The IRS released two documents today on their website, Commissioner Koskinen Statement regarding Whistleblower Program and Deputy Commissioner for Service and Enforcement Memorandum.  

The Commissioner’s statement reaffirmed his commitment and support of the IRS Whistleblower Program.  The Commissioner says that he is “committed to expanding the program’s reach and improving communications with existing and potential whistleblowers.”  I sincerely hope that he follows through with this commitment in real and concrete ways.  One way that the Commissioner could improve the program would be to give whistleblower cases priority for audit.  In making cases where a whistleblower has provided information to the IRS a priority for audit will ensure that more of the information provided by whistleblowers is used by the IRS, which will in turn lead to more collected proceeds and more awards.  After all the way to promote the IRS Whistleblower Program is to pay awards. 

The Commissioner went on to mention that to the extent that statutory changes are necessary to improve the program, he intends to work with Congress to ensure that the changes are enacted.  While the Final Regulations highlighted a number of places where statutory changes could improve the way section 7623 is implemented, the most pressing statutory change should be the addition of anti-retaliation provisions in the statute.  The addition of anti-retaliation provisions would bring section 7623 in line with the other Federal whistleblower provisions. 

The Deputy Commissioner for Service and Enforcement Memorandum is largely an update of the Steven Miller Memorandum, published on June 20, 2012.  The update of this memorandum after two years was necessary.  The memorandum outlines highlights some of the administrative changes that have been implemented in the last two years and incorporates some of the preamble of the final regulations.  These changes do not always make their way into other guidance, so it is nice to have this memorandum updated to reflect the current operations of the IRS Whistleblower Program.  The Memorandum also reaffirms the guidelines how long certain parts of the administrative process should take and adds:

The Office of Chief Counsel has established controls and reporting requirements for its risk analysis opinions.  BPR reports should include data on cases for which a risk analysis has been requested but not received for more than 30 days.  Chief Counsel has concurred in making this area a priority. 

The inclusion of the new guideline should ensure that the Office of Chief Counsel is making its determinations is a timely manner to ensure that the information can be passed along to the field before the information becomes stale. 

While these two documents will not have as large of an impact in shaping the IRS Whistleblower Program as the Regulations will, these documents do show that the IRS is committed to improving the IRS Whistleblower Program.

  • Bubba Shawn

    Where is the money?

    We have read IRS Commissioner statements now for seven long years. IRS whistleblowers are fed up with platitudes from IRS officials who say one thing and then do just opposite with arbitrary rules that limit, block and delay our rewards.

    How do IRS whistleblowers judge the sincerity of Commissioner Koskinen’s statement? Especially after he just approved of narrowing and limiting related actions in the final rules?

    The final rules repeated the IRS’s priority over and over again. That is they believe that rules benefiting IRS whistleblowers create an overwhelming burden on tax administration and administrating the whistleblower program.

    Talk comes too cheap.

  • FCA Aficionado

    Bubba:

    I agree that the best way for the Commissioner Koskinen and Dep. Commissioner Dalrymple to demonstrate that the WbO is really “OPEN for Business” (open truly writ large), would be to minimize the time and the obstacles, and to maximize the tracking, transparency, and (especially) the rewards to Wb’s.

    Presently, the talk from the top, while encouraging, could be seen as repackaged statements previously made by Schulman and Miller, so next to the accumulated bad experiences of “past” policies and practices the new talk will ring hollow until new actions validate that there are two new sheriffs in town.

    So many disappointments in the past, where actions have net met talk or commitments, may have made me cautious and cynical, and there is a part of me that thinks this is part of a larger “slow-walk the Wb” strategy to cut-down both on workload, and to let the SOL run out on older violations. (That same part of me thinks that a good many of valid submissions have been “stolen” by the operating divisions and reported back to the WbO as “not useful”.)

    There is a long way for the Service to go before it regains the trust of the Wb community.

  • Bubba Shawn

    FCA Aficionado:

    I appreciate your point of view. The IRS Commissioner has been under so much pressure from Congress that is is surprising that he has the time to even write in support of the IRS Whistleblower Program at all.

    I just want to get paid and put this bad experience behind. I have spoke to WO folks in Ogden and DC and they are decent people doing their jobs with zero control over the rules or duration of the whistleblower claim. The religion of section 6103 is used to deny whistleblowers and their advocates on the only two questions that matter to whistleblowers. The first of those is when will I get paid? The second of those is how much will I get paid?

    My beef with Commissioner Koskinen’s statement is that he declared evidence of support for the IRS Whistleblower Program throughout the entire IRS. Come on! Either their has been a road to Damascus lightning conversion in the IRS Chief Counsel Office or Commissioner Koskinen is wearing rose colored glasses.

    He is an experienced chief executive that tells it like is regardless where the chips may fly. So he very well may have persuaded the the changes in the attitudes we have seen regarding IRS whistleblowers.

    The US Tax Court Docket is full of W’s following the docket number. Thus far, the IRS has prevailed in every case ruled by the TC judges despite the best efforts of whistleblowers. Scott has said there is another list of cases where the whistleblower is protected from being identified. So I am not able to monitor those cases. From what I’ve seen there is not the support that Commissioner Koskinen declared.

  • Disappointed Whistleblower

    I posted this under the new regulations posting. It all makes sense why the Commissioner supports the program–They have a license to steal.

