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IRS paid record $125 million to whistleblowers in 2012: report

By Nanette Byrnes

(Reuters) - The Internal Revenue Service paid a record $125.4 million in 2012 to whistleblowers who provided evidence of tax cheating, including a massive payout 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 putting inadequate resources behind its efforts, causing whistleblowers to grow reluctant to file claims. The program was overhauled by Congress in 2006 amid such criticism.

The report marks an increase in awards paid from $8 million in 2011. 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.

Award payouts in 2012 were boosted by a $104 million reward the IRS paid to Bradley Birkenfeld, a former employee of UBS AG. He helped wealthy Americans hide millions of dollars in secret Swiss accounts and later told the IRS about it.

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.

In a letter accompanying the report sent to Senator Charles Grassley, IRS Acting Commissioner Steven Miller voiced commitment to the program and predicted the pace of awards paid would increase. Grassley is the Iowa Republican who co-authored the 2006 overhaul and who has been a vocal critic of the program's implementation.

In his letter, Miller said a public hearing is likely to be scheduled on the program's rules after a public comment period closes February 19.

(Editing by Kevin Drawbaugh and Andrew Hay)

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