In February, the Internal Revenue Service (IRS) released its FY 2018 Annual Report and announced a record-breaking year for the agency’s whistleblower program. Overall, whistleblowers provided information that contributed to the agency’s recovery of over $1.44 billion during the course of the year. As a result, the IRS awarded $312 million in bounty awards to whistleblowers in FY2018, an almost ten-fold increase from the $33.9 million in awards it made in FY2017. Of the 217 total awards the agency made to whistleblowers in FY 2018, 31 were mandatory awards under Internal Revenue Code section 7623(b) and 186 were discretionary awards under section 7623(a) (which applies to smaller cases). The average award percentage from the total amount collected was 21.7% – up from 16.6% in FY 2016 and 17.8% in FY 2017.
Lee Martin, the Director of the IRS’ Whistleblower Office, highlighted recent enhancements in the IRS’s whistleblower program, including providing whistleblowers with information about their pending claims earlier by means of Preliminary Reward Recommendation Letters (PARLS). The Report also explained that the addition of Internal Revenue Code section 7623(c) as part of the Bipartisan Budget Act of 2018 has been a game-changer in the size of bounty awards. It defines “proceeds” broadly for purposes of a whistleblower award to include penalties, interest, additions to tax, additional amounts provided under the internal revenue laws, criminal fines and civil forfeitures, and violations of reporting requirements. The new 7623(c) further provides that the amount of proceeds is to be “determined without regard to whether such proceeds are available to the Secretary.” Prior to the change, the IRS would routinely take the position that the recovery percentage should exclude criminal fines and civil forfeitures paid under Title 18.Read more here.