HR7959-119

What This Bill Does

The IRS Whistleblower Program Improvement Act changes how tax whistleblower award disputes, privacy, reporting, interest, and attorney-fee deductions work. For award determinations under Internal Revenue Code section 7623(b), Tax Court review becomes de novo and is based on the administrative record plus newly discovered or previously unavailable evidence. Whistleblowers may proceed anonymously before the Tax Court unless the court finds that a societal interest in disclosure outweighs the potential harm to the whistleblower. IRS annual whistleblower reports must include a list and descriptions of up to 10 top tax-avoidance schemes disclosed by whistleblowers during the year. If the Treasury Secretary does not provide notice of a preliminary award recommendation by the applicable date, the award must include interest at the overpayment rate. The applicable date begins 12 months after all proceeds from the action have been collected and refund periods or final liability agreements are resolved. The bill also corrects attorney-fee deduction rules so above-the-line deductions apply to attorney fees connected to section 7623 awards generally, not only section 7623(b) awards.

Who Benefits and How

IRS tax whistleblowers benefit from stronger Tax Court review, possible anonymity, interest when preliminary award recommendations are delayed, and broader attorney-fee deduction treatment. Whistleblower attorneys benefit because fee deductions are clarified across section 7623 awards and award disputes have a clearer evidentiary standard. Tax Court petitioners benefit from the ability to use newly discovered or previously unavailable evidence in de novo review. Federal taxpayers benefit if stronger whistleblower incentives expose major tax-avoidance schemes and improve enforcement recoveries. Congressional tax-writing committees benefit from annual reporting that names up to 10 top schemes disclosed by whistleblowers. Tax administration watchdogs benefit from more informative IRS whistleblower reports.

Who Bears the Burden and How

The Treasury Secretary and IRS whistleblower office must calculate interest on delayed awards, issue preliminary award notices, preserve administrative records, support de novo Tax Court review, apply anonymity procedures, and update annual reports. IRS litigation counsel must defend award determinations under the new standard and address additional evidence. Tax Court judges must balance societal disclosure interests against whistleblower harm and manage anonymous proceedings. Taxpayers subject to whistleblower actions may face stronger enforcement pressure and later interest costs built into awards. IRS report writers must describe up to 10 disclosed avoidance schemes without violating taxpayer privacy. Treasury guidance staff may need to update rules for attorney-fee deductions and award interest.

Key Provisions

• Requires Tax Court review of IRS whistleblower award determinations to be de novo using the administrative record plus newly discovered or previously unavailable evidence.
• Allows whistleblowers to proceed anonymously before the Tax Court unless disclosure interests outweigh potential harm.
• Requires IRS whistleblower reports to list and describe up to 10 top tax-avoidance schemes disclosed during the year.
• Adds interest at the overpayment rate when preliminary award recommendations are not issued by the applicable date.
• Defines the applicable date by collection of proceeds and final resolution of refund periods or tax liabilities.
• Expands attorney-fee deduction language from section 7623(b) awards to section 7623 awards generally.