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IRS issues first whistleblower award to Philly accountant

The IRS recently awarded $4.5 million dollars to an accountant from the Philadelphia area in the first ever whistleblower award to be issued by the IRS Whistleblower Office since in authorization back in 2006.

The accountant had informed IRS that his employer, a well known financial services firm, had ignored underpayments on $20 million of taxes and interest.

Sources said the accountant filed the complaint with the IRS back in 2007, shortly after the Whistleblower Office opened. After two years of receiving no response from the IRS concerning his complaint, he hired an attorney to represent him. The accountant reportedly received his award last week, in the amount of $3.24 million after 28 percent in taxes was removed. The original award of $4.5 million reportedly amounted to 22 percent of the total taxes recovered by the IRS in this case.

The Philadelphia accountant's attorney said that the whistleblower award system is beneficial for both taxpayers and the government, since money is returned to the Treasury that wouldn't otherwise be there.

Sources said the issues raised by the accountant's complaint were not considered by the IRS to be complex, but they have apparently brought up new questions that will appear on a routine IRS audit.

Although the IRS Whistleblower Office was authorized in 2006, it has had a slow start in responding to complaints. The office itself was designed to encourage tips in large tax fraud cases, and mandates a 15 to 30 percent award for tipsters.

But even thought the office has been slow to start, there have been plenty of complaints. In fiscal years 2008 and 2009, the IRS' Whistleblower Office reported to Congress that it had almost 1,000 tips concerning over 3,000 taxpayers. Sources said that "hundreds" of the reports concerned underpayments of over $10 million, and "dozens" dealt with amounts upwards of $100 million.

Sources said that the Whistleblower Office may be ramping up to being responding to more of these cases in the near future.

Source: philly.com, "Local whistleblower gets $4.5M from the IRS," 9 April 2011.

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