January 05,2007

Grassley Urges Effective Implementation of New IRS Whistleblower Provisions

WASHINGTON – Sen. Chuck Grassley, outgoing chairman of the Committee on Finance,today urged the Treasury Department to implement new Internal Revenue Service whistleblower incentive improvements as effectively as possible. Last December, Grassley won enactment of his proposal to make the whistleblower program more effective in cracking down on tax cheats and collecting taxes owed to the Treasury. Today he asked the Treasury secretary to keep him informed of all developments in the implementation of the improvements and asked Treasury and IRS officials to attend a bipartisan Finance Committee roundtable on this provision on Monday, Feb. 5, at 2 p.m.Grassley is the lead Senate author of the 1986 whistleblower amendments strengthening thefederal False Claims Act and is a strong proponent of encouraging whistleblowers to identify fraudagainst the government.

The text of Grassley’s letter to Treasury Secretary Henry Paulson follows here.

January 5, 2007

The Honorable Henry Paulson
U.S. Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Mr. Secretary:

I am writing to you regarding a matter of great personal interest to me – whistleblowers. Ihave long championed the work of whistleblowers and am proud that legislation I sponsored severalyears ago – the False Claims Act – has translated into recovering well over $10 billion in fraudulentspending by the federal government.

It is for these reasons that I am especially pleased that the “Extension of Tax Relief Act of2006" signed into law recently by the President contains important legislation that provides theTreasury Department the potential to similarly benefit from the work of whistleblowers.While the statute provides significant guidelines based on the success of the False ClaimsAct, there are still requirements for the Secretary of the Treasury to issue guidance within one yearto help ensure the success of this legislation. I would appreciate your informing me of the guidancethat Treasury and the Internal Revenue Service (IRS) are planning or considering issuing in this area;the timing for that guidance; and, the individuals responsible. In addition, please inform me of whatsteps are being taken in response to the recent Treasury Inspector General for Tax Administration(TIGTA) report and findings on the whistleblower office.

In addition, I would ask what steps Treasury is taking to inform the general public about thenew whistleblower rewards program. Under current procedure, IRS instructs employees not tosolicit informants to provide information in exchange for a reward. While this may make sense forinformation regarding individuals not covered by this legislation, it is important that there be broadpublic knowledge of this legislation. I appreciate your informing me of what changes will be madein this matter and also steps to publicize this rewards program.

I am especially concerned about who will be responsible for administering the newWhistleblower Office created by this legislation. It is important that the individual selected to headthe office has a commitment to this program and energy and experience to make sure the potentialof this legislation to bring billions of dollars into the treasury is fully realized. I appreciate yourkeeping me fully informed of the selection criteria and process. My hope is that capable leadershipcan quickly be put in place. I also would appreciate your views on the location of the WhistleblowerOffice within the IRS. Given the intent of the legislation to create an independent office and thefocus on large cases, I would suggest the location of the current office should be revisited.

The Finance Committee will be having a bipartisan roundtable on this provision on February5th, at 2:00 p.m. I would ask that those responsible for this new program at Treasury, IRS and theTIGTA attend this roundtable. We want to have an informed dialogue with all interested partiesabout this new provision. I’m confident this roundtable will assist the Treasury and IRS in theirwork.

Thank you for your time and attention to this matter.

Cordially yours,
Charles E. Grassley

cc: Ranking Member Baucus