IRS Tax Whistleblower Resources
IRS Whistleblower Authorities
This law, passed on December 20, 2006: established the IRS Whistleblower Office, required annual reports to Congress, added the section 7623(b) enhanced whistleblower award provisions, and provided for an above the line deduction for attorneys fees in section 7623(b) cases.
IRS Regulations, Rulings, and Guidance
Proposed Treasury Regulations, published on December 14, 2012, that propose rules for governing whistleblowers under section 7623. These rules specifically include rules for submitting information and filing claims for awards, outline whistleblower administrative proceedings applicable to claims for awards, and addresses the computational determination and payment of awards.
IRS internal memorandum concluding that amounts recovered for violation of non-tax laws may not be considered for purposes of computing an award under section 7623.
The treasury regulation was adopted unchanged from the proposed regulation, which extended the definition of "proceeds of amounts collected" and "collected proceeds" to include amounts collected prior to receipt of the whistleblower's information if the information provided results in the denial of a claim for refund, or a reduction of an overpayment credit balance used to satisfy a tax liability incurred.
IRS internal memorandum concluding that Form 211R, Declaration of Representation for Whistleblower Claim, as written, does not adhere to the requirements of a valid power of attorney and cannot be accepted by the IRS as a valid power of attorney.
The IRS cannot accept a Form 2848, Power of Attorney and Declaration of Representative, or other power of attorney that has been altered or modified so that the power of attorney not longer complies with the established rules and regulations regarding powers of attorney for whistleblower representatives.
IRS internal memorandum concluding that employees of the Whistleblower Office are authorized to disclose taxpayer return information to whistleblowers in making determinations pursuant to section 7623, or providing status updates to whistleblowers regarding pending, unprocessed, or dismissed claims under section 7623. The specific taxpayer return information that may be disclosed to a whistleblower in a particular instance will depend on the facts and circumstances of the matter.
IRS internal memorandum concluding that an award paid under section 7623 to a nonresident alien individual is characterized as compensation for services and taxes must be withheld under section 1441 on the U.S. source portion of the award payment unless specifically exempted by treaty.
IRS internal memorandum concluding that it is permissible to withhold potential income tax on whistleblower awards under section 7623(a), as there is no legal or factual basis for differentiating between the federal tax treatment of payments made under section 7623(a) and (b), and that a de minimis exception to administrative withholding is legally supportable.
IRS internal memorandum stating that the IRS's decision to withhold on whistleblower awards under section 7623 is legally defensible even though they have no specific statutory authority to withhold on these awards.
IRS internal memorandum concluding that including refunds not issued and the elimination or reduction of credit balances in collected proceeds is not only a legally permissible interpretation of that term, it would be consistent with the purpose of section 7623.
IRS internal memorandum concluding that criminal fines are not part of collected proceeds because all criminal fines collected for offenses against the United States government are required to be deposited in to the Crime Victims Fund, except those specifically excluded, under the Victims of Crime Act of 1984.
Final Treasury Regulations on the disclosure of return information under section 6103(n) in connection with written contracts among the IRS, whistleblowers, and legal representatives of whistleblowers, for services concerning the detection of violations of the internal revenue laws or related statutes.
Treasury Regulations published on January 18, 2011 that propose extending the definition of "proceeds of amounts collected" and "collected proceeds" to include amounts collected prior to receipt of the whistleblower's information if the information provided results in the denial of a claim for refund, or a reduction of an overpayment credit balance used to satisfy a tax liability incurred.
Final Regulations requiring corporations to file a schedule disclosing uncertain tax positions taken on the tax return for years beginning on or after January 1, 2010.
Internal IRS procedures for analyzing informant information and disseminating it to the audit team in the IRS Large and Mid-Size Business Division.
This Notice provides guidance to the public on how to file claims under Internal Revenue Code section 7623 as amended by the Tax Relief and Health Care Act of 2006.
Based on the old Informant's Rewards Program.
U.S. Tax Court Cases
The Tax Court dismissed a whistleblower's challenge to the IRS's decision not to pursue a lead he provided and denied his petition to force the IRS to reopen his award claim, holding that the Tax Court is not authorized by section 7623(b) to order the IRS to reopen a claim or to order the IRS to pursue particular information provided.
(Holding that the potential harm from disclosing a whistleblower's identity as a confidential informant outweighs the public interest in knowing the whistleblower’s identity, and that redacting identifying information adequately protects the whistleblower's legitimate privacy interests as a confidential informant.)
Granting the IRS's motion to dismiss for lack of jurisdiction because the Petitioner failed to timely filing a petition with the Tax Court to appeal his adverse whistleblower award determination. It is important to note that the IRS argued that the letter mailed to the Petitioner denying an award was an administrative decision, thus apparently acquiescing to the Court's ruling on that issue in Cooper.
Holding that the 30-day period to petition the Tax Court under section 7623(b)(4) begins on the date of mailing of the determination by the Whistleblower Office, and the IRS must prove by direct evidence the date and fact of mailing of the determination to the whistleblower.
Holding that the Tax Court's jurisdiction in a whistleblower case does not include opening or ordering the IRS to open an administrative or judicial action to redetermine the tax liability.
Holding that the Tax Court has jurisdiction to review the IRS's denial of an individual's whistleblower claims, finding that an IRS letter to the individual denying his claims constitutes a "determination" under section 7623(b)(4), following Cooper v. Commissioner. But dismissed the case because the individual failed to file a timely petition with the court, within 30 days of the original denial letter.
In a case of first impression, the Tax Court held that an IRS letter denying whistleblower awards constitutes a final administrative determination necessary to allow the court to review the petitioner's claim, and denied the IRS's motion to dismiss.
The Court of Federal Claims dismissed actions against the government for whistle-blower rewards finding that the Tax Court has sole jurisdiction, there is no contractual claim, and transfer of the case to the Tax Court is not statutorily permissible.
The Tax Court denied an untimely request for a reward under the tax whistleblower provisions.
The IRS Whistleblower Office's report to Congress for the IRS's fiscal year ended September 30, 2012.
The IRS Whistleblower Office's report to Congress for the IRS's fiscal year ended September 30, 2011.
The IRS Whistleblower Office's report to Congress for the IRS's fiscal year ended September 30, 2010.
The IRS Whistleblower Office's report to Congress for the IRS's fiscal year ended September 30, 2009.
The IRS Whistleblower Office's report to Congress for the IRS's fiscal year ended September 30, 2008.
Internal Revenue Manual
Reissued interim guidance that provides updates to the Internal Revenue Manual which outlines procedures for making partial award payments and refund netting, a procedure whereby whistleblowers are eligible for awards on amounts that act as offsets to adjustments made or refunds denied as a result of the whistleblower's information.
Reissued interim guidance that provides updates to the Internal Revenue Manual to outline procedures for whistleblower award determination administrative proceedings, allowing a whistleblower to contest the proposed award in an administrative proceeding with the IRS before a final award determination is made.
Reissued interim guidance that adds new sections to the Internal Revenue Manual that will reduce withholding on whistleblower awards.
Updates the Internal Revenue Manual to outline procedures for making partial award payments and refund netting, a procedure whereby whistleblowers are eligible for awards on amounts that act as offsets to adjustments made or refunds denied as a result of the whistleblower's information.
Updates the Internal Revenue Manual to outline procedures for whistleblower award determination administrative proceedings, allowing a whistleblower to contest the proposed award in an administrative proceeding with the IRS before a final award determination is made.
Adds new sections to the Internal Revenue Manual that will reduce withholding on whistleblower awards.
(June 18, 2010) Internal IRS procedures for the payment of claims for awards to whistleblowers.
Chief Counsel Advice
This Notice modifies Notice CC-2008-011 by loosening the limitations on the IRS's ability to contact Whistleblowers who are current employees of a taxpayer.
