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Proposed tax bill would improve IRS whistleblower program

Congress is considering improvements to the IRS whistleblower program as part of bipartisan legislation that would make important changes to the Internal Revenue Service. Photo credit: Chris Phan via Flickr, CC license

Congress is considering improvements to the IRS whistleblower program as part of bipartisan legislation that would make important changes to the Internal Revenue Service.

The Taxpayer First Act of 2019, spearheaded by Senate Finance Committee Chair Chuck Grassley (R-IA) and Senator Ron Wyden (D-OR), builds on a similar bill that failed last year.

A strong and consistent advocate for whistleblowers who led congressional efforts to adopt the modern-day False Claims Act, Sen. Grassley addressed in a statement the risks IRS whistleblowers take and the pressing need to provide IRS whistleblower with protection against retaliation.

“Unfortunately, too often IRS whistleblowers continue to be treated like a skunk at a picnic … They often wait for years in the dark with no indication of whether the information they provide will lead to a successful recovery or whether their reward is even being processed … Moreover, they are often putting their careers on the line exposing corporate tax shelters with no protections should their employer decide to retaliate.”

The proposed law would grant IRS whistleblowers anti-retaliation protections similar to those available to whistleblowers under the False Claims Act and the Sarbanes-Oxley Act. Whistleblowers who have been fired, demoted or harassed would be entitled to sue for reinstatement, doubled back pay and compensation for damages.

The Taxpayer First Act also would allow for freer communication between the IRS and whistleblowers to advance investigations while still protecting taxpayer privacy, Grassley says. To stop tax whistleblowers from being left “in the dark,” the law would require the IRS to notify whistleblowers of the status of their cases.

Grassley, who authored legislation that established the IRS whistleblower program in 2006, said the program has helped recover more than $5 billion in taxes that otherwise would have been lost to fraud.

Whistleblowers and their attorneys have long had many concerns about the IRS whistleblower program. Phillips & Cohen partner Edward Arens wrote an article detailing some of the problems with the IRS Whistleblower Program, with ideas on how to fix it, for Accounting Today.

He recently won an important victory in US Tax Court for an IRS whistleblower client. The ruling allows IRS whistleblowers to challenge IRS award decisions when new information is obtained that would affect the award determination.

If you are aware of a tax fraud and would like to consult with our whistleblower attorneys to discuss your case, please contact us for a free, confidential review.

About Phillips & Cohen LLP

Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling over $12.3 billion. We have been recognized for our work by numerous national awards. Our attorneys and cases have been in The New York Times, The Wall Street Journal, the Financial Times and other news media. Three of our cases were featured in the CBS series, “Whistleblower.” Phillips & Cohen’s roster includes former federal prosecutors, the first head of the SEC Office of the Whistleblower, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act and attorneys with decades of experience representing whistleblowers.

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