IRS Whistleblower Improvements Act of 2017

Summary: IRS Whistleblower Improvements Act of 2017  This bill amends the Internal Revenue Code (IRC), with respect to whistle-blowers, to establish rules regarding the disclosure of tax return information and retaliation by employers.  The Internal Revenue Service (IRS) may disclose tax return information to whistle-blowers if: (1) the information is related to the investigation of any taxpayer with respect to whom the whistle-blower has provided information; and (2) the disclosure is necessary to obtain information, which is not otherwise reasonably available, with respect to the correct determination of tax liability or the amount to be collected with respect to the enforcement of any other provision of the IRC.  The bill also: (1) requires the IRS to provide updates to whistle-blowers regarding investigations, and (2) subjects whistle-blowers who receive tax return information to criminal penalties for the unauthorized disclosure of taxpayer information. An employer or any officer, employee, contractor, subcontractor, or agent of the employer may not retaliate against an employee for certain lawful activities related to alleged underpayments of taxes or violations of tax law. The specified activities include: (1) providing certain information or assistance to federal agencies or Congress; and (2) testifying, participating in, or otherwise assisting in IRS actions. The bill also specifies: (1) enforcement actions that may be brought before the Department of Labor or in federal court to enforce the laws against retaliation, (2) procedures that apply to the actions, and (3) remedies that must be provided to employees that prevail in the actions. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``IRS Whistleblower Improvements Act 
of 2017''.

SEC. 2. WHISTLEBLOWER REFORMS.

