$74 Million IRS Whistleblower Award Shows Effect of Recent Reforms

$74 Million IRS Whistleblower Award Shows Effect of Recent Reforms

In recent years, the IRS Whistleblower Program has faced criticism for falling award payouts and lengthy processing times. While meager annual award payouts hovered around $37 million throughout 2021 and 2022, the average time to process an award soared to over 11 years.

In 2022, John Hinman became the Director of the Whistleblower Office and began implementing measures to improve the program. In a recent Bloomberg Tax article, whistleblower attorney Stephen M. Kohn praised Hinman’s efforts. He pointed to Hinman’s reforms that addressed these problems, including increasing staffing at the office and disaggregating whistleblower claims to speed up award payouts. Since Hinman’s leadership began, Kohn says, the office has also shown more dedication to working alongside whistleblowers and their representation, playing critical roles in securing significant awards.

The IRS recently awarded $74 million to three anonymous whistleblowers who recovered over $263 million. This substantial award, as Kohn points out, is a clear testament to the effectiveness of the recent reforms. The speed and size of the award validate the program’s reinvigorated dedication to whistleblowers and instill hope for its future success.

However, as the US tax gap rises to a staggering $688 billion, Kohn emphasizes the urgent need for more substantial legislative reforms to the IRS Whistleblower Program. These reforms are crucial in effectively combating tax cheats and ensuring a fair tax system.

If passed, the IRS Whistleblower Program Improvement Act of 2023, could be a game-changer. This act includes four major reforms addressing pervasive faults in the program. If passed, the act will impose interest on delayed awards, remove budget sequestration for awards, end double taxation of attorney fees, and institute de novo review in award case appeals. The potential impact of these reforms is significant. With the IRS’s reinvigorated dedication to whistleblowers under Hinman’s leadership, its passage is finally feasible.

American taxpayers require an effective anti-corruption program at the IRS, and its Whistleblower Office is key to this initiative. As the Treasury continues to resist timely whistleblower award payouts, the legislative mandate found in the IRS Whistleblower Improvement Act is the solution the IRS Whistleblower Program needs to serve the American public.

National Whistleblower Center, a 501(c)(3) that advocates for stronger whistleblower protections, has issued an Action Alert asking supporters to urge Congress to pass the IRS Whistleblower Program Improvement Act of 2023.

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