved while away), perhaps we will see some meaningful progress on the promising I.R.S. Whistleblower Reward Program?

PATRICK CARMODY

Patrick Carmody files whistleblower cases with the I.R.S. Whistleblower program. For details see www.CarrigCounsel.com.

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