"Limitations on Informant Contacts: Current Employees and Taxpayer Representatives"
This Notice provides guidance relating to a new cause of action in the Tax Court for review of award determinations made by the Service's Whistleblower Office, pursuant to section 7623.
Other Government Reports & Letters
TIGTA auditors determined that the process for individuals to report suspected tax law violations is not efficient or effective.
Deputy Commissioner Steven T. Miller's directive imposes formal internal deadlines for reviewing whistleblower submissions by the whistleblower office and operating divisions, and it imposes a formal deadline by when whistleblowers should be notified of an award determination.
(April 30, 2012) TIGTA auditors determined that improved oversight is needed to effectively process whistleblower claims.
(Letter to Commissioner Shulman from Senate Finance Committee member Charles Grassley, dated September 13, 2011, urging the IRS to incorporate the changes to the IRS's Whistleblower Program regarding claim processing and reporting key information to Congress outlined in Government Accountability Office report GAO-11-683).
(Senate Finance Committee member Charles Grassley calls on government officials to follow the road map provided in the Government Accountability Office report for how to improve the IRS Whistleblower Office, urging Treasury and IRS officials to "do all they can to ensure the success of what's clearly one of the best tools available to go after tax fraud.")
“TAX WHISTLEBLOWERS - Incomplete Data Hinders IRS’s Ability to Manage Claim Processing Time and Enhance External Communication” This GAO Report addressed how improved tracking of cases by the IRS could improve the Whistleblower Program, decrease delays, and aid Congress’s ability to oversee it.
(Letter to Commissioner Shulman from Scott A. Knott and Gregory S. Lynam, The Ferraro Law Firm Tax Partners, urging the IRS to take action to reconcile conflicting guidance issued by Chief Counsel with respect to whether "collected proceeds" under section 7623 include denied claims for refund, and when whistleblower award determinations are eligible to be made).
(April 8, 2011) (Senate Finance Committee member Charles Grassley applauded the IRS's use of information provided by a whistleblower to recover $20 million that might otherwise have taken years of work by the IRS to uncover or missed entirely).
The announcement explains the actions being taken by the IRS in response to the comments received on the proposed schedule and instructions for the reporting of uncertain tax positions.
The announcement explains the IRS is expanding its policy of restraint in connection with its decision to require certain corporations to file Schedule UTP, Uncertain Tax Position Statement, and will forgo seeking particular documents that relate to uncertain tax positions and the workpapers that document the completion of Schedule UTP.
Letter to Secretary Geithner from Senate Finance Committee ranking minority member Charles Grassley, dated June 21, 2010, requesting a delay in the implementation of the new Internal Revenue Manual provisions until these provisions can be more fully evaluated
(August 20, 2009) "DEFICIENCIES EXIST IN THE CONTROL AND TIMELY RESOLUTION OF WHISTLEBLOWER CLAIMS" This TIGTA report evaluated how the IRS has implemented the enhanced IRS Whistleblower Program. TIGTA found that the IRS did not have an effective inventory control system or adequate procedures and processes in place, creating inaccuracies and inconsistencies among control systems. The report recommends that the new single inventory control system should include reporting capabilities, written procedures with timeliness standards should be established, and processes to monitor the timely processing of claims should be developed. The IRS agreed with the recommendations and began to take corrective action.
Internal IRS procedures for processing cases to be analyzed by the IRS Small Business/Self-Employed Division.
The IRS Whistleblower Office's first annual report to Congress on the status of the program after the first 12 months.
Internal IRS procedures for processing cases to be analyzed by the IRS Large and Mid-Size Business Division.
United States Tax Court Washington, D.C., October 3, 2008 Press Release
Which he has championed in Congress for two decades.
February 2, 2007 - The first Director of the new IRS Whistleblower Office
The Informants' Rewards Program Needs More Centralized Management Oversight June 2006 audit report by the Treasury Inspector General for Tax Administration of the old tax whistleblower program