    (a) Modifications to Disclosure Rules for Whistleblowers.--
            (1) In general.--Section 6103(k) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(13) Disclosure to whistleblowers.--
                    ``(A) In general.--The Secretary may disclose, to 
                any individual providing information relating to any 
                purpose described in paragraph (1) or (2) of section 
                7623(a), return information related to the 
                investigation of any taxpayer with respect to whom the 
                individual has provided such information, but only to 
                the extent that such disclosure is necessary in 
                obtaining information, which is not otherwise 
                reasonably available, with respect to the correct 
                determination of tax liability for tax, or the amount 
                to be collected with respect to the enforcement of any 
                other provision of this title.
                    ``(B) Updates on whistleblower investigations.--The 
                Secretary shall disclose to an individual providing 
                information relating to any purpose described in 
                paragraph (1) or (2) of section 7623(a) the following:
                            ``(i) Not later than 30 days after a case 
                        for which the individual has provided 
                        information has been referred for an audit or 
                        examination, a notice with respect to such 
                        referral.
                            ``(ii) Not later than 30 days after a 
                        taxpayer with respect to whom the individual 
                        has provided information has made a payment of 
                        tax with respect to tax liability to which such 
                        information relates, a notice with respect to 
                        such payment.
                            ``(iii) Subject to such requirements and 
                        conditions as are prescribed by the Secretary, 
                        upon a written request by such individual--
                                    ``(I) information on the status and 
                                stage of any investigation or action 
                                related to such information, and
                                    ``(II) in the case of a 
                                determination of the amount of any 
                                award under section 7623(b), the 
                                reasons for such determination.
                Clause (iii) shall not apply to any information if the 
                Secretary determines that disclosure of such 
                information would seriously impair Federal tax 
                administration. Information described in clauses (i), 
                (ii), and (iii) may be disclosed to a designee of the 
                individual providing such information in accordance 
                with guidance provided by the Secretary.''.
            (2) Conforming amendments.--
                    (A) Confidentiality of information.--Section 
                6103(a)(3) of such Code is amended by striking 
                ``subsection (k)(10)'' and inserting ``paragraph (10) 
                or (13) of subsection (k)''.
                    (B) Penalty for unauthorized disclosure.--Section 
                7213(a)(2) of such Code is amended by striking 
                ``(k)(10)'' and inserting ``(k)(10) or (13)''.
                    (C) Coordination with authority to disclose for 
                investigative purposes.--Section 6103(k)(6) of such 
                Code is amended by adding at the end the following new 
                sentence: ``This paragraph shall not apply to any 
                disclosure to an individual providing information 
                relating to any purpose described in paragraph (1) or 
                (2) of section 7623(a) which is made under paragraph 
                (13)(A).''.
    (b) Protection Against Retaliation.--Section 7623 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subsection:
    ``(c) Civil Action To Protect Against Retaliation Cases.--
            ``(1) Anti-retaliation whistleblower protection for 
        employees.--No employer or any officer, employee, contractor, 
        subcontractor, or agent of such employer may discharge, demote, 
        suspend, threaten, harass, or in any other manner discriminate 
        against an employee in the terms and conditions of employment 
        (including through an act in the ordinary course of such 
        employee's duties) in reprisal for any lawful act done by the 
        employee--
                    ``(A) to provide information, cause information to 
                be provided, or otherwise assist in an investigation 
                regarding underpayment of tax or any conduct which the 
                employee reasonably believes constitutes a violation of 
                the internal revenue laws or any provision of Federal 
                law relating to tax fraud, when the information or 
                assistance is provided to the Internal Revenue Service, 
                the Secretary of the Treasury, the Treasury Inspector 
                General for Tax Administration, the Comptroller General 
                of the United States, the Department of Justice, the 
                United States Congress, a person with supervisory 
                authority over the employee, or any other person 
                working for the employer who has the authority to 
                investigate, discover, or terminate misconduct, or
                    ``(B) to testify, participate in, or otherwise 
                assist in any administrative or judicial action taken 
                by the Internal Revenue Service relating to an alleged 
                underpayment of tax or any violation of the internal 
                revenue laws or any provision of Federal law relating 
                to tax fraud.
            ``(2) Enforcement action.--
                    ``(A) In general.--A person who alleges discharge 
                or other reprisal by any person in violation of 
                paragraph (1) may seek relief under paragraph (3) by--
                            ``(i) filing a complaint with the Secretary 
                        of Labor, or
                            ``(ii) if the Secretary of Labor has not 
                        issued a final decision within 180 days of the 
                        filing of the complaint and there is no showing 
                        that such delay is due to the bad faith of the 
                        claimant, bringing an action at law or equity 
                        for de novo review in the appropriate district 
                        court of the United States, which shall have 
                        jurisdiction over such an action without regard 
                        to the amount in controversy.
                    ``(B) Procedure.--
                            ``(i) In general.--An action under 
                        subparagraph (A)(ii) shall be governed under 
                        the rules and procedures set forth in section 
                        42121(b) of title 49, United States Code.
                            ``(ii) Exception.--Notification made under 
                        section 42121(b)(1) of title 49, United States 
                        Code, shall be made to the person named in the 
                        complaint and to the employer.
                            ``(iii) Burdens of proof.--An action 
                        brought under subparagraph (A)(ii) shall be 
                        governed by the legal burdens of proof set 
                        forth in section 42121(b) of title 49, United 
                        States Code, except that in applying such 
                        section--
                                    ``(I) `behavior described in 
                                paragraph (1)' shall be substituted for 
                                `behavior described in paragraphs (1) 
                                through (4) of subsection (a)' each 
                                place it appears in paragraph (2)(B) 
                                thereof, and
                                    ``(II) `a violation of paragraph 
                                (1)' shall be substituted for `a 
                                violation of subsection (a)' each place 
                                it appears.
                            ``(iv) Statute of limitations.--A complaint 
                        under subparagraph (A)(i) shall be filed not 
                        later than 180 days after the date on which the 
                        violation occurs.
                            ``(v) Jury trial.--A party to an action 
                        brought under subparagraph (A)(ii) shall be 
                        entitled to trial by jury.
            ``(3) Remedies.--
                    ``(A) In general.--An employee prevailing in any 
                action under paragraph (2)(A) shall be entitled to all 
                relief necessary to make the employee whole.
                    ``(B) Compensatory damages.--Relief for any action 
                under subparagraph (A) shall include--
                            ``(i) reinstatement with the same seniority 
                        status that the employee would have had, but 
                        for the reprisal,
                            ``(ii) the sum of 200 percent of the amount 
                        of back pay and 100 percent of all lost 
                        benefits, with interest, and
                            ``(iii) compensation for any special 
                        damages sustained as a result of the reprisal, 
                        including litigation costs, expert witness 
                        fees, and reasonable attorney fees.
            ``(4) Rights retained by employee.--Nothing in this section 
        shall be deemed to diminish the rights, privileges, or remedies 
        of any employee under any Federal or State law, or under any 
        collective bargaining agreement.
            ``(5) Nonenforceability of certain provisions waiving 
        rights and remedies or requiring arbitration of disputes.--
                    ``(A) Waiver of rights and remedies.--The rights 
                and remedies provided for in this subsection may not be 
                waived by any agreement, policy form, or condition of 
                employment, including by a predispute arbitration 
                agreement.
                    ``(B) Predispute arbitration agreements.--No 
                predispute arbitration agreement shall be valid or 
                enforceable, if the agreement requires arbitration of a 
                dispute arising under this subsection.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to disclosures made after the date of the enactment 
        of this Act.
            (2) Civil protection.--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.