The Bipartisan Budget Act of 2018, passed overnight and signed this morning by President Trump to end the second federal government shutdown of this year, includes two key provisions for whistleblowers previously introduced by Senator Charles Grassley but removed from the January budget deal.
The Wall Street Journal reported yesterday that the reconciliation of the tax legislation has dropped the definition of collected proceeds for the IRS whistleblower program introduced into the Senate version that passed. The amendment was added by Senator Chuck Grassley, an advocate for whistleblowers and responsible for introducing the legislative provision in 2007 that created the IRS whistleblower program.
The Justice Department has appealed a decision by the U.S. Tax Court last year to provide an IRS whistleblower reward based upon a criminal fine and civil forfeitures. The Government’s appeal to the D.C. Circuit attempts to reverse a favorable decision for whistleblowers on the definition of collected proceeds used in the terms of the IRS whistleblower program.
The IRS Large Business & International Division (LB&I) is launching eleven compliance campaigns to target potential tax issues at the nearly 300,000 taxpayers within its jurisdiction. When a regulator announces that it will spend resources for investigation and enforcement in a particular area, it can be a good signal that it will look carefully at any credible whistleblower tips.
Earlier this year, the IRS Whistleblower Office and its Director Lee Martin issued guidelines for the use of 6103(n) contracts with tax whistleblowers. This has been a somewhat controversial area in the past, since it requires balancing the privacy rights of the taxpayer.
The Tax Court has reminded IRS whistleblowers in a recent decision that the ability to proceed anonymously is not absolute. On June 28, 2017, the U.S. Tax Court denied an anonymous proceeding to Whistleblower 14377-16W after weighing the public interest in knowing who is using the Tax Court to bring serial whistleblower claims against an insufficient fact-specific justification for anonymity (Opinion here).
Senators Chuck Grassley and Ron Wyden have proposed the IRS Whistleblower Improvements Act of 2017 in the U.S. Senate today. If adopted, the law will provide for (1) enhanced communications between the Internal Revenue Service and whistleblowers, and (2) anti-retaliation protections for tax whistleblowers. Both would be significant improvements to the IRS whistleblower program created a decade ago.
We have discussed the potential for whistleblower actions grounded in the protection of the environment and compliance with environmental laws here before. Most depend on the unique circumstances of the case and the fraudulent scheme in order to fit within one of the whistleblower programs. With the Trump Administration in office, it is unclear how long these programs will continue in action. But to the extent that there is evidence of a fraudulent scheme that is unlawfully taking millions from taxpayer dollars, we would be interested in hearing about it.
The Internal Revenue Service is just over halfway done releasing its list of tax scams for 2017. The Dirty Dozen list has been an annual feature of the IRS website and garners a significant amount of media attention warning taxpayers to avoid the tax evasion techniques and fraudulent schemes listed. In recent years, the IRS has released one entry on the list daily in order to garner additional attention.
In the 10th year since the creation of Internal Revenue Code section 7623(b), the Internal Revenue Service (IRS) Whistleblower Program issued 418 awards totaling more than $61 million (before sequestration), according to the annual report issued by the program’s Whistleblower Office to Congress. The total number of awards represented a 322 percent increase over fiscal year 2015. The monetary disbursement, however, was down from the more than $100 million paid out last year.