Lee Martin, Director IRS Whistleblower Office: Guest Speaker at TWLF's Attorneys Conference Call

On May 11, 2016, the Tax Whistleblower Law Firm held its bi-monthly conference call between tax whistleblower attorneys.  During this conference call, Lee Martin, the Director of the IRS Whistleblower Office, along with his representative from the IRS Chief Counsel, were in attendance and answered questions from the tax whistleblower attorneys as presented by Tom Pliske.

Some highlights of Director Martin’s responses are as follows:

• Director Martin views his role is to pay awards and make the whistleblower program successful.
• Director Martin stated that he was available to review a whistleblower case if a whistleblower or attorney was not satisfied with the outcome of the IRS’ determination. In fact, he encouraged whistleblowers and their representatives to contact him to review their case if there is a disagreement between the whistleblower and their representative and the IRS determination.
• Director Martin anticipated paying more awards in fiscal year 2016.
• Director Martin mentioned that his office is working with the IRS Congressional liaison to prepare legislation that would: a) create legal protections for whistleblowers and b) would increase protections for taxpayers against whistleblowers using the taxpayers’ information against them.
• Director Martin also stated that while a point system for differentiating whistleblower cases that are vetted by attorneys may sound like a good idea, pragmatically speaking he does not see that it is currently a possibility.  He stated that even though cases are vetted by attorneys, the cases still end up with the Whistleblower Office; and his job is to process all cases regardless if the claims have been vetted by an attorney.
• Director Martin stated that the de-briefing timelines and determination letter processing timelines in former Deputy Commissioner Miller’s and Deputy Commissioner Dalrymple’s guidelines are targets but are not set in stone.
• Director Martin commented that he and the IRS whistleblower program have the full support of Commissioner Koskinen.  He also stated that there were no advantages to having the IRS whistleblower program as an independent from IRS.  Director Martin also clarified that he maintains independent autonomy over whistleblower office and does not report to a board within the IRS to make decisions or to conduct and administrative appeal.
• Director Martin stated that the Informant Claims Examination (“ICE”) unit is moving back to SBSE to be more transparent.  He also stated that the rationale for the movement was it allowed the IRS to have the ability to better utilize analysts.  He then stated that this would apply to all whistleblower cases (7623(a) and 7623(b)).
• With respect to cases that have been open for 10+ years, Director Martin stated that there may be a valid reason why the cases remained open.  He reiterated that it does not hurt the process for whistleblowers and/or their counsel to inquire with the assigned analyst.  He further stated that the IRS whistleblower office is working on getting through every case, and to pay more awards.  He then stated that because he is trying to get more awards paid, the numbers of cases and awards paid are increasing.
• Finally, with respect to Title 18 and Title 31 penalties and whether they are collected proceeds, Director Martin stated that these penalties are not subject to an award.  He stated that the IRS whistleblower office has no policy as to these penalties, and that he would defer to Congress to determine if they should be included in the term "collected proceeds".

If you are a tax whistleblower attorney and are interested in participating in the conference calls, contact our firm to have us inform you of the next call and how to participate. 

Alternatively, if you have specific and credible information (including documents) of a taxpayer’s tax violations/liabilities, contact us to have us review your claim for an award from the IRS.  As a reminder, the IRS pays 15-30% of the tax, penalties, interest and other amounts collected from non-conforming taxpayers to whistleblowers that provide specific and credible information to the IRS.

2016 Tax Sequestration Rate Reduces Whistleblower Awards

Today, November 3, 2015, the IRS Whistleblower Office announced that it will continue to reduce Whistleblower Awards by 6.8%.  The IRS claims that the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, allows it to reduce whistleblower award payments because of sequestration.

Therefore, award payments made to whistleblowers under Section 7623 on or after October 1, 2015, and on or before September 30, 2016, will be reduced by the fiscal year 2016 sequestration rate of 6.8 percent. The fiscal year 2015 sequestration rate was 7.3 percent.

The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change.

The sequestration reduction will be applied after the Whistleblower Office determines the amount of collected proceeds and the applicable award percentage to be paid under section 7623.

Currently, the Tax Whistleblower Law Firm has several court cases on appeal that are currently pending before the United States Tax Court challenging the authority of the IRS to unilaterally reduce these awards for sequestration.  In addition, the whistleblower statute, I.R.C. § 7623, provides “Any amount payable under …. shall be paid from the proceeds of amounts collected by reason of the information provided, and any amount so collected shall be available for such payments.”  This alone would lead one to believe that the payment of the award, once it is determined, is not discretionary.

IRS Whistleblower Program: Changing of the Guard

Effective August 3, 2015, Director of the IRS Whistleblower Office, Stephen Whitlock, was replaced by Lee Martin from the IRS Office of Professional Responsibility.  Although Mr.  Martin is neither a lawyer nor an accountant, he was selected by Deputy Commissioner John Dalrymple, perhaps in an effort to bring (good) change the IRS Whistleblower program.

In February 2007, Director Stephen Whitlock was given the responsibility to establish the IRS Whistleblower Office.  His accomplishments include centralizing the whistleblower program in Washington DC, where whistleblower claims are now being reviewed and paid in a consistent and objective manner.  Current claims are no longer being lost in the system as they were before the enactment of I.R.C. § 7623(b).  Mr. Whitlock can be credited with a great many accomplishments including establishing a qualified team consisting of 43 personnel as of September 30, 2014.  Many of the whistleblower analysts in this office process and monitor whistleblower claims and often act as whistleblower advocates fighting on behalf of the whistleblowers.  Mr. Whitlock has been responsible for providing on going guidance to IRS personnel as well as whistleblowers and practioners.  The Internal Revenue Manual and Treasury Regulations have been updated under his reign.  Mr. Whitlock has put a good team together and will be missed within the IRS as well as from the IRS whistleblower attorneys for whom he gave so much guidance.

Although lacking a tax background, Director Martin is known for his organizational skills and for being an independent thinker.  He brings his ethics background to the Whistleblower Office from his time with the Office of Professional Responsibility.  In addition, Mr. Martin has significant experience with Information Technology which could be utilized to better organize the flow of information within the IRS Whistleblower Office.  As time will tell, Mr. Martin will begin the next chapter of making the IRS whistleblower program even more successful as it is quickly being recognized as the most powerful tools ever given to the IRS by Congress for the enforcement of the Internal Revenue Code. 

Director Martin likely will be facing similar oppositions from within the IRS that has been plaguing the program since the program started.  There seems to be ongoing resistance by Counsel as well as IRS executives to promote the program.  Many within the IRS continue to interpret the law narrowly resulting in the lack of communications with the Whistleblower, delaying payment of awards as well as diminishing and or eliminating awards altogether.  We hope that the new Director will only build on the program for which he took over and garner the support of the Commissioner and Secretary of Treasury. 

The Tax Whistleblower Law Firm (TWLF) has the deepest respect for Director Whitlock and wishes the best of luck to him in his new position as well as thanks him for his past leadership.