UPDATE 1-U.S. IRS paid record $125 mln to whistleblowers in 2012

Wed Feb 13, 2013 5:34pm EST

By Nanette Byrnes
    Feb 13 (Reuters) - The U.S. Internal Revenue Service paid a
record $125.4 million in 2012 to whistleblowers who provided
evidence of tax cheating, most of it to a former employee of
Swiss bank UBS AG, according to an IRS report made
public on Wednesday.
    The IRS whistleblower program has been criticized for moving
too slowly and being given inadequate resources, causing
whistleblowers to grow reluctant to file claims. The program was
overhauled by Congress in 2006 amid such criticism.
    The IRS also reported a jump in collections of previously
unpaid taxes and penalties resulting from the program, up to
$592.5 million last year from $48 million in 2011.
    More than 80 percent of the total paid out by the IRS in
2012 went to Bradley Birkenfeld, a former employee of UBS AG
 who received $104 million. He helped wealthy Americans
hide millions of dollars in secret Swiss accounts and later told
the IRS about it.
    Excluding the award to Birkenfeld, the IRS paid out $21.4
million in 2012, compared with $8 million the year before 
    The number of new whistleblower submissions rose to 332 in
fiscal 2012 from 314 the year before, but remained well below
the high water mark of 472 in 2009. The average number of days
the IRS spent evaluating an award rose to 1,141 in 2012,
according to the report, from 285 the year before.
    Senator Charles Grassley, an Iowa Republican who co-authored
the 2006 overhaul and a vocal critic of the program's
implementation, called the report's low number of new
whistleblowers "alarming." 
    "Instead of rushing to raise new revenue through tax
increases, as the President wants, the government should work
with whistleblowers to collect taxes that are due under current
tax levels," he said in a statement to Reuters. "The IRS needs
to do a lot more to give whistleblowers the confidence they need
to take the risk of coming forward to expose tax fraud."
      
     
    In a letter accompanying the report sent to Grassley, IRS
Acting Commissioner Steven Miller voiced commitment to the
program and predicted the pace of awards paid would increase. 
    In his letter, Miller said a public hearing is likely to be
scheduled on the program's rules after a public comment period
closes Feb. 19.
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