IRS Rejects Whistleblower Reward Claims

The Internal Revenue Service has rejected a reward claim made by a whistleblower, former banker Joseph Insinga, who had sued the agency in a closely watched case.  According to Reuters, the IRS told Insinga on April 15 that he was not entitled to a reward.

In 2007, Insinga gave the IRS information about several companies he alleged dodged taxes.  But the IRS says the information did not result in collection of any additional taxes.

Insinga had sued the IRS last year, trying to force it to announce a determination on his claims after years of being kept in the dark about the status of his case.  Other whistleblowers and lawyers had hoped the Insinga case would bring more clarity to how the IRS handles whistleblower claims.

A 2006 overhaul of the IRS whistleblower program gave informants the right to appeal a rejection to the Tax Court. Insinga has 30 days to file. So far, no such appeal has been successful.

The IRS has been criticized for moving too slowly to embrace the whistleblower program. At an April 10 hearing about new rules for the program, IRS officials were told by lawyers that informants worry their tips are not welcome.

At a Senate hearing this week, Acting IRS Commissioner Steven Miller said whistleblowers are "vital" to tax collecting where "there are blind spots for us ... in the offshore area."