March 8, 2010
Details on the Whistleblower Program
Many people have by now become aware of the newly improved whistleblowers program that the IRS has put into place. They have a reward system which has been created to profit individuals that may provide them within information that results in the prosecution of someone for income tax fraud, or collection of fees owed through tax evasion. By encouraging people to report tax fraud, the IRS hope to increase overall levels of honesty within the tax system, as well as to install a system that is going to enable them much more thoroughly to root out those who are trying to avoid paying what they owe.
However, there are some details about this program that CPA’s really need to find out about. There are actually a couple of reasons that a CPA should know the details of this system used to report tax fraud. The increases that came as a result of the revamp to the system has also increased the number of people coming forward within information. While many go straight to attorneys in order to help them process the tip and submit it to the IRS, there are cases where they may be benefitted more by visiting with a CPA first, who could easily by taking the time to research the program let them know what the appropriate action should be.
CPA’s should become familiar with the laws around this program because informants may come to them looking for information. A good example is that the program will attempt to protect the identity of someone providing information in one of these cases. If the program goes to any kind of judicial proceeding though, there is no protection against being called as a witness, at which point their identity will become exposed. It is also important to let prospective informants know that any misinformation they provide could leave them open to prosecutions for perjury in particular situations.
Whistle blowers have another reason to contact CPA’s as well, and this is one that doesn’t relate as directly to income tax fraud. If an informant should be paid out a benefit under the new program for reporting whistleblowers, the reward that they receive could be considerable. As such, they may need to contact their CPA regarding the tax considerations of their windfall, and accountants need to be familiar with these. Full reporting and withholding applies to rewards paid out under the IRS Whistle Blower Program