The IRS Tax Whistleblower Program: Part II, Whistleblower Protection

This is a continuation of the first post on the IRS Tax Whistleblower Program.

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 address IRS confidentiality requirements, situations where confidentiality is impractical, and protection from retaliation for whistleblowing.

A 2012 Ethics Resource Center report indicates that roughly 65% of workers who witness wrongdoing report it and 22% of them experience some form of whistleblower retaliation as a result. Nearly half choose not to report the wrongdoing they have witnessed, keeping silent out of fear.

To ensure that people continue to expose individual and corporate wrongdoing, certain laws and regulations are in place to safeguard IRS whistleblowers. Here are a few:

Confidentiality of IRS whistleblower identity

It is the duty of the IRS to protect the identity of a whistleblower to the fullest extent permitted by law. See IRS Notice 2008-4. 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 accused 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 is obligated to 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 their identity.

Whistleblowers are advised to go immediately to an attorney and not discuss the matter with anyone else – it is usually a disgruntled spouses, neighbors and friends/acquaintances that are the first to reveal a whistleblower’s identity.

IRS whistleblower retaliation protection

Although 26 U.S. Code Section 7623 does not address retaliation against whistleblowers such as firings and threats of physical and/or economic harm, whistleblowers may be protected against adverse employment actions under the Sarbanes-Oxley Act whistleblower retaliation provision or the False Claims Act (FCA). 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 can be protected 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 IRS whistleblower attorneys at Moskowitz, LLP today.