A 2011 National Business Ethics Survey showed a high retaliation rate against employees who reported wrongdoing at their workplace. The report indicated that 65% of workers who witnessed wrongdoing reported it, and 22% of them experienced some form of retaliation as a result. Nearly half who chose not to report wrongdoing they witnessed kept silent out of fear.
It’s nice to be able to do good without being punished for it. For this reason, the most concerning issues for the vast majority of whistleblowers is confidentiality and protection from retaliation. In this post we will address IRS confidentiality requirements, situations where confidentiality is impractical, and the risks of retaliation for whistleblowing.
Confidentiality of Whistleblower’s Identity
IRS Notice 2008-4 states that the IRS must protect the identity of a whistleblower to the greatest extent possible. Absolute protection is not guaranteed—for example, if the whistleblower is needed to testify in legal proceedings, it may not be possible to proceed without revealing their identity. In addition, the taxpayer may be able to discern the whistleblower’s identity if the whistleblower’s information is used as part of a search warrant affidavit. In either case, the IRS should make every effort to notify the whistleblower in advance.
Note that the IRS generally does its best to frame questions and requests for documents in ways that cannot be traced to the whistleblower. The IRS also has the option of dismissing a case to protect the whistleblower’s identity.
In general, it is disgruntled spouses, neighbors and friends/acquaintances that are the first to reveal a whistleblower’s identity. Thus, use caution when discussing the matter with anyone but your attorney.
Protection from Retaliation
26 U.S. Code Section 7623 does not address retaliation such as firings and threats of physical and/or economic harm against a whistleblower. However, if the case also involves a disclosure under the Sarbanes-Oxley Act or the False Claims Act (FCA), the whistleblower may be protected against adverse employment actions under one of those Acts. In some cases, protection may also be available under the anti-retaliation provision of the Fair Labor Standards Act.
Trusted legal counsel and whistleblower protection
There are a number of ways that IRS whistleblowers should be represented and much depends on how their information is presented to the IRS. If you have important information to share with the IRS and are concerned about your privacy and your rights, contact the experienced tax attorneys at Moskowitz, LLP today.