IRS Whistleblower Office paid out record total of $312M to tax tipsters

The Internal Revenue Service’s Whistleblower Program made 217 awards to whistleblowers totaling $312,207,590 and collected $1,441,255,859 in fiscal year 2018, according to a new report.

The annual report from the IRS Whistleblower Office said the number of awards paid under section 7623(b) of the Tax Code increased 14.8 percent in fiscal year 2018, compared to fiscal 2017. The proceeds collected from taxpayers were $1,441,255,859.

Award dollars to whistleblowers as a percentage of proceeds collected increased to 21.7 percent in fiscal 2018, an increase from 17.8 percent in the previous fiscal year.

Despite the challenges involved in implementing the new tax law, the IRS was able to make some improvements in the Whistleblower Program, giving tipsters some advance information about their pending awards.

“I am excited to report that one of our improvement initiatives started in FY 2017, to provide whistleblowers information about their pending claims as early as possible, has resulted in the Whistleblower Office issuing 268 Preliminary Award Recommendation Letters (PARLs) months in advance of the Refund Statute Expiration Date,” wrote Whistleblower Office director Lee D. Martin in introducing the report.

The Whistleblower Office has been making efforts in recent years to improve its interactions with tipsters after coming under criticism for not being responsive to them and dragging out cases. Both the IRS and the Securities and Exchange Commission have been making potentially larger whistleblower awards available. The Bipartisan Budget Act of 2018 also included two amendments closing some loopholes that could have double-taxed some whistleblower awards under the Dodd-Frank Act of 2010.

The changes to the program date back even earlier. The Tax Relief and Health Care Act of 2006 added section 7623(b) to the Tax Code, providing a new framework for the consideration of whistleblower submissions and establishing the Whistleblower Office within the IRS to administer that framework.

The total number of awards has been declining, going from 418 in fiscal year 2016 to 242 in fiscal 2017 and 217 in fiscal 2018. But the total amounts spiked last year, going from $61.3 million in fiscal 2016 and $33.9 million in fiscal 2017 to $312.2 million in fiscal 2018.

IRS whistleblower awards

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