Whiltleblower Shennaingans

Now we’ve heard everything – a marginally ethical tax preparer signs up a sleazy client and collects fees for doing his tax work, then turns the bloke into the Revenooers and collects a reward!!!

So what that the tipster’s squealing netted the government $20 million in taxes and interest?  What kind of system encourages so-called “professionals” to deal with slime bags, then turn them in, and get a reward???

“It ought to encourage a lot of other people to squeal,” quoth Iowa Republican Charles Grassley – now one of our most unfavorite senators.

Encouragement in the form of a cut of the tax deficiency, that is – something in excess of $3 million bucks (net of tax) which the whistleblower received for ratting.

“It’s a win-win for both the government and taxpayers,” says Eric Young, the squealer’s attorney.  “These are dollars that are being returned to the Treasury that otherwise wouldn’t be.  It’s very difficult being a whistleblower…..The process can be time-consuming, arduous and stressful, from both a personal and professional standpoint.”

We hear this disgusting “Whistleblower Office” has received nearly 1,000 tips involving more than 3,000 taxpayers in fiscal years 2008 and 2009, as noted in its annual reports to Congress.

And no small change need be the subject of tipsters – the whistleblower program only promises awards for returns of $2 million or more.

“This law is not designed to snag the guppies, but to harpoon the whales,” says Patrick Burns, spokesperson for Taxpayers Against Fraud.

Sorry, but most of us in this business would rather provide honest, reputable advocacy to all of our good and valued clients, than hang around with sleazebags who cheat, and turn them in only for our own advantage.

And in yet another example of the Ninth Circus (oops – that would be ‘Circuit’) Court of Appeals getting overturned by the Supremes, came a decision this week throwing out a challenge to an Arizona tax law under which folks receive a state income tax credit for contributing to organizations that use the funds to provide scholarships at non-public schools.

Needless to say, Kagan and her liberal dissenters to the Court’s decision have their hair on fire over this one, claiming that the decision “damages one of this nation’s defining constitutional commitments,” the religious liberty guarantee.  Not to mention the ACLU getting all tied up in its shorts, as noted by Steven Shapiro, legal director, who says the decision “undermines the role of the courts in preserving the core constitutional principle that government may not subsidize religion.”

Sit down and shut up, said the majority, in noting that the Arizona groups challenging the tax credits lacked sufficient grounds to bring a lawsuit over the issue.

So there.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs & Consultants, Ltd., with offices in Incline Village and Reno.  He can be reached at 831-7288, welcomes comments below, at jquinn@ashleyquinncpas.com, and invites readers to view his other commentaries at www.taxlawtips.com.