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First payment made to an IRS whistleblower
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- Category: Editor Blog
- Created on Tuesday, 12 April 2011 13:31
- Written by Steel Rose
The tax news today concerns the first payment made to an IRS whistleblower since the Whistleblower program was announced by the IRS in 2007.
An accountant tipped off the IRS in 2007 that his employer was skimping on taxes. The IRS mailed the accountant's lawyer a $3.24 million dollar check last Thursday that is net of a 28 percent tax on the full $4.5 million Whistleblower award. The accountant's tip netted the IRS $20 million in taxes and interest from the financial-services firm that was the accountant employer at the time. The award represents a 22 percent cut of the taxes recovered.
The Whistleblower program, designed to encourage tips in large-scale cases, mandates awards of 15 to 30 percent of the amount recovered.
The lawyer, Eric Young of Blue Bell, Pennsylvania will not reveal the name of his client or the firm because his client remains a small-town accountant, and hopes to continue to work in his field. "It's a win-win for both the government and taxpayers. These are dollars that are being returned to the Treasury that otherwise wouldn't be," Young said.
"It's very difficult to be a whistleblower," said Young, who has represented more than a dozen IRS whistleblowers. "Most people would be inclined to turn a blind eye to it. The process can be time-consuming, arduous and stressful," Young said.
The accountant filed a complaint with the IRS in 2007, just as the IRS Whistleblower Office opened, but heard nothing for two years. He Eric hired Young to help press the issue with the IRS.
In the accountant's case, the IRS did not deem the issues he raised complex. But the agency said the information he shared pointed out new questions for a routine IRS audit that was already under way.
The Whistleblower Office received nearly 1,000 tips involving more than 3,000 taxpayers in fiscal years 2008 and 2009, according to its annual reports to Congress. Hundreds of them are alleged tax underpayments of more than $10 million, and dozens more are for underpayments of $100 million or more.
Senator Grassley, a major proponent of the program, has been discouraged by the program's slow start, which some blame on ambivalence about whether tipsters should receive potentially huge windfalls. “The IRS may also fear embarrassment,” the senator said. "When you got a whistleblower that's saying somebody didn't pay $20 million in taxes, then that's an embarrassment to the full-time employees of the IRS," Grassley said.
The Whistleblower’s Office annual reports note a new policy of waiting to pay awards until the two-year window for taxpayers to appeal their payments has expired. Young's case might therefore be the first in a series of awards that are ripe for payment.
The whistleblower office has about 17 employees, who refer complaints to IRS agents and investigators around the country to pursue. The whistleblower program only promises awards for returns of $2 million or more.
That sums up the CPA Tax Professionals news for today. Thanks for reading CPA Magazine and have a great day.
Tax Scams to avoid and other Tax CPA Tax Tips
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- Details
- Category: Editor Blog
- Created on Friday, 08 April 2011 15:22
- Written by Steel Rose, CPA
Hi and Welcome to Three Minutes of Tax Tips for CPA Tax Professionals Today from CPA Magazine
Hiding income in offshore accounts, identity theft, return preparer fraud, and filing false or misleading tax forms top the annual list of “dirty dozen” tax scams in 2011, the IRS announced today. “The Dirty Dozen represents the worst of the worst tax scams,” IRS Commissioner Doug Shulman said. Frivolous Arguments, Nontaxable Social Security Benefits, Abuse of Charitable Organizations and Deductions, Abusive Retirement Plans, Disguised Corporate Ownership, Zero Wages, Fuel Tax Credit Scams, and Misuse of Trusts round out the Dirty Dozen Tax Scams announced today.
Barbara Weltman reminds us there is a Free IRS webinar today on retirement plans. You can also watch an archive if you miss the start time today.
Request for Comments Regarding Application of § 501(c)(29) of the Internal Revenue Code
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- Category: Editor Blog
- Created on Thursday, 10 March 2011 06:00
- Written by T. Steel Rose, CPA
Notice 2011-23
SECTION 1. PURPOSE
This Notice addresses the requirements for tax-exemption for qualified nonprofit health insurance issuers described in new § 501(c)(29), added to the Internal Revenue Code (Code) by § 1322(h) of the Patient Protection and Affordable Care Act (Affordable Care Act), enacted March 23, 2010, Pub. L. No. 111-148. This Notice provides guidance on the annual filing requirement for qualified nonprofit health insurance issuers that intend to apply for recognition of exempt status under § 501(c)(29), as well as the effective date of exempt status for certain applicants. The IRS intends to issue a revenue procedure on how and when qualified nonprofit health insurance issuers described in § 501(c)(29) may apply for recognition of exempt status. This Notice includes a request for public comments.
Read more: Request for Comments Regarding Application of § 501(c)(29) of the Internal Revenue Code
IRS Issues Information on 2011 Offshore Voluntary Disclosure Initiative in Eight Foreign Languages
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- Category: Editor Blog
- Created on Tuesday, 08 March 2011 06:00
- Written by T. Steel Rose, CPA
WASHINGTON — The IRS today announced that it has made available information in eight foreign languages about the 2011 Offshore Voluntary Disclosure Initiative (OVDI) for those taxpayers with undisclosed offshore accounts. The agency took this step to reach taxpayers whose primary language may not be English.
The IRS is offering people with undisclosed income from offshore accounts an opportunity to participate in a new, voluntary disclosure initiative to get current on their tax returns. The 2011 OVDI will be available only through Aug. 31, 2011.