Senate Bill Strengthens IRS Whistleblower Protections

It provides for De Novo review in appeals heard by the U.S. Tax Court — allowing for new evidence to be admitted to the record, and establishes a presumption of anonymity for whistleblowers before the court, according to a summary of the bill.

The legislation also exempts whistleblower awards from budget sequestration, provides that interest be paid to awardees if the award has not been paid within one year and brings the tax treatment of attorney’s fees into line with other whistleblower programs by not subjecting whistleblowers to double taxation on attorney’s fees.

The bill also allows the IRS to retain some proceeds for the administration of the program. As the bill summary explains, “similar to the False Claims Act, the Commodity Futures Trading Commission whistleblower award program, and the IRS debt collection program, the proposal will allow the IRS to retain 3% of proceeds collected (up to $10 million indexed for inflation) under the whistleblower program to be retained and used for program costs associated with administering the program.”

The IRS whistleblower program would also be required to list in its annual report to Congress the top 10 areas where whistleblowers have identified tax avoidance schemes.

Whistleblower attorney Stephen Kohn of Kohn, Kohn & Colapinto, who also serves as the Chairman of the Board of Directors of the National Whistleblower Center, said Wednesday in a statement that “the tax whistleblower law has recovered billions of dollars to the U.S. treasury. Tens of thousands of illegal offshore accounts have been shut down by whistleblower disclosures. It’s time for the Department of Treasury to properly implement the IRS whistleblower law. This bill will achieve that goal.”