IRS Whistleblower Program Improvement Act

Key Points

• Whistleblowers who report tax cheats to the IRS would be able to keep their names secret in Tax Court proceedings. This protects them from retaliation or harassment that could come from having their identity revealed during legal disputes over their awards.
• If the IRS takes more than 12 months after collecting tax money to notify a whistleblower about their award, the government must pay interest on the award amount. This pushes the IRS to process claims faster and compensates whistleblowers for long delays.
• Whistleblower awards would be protected from automatic government spending cuts known as sequestration. This ensures the money owed to whistleblowers cannot be reduced by across-the-board budget cuts.
• The bill changes how the Tax Court reviews disputes over whistleblower awards from an appeals process to a full "de novo" review, allowing judges to consider new evidence. This gives whistleblowers a fairer chance to challenge IRS award decisions they disagree with.
• Whistleblowers who hire lawyers could deduct those attorney fees from their taxes regardless of whether their claim falls under the mandatory or discretionary award program. Current law only allows the deduction for one program, and this bill fixes that gap.
• The IRS annual whistleblower report must now include a list of up to 10 top tax avoidance schemes disclosed by whistleblowers each year, giving the public more transparency into common tax cheating strategies.