The Internal Revenue Service's whistleblower program helped the agency collect $338 million in fiscal year 2023.
The IRS Whistleblower Office also noted in its 2023 report, issued on June 24, that it paid whistleblowers 121 awards, totaling $88.8 million, for the revenue-increasing information. That awards total was more than double the $37.8 million the office paid in fiscal 2022.
But the total number of whistleblower awards for FY23 dropped, going from 132 in 2022 to 121 the following fiscal year.
And to keep the Whistleblower Office on pace to help with tax compliance, the latest report wants Congress to provide some help. Specifically, the office needs the legislative assistance to upgrade its servicers, notably when it comes to dealing with a 30,135 case backlog.
Improving the whistleblower process: “Whistleblower information that the IRS can act on is an important component of effective tax administration as it bolsters the fair and effective enforcement of our nation’s tax laws, the success of our voluntary tax system, and our efforts to reduce the tax gap,” wrote IRS Whistleblower Director John Hinman in the report.
To maintain and upgrade this process, the report points to the IRS Whistleblower Program Improvement Plan, currently being developed.
The current draft of the plan has seven objectives with the four key themes below.
- Staffing — Ensuring that we have the right resources supported with effective tools, technology, and training.
- Systems and Processes — Identifying improvements to the claim management system, claim filing, initial claim analysis, and in other areas.
- Data and Information — Gathering and using better data and ensuring both whistleblower and taxpayer information is effectively protected.
- Collaboration — Increasing collaboration with IRS compliance functions, with IRS Counsel, with whistleblower practitioners, and with other stakeholders to continuously improve the program.
Even though the plan is still under development, the Whistleblower Office says it has started to implement some of the initiatives. And several of the plan’s goals are part of the bipartisan IRS Whistleblower Improvement Act.
The bill was introduced in March 2023 by Sens. Chuck Grassley (R-Iowa), Ron Wyden (D-Oregon), Roger Wicker (R-Mississippi), and Ben Cardin (D-Maryland). Its six proposed reforms to bolster the IRS Whistleblower Program are —
- Provide for De Novo review in appeals heard by the U.S. Tax Court, allowing for new evidence to be admitted to the record;
- Establish a presumption of anonymity for whistleblowers before the court
- Exempt whistleblower awards from budget sequestration;
- Provide that interest be paid to awardees if the whistleblower award has not been paid within one year of the IRS collecting all proceeds;
- Bring the tax treatment of attorney’s fees into line with other whistleblower programs; and
- Improve the program’s annual report to Congress to help tax writers identify areas in most need of attention.
The IRS Whistleblower Improvement Act is necessary to make the program work, said Stephen M. Kohn, Chairman of National Whistleblower Center and founding partner at the whistleblower law firm of Kohn, Kohn and Colapinto.
“The fact that it takes an average of 11.26 years to process the payment of a mandatory whistleblower award, combined with the Office’s acknowledgment that there is a backlog of over 30,000 cases, speaks for itself. Legislative reforms are needed, and the bipartisan IRS Whistleblower Improvement Act should be an immediate priority within the Congress,” Kohn added.
That 11.26 year average whistleblower payment processing time cited by Kohn is jaw-drawing. It’s also why 11.26 years is this weekend’s By the Numbers figure.
Blowing the whistle on tax evaders: If you have information about suspected tax evasion and aren’t dissuaded by this week’s 11.26 years number, the IRS Whistleblower Office would love to hear from you.
“We encourage all individuals with specific and credible information about tax noncompliance to provide this information to the IRS by filing a claim on Form 211, Application for Award for Original Information, with the Whistleblower Office,” notes the report.
You can find Form 211 at the IRS Whistleblower Office webpage.
Once you do that, you need to enter the following on the form —
- A description of the alleged tax noncompliance, including a written narrative explaining the issue(s).
- Information to support the narrative, such as copies of books and records, ledger sheets, receipts, bank records, contracts, emails, and the location of assets.
- A description of documents or supporting evidence not in the whistleblower's possession or control, and their location.
- An explanation of how and when the whistleblower became aware of the information that forms the basis of the claim.
- A complete description of the whistleblower's present or former relationship (if any) to the subject of the claim (for example, family member, acquaintance, client, employee, accountant, lawyer, bookkeeper, customer).
- The whistleblower's original signature on the declaration under penalty of perjury (a representative cannot sign Form 211 for the whistleblower) and the date of signature.
When completed, mail the Form 211 with supporting documentation to:
Internal Revenue Service
Whistleblower Office – ICE
1973 N Rulon White Blvd.
M/S 4110
Ogden, UT 84404
You can find additional considerations when submitting a whistleblower claim, which includes submitting information with potential evidentiary, ethical, legal, or privilege concerns.
You also might find these items of interest:
- Added whistleblower safeguards included in IRS reform bill
- UBS whistleblower gets record $104 million reward for helping IRS
- Revolutionary sailors' report of misconduct led to first U.S. whistleblower law
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