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Senators Grassley And Wyden Introduce Bill To Improve Incentives And Protections For Irs Whistleblowers

  • Posted on: Apr 4 2017

On March 29, 2017, Sen. Chuck Grassley and Sen. Ron Wyden, the founding members of the Senate Whistleblower Protection Caucus, introduced the IRS Whistleblower Improvements Act of 2017, bipartisan legislation intended to improve communication between the IRS and whistleblowers and strengthen the protections for whistleblowers against workplace retaliation.

“Whistleblowers are a crucial line of defense against waste, fraud and abuse,” said Wyden in a joint statement. “This legislation will strengthen protections for employees of companies who come forward to report tax evasion.  Empowering these whistleblowers is key to rooting out bad actors who are breaking the law by dodging their taxes.”

The bill was originally introduced last year as an amendment to the Taxpayer Protection Act of 2016. The Senate Finance Committee approved the amendment last April, but it failed to receive the approval of the full Senate.

“Whistleblowers have helped the IRS recover more than $3 billion for the taxpayers that otherwise would have been lost to fraud,” Grassley said in the statement. “Whistleblowers have the potential to help even more. They need assurances that putting their jobs at risk carries protections. They also need better communication about where their cases stand so they’re not sitting in limbo. This bill will offer a welcome mat to those who are too often treated like skunks at a picnic.”

If passed, the bill would: (1) increase communication between the IRS and whistleblowers, while protecting taxpayer privacy; and (2) provide legal protections to whistleblowers from employers retaliating against them for disclosing tax abuses.

To increase communication, the bill would allow the IRS to exchange information with whistleblowers where doing so would be helpful to an investigation.  It would further require the IRS to provide status updates to whistleblowers at significant points in the review process and allow for further updates at the discretion of the IRS.  It does this while ensuring that the confidentiality of this information is maintained.

To protect whistleblowers from employer retaliation, the bill extends anti-retaliation provisions to IRS whistleblowers that are currently afforded to whistleblowers under other whistleblower laws, such as the False Claims Act and the Sarbanes-Oxley Act of 2002.

“Tax whistleblowers may be easily identified within their firms as having specific knowledge of tax fraud.  Extending the protections to tax whistleblowers that apply to whistleblowers in other fields is a matter of fairness and in the interest of U.S. taxpayers who benefit from such whistleblowing,” Grassley and Wyden said.

According to the IRS, “since 2007, information submitted by whistleblowers has assisted the IRS in collecting $3.4 billion in revenue, and, in turn, the IRS has approved more than $465 million in monetary awards to whistleblowers.” See IRS Whistleblower Program Fiscal Year 2016 Annual Report to the Congress.

Takeaway:

If enacted, the bill will strengthen the power of the IRS to fight tax fraud under its whistleblower program and protect whistleblowers from workplace retaliation. Given the number of submissions the IRS considers per year, and the concerns whistleblowers have about reporting fraud to the IRS, this bill is much needed.

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