    When I read these blog posts it seems that we all believe that the program will be run with honesty and integrity. Unfortunately, that is not the case with the IRS. There is a systematic and blatant attempt to not pay Whistleblowers. They have written the regulation to require that the information provided substantially contributes to the collection of proceeds. This is a complete misreading of the statute. The statute requires that if the information is USED to collect proceeds you are entitled to at least 15%. (Grassley agrees with this view) The substantial contribution test is whether you receive above 15% up to 30%. So they will deny 95% of all claims. All they need to show under the regulations is that they were already “looking into” the issue they will deny your award or if it was broadly defined in the audit plan they will deny your award. The Whistleblowers Office is a toothless paper pusher that will blindly take the opinion of the IRS field personnel that are already resentful of the extra work caused by the Whistleblower. If you are lucky enough that you get your denial letter within 6 years you can go to battle with the Office of the Chief Counsel that will try everything to limit you to the documents in the Administrative Claim file that only consists of cherry picked documents that support their position. Of course, they support the program they use your information and refuse to pay. They have created a license to steal. The truth will come out eventually. I feel sorry for all those people who will get denial letters and believe the IRS was fair and let the 30 day period to appeal lapse. There needs to be a challenge to the Regulations in District Court as soon as possible.

  • Linda Williams

    Disappointed Whistleblower……………………You provide an accurate summation of the poor state of the IRS Whistleblower Program. Particularly the 30 day appeal process…………………. where you correctly state that the rejected whistleblowers are shown ‘cherry picked’ documents by the IRS from an audit investigation.

    In retrospect, the 2006 legislation was poorly drafted, In addition to leaving the IRS unaccounable for what it does with the submitted information the legislation also left too much open to the interpretation of the IRS i.e. after waiting 7 years the ‘final regulations leave the deck stacked in the IRS’s favour.

    During FY 2013 there were some 250 rejections of long term Whistleblower submissions which had been in the system for over 3 years. Whilst a Whistleblower submission is no guarantee of an award, presumably these submissions must have had real merit and been good enough to have gotten through the initial filters at the whistleblower office and sat in the system for over 3 years.

    The current rate of rejection letters indicates that the IRS is stepping up the rejection process and will be culling 400-500 per year after rejecting relatively few during the first 5 years of the program.

    Unfortunately Senator Grassley and his staff lost interest in the IRS Whistleblower program 2 years ago. The ’roundtable discussions with the IRS came to nothing.

    The Commissioner’s statement is just window dressing.

    IRS Whistleblower Program ………………………………….R.I.P

  • Bubba Shawn

    Erica,

    Does Ferraro Law Firm know of any 7623(b) awards paid during 2014? The assertion that the IRS Whistleblower Program is “R.I.P.” is nonsense.

    The IRS is currently advertising job openings for open IRS Whistleblower staff positions. Is the IRS Commissioner hiring additional staff to communicate with whistleblowers and process claims more quickly? That seems to be what is going on.

    All IRS whistleblowers live within an information vacuum. Nobody has inside information on the amount of annual rejections numbers.

    Speculation upon the intent of the final rules language is just that. Understandably, the seven years of delays, limits and blocking of whistleblowers’ awards leaves no more room for extending the IRS the benefit of the doubt.

    The IRS Commissioner simply needs to get the award checks out the door to rebuild lost creditably.

  • Disappointed Whistleblower

    Linda is absolutely correct.

    The trend is very troubling.only a small percentage of awards have been granted (although high in dollar amount). As of the Treasury Department’s annual report to Congress on the whistleblower program for fiscal year 2013, of the 39,746 claims received by the IRS in fiscal years 2010 through 2013, 17,073 remained open and only 16 were paid in full in 2013. The IRS awarded over $53 million to whistleblowers in fiscal 2013, collecting over $367 million based on the information provided. Both totals are smaller than comparable figures for 2012. That is a total payout of LESS THAN 1/10 of 1%. Now that the regulations are published there will be more denials. Of course they are hiring more people in the Whistleblowers Office its free money for the government without the requirement to pay. Bubba let me know if and when you get your denial letter. I hope you have your attorney lined up and ready to go. Unless action is taken its RIP for this program.

    BTW–They could care less if the program has any credibility. Its the IRS.

  • Bubba Shawn

    Linda may be correct historically. However, Commissioner Koskinen is making speeches announcing increases in WO staff. Perhaps they will be trained to say more then “open and actively being considered”. Politico reported that Commissioner Koskinen gave a speech at TAFEF yesterday. The IRS Whistleblower Program is far from “R.I.P.” Below is the brief Politico article:

    By the way, the only “insiders” that know what is going on inside the WO and program is Director Whitlock and his managers.

    Everybody else is just speculating.

  • Linda Williams

    Approaching the 8 year anniversary of the IRS Whistleblower legislation the evidence of the poor state of the IRS Whistleblower Program speaks for itself. I’m reminded of Judge Foley’s rebuke of the IRS in Federal Tax Court (May 2013). A case in which the IRS rejected a long-term IRS Whistleblower submission without paying an award, whilst continuing an investigation audit into the miscreant taxpayer using the material supplied by the original whistleblower.

    “In an unusually blunt opinion, the U.S. Tax Court rebuked the Internal Revenue Service for continuing to fight award claims made by two anonymous whistleblowers — even as the agency was reopening the same claims in a related investigation.

    In a dismissal order issued on May 10, 2013, Judge Maurice Foley slammed the IRS for providing “incomplete, misleading, and possibly inaccurate information”.

    in the case “We do not know whether these failures were the result of bureaucratic confusion or ineptitude,” wrote Judge Foley. “We do know, however, that the obfuscation surrounding this matter has either been caused or exacerbated by” the federal agency.”