The IRS Whistleblower Office released it FY 2018 Report to Congress today.  The report comes out one year after Congress amended section 7623 in the Bipartisan Budget Act of 2018, which clarified the definition of proceeds includes non-Title 26 amounts such as criminal fines, civil forfeitures, and violations of reporting requirements.  This change in the statute has clearly transformed the program, increasing the total amount of awards paid in FY 2018 to more than nine times what was paid in FY 2017.

The Whistleblower Office attributes this increase in the amount of awards to the change in the statute.  Under this new definition of proceeds, the Whistleblower Office reports that the proceeds collected for FY 2018 was $1,441,255,859, of which $809,915,922 is attributable to non-Title 26 amounts collected for criminal fines, civil forfeitures, and violations of reporting requirements.  Under the law prior to the addition of section 7623(c), the $809,915,922 of proceeds would not have been counted as proceeds, and the whistleblowers who provided information relating to these collections would not have received credit for these amounts when their awards were calculated.

Also notable is the increase in the average days to process awards claims.  The amount of time for claims under both subsections (a) and (b) has increased.  For claims under subsection (b), the time increased to 9.32 years in FY 2018 from 7.32 years in FY 2017.  This increase in not surprising, particularly when coupled with the large increase in awards, because large complex tax cases take longer to process and the change in law has likely resulted in old cases getting an award.

Finally, while it might take the better part of a decade on average to receive an award, the whistleblowers who overcome the hurdles of their information being considered to be speculative, not specific, or not credible, being below the threshold for IRS action, and properly filing a Form 211; the chances of receiving an award is 16 percent.  This is because the most common reason for the closure of a claim continues to be that the allegations made in the claim are not specific, credible, or are speculative in nature.  The percentage of claims closed for this reason in FY 2018 was 64%, up from 57% in FY 2017.

We are looking forward to an equally exciting and productive FY 2019.

Today the GAO released a study wherein they looked at the ability of the IRS to track and then pay awards on monies that are collected by the Government relating to “FBAR” violations.  Recall that FBAR stands for the “Reports of Foreign Bank and Financial Accounts”  and it represents information and return reporting requirements and associated penalties for violations thereof under Title 31’s Bank Secrecy Act.  The law on whistleblower awards changed on February 9, 2018 in the Bipartisan Budget Act of 2018, Pub. L. 115-123, div. D, title II, §41108(a)-(c) Feb. 9, 2018, 132 Stat. 158, so that monies that are paid under those provisions can represent “proceeds” (as defined in section 7623(c)) under section 7623(b) if the whistleblower’s information made a substantial contribution to the collection of these amounts.  So if you have information about FBAR violations, you should consider reporting that to the IRS for an award.

 

But the GAO reports that things are not so easy in IRS-land.  The report itself is here: https://www.gao.gov/assets/700/694825.pdf  Specifically, before the law changed the IRS did not even collect information from agents about whether or not monies were collected under Title 31 as a result of a whistleblower’s information.  So you may have to look in the IRS files to determine this, which means going through the administrative award determination procedure at best, or litigation with the IRS at worst.  We have done and are currently doing both of those things on behalf of our whistleblower clients.  Be prepared to do the same by getting representation early on in the process, preferably before filing anything so that your IRS filing properly documents your claim.