IRS Pays Whistleblowers $103 Million in FY2015: Whistleblower Retaliation Protection May Become Law in 2016
22nd February 2016

The IRS released its 2015 annual report for its Whistleblower Program on February 10, 2016 which disclosed that in 2015, 99 awards were made to whistleblowers totaling $103,486,677. This amount almost doubles the $52 million in awards made to whistleblowers in 2014. The annual report data indicates that this huge increase in total awards made to whistleblowers is due to the large increase in the average award percentage made to whistleblowers. In 2015, this award percentage was 20.6% of the total amounts collected by the IRS, substantially greater than the award percentages for the last two years - 16.9% in 2014 and 15.7% in 2013.  

“FY 2015 was a big year for awards under the Whistleblower Program, with 99 awards made to whistleblowers totaling more than $103 million before sequestration, which reduced the total payouts,” stated IRS Whistleblower Office Director Lee D. Martin. Martin also stated that “[s]ince 2007, information received from whistleblowers has assisted the IRS in collecting over $3 billion dollars in tax revenue, and the IRS has awarded more than $403 million to whistleblowers.”

While whistleblower claims received in FY 2015 were down 17% from FY 2014 (12,078 claims received in FY 2015 compared to 14,474 claims received in FY 2014), the total claims closed increased by 27% for the same period (10,615 claims closed in FY 2015 compared to 8,365 claims closed in FY 2014).

The report data also indicated that it took 6.2 years on average for the IRS to process whistleblower awards. Whistleblower claims of fraud that were under $2 million took on average 8.72 years to process awards.

IRS Whistleblower Office Director Lee D. Martin also stated that that the IRS is pursuing opportunities through process improvements to reduce the lifecycle of whistleblower claims, including improving its communication strategy with whistleblowers, potential whistleblowers and their attorneys and by also providing external educational materials that explain best practices for successful claim submissions.   

Increasing award percentages and decreasing the award processing time period could encourage more whistleblowers to come forward with claims and therefore continue to strengthen the IRS Whistleblower Program. 

However, currently the program does not offer whistleblowers with retaliation protection from their employers, as other whistleblower awards programs do. According to the report, two legislative proposals have been included in the IRS’s FY 2016 budget proposal, which include (i) retaliation protection for whistleblowers and (ii) stronger protections for taxpayers whereby sanctions would be imposed on whistleblowers for improperly disclosing taxpayer information obtained from the IRS in connection with the whistleblower’s claim. Although the IRS whistleblower program is poised for another growth year, whistleblower retaliation protection could bring other claims to light that may otherwise not be reported.