IRS Issues New Whistleblower Regulations, Promises Timelier Action

In August 2014, the Internal Revenue Service issued final regulations amending its whistleblowing program. The most significant changes pertain to administrative proceedings outlined in 26 C.F.R. § 301.7623, and provide whistleblowers with more information regarding the status of IRS investigations of their claims. The changes also provide more structured timelines in which the IRS must process claims under its whistleblowing program.

Prior to issuing the final regulations, the IRS invited public comments. The Employment Law Group® law firm (TELG) submitted comments and its managing partner, R. Scott Oswald, spoke at a congressional hearing.

In its comments, TELG explained that the IRS Whistleblower Office lacked transparency and speed. TELG stressed that the IRS needed to be more open and welcoming to whistleblowers. TELG suggested that the IRS have whistleblowers sign a confidentiality agreement to facilitate cooperation between IRS officials and whistleblowers.

After the IRS issued final regulations in August 2014, two IRS officials made encouraging comments regarding the new regulations. IRS Commissioner John Koskinen said that the IRS must strengthen its Whistleblower Program and build on its progress. Koskinen said he was committed to expanding the program’s reach and improving communications with existing and potential whistleblowers. Koskien also left open the possibility of further statutory changes to improve the program.

In a separate statement, IRS Deputy Commissioner for Services and Enforcement, John M. Dalrymple, outlined his office’s comprehensive review of the operating guidelines and procedures. As a result of the review, the IRS listed expectations for timely action on whistleblower submissions. These expectations include the following:

• The Whistleblower Office should initially review claims within 90 days of receipt.
• Subject matter experts in the Operating Divisions and Criminal investigations should complete reviews within 90 days of receipt.
• The Whistleblower Office should notify whistleblowers of an award decision within 90 days of a final determination of collected proceeds.
• The Office of Chief Counsel has established controls and reporting requirements for risk analysis opinions. Business Performance Review reports should include data on cases for which a risk analysis request has been pending for more than 30 days. The Chief Counsel concurred in making this a priority.

While the new regulations are a good start to making the IRS Whistleblower Office more effective, the comments by IRS officials indicate that the IRS recognizes the need for — and is ready to make — additional improvements to the program.

Tagged: Enforcement Bodies, Internal Revenue Service (IRS)