The “New IRS Whistleblower Law” refers to legislative and regulatory amendments aimed at enhancing the IRS Whistleblower Program. These amendments have evolved over time since the enactment of the Tax Relief and Health Care Act of 2006, which initially established the IRS Whistleblower Office. The primary intent behind these changes is to incentivize individuals to report tax violations by offering monetary awards and to provide protection against retaliation for whistleblowers. Here are some of the notable changes and provisions in the law:
- Award Percentage:
- Protection Against Retaliation:
- The Taxpayer First Act signed on July 1, 2019, includes provisions for the protection of whistleblowers against retaliation3.
- Notification Process:
- The Taxpayer First Act also introduced changes to the notification process for whistleblowers. The IRS Whistleblower Office will notify the whistleblower when a case they provided information for has been referred for audit or examination, and again when a payment has been made by the taxpayer the whistleblower identified. However, these notifications do not guarantee an award will be issued3.
- Authorized Disclosure:
- Regulations outline authorized disclosure of returns and return information in whistleblower administrative proceedings, and provide general rules for submitting information on underpayments of tax or violations of internal revenue laws and filing claims for awards4.
- Framework for Award Determination:
- The regulations also provide a framework and criteria that the Whistleblower Office will use in exercising the discretion granted under section 7623 to make awards4.
- Partnering with TTB:
- New procedures were established to enable a partnership with the Alcohol and Tobacco Tax and Trade Bureau (TTB) to provide a consistent approach for claims for a whistleblower award administered under Internal Revenue laws5.
These changes aim to enhance the IRS Whistleblower Program by improving communication, protection, and incentives for whistleblowers, thereby encouraging the reporting of tax fraud and other tax-related misconduct.
The IRS’s new whistleblower provisions can be found in Section 406 of the Tax Relief and Health Care Act of 2006. Implementing regulations are expected to be developed in the coming year by the IRS and will be posted here.