II 

117TH CONGRESS 

1ST SESSION S. 2055 

To amend the Internal Revenue Code of 1986 to modify and reform rules 

relating to investigations and whistleblowers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 15, 2021 

Mr. GRASSLEY (for himself and Mr. WYDEN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

and reform rules relating to investigations and whistleblowers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘IRS Whistleblower 

5 Program Improvement Act of 2021’’. 

6 SEC. 2. STANDARD AND SCOPE OF REVIEW OF WHISTLE7 BLOWER AWARD DETERMINATION. 

8 (a) IN GENERAL.—Paragraph (4) of section 7623(b) 

9 of the Internal Revenue Code of 1986 is amended— 


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1 (1) by striking ‘‘appealed to’’ and inserting ‘‘re2 viewed by’’; and 

3 (2) by adding at the end the following: ‘‘Any re4 view by the Tax Court under the preceding sentence 

5 shall be de novo and shall be based on the adminis6 trative record established at the time of the original 

7 determination and any additional newly discovered 

8 or previously unavailable evidence.’’. 

9 (b) CONFORMING AMENDMENT.—The heading of 

10 paragraph (4) of section 7623(b) of the Internal Revenue 

11 Code of 1986 is amended by striking ‘‘APPEAL’’ and in12 serting ‘‘REVIEW’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to cases under section 7623(b)(4) 

15 of the Internal Revenue Code of 1986 which are pending 

16 on, or filed on or after, the date of the enactment of this 

17 Act. 

18 SEC. 3. EXEMPTION FROM SEQUESTRATION. 

19 (a) IN GENERAL.—Section 255 of the Balanced 

20 Budget and Emergency Deficit Control Act of 1985 (2 

21 U.S.C. 905) is amended— 

22 (1) by redesignating subsection (k) as sub23 section (l); and 

24 (2) by inserting after subsection (j) the fol25 lowing: 


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1 ‘‘(k) AWARDS TO WHISTLEBLOWERS.—An award au2 thorized under section 7623 of the Internal Revenue Code 

3 of 1986 shall be exempt from reduction under any order 

4 issued under this part.’’. 

5 (b) APPLICABILITY.—The amendment made by this 

6 section shall apply to any sequestration order issued under 

7 the Balanced Budget and Emergency Deficit Control Act 

8 of 1985 (2 U.S.C. 900 et seq.) after December 31, 2020. 

9 SEC. 4. WHISTLEBLOWER PRIVACY PROTECTIONS. 

10 (a) IN GENERAL.—Paragraph (4) of section 7623(b) 

11 of the Internal Revenue Code of 1986, as amended by sec12 tion 2, is further amended— 

13 (1) by striking ‘‘DETERMINATION.—Any deter14 mination’’ and inserting ