Advocates for whistleblower protection in the U.S. Senate have taken steps to extend help to those reporting tax fraud. Senators Chuck Grassley and Ron Wyden recently proposed a new piece of legislation aimed at encouraging those with knowledge of tax fraud to come forward. The measure is designed to reduce fraud and abuse that drains billions of dollars from government coffers each and every year. The hope is that by sending a message to potential whistleblowers that protections are available, they might succeed in encouraging more people to come forward with information about wrongdoing.
This particular piece of legislation, the IRS Whistleblower Improvements Act of 2017, is the second time that Senators Grassley and Wyden have tried to push forward reform. Last year, the two authored the Grassley-Wyden amendment to the Taxpayer Protection Act of 2016. The Act and the amendment managed to pass the Senate Finance Committee, but failed to make it to a full vote of the Senate, dashing hopes that change might come quickly. The two haven't given up and are back again this year, proposing similar protections that they hope will become law.
The 2017 Improvements Act sets out to do two important things. First, to improve communication between the IRS investigators handling a potential case of fraud and the whistleblowers who brought the matter to the IRS's attention. Second, to provide legal protection to whistleblowers so that employers cannot retaliate against those who come forward with evidence of tax abuse.
The first prong of the 2017 Improvements Act is all about opening up the lines of communication between whistleblowers and the IRS. Though this might not seem crucial, experts say that it is. Current whistleblowers have complained that they feel frustrated by a lack of updates about the claims they bring to IRS investigators. Given that the process can take years, the wait can be excruciating. The 2017 Improvements Act requires the IRS to give periodic status updates to whistleblowers whenever the case experiences a significant development. The hope is that this increased communication encourages other potential whistleblowers to come forward.
The second, and likely more important, aspect of the 2017 Improvements Act is aimed at extending anti-retaliation protections to tax whistleblowers. Currently, legal anti-retaliation protections extend to cover whistleblowers under the False Claims Act and Sarbanes-Oxley, but for some reason fail to protect those reporting fraud and abuse to the IRS. By offering the same protections from retaliation by employers, the goal is to make future whistleblowers more comfortable with the prospect of coming forward, especially given that tax information is usually available only to a small subset of employees, which can make the whistleblower relatively easy to identify.
According to Grassley and Wyden, previous efforts to expand the IRS whistleblower program have been wildly successful, leading to the recovery of more than $3 billion in taxes that would otherwise have been lost due to fraud and abuse. By continuing to fine tune the whistleblower program, it stands to reason that many billions more could be recovered, helping not only the government, but the millions of honest taxpayers who are stuck making up for all those who failed to pay their fair share.
Source: “Senators Introduce Bill to Protect IRS Whistleblowers,” by Michael Cohn, published at AccountingToday.com on March 29, 2017.
Source: “Grassley, Wyden Introduce IRS Whistleblower Improvements Act of 2017,” published at Grassley.Senate.gov, on March 29, 2017.