In 2006, a law was signed that enabled the Internal Revenue Service to pay informants up to 30% of the unpaid taxes owed by an individual or a firm. The goal, obviously, was to increase revenues. People are afraid of being exposed. Whistleblowers (“snitches”) increase the likelihood of exposure.
The snitches snitched. The IRS did not pay.
Since 2007, at least 1,300 cases were revealed by the informants against 10,000 companies. So far, three informants have been paid. The IRS will not say how much money was paid.
People may think that they will clean up by informing. They won’t. They will get their hopes up, only to be let down.
A similar program run by the Treasury to get people to inform on companies that have cheated the government or the public has paid out a little under $1 billion a year since 1986. Not much.
The Senator who sponsored the 2006 snitch law, Charles Grassley, complained that the IRS is demoralizing snitches. It gets lots of them to inform, Grassley says. It just doesn’t pay them. He thinks they will stop coming forward.
Let’s hope so.
The IRS says it can take up to seven years to receive payment. This year, three to five people will be paid, the IRS says.
In other words, the program does not work.