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Washington Alert—Part II

…Since late October, the Justice Department has announced 15 settlements with Swiss financial institutions pursuant to the provisions of the Swiss Bank Program. Most of the settlements involved hefty financial penalties with the largest penalty reaching nearly $60 million. The Swiss Bank Program provides a path for Swiss banks to resolve potential criminal liabilities in the U.S. Commenting on the spate of recent settlements, Richard Weber, chief, IRS Criminal Investigation, said, “The amount of money associated with each agreement is not insignificant, but even more significant is the amount of data that we will receive as a result of the Swiss Bank Program. At this point, we’ve already learned so much about the formerly hidden world of offshore banking. This information enables us to vigorously pursue noncompliant individual U.S. taxpayers and guides us in the development of innovative partnerships and methodologies to combat a wide variety of international tax evasion techniques.” Additional details on these cases can be found at http://www.justice.gov/tax .

…The Government Accountability Office (GAO) on Nov. 30 issued a report lauding the IRS Whistleblower Office (WO) for its success in collecting significant revenue generated by whistleblower claims. (GAO-16-20) However, the report criticized the WO for “not using available capabilities to track and monitor key dates in its claim management system.” According to GAO, tax whistleblowers who report on the underpayment of taxes by others have helped collect some $2 billion in additional revenue since 2011. GAO noted that between fiscal year 2011 and June 2015, the WO awarded more than $315 million to whistleblowers. Errors were found in determining some awards resulting in either overpayments or underpayments. “The WO’s communication with stakeholders, including whistleblowers, is limited due to delayed annual reports to Congress, incomplete data, and limited program information for whistleblowers,” GAO said. The report acknowledged that both IRS and the WO take steps to protect whistleblowers and the information they submit, but “gaps” exist in their procedures. This can result in the compromising of the identities of whistleblowers. “Further, tax whistleblowers do not have statutory protections against retaliation from employers,” GAO said. “IRS and the whistleblower community support such protections, noting that inadequate protections may discourage whistleblowers from coming forward,” it added. The report is available athttp://gao.gov/assets/680/673440.pdf .

…The Treasury Inspector General for Tax Administration (TIGTA) on Dec. 1 released its Federal Information Security Modernization Act (FISMA) evaluation of IRS for fiscal year 2015 and said the agency’s Information Security Program “generally complied” with FISMA requirements. (Audit Report No. 2015-20-092) Seven security program areas passed muster, the audit said. However, three security program areas failed to meet FISMA requirements due to not complying with many of the performance attributes specified by the Department of Homeland Security, it said. “The IRS collects and maintains a significant amount of personal and financial information about taxpayers,” said J. Russell George, the inspector general. “As custodians of this sensitive information, the IRS has an obligation to protect it against unauthorized access or loss,” he added. The audit can be found at https://www.treasury.gov/tigta/auditreports/2015reports/201520092fr.pdf .

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