The IRS gave whistleblowers 121 awards totaling $88.8 million for information attributable to $338 million in tax revenue being collected in fiscal year 2023, according to the latest annual report from the agency’s Whistleblower Office.
The total dollar amount of awards paid increased substantially from FY 2022 when the IRS awarded $37.8 million to whistleblowers. However, the total number of awards paid last year decreased from 132 in FY 2022 to 121 in FY 2023.
“Although the number of awards decreased in FY 2023, the number of claims related to those awards was 1,234 in FY 2023 compared to 396 claims in FY 2022,” the report states. “Indeed, the 1,234 claims related to awards was the highest since the start of the current IRS Whistleblower Program in 2007. Awards paid as a percentage of proceeds collected increased from 14.7% in FY 2021 to 21.9% in FY 2022 and 26.3% in FY 2023.”
The following are other key findings of the FY 2023 report, by the numbers:
- 6,455: New whistleblower cases filed in FY 2023.
- 30,135: Total backlog of cases.
- 4,021: Backlog in cases evaluating whistleblower award qualification/amount.
- 11.29: Number of years it takes to process mandatory awards—from claim filed to award paid.
- $6.9 billion: Amount of taxes collected since the whistleblower program began in 2007, plus additional billions attributed to whistleblowers but are still being processed.
- $1.2 billion: Amount of payments to whistleblowers since 2007.
“The good news from this report for whistleblowers is the big increase in awards—$88 million up from the previous year of $37.8 million. And the good news for honest taxpayers—the whistleblower program brought in $338 million in revenue,” Dean Zerbe, a senior advisor at the National Whistleblower Center and a partner at the tax whistleblower firm of Zerbe, Miller, Fingeret, Frank & Jadav, said in a statement. “The report highlights the reform efforts of the IRS to encourage and identify better whistleblower submissions—actionable submissions. The IRS is clearly interested in hearing from whistleblowers with detailed information about significant, recent, and current tax evasion regarding high-wealth individuals, complicated partnerships, overseas accounts, and large businesses.”
Stephen Kohn, chairman of the National Whistleblower Center and founding partner at the whistleblower law firm of Kohn, Kohn and Colapinto, said in a statement that Congress needs to pass the bipartisan IRS Whistleblower Improvement Act, a bill that he said “is necessary to make the program work.”
The bill—introduced in March 2023 by Sens. Chuck Grassley (R-IA), Ron Wyden (D-OR), Roger Wicker (R-AL), and Ben Cardin (D-MD)—includes six measures that would bolster the program, ensure fairness, and protect the whistleblowers who come forward.
If passed by Congress, the legislation would:
- Provide for De Novo review in appeals heard by the U.S. Tax Court, allowing for new evidence to be admitted to the record;
- Establish a presumption of anonymity for whistleblowers before the court;
- Exempt whistleblower awards from budget sequestration;
- Provide that interest be paid to awardees if the whistleblower award has not been paid within one year of the IRS collecting all proceeds;
- Bring the tax treatment of attorney’s fees into line with other whistleblower programs; and
- Improve the program’s annual report to Congress to help tax writers identify areas in most need of attention.
“The good faith and hard work of the professionals who staff the whistleblower office can only go so far in improving the unacceptable backlog. Congress needs to fix the laws that have stifled whistleblowers and undercut the tremendous potential of the office,” Kohn said. “The fact that it takes an average of 11.26 years to process the payment of a mandatory whistleblower award, combined with the office’s acknowledgment that there is a backlog of over 30,000 cases, speaks for itself. Legislative reforms are needed, and the bipartisan IRS Whistleblower Improvement Act should be an immediate priority within the Congress.”
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Tags: Income Tax, IRS, Taxes
