Paul L. Caron

Saturday, June 22, 2019

Congress Enacts Robust Protections For Tax Whistleblowers

IRS Whistleblower (2014)Jason Zuckerman & Matthew Stock, Congress Enacts Robust Protections For Tax Whistleblowers:

Although plagued by delays and other challenges, the IRS Whistleblower Reward Program has achieved some success in encouraging insiders with information about significant tax underpayments to come forward.  Since Congress established the IRS Whistleblower Program in 2006, whistleblower disclosures to the IRS have enabled the IRS to recover $5 billion, and the Whistleblower Office has awarded whistleblowers approximately $811 million.

But many whistleblowers are reluctant to come forward because there is no federal law protecting tax whistleblowers against retaliation.  For several years, the IRS Office of the Whistleblower has called on Congress to enact statutory protections from retaliation.  In its FY 2018 annual report to Congress, the IRS Whistleblower Office notes that  “[p]roviding whistleblowers with a zone of protection from economic or physical harm is imperative to the success of any whistleblower program as Congress has recognized in other whistleblower statutes . . . The need for greater protection of whistleblowers is amplified as sophisticated taxpayers are increasingly attempting to learn the existence or identity of a whistleblower.”

This week, Congress heeded that request by enacting robust whistleblower protections for tax whistleblowers, modeled on the whistleblower protection provisions of the Sarbanes-Oxley Act and False Claims Act

These new protections are included in the Taxpayer First Act (TFA), which the House passed on June 10, 2019, and the Senate passed on June 13, 2019.  This bipartisan legislation will enhance the IRS’ ability to combat tax fraud, a laudable goal as the annual tax gap (taxes that are owed and not paid to the Treasury) exceeds $400 billion.   Providing protection against retaliation should encourage whistleblowers with high-value inside information about tax noncompliance to come forward.

IRS News, Tax | Permalink