THE IRS WHISTLEBLOWER PROGRAM IMPROVEMENT ACT OF 2023.
One of the most effective anti-fraud award schemes accessible to whistleblowers who expose tax evasion and fraud is the IRS Whistleblower Act. Congress mandated the IRS to establish the IRS Whistleblower Office to reward whistleblowers who provide the IRS with precise and reliable information and if the information leads to the recovery of taxes, fines, interest, or other sums from the noncompliant taxpayer.
Since 2006 when Section 7623 was modernized, the IRS Whistleblower Award Program (WB Program) has helped the agency successfully uncover and investigate major tax wrongdoing. Through the initiative, the U.S. Treasury has been able to directly recover more than $6 billion from affluent individuals and businesses that were found to be evading taxes.
Through the Offshore Voluntary Disclosure Program, which was established in direct response to useful information provided to the IRS by whistleblowers, the WB Program has recovered additional billions.
One of the IRS's most useful tools for pursuing tax evaders, the WB Program, would be improved by the commonsense clarifications and modifications provided by the IRS Whistleblower Act of 2023.
An Overview of the IRS Whistleblower Informant Award Program's History
The IRS Whistleblower statute was primarily designed to incentivize individuals who were aware of substantial tax evasion to tell the IRS of such information. Congress realized that it is extremely difficult for the government to discover tax evasion and tax fraud due to their complexity and the lack of resources to audit or analyze all returns, which is one of the main reasons they enacted the law.
Due to the implementation of a strong IRS Whistleblower Act, the IRS receives complaints of major tax fraud from whistleblowers, many of whom have inside knowledge of the intricate financial transactions and other criminal activity that leads to tax fraud. To substantiate their claims, whistleblowers frequently supply copious amounts of paperwork that the IRS would not have otherwise been aware of.
With the successful collection of more than $6.6 billion from taxpayers who are not in compliance, the IRS Whistleblower Office has awarded more than 2,500 awards totaling more than $1.1 billion to tax whistleblowers since its establishment in 2007. Since 2012, Kohn, Kohn & Colapinto have been responsible for more than one-third of the $369 million in IRS whistleblower awards.
IRS Whistleblower Program Improvement Act of 2023
- This bill amends the Internal Revenue Code's whistleblower protection provisions. In particular, the bill:
- Changes the abuse of discretion criterion, which is now in place, to a de novo review standard for the Tax Court's review of whistleblower awards;
- shields whistleblower compensation from cuts brought on by budget sequestration;
- permits whistleblowers to remain anonymous throughout Tax Court trials;
- allows payment of the attorney fees of whistleblowers regardless of whether the whistleblower award was paid through the discretionary or mandatory whistleblower award program.
- requires the Internal Revenue Service (IRS) to include a list and description of the top 10 tax avoidance schemes disclosed by whistleblowers.
- requires the IRS to pay interest on whistleblower awards if they are not paid within a year of receiving proceeds from whistleblower disclosures.