Confidentiality is an important consideration for anyone considering filing a tax whistleblower claim with the IRS. By law, a taxpayers’ information is protected (I.R.C. § 6103). There are also protections in place for a whistleblowers’ identity in most cases. Below, we cover frequently asked questions surrounding whistleblower confidentiality.
Will my identity be protected? In short, the answer is “Yes, in most cases”. The IRS needs to know a whistleblower’s identity and contact information with any claim as a whistleblower claim is submitted under penalties of perjury. While the IRS Whistleblower Office carefully protects a whistleblower’s identity, there are a few ways in which that identity can be divulged.
First is the remote possibility that the tax case proceeds to a trial, where the IRS reserves the right to call the whistleblower as a witness, if needed.
Finally, unless anonymity is provided by the Court, whistleblowers that sue the IRS in Tax Court (i.e. a judicial appeal of the determination of award) over their whistleblower claim will have their identity revealed.
The informant privilege allows the Government to withhold the identity of a person that provides information about violations of law to those charged with the alleged crime. The informant privilege is held by the Government, not the informant, and is not an absolute privilege. There may be instances when, after careful deliberation and high-level IRS approval, the disclosure of the identity of a whistleblower may be determined to be in the best interests of the Government. Nonetheless, in such cases, the IRS first carefully considers and weighs the potential risks to the whistleblower and the Government’s need for the disclosure and then looks for alternative solutions.
Currently, I.R.C. § 7623 (the whistleblower statute) does not provide any protections regarding the identification of whistleblowers. Treasury and the IRS, however, are very sensitive to the legitimate concern whistleblowers have with protecting their identities. Treas. Reg. § 301.7623–1(e) provides that “[n]o unauthorized person will be advised of the identity of an informant.” The IRS will use its best efforts to: (i) prevent the disclosure of a whistleblower’s identity; and (ii) notify a whistleblower prior to any disclosure. See IRS Statement on Confidentiality for more information.
Should I worry about retaliation? The whistleblower statute (I.R.C. § 7623) does not provide protection to a whistleblower from retaliation by the taxpayer. Thus, your best protection is to maintain your anonymity. Other than required IRS personnel and your whistleblower attorney, it is best to maintain your status as a whistleblower in strict confidence. In our experience, the IRS takes appropriate steps to protect the identity of the whistleblower, especially in those situations where the whistleblower is still employed by the taxpayer. However, whistleblowers, even those with the potential of a large award from their claim, are often eager to share their involvement with persons close to them, and then information may be leaked to third parties. Often, when a whistleblower’s identity does become known to a taxpayer, it is usually due to whistleblower’s own actions or disclosures.
Every situation is unique; however, a whistleblower could be subject to a lawsuit or even criminal retaliation from a taxpayer they are reporting to the IRS. Thus, it is extremely important that confidentiality be maintained. Filing a whistleblower claim can be a lengthy process and often marriages, business partnerships and even close family relationships sometimes dissolve. With these events your anonymity may be exposed or compromised. Remember the old adage: “loose lips sink ships.”
What can I do to ensure my confidentiality? Keep these thoughts in mind as you plan for and embark on a whistleblower claim:
Hire an experienced whistleblower attorney who can guide you through the process, including how to maintain your confidentiality as well as properly assembling your Claim and determining whether you are likely to be called as a witness by the IRS should the taxpayer proceed with litigation.
Setup protected communications regarding all whistleblower related matters.
o Do not use your employer email, FAX, landline, cellphone or printers, especially if your employer is the taxpayer. Setup a separate email address (typically with a separate provider) for use only with whistleblower related activities.
o Do not use your business or home address for contact with the IRS about your claim. Let your whistleblower attorney handle communications with the IRS.
o Do not use public WiFi (hotspots) when communicating with your whistleblower attorney. Use a cellular connection or encrypt your home internet connection with a virtual private network (VPN).
Be patient. A successful whistleblower claim is a lengthy process. It can also bring tremendous financial rewards. Don’t become discouraged during the long periods of unknown and talk about your frustration with persons that do not have a need to know.
Author, SHINE LIN strives to present a balanced yet focused claim which allows the IRS to concentrate on the key facts, legal issues, law and legal analysis so that the IRS may successfully pursue the alleged wrongdoers.