Not Just Whistling Dixie: The Case for Tax Whistleblowers in the States

79 Pages Posted: 29 Mar 2014 Last revised: 30 Aug 2014

See all articles by Dennis J. Ventry

Dennis J. Ventry

University of California, Davis - School of Law

Date Written: March 27, 2014

Abstract

This Article examines the successes and failures of current tax whistleblower regimes, with particular emphasis on the states. It considers and then refutes several popular arguments against permitting whistleblowers to submit tax claims, under either a state’s False Claims Act (FCA) or standalone statute, including: (i) whistleblower statutes have historically been used to uncover and prosecute fraudulent behavior, not mere noncompliance with the law; (ii) the “knowing” standard of liability under FCAs creates new liability on taxpayers in jurisdictions permitting false claims pertaining to tax; and (iii) tax law is more complex and uncertain than other areas of the law and therefore off limits to whistleblower actions.

The Article also makes the positive case for tax whistleblowers. It demonstrates how informant insiders can assist outgunned tax agencies combat two persistent problems in tax administration, namely the information gap and the tax gap. At the same time, it makes specific recommendations to address widely shared concerns in the tax whistleblower arena, including (i) the proliferation of frivolous and harassing claims, (ii) unnecessary disclosure of tax return information, and (iii) creating a tax enforcement mechanism that bypasses traditional administrative procedures and expert review. In addition, the Article offers alternative tax whistleblower policies for states to consider. It concludes that a properly drafted and implemented tax whistleblower program can reinforce and improve existing tax enforcement efforts, and yield significant increases in revenue.

Suggested Citation

Ventry, Dennis J., Not Just Whistling Dixie: The Case for Tax Whistleblowers in the States (March 27, 2014). Villanova Law Review, Vol. 59, No. 3, 2014; UC Davis Legal Studies Research Paper No. 373. Available at SSRN: https://ssrn.com/abstract=2417068

Dennis J. Ventry (Contact Author)

University of California, Davis - School of Law ( email )

UC Davis School of Law
400 Mrak Hall Drive
Davis, CA 95616-5201
United States
530-752-4566 (Phone)

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