IRS Whistleblower Protections Against Retaliation

Tax whistleblowers are left with less protection against retaliation than other whistleblower programs.  The CFTC and SEC whistleblower programs, as well as the False Claims Act, provide for a cause of action when a whistleblower suffers retaliation.  The law authorizing the IRS whistleblower program in 2006 did not provide for a federal cause of action to protect whistleblowers from retaliation by their employer.  Individuals who submit tips to the IRS are only protected from retaliation by their employer if they are covered by the whistleblower protections of another law.  Although some whistleblowers may be able to find relief, the lack of specific protection will leave some whistleblowers without a remedy.

Yellow and Black Warning Sign with letters IRS on it

One place for an IRS whistleblower to look for anti-retaliation protections is the Sarbanes-Oxley Act.  SOX contains a provision protecting employees who make disclosures of federal mail, wire, bank and securities fraud.  Reporting to the IRS may also involve allegations, such as accounting misconduct or financial statement fraud, that would be covered by the SOX anti-retaliation provisions.  Although not ideal, SOX may at least offer some whistleblowers relief from retaliation.

There have been some efforts to add protections for IRS whistleblowers.  The IRS noted the lack of whistleblower protection in its Fiscal Year 2012 annual report to Congress about the program.  The Obama Administration had a section in its FY2014 budget proposal authorizing a change to section 7623 of the IRS Code to provide for anti-retaliation provisions similar to the False Claims Act for tax whistleblowers.  This part of the budget was unfortunately not adopted by Congress.  Until the IRS whistleblower law is changed, however, whistleblowers may not have an adequate remedy.

At the moment, the best protection against retaliation offered by the IRS is the ability to remain anonymous.  The IRS treats whistleblowers who provide tips as confidential informants and protects their identity to the fullest extent permitted by the law.  However, the IRS warns that individuals may need to be identified as a witness and called in a judicial proceeding in certain circumstances.  Eric L. Young represented the first IRS whistleblower to receive an award under the 2006 tax whistleblower program and maintained the anonymity of his client throughout the process.  Eric and the IRS whistleblower attorneys of McEldrew Young can evaluate your whistleblower claim and advise you about the potential to remain anonymous.  Please call 1-800-590-4116 or contact us to discuss your claim and potential remedies for retaliation.

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