As previously discussed in this Blog, we have challenged both (i) the IRS to better utilize the Whistleblower Program, and (ii) Congress to improve the Whistleblower Program through legislation. On July 1, 2019, President Trump signed the Congressional legislation known as the Taxpayer First Act. This new legislation contains necessary Whistleblower Reforms, as follows:
Authorizes the IRS to communicate with whistleblowers while protecting taxpayer privacy.
Extends anti-retaliation provisions to IRS whistleblowers that are afforded to other whistleblowers under other laws.
Looking at the specific language in the Taxpayer First Act related to whistleblowers, Congress has provided the following changes to the Whistleblower Program:
The IRS is given authority to disclose information to whistleblowers regarding return information of the taxpayers for whom the whistleblower has reported, if such disclosure is necessary in obtaining information which is not otherwise reasonably available to determine the correct tax liability or to collect taxes due.
The IRS must provide updates on whistleblower investigations to whistleblowers, as follows:
a. No later than 60 days after a case has been referred for an audit or examination a notice of such referral must be sent to the whistleblower;
b. No later than 60 days after a payment has been made by the taxpayer related to the information provided by a whistleblower, the IRS must send a notice of payment to the whistleblower.
c. Pursuant to additional regulations established by the IRS, the following information may be disclosed:
i. Information on the status and stage of any investigation or action related to such information;
ii. When an award determination of any amount is made, the reasons for such determination.
3. Federal protections against retaliation against an IRS whistleblower:
a. Prevents employers from discriminating, harassing, demoting, suspending, threatening, etc. an employee that provides information or that leads or assists in the investigation regarding an underpayment of tax; or that testifies in an administrative or judicial action taken by the IRS.
b. Provides a cause of action for the whistleblower against his former employment in District Court after filing a complaint with the Secretary of Labor.
c. Provides remedies for any retaliation, including compensatory damages (restoration of employment status, 200% backpay, 100% of lost benefits with interest, and compensation for special damages (including litigation costs, expert fees and attorney fees).
We applaud Congress and the President for the changes passed in the Taxpayer First Act, and look forward to future legislation implementing more of our suggested changes to the IRS whistleblower program, including:
Paying interest to whistleblowers from the date taxes are collected until payment of an award.
Ending the sequestration reduction of awards.
Prioritizing IRS whistleblower claims.
Implementation of these three additional tweaks would continue to enhance this important tax collection tool for the IRS.
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.