Whistleblower Law Blog

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IRS Whistleblower Statute


   (a) In General.–Section 7623 (relating to expenses of detection of
underpayments and fraud, etc.) is amended–
          (1) by striking “The Secretary” and inserting “(a) In
          General.–The Secretary”,
          (2) by striking “and” at the end of paragraph (1) and
          inserting “or”,
          (3) by striking “(other than interest)”, and
          (4) by adding at the end the following new subsections:
 “(b) Awards to Whistleblowers.–
 “(1) In general.–If the Secretary proceeds with any
 administrative or judicial action described in subsection (a)
 based on information brought to the Secretary’s attention by an
  individual, such individual shall, subject to paragraph (2),
  receive as an award at least 15 percent but not more than 30
  percent of the collected proceeds (including penalties,
 interest, additions to tax, and additional amounts) resulting
 from the action (including any related actions) or from any
  settlement in response to such action. The determination of the
  amount of such award by the Whistleblower Office shall depend
  upon the extent to which the individual substantially
  contributed to such action.
  “(2) Award in case of less substantial contribution.–
  “(A) In general.–In the event the action
  described in paragraph (1) is one which the
Whistleblower Office determines to be based principally
  on disclosures of specific allegations (other than
  information provided by the individual described in
  paragraph (1)) resulting from a judicial or
  administrative hearing, from a governmental report,
 hearing, audit, or investigation, or from the news
 media, the Whistleblower Office may award such sums as
 it considers appropriate, but in no case more than 10
  percent of the collected proceeds (including penalties,
  interest, additions to tax, and additional amounts)
  resulting from the action (including any related
  actions) or from any settlement in response to such
  action, taking into account the significance of the
  individual’s information and the role of such
 individual and any legal representative of such
  individual in contributing to such action.
  “(B) Nonapplication of paragraph where individual
  is original source of information.–Subparagraph (A)
 initiation of the action described in paragraph (1) was
  originally provided by the individual described in
paragraph (1).
“(3) Appeal of award determination.–Any determination
  regarding an award under paragraph (1) or (2) shall be subject
  to the filing by the individual described in such paragraph of
  a petition for review with the Tax Court under rules similar to
  the rules under section 7463 (without regard to the amount in
  dispute) and such review shall be subject to the rules under
  section 7461(b)(1).
  “(4) Application of this subsection.–This subsection
  shall apply with respect to any action–
  “(A) against any taxpayer, but in the case of any
  individual, only if such individual’s gross income
  exceeds $200,000 for any taxable year subject to such
  action, and
 “(B) if the tax, penalties, interest, additions to
  tax, and additional amounts in dispute exceed $20,000.
 “(5) Additional rules.–
“(A) No contract necessary.–No contract with the
  Internal Revenue Service is necessary for any
 individual to receive an award under this subsection.
  “(B) Representation.–Any individual described in
  paragraph (1) or (2) may be represented by counsel.
“(C) Award not subject to individual alternative
  minimum tax.–No award received under this subsection
 shall be included in gross income for purposes of
 determining alternative minimum taxable income.
  “(c) Whistleblower Office.–
 “(1) In general.–There is established in the Internal
  Revenue Service an office to be known as the `Whistleblower
 Office’ which–
“(A) shall analyze information received from any
  individual described in subsection (b) and either
investigate the matter itself or assign it to the
 appropriate Internal Revenue Service office,
 “(B) shall monitor any action taken with respect
  to such matter,
“(C) shall inform such individual that it has
  accepted the individual’s information for further
 “(D) may require such individual and any legal
 representative of such individual to not disclose any
 information so provided,
 “(E) may ask for additional assistance from such
 individual or any legal representative of such
 individual, and
 “(F) shall determine the amount to be awarded to
  such individual under subsection (b).
  “(2) Funding for office.–From the amounts available for
  expenditure under subsection (a), the Whistleblower Office
  shall be credited with an amount equal to the awards made under
 subsection (b). These funds shall be used to maintain the
  Whistleblower Office and also to reimburse other Internal
  Revenue Service offices for related costs, such as costs of
 investigation and collection.
  “(3) Request for assistance.–
“(A) In general.–Any assistance requested under
 paragraph (1)(E) shall be under the direction and
 control of the Whistleblower Office or the office
 assigned to investigate the matter under subparagraph
  (A). To the extent the disclosure of any returns or
  return information to the individual or legal
representative is required for the performance of such
 assistance, such disclosure shall be pursuant to a
 contract entered into between the Secretary and the
recipients of such disclosure subject to section
  “(B) Funding of assistance.–From the funds made
  available to the Whistleblower Office under paragraph
  (2), the Whistleblower Office may reimburse the costs
  incurred by any legal representative in providing
  assistance described in subparagraph (A).”.
  (b) Effective Date.–The amendments made by this section shall
apply to information provided on or after the date of the enactment of
this Act.