Under the leadership of John Hinman, the Director of the IRS Whistleblower Office, significant efforts have been made to reform and improve the award program for tax whistleblowers. These reforms aim to make the program more effective and efficient, encouraging more individuals to come forward with information about tax violations. The WBO has actively engaged with outside stakeholders in these reform efforts and has seen an increase in award amounts, signaling positive progress in the program.
One of the visible reforms is the release of a new Form 211 by the IRS, which allows whistleblowers to submit information about tax violations and apply for an award. The new form includes expanded data fields, additional instructions, and updated alleged violation issues to choose from, enhancing the amount and quality of information whistleblowers can provide. This reform is expected to improve the IRS’s understanding of whistleblower submissions and help in identifying key aspects of tax violations.
The IRS and the WBO are also working on identifying issues that are of greatest interest to the IRS, urging whistleblowers to come forward with information on specific matters such as fraud in Employee Stock Ownership Plans (ESOP). The WBO website provides resources on the IRS’s exam priorities and areas of interest, including high-wealth individuals evading taxes, complex partnership schemes, corporate tax violations, and undeclared foreign bank accounts. Encouraging whistleblowers to provide information on these specific issues is seen as a significant step in improving tax enforcement efforts.
A recent guidance issued by the WBO focuses on who can file a whistleblower submission, with a particular emphasis on taxpayer representatives. The IRS has long held that information submitted by a whistleblower who is the taxpayer’s current representative will not be acted upon. The new Form 211 includes boxes that address the potential taint of whistleblower representatives, expanding the definition of a taxpayer representative to include anyone representing the taxpayer in any capacity during an administrative matter pending before the IRS. The guidance aims to prevent potential conflicts of interest and ensure the integrity of whistleblower submissions.
While the reforms and improvements in the IRS whistleblower program are seen as a positive step forward, there are still unresolved questions regarding the definition of a taxpayer representative and potential taint issues. Greater guidance and clarification from the IRS on this matter, particularly as it relates to the Form 211 instructions, would be beneficial for whistleblowers, especially those who are insiders with valuable information on tax violations. It is hoped that the IRS will address these issues and provide more clarity on the criteria for determining taint in whistleblower submissions.
Overall, the reforms in the IRS Whistleblower Office and the ongoing efforts to improve the tax whistleblower program are seen as positive developments for whistleblowers. With increased transparency, communication, and support from senior management at the IRS, the program is better equipped to handle whistleblower submissions and encourage more individuals to come forward with information on tax violations. The future looks promising for whistleblowers as the WBO continues to make improvements and create a welcoming environment for those with valuable information to report.
