IRS Tax Whistleblower Articles

2015 Whistleblower Report Touts Big Year

By Andrew Velarde

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Citing the growing number of awards it gave out in 2015, the IRS Whistleblower Office in its annual report released February 10 called 2015 "a big year," but practitioners cautioned that the office still has work to do on improving its claims process.

According to the report , 99 awards, including 19 payments under section 7623(b), were made in 2015 to whistleblowers, totaling more than $103 million before sequestration. The amount is only slightly less than what had been paid out the previous two years combined. With $501 million in amounts collected under section 7623, 20.6 percent of awards were paid out as a percentage of amounts collected. That is substantially greater than the 15.7 percent and 16.9 percent for 2013 and 2014, respectively.

"The new whistleblower report reads like 'the end of the beginning,'" Dean Zerbe of Zerbe, Fingeret, Frank & Jadav PC said, citing the initial efforts by the IRS to establish the office and put in place guidance. "The focus with the new director is shifting toward improving the timeliness of processing whistleblower submissions and also working through award claims at a better pace -- all very good news for whistleblowers if it will result in hard improvements."

In 2006 the whistleblower provisions of section 7623 were revised to include a "shall pay" provision under section 7623(b), dictating payouts between 15 and 30 percent of collected proceeds. In August 2014 the IRS published final regs related to whistleblowers, which provided guidance on claim submission, administrative proceedings, and award determination and payment.

Zerbe said that it was encouraging to see the uptick in section 7623(b) awards as well as the half a billion in revenue, which is significantly more than what Treasury originally estimated for a 10-year period when the legislation was enacted in 2006.

Scott A. Knott of Lynam Knott P.A. said that the data suggested that the backlog of section 7623(b) award determinations had been broken, which would be responsible for the "sudden spurt" in awards paid.

The report, which has changed its content and presentation of data, is out significantly earlier than the previous year's report, which was not released until July. Gone is the information on how long claims spent in each step of the whistleblower review process. For the first time, the report presents information for each of the preceding three fiscal years, as opposed to the sometimes inconsistent reporting periods used in the past.

Erica Brady of Ferraro said that she was pleased with the inclusion of a data table outlining the status of open section 7623(a) and (b) claims.