IRS Tax Whistleblower Articles
IRS Provides Welcome Update to Whistleblower Program Goals
by Andrew Velarde
Following a comprehensive review of the operating guidelines and procedures of the IRS Whistleblower Office, the agency has outlined timeline performance goals for its whistleblower program in a memorandum issued August 20.
"The objective of the review was to improve the timeliness and quality of decisions as the Service evaluates and acts on whistleblower information," John Dalrymple, IRS deputy commissioner for services and enforcement, said in the memo.
The memo largely echoes the one released in June 2012 that was drafted by Steven Miller, then- IRS deputy commissioner for services and enforcement, which called for the IRS to adopt temporary timelines for acting on whistleblower submissions while it conducted a review of the whistleblower program.
Erica Brady of the Ferraro Law Firm acknowledged the similarities to the Miller memo, but said the new memo was a good and necessary update. "This memo encapsulates the changes procedurally to the whistleblower program over the last two years," she said. "There are some administrative changes that don't have a home to be written about anywhere else."
Acknowledging that timely action is essential, the timeline goals outlined in the new memo include initial evaluation by the Whistleblower Office following receipt of claims within 90 days, review by operating divisions and Criminal Investigation subject matter experts or their designee within 90 days, and notification of an award decision by the Whistleblower Office within 90 days of when the collected proceeds can be finally determined. Following a comprehensive review of the operating guidelines and procedures of the IRS Whistleblower Office, the agency has outlined timeline performance goals for its whistleblower program in a memorandum issued August 20.
A new goal not included in the Miller memo is for the Office of Chief Counsel to establish controls and reporting requirements for its risk analysis opinions. Business performance review reports, which include summary data on performance goals and explanations of facts and circumstances for cases that exceed the target timelines, would include data on cases for which a risk analysis has been requested but has not been received within 30 days.
"Chief Counsel has concurred in making this area a priority," the memo states.
Brady said the inclusion of that new goal is especially important because it would help expedite the whistleblower review process further. "When you look back at the time frames for when cases have gotten stuck in the whistleblower reports, the chief counsel review is one of the larger blocks of time," Brady said. "The addition of the time frame for chief counsel review should ensure a timely review process when the IRS is trying to determine whether or not they can use the information at all."
Brady added that the new goal would aid the IRS in its enforcement measures, ensuring that the agency receives timely information.
Delays in reward determinations and lack of communication between the Whistleblower Office and whistleblowers have plagued the program and have been the target of much practitioner criticism.
The memo says that whistleblowers provide valuable leads and offer "unique insights into taxpayer activity," including information that the IRS would be unable to obtain using its compliance processes and procedures.
The memo also normalizes the debriefing process for the whistleblower, Brady said. It provides that all whistleblower submissions referred for review by subject matter experts in the Large Business and International, Tax-Exempt and Government Entities, and Small Business/Self-Employed divisions will include debriefing of the whistleblower, unless a "specific justification for a decision not to conduct a debriefing" is given. Debriefing the whistleblower, who could help the IRS understand complex or hidden relationships, is invaluable, the memo says.
The memo also provides that section 6103(n) contracts may be used when disclosure of taxpayer information may be necessary. Brady said that the use of those contracts would allow whistleblowers to provide greater assistance to the IRS in the audit process, but that to her knowledge the tool has remained unused.
The memo also stresses the need to protect the identity of whistleblowers from those who do not have a need to know based on their official duties. Whistleblower information will be segregated from regular exam workpapers and the regular administrative file, the memo states. "There should be no mention or discussion of the whistleblower in the regular examination activity log, workpapers (e.g., emails, letters, and intra-agency correspondence) or case file," it says.
In a statement August 20, IRS Commissioner John Koskinen said, "Looking to the future, the IRS must do everything possible to strengthen the Whistleblower Program and build on the progress already made in implementing the law, while remaining mindful of the need to protect taxpayer rights." He added, "I am committed to expanding the program's reach and improving communications with existing and potential whistleblowers."
Koskinen also said he intends to work with Congress on any statutory changes necessary to further improve the program.
Brady speculated that any statutory changes may be additional protections for tax whistleblowers, such as retaliatory protections, which were previously discussed in President Obama's fiscal 2015 budget . "Encapsulating these protections in the IRS whistleblower program would be great. It would bring it in line with the other federal whistleblower programs," she said.
Final whistleblower regulations (T.D. 9687 ) released August 7 that provided comprehensive guidance for the award program authorized under section 7623 have been met with a lukewarm reception by practitioners.