You can think of this here as a shortening of or . is what's called a verb, where you take a noun and add to make a verb out of it. 'Is it true Tom witness a murder?' is a perfect translation already.
Forget trying to do 'hyper-literal' translations under the mistaken assumption it will help you grasp the internal logic of the Japanese sentence. is one unit, closer to 'witness' than 'do witness'; you can't say .
As for here, basically, it explicitly marks it as hearsay. The most literal I believe there's any point in going, 'How they say Tom witnessed a murder, is it true?'