TIGTA Recommends IRS Improve Procedures Around Whistleblower Tax Fraud Referrals (Forms 3949-A)

All taxpayers are familiar with the IRS. Less well-known is TIGTA: the U.S. Treasury Inspector General for Tax Administration. TIGTA – a federal organization, comprised primarily of auditors and investigators, tasked with monitoring the Internal Revenue Service – periodically issues notices and reports recommending various IRS enforcement actions. For instance, as our employment tax attorneys previously wrote about, in 2017 TIGTA issued recommendations to the IRS concerning payroll tax fraud. TIGTA’s latest recommendations focus on IRS use of Form 3949-A (Information Referral), which, along with Form 211 (Application for Award for Original Information), is filed by tax whistleblowers who wish to report suspected tax violations. In this article, our tax fraud attorneys cover some of the TIGTA report’s highlights – and what they could mean for taxpayers who have unresolved compliance issues.

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What Did TIGTA Recommend to the IRS Concerning Tax Fraud Information Referrals?

The full TIGTA report (“Improvements Are Needed to Correct Continued Deficiencies in the Processing of Taxpayer Referrals of Suspected Tax Fraud”), along with selected highlights, are both linked above for interested readers. Both note that TIGTA identified five key areas for improvement:

1. “Improvements Are Needed to Ensure That Taxpayers Can Easily Obtain Information on How to Report Suspected Tax Fraud” TIGTA noted that information on the reporting process was surprisingly hard to find online, and suggested improving the IRS website to make information more searchable and accessible.

2. “Information Referrals Are Still Not Accurately Accounted for and Tracked.” When TIGTA evaluated IRS records, it found various discrepancies in tracking systems, resulting in referrals that “were not recorded” properly or were otherwise mishandled.

3. “Valid Information Referrals Continue to Be Erroneously Sent for Destruction.” In other words, the IRS repeatedly destroys legitimate referrals. According to the report, in some cases “clerks were told to send the form to retention even if the individual checked a tax law violation box” on the referral.

4. “Processes and Procedures Do Not Ensure That Information Referrals Written in Languages Other Than English Are Sent for Screening.” TIGTA recommended improvements in the way non-English referrals are processed, suggesting the IRS implement better translation and linguistic services.

5. “Lack of Routing Guidance Continues to Result in Misrouted Information Referrals.” Tax whistleblower forms are frequently sent to the wrong locations or departments, resulting in delays and lost information. Tellingly, the report noted, “Repeated concerns have been raised about the misrouting of referrals, but little improvement has been made.” TIGTA made various recommendations, including developing new, written procedures to ensure better accuracy and timeliness.

Worried About a Criminal Tax Referral? Get Help from Experienced Tax Defense Lawyers

Taxpayers should not take the wrong message away from TIGTA’s report. Does it suggest that, because there may be weak points in the IRS’ current system, tax evaders should not be worried about whistleblowers? Not in the slightest. On the contrary, the IRS is now in the process of improving its procedures, making it simpler and easier than ever before to report potential tax fraud effectively. As the IRS continues to implement TIGTA’s recommendations and tighten existing protocols, more and more tax evaders are likely to be caught in the web. If you have a history of noncompliance, now is the time to begin working out a strategy with an experienced criminal tax lawyer.

The good news here is most domestic or foreign income tax evasion can be disclosed and criminal prosecution avoided if the terms of the IRS voluntary disclosure procedure are adhered to.

If you are concerned about a previous failure to file taxes, failure to pay taxes, payroll tax issue, or other tax issue, ask the tax compliance attorneys at the Tax Law Office of David W. Klasing how we can help you reenter the IRS system. For a reduced-rate consultation, contact our law offices online, or call the Tax Law Office of David W. Klasing at (800) 681-1295 today.

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