SEC. 488. WHISTLEBLOWER REFORMS.
(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
review,
“(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
6103(n).
“(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.
