IRS Whistleblower Program Improvement Act

This bill changes how the U.S. Tax Court reviews decisions about IRS whistleblower awards. The court’s review would be “de novo,” which means the judge looks at the case fresh, not just for mistakes, and can use the existing IRS record plus any new or previously unavailable evidence. The law’s wording is updated from “appealed to” the Tax Court to “reviewed by” the Tax Court, and this applies to current and future whistleblower cases already in or going to that court. The bill lets tax whistleblowers ask to stay anonymous in Tax Court. Their names can only be released if the court finds that a strong public interest in knowing their identity is greater than the possible harm to them. The bill also changes the required annual IRS whistleblower report to Congress so that it must include a list and short descriptions of up to 10 top tax avoidance schemes reported by whistleblowers each year. The bill adds interest to whistleblower awards when the IRS takes too long to send a preliminary award recommendation. If more than 12 months pass after the IRS has collected all the money in the case and the tax debts are final, and the IRS still has not sent the preliminary award notice, the award must include interest at the normal IRS overpayment rate until that notice is sent. There is a special timing rule for old cases when the law first takes effect. Finally, the bill fixes a tax rule about deducting attorney’s fees for whistleblowers. It changes the law so that people with awards under any part of section 7623, not just subsection (b), can take the above‑the‑line deduction for legal fees. This change applies to tax years ending after the bill becomes law.

The bill affects how safe and fairly treated tax whistleblowers may feel when deciding whether to report possible tax cheating or fraud. Stronger privacy options in court and clearer rules for how judges review award decisions could make the process more predictable for people who come forward. Adding interest to delayed awards may change how the IRS manages whistleblower cases and how long people wait to be paid. Including a list of major tax avoidance schemes in the IRS whistleblower report could give Congress and the public more detail about patterns of tax avoidance that whistleblowers uncover. The fix for attorney’s fee deductions may change the after‑tax value of awards for some whistleblowers, which could matter for people deciding whether they can afford to hire lawyers. The exact effect on the number of whistleblower reports and on tax collections is not stated in the bill and is uncertain.