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IRS Whistleblower Office Announces Important Changes, New Procedures for IRS Whistleblower Program

By Finch McCranie, Esq.

IRS Whistleblower Office Director Steve Whitlock announced important long-awaited developments in the new IRS Whistleblower Program yesterday at the Second Annual "IRS Whistleblower Boot Camp" in Washington.

First, Director Whitlock finally announced how the IRS will share information with whistleblowers that will allow them to understand the Whistleblower Office's decisions about what awards are made to whistleblowers. A year ago in my interview with the IRS Whistleblower Office Director, Mr. Whitlock discussed the need to solve the vexing question of how the IRS can share this information with whistleblowers and their attorneys while also complying with legal requirements for confidentiality of taxpayer information under section 6103 of the Internal Revenue Code.

The new procedures described yesterday for what will happen with IRS Whistleblower claims are as follows:

1. Once the whistleblower receives a report from the IRS Operating Division that handled the matter, the Whistleblower Office Analyst will review the files and recommend an award to the whistleblower.

2. That recommendation then will go to the Whistleblower Office Director for review and approval.

3. A summary of the award recommendation then will be provided to the whistleblower and the whistleblower's attorney for comment. That summary will identify (a) the amount of money collected by the IRS based on information provided by whistleblower; (b) the recommended award percentage (15-30% of the funds recovered unless an exception applies); (c) the factors considered in reaching the recommended percentage; (d) the recommended award amount; and (e) the whistleblower's options.

In welcome news to whistleblower attorneys, the IRS Whistleblower office will make available a "detailed" award recommendation to whistleblowers and their attorneys who sign a confidentiality agreement. The whistleblower and counsel then may review in person (but not copy) the documents in the IRS administrative file that are the basis of the award recommendation, and comment to the Director about the award. Violation of the confidentiality agreement will lead to reduction of the award.

The new procedures are to be published in the Internal Revenue Manual in June 2010, and later will be included in regulations, with an opportunity for notice and comment.

Full post as published by Whistleblower Lawyer Blog on April 29, 2010 (boomark / email).