The IRS Whistleblower Improvement Act and What it Could Mean For IRS Whistleblowers

Whistleblower attorney Tony Munter discusses a proposed bill that would help protect whistleblowers reporting IRS violations

By Whistleblower Attorney Tony Munter

Just in time for Tax Season, the IRS Whistleblower Law may be getting a much-needed improvement.

It may come as a surprise that there is real legislative progress to report for whistleblowers, but Senator Charles Grassley (R-Whistleblowers) and his colleague in the Whistleblower Caucus of the Senate Ron Wyden of Oregon are introducing legislation to improve the IRS whistleblower law.

Nobody knows if the Bill will become law, but the legislation highlights some very interesting issues in whistleblower law generally even as it addresses some particular technical issues that are relevant, I suppose, only to IRS whistleblower law.

The bill is Called the IRS Whistleblower Improvements Act of 2017

Shockingly enough for legislation introduced in this era, it actually would do what the title says.  It would improve the IRS whistleblower law under which individuals can file, and if the IRS collects tax money as a result, obtain a reward. Most importantly the law includes a provision, which allows an IRS whistleblower to have a private right of action for retaliation should reporting to the IRS lead create retaliation issue for them.

Generally, the IRS has been very good about not revealing sources of whistleblower complaints, but as in any whistleblower situation, retaliation can happen. So the right of the whistleblower to be able to fight such an action taken against them in court is truly crucial to this law, as it is to any whistleblower law.

The IRS has treated information provided to it and resulting investigations it conducts very, very, very, discretely.  Part of this makes sense. The IRS is not supposed to go around sharing individual tax information of any American.

Still, the IRS has not had much in the way of a procedure either to discuss the case or the status of its investigation with the Whistleblower while it conducts its investigation. This new legislation would create such a procedure and Whistleblowers would at least have some idea of the status of the IRS action.

Having the IRS law provide a right to sue for retaliation is a huge advance. The law as written does not even allow for this right to be taken away by any pre-dispute arbitration agreement. It has a short statute of limitations, but it provides a private right for someone who in the course of reporting tax fraud has been the subject of retaliation.

This basic right, which should be accorded all whistleblowers, is an important step forward for this law and for the principle that whistleblowers deserve protection under the law.

Hopefully, this will not only lead to more collections but also further the perception in Congress and in the law that whistleblowers are the heroes of investigations into fraud of all kinds. We will be watching to see if this legislation becomes law.