IRS Whistleblower Program Improvement Act

This bill would modify the Internal Revenue Service (IRS) whistleblower program by requiring the Tax Court to use a de novo standard of review for award determinations and allowing whistleblowers to remain anonymous during court proceedings. The proposal would also require the IRS to pay interest on mandatory awards if notification is delayed and expand tax deductions for whistleblower attorney fees to include discretionary award cases. Additionally, the IRS would be required to include descriptions of the top 10 tax avoidance schemes identified by whistleblowers in its annual reports.

This bill primarily affects individuals who provide information to the Internal Revenue Service (IRS) regarding tax law violations, specifically those seeking whistleblower awards through mandatory or discretionary programs. It also impacts the IRS and the Tax Court by modifying administrative reporting requirements and judicial review standards for award determinations. Additionally, legal professionals representing whistleblowers are affected by changes to how attorney fees are deducted from a whistleblower's adjusted gross income.

• Revised Tax Court review standard. Changes the Tax Court's review of whistleblower awards to a de novo standard based on the administrative record and any new or previously unavailable evidence.
• Whistleblower anonymity in court proceedings. Permits whistleblowers to remain anonymous during Tax Court proceedings unless the public interest in disclosure outweighs the potential harm to the individual.
• Expanded reporting on tax avoidance schemes. Requires the IRS whistleblower report to include descriptions of up to 10 of the top tax avoidance schemes identified through whistleblower disclosures.
• Interest payments on delayed award notices. Mandates that the IRS pay interest on whistleblower awards if the agency fails to provide timely notice regarding an award recommendation.
• Expanded tax deductions for attorney fees. Allows whistleblowers to deduct attorney fees from their adjusted gross income regardless of whether the award was granted through the mandatory or discretionary program.

This bill modifies provisions of the Internal Revenue Code regarding whistleblower awards and protections, including expanding the tax deduction for whistleblower attorney fees to include discretionary awards. It also changes the Tax Court's standard of review for awards from an abuse of discretion standard to a de novo review and updates reporting requirements for the Internal Revenue Service whistleblower program.

The bill aims to strengthen the Internal Revenue Service whistleblower program by enhancing legal protections and financial incentives for individuals who report tax law violations. It seeks to improve the judicial review process for awards, protect whistleblower anonymity in court, and expand tax deductions for related legal fees.