Whistling Dixie About the IRS Whistleblower Program Thanks to the IRC Confidentiality Restrictions‪.‬

I. INTRODUCTION The Internal Revenue Service (Service) has been authorized for over 140 years to pay awards to individuals who blow the whistle on those who do not pay the taxes they owe. (1) Paying cash awards to individuals who turn in delinquent taxpayers has been controversial. During debate of the 1998 Internal Revenue Service Restructuring and Reform Act, Senator Harry Reid (D-Nev.) proposed to eliminate the Service whistleblower program, which he referred to as the "Award for Rats Program" and the "Snitch Program." (2) Senator Reid found the idea of the Service paying "snitches" to rat on their "associates, employers, relatives, and others" as "unseemly, distasteful, and just wrong." (3) Senator Reid ultimately backed away from his proposal to eliminate the program and instead agreed to a floor amendment that required the Service to study and report to Congress about whether the program should be eliminated or modified. (4) Congress did not eliminate the Service whistleblower program. Instead, eight years later in 2006, Congress modified the program to boost the Service's authority to pay cash awards to tax whistleblowers. (5) Congress likely was prompted to retain the Service whistleblower program because the Treasury Inspector General for Tax Administration (TIGTA), in a June 2006 audit report, found that the program had "significantly contributed to the detection and punishment of tax law violations." (6) TIGTA also found that the program was more effective and less expensive than the Service's primary method of selecting tax returns for audit. (7) Lawmakers find appealing programs that enhance Service tax enforcement efforts to shrink the tax gap--the difference between the amount of taxes owed and what is actually collected--which the Service estimates to be approximately $345 billion. (8)