By Patrick Carmody
Even camels ambling through remote parts of Arabian deserts will have heard about Bradley Birkenfeld’s $104 Million reward from the I.R.S. for turning in U.B.S.’s dark tax schemes. Any inattentive camel that hasn’t heard about THE event should consider some dromedary ADD medicine.
For Mr. Birkenfeld’s lawyers have been exceptionally talkative about his $104 Million I.R.S. reward. At times heaping praise on the I.R.S. for its efforts in paying their client and noting this award represents tangible proof that the I.R.S. Whistle-Blower Office (WBO) has “turned a corner” in the process saving it from damnation. So what’s the truth?
Indeed, now the I.R.S. may be rolling out red carpets to all manner of tax whistle-blowers, and becoming a bulging plutocrat, compliments of the U.S. Treasury, never may have been so easy for those with qualifying information. Conversely, WBO detractors say I.R.S. Commissioner Shulman has shunned the program during his entire tenure, with a program that remains a disaster, always was and will be. It’s “unseemly” in the words of one former I.R.S. Commissioner who now represents large corporations and high net-worth individuals. Or it may be that nothing much has changed—the I.R.S. never managed the WBO program as badly, and I.R.S. management has not become as good recently, as the different constituencies present.
Objectively, there has been one major reward. That is not a parade. There are less than 10 scheduled for 2013. From those cold statistics, it’s hard to see how Mr. Birkenfeld’s reward, in and of itself, brings any internal I.R.S. Reformation into high relief. True, the reward is for an obscenely large amount, demonstrating commitment on the part of the Treasury to resist arthritic reaction in its corporate check-signing hand. That gives one comfort.
Another positive indicator is that, in June, Mr. Steven Miller, a recent and important convert to the I.R.S. whistleblower program, set time-lines for I.R.S. processing of whistle-blower submissions — incomprehensibly those had not be set before then, 5 years into the program! Last week, the I.R.S. announced Mr. Miller would become Acting Commissioner on Mr. Shulman’s exit in November. Scuttlebutt has it that Mr. Miller has a real shot at becoming Commissioner in a second Obama term.
These developments augur well for tax whistle-blowers and the I.R.S. as an institution, something we all should hope for in a context of rampant tax evasion and avoidance, or so it seems from iterative media reports including those of dodgy tax planning by the Republican U.S. Presidential Candidate Mr. Romney.
However, on the negative side, most whistle-blower cases still meander through the I.R.S. system, without any feedback from the I.R.S. to whistle-blowers. Who knows what’s happening with those claims? Certainly not the tax whistle-blowers who came forward, risking much to do so because the I.R.S. has said nothing to anyone, other than the banal and useless “your claim continues to be under active consideration….” That is, to my mind, the single biggest weakness of the WBO program which has not been addressed thus far. To have a successful program there must be continual and meaningful dialogue between the I.R.S. and the whistle-blower. The I.R.S. must bridge this mutual information-gap as a priority.
Which brings me to the wild-card: what happens if Mr. Romney gets elected POTUS? Objectively, a Republican should be good for the I.R.S. WBO, but Mr. Romney’s alleged dodgy tax planning gives one considerable pause. As POTUS, would he fully support the I.R.S. tax whistle-blower program? If he didn’t, would Senator Grassley allow this program to be eviscerated? Would the I.R.S. commit to a program that did not have unambiguous political support? Would the mere existence of the Romney factor cause problems? The answers to those questions will determine the future trajectory for the program I believe, Birkenfeld hoopla aside.
We will have to wait and see, and, unfortunately, this has been a consistent anthem for this worthy program since its beginning.
Patrick Carmody files whistleblower claims with the IRS Whistleblower Program. He can be reached here.