As we have written about in the past, for the last few years IRS whistleblower awards under section 7623 have been subject to sequestration reductions of between 7.2% and 8.7% (currently 7.3% for fiscal year 2015 awards) pursuant to the Balanced Budget and Emergency Deficit Control Act.  We believe these cuts are contrary to law, and furthermore make bad fiscal sense, much like cuts to the IRS enforcement budget.  However, the budget that President Obama released today would put an end to these automatic across-the-board spending cuts.  He said:  “I’m not going to accept a budget that locks in sequestration going forward. It would be bad for our security, and bad for our growth.” 

Now a budget proposal is pretty far from law, and with the Republicans in control of both chambers of Congress they are really calling the shots on the budget, but it is a good sign that an end to sequestration is on the table.  We believe that the legality of sequestration cuts to whistleblower awards under section 7623 is currently being disputed in the US Tax Court, but it would be great if that issue became moot through legislation.

  • Bubba Shawn


    President Obama’s Budget is not going to pass in the House nor the Senate. After seven and a half years of waiting to get paid, we were told that partial payments would be forthcoming and the final rules would favor IRS whistleblowers.

    Neither of those happened just as the sequestration reductions be changed.

    Do you know of any IRS whistleblower awards that were paid during FY 2014 and FY 2015?

  • I also said that this budget as-is will not pass, the open question is what will happen with sequestration.

    One of our clients received an award in FY 2014 and we expect that our first award in FY 2015 will be occurring very soon.

  • Bubba Shawn

    President Obama’s proposal also includes a line that allocates no taxpayer money to “Improve the IRS Whistleblower Program”. Being a high level budget request, those details aren’t revealed.

    Does anybody have any information on what those improvements are? Perhaps they are the three additional WO employees Commissioner Koskinen announced. Perhaps they are badly needed changes to Section 6103 rules. Perhaps they are changes to universally the hated two year SOL on whistleblower claims. Perhaps they are related to the recent amendments on closing agreements.

    Those would certainly be long sought IRS Whistleblower Program improvements.

  • Fca Aficionado

    Bubba, as perhaps one of the most disappointed, disillusioned and cynical IRS WBs ever (as our ranks must be legion) due to the inefficiently dysfunctional policies and performance of the service and both the executive and legislative branches for most things relating to the IRS WB program, I fear that in the looking glass world relating to this topic where nothing is as it should be, “improvements” could mean just letting the SOLs run on the aging cases to improve statistical optics or similarly finding more creative ways to minimize rewards or avoid paying WBs altogether.

  • Bubba Shawn

    Well said Fca.

    Alas, those “improvements” only repeat the Section 6103 provisions allowing the sharing of protected information with a NDA.

    The IRS has an infinite capacity to disappoint IRS whistleblowers.