Annual Report Indicates Overall Aggressive IRS Trend in Whistleblower Program

On January 6, 2020, the Internal Revenue Service (IRS) released its Fiscal Year 2019 Whistleblower Report.[1] Although the report shows a decline in awards made as compared to last year, potential whistleblowers should note that the report clearly portrays an overall trend that the IRS is increasingly motivated in today's mandatory tax whistleblower program. An important takeaway for potential whistleblowers is the report's emphasis that the number one reason for IRS rejection of whistleblower submissions was due to submissions lacking in specificity-51% of total closures were due to allegations that were not specific, not credible, or speculative. In other words, whistleblowers should understand that their best chance of success is a skillfully drafted submission with specifics which are presented in the clearest way possible.

According to the report, fiscal year 2019 resulted in awards amounting to $120 million-certainly lower than the $312 million in 2018, but still much better than the $33.9 million awarded in 2017. Clearly, since 2017, the awards have dramatically increased, and while 2019 fell short of 2018, the Director the Whistleblower Office, Lee D. Martin emphasized that:

For a second year in a row, statutory changes have resulted in massive operational changes for the Whistleblower Office and to the Whistleblower Program. Following adjustments to operations resulting from the passage of Section 41108 of the Bipartisan Budget Act of 2018 (BBA 2018), effective July 1, 2019, the Taxpayer First Act of 2019 (TFA 2019) added, to IRC § 7623, several important provisions that would help improve taxpayer service, ensure the continual enforcement of the tax laws in a fair and impartial manner, and ultimately support the continued success of our nation. The new law also extends greater employment protections for whistleblowers against retaliation.[2]

Significantly, TFA 2019[3] expanded whistleblower protections and implemented an anti-retaliation provision. Additionally, the TFA 2019 requires mandatory IRS disclosures to the whistleblowers at various points throughout an investigation. The law offers whistleblowers greater employment protection from retaliation, as well.

Finally, the report emphasizes that the recent clarification that FBAR violations and criminal fines can also result in a payout for whistleblowers has resulted in approximately $110 million. The report notes that 282 whistleblower submissions were received from whistleblowers located overseas. Clearly, the IRS maintains an aggressive pursuit of whistleblowers' information regarding offshore accounts and crimes.

Again, with 51% of total closures resulting from allegations that were not specific, not credible, or speculative, whistleblowers are well advised to seek an experienced tax professional to help them create a skillfully drafted submission.

If you have a whistleblower claim that would like to discuss, contact Frost & Associates, LLC today at (410) 497-5947.


[2]Id. at 3.

[3] Pub. L. No. 116-25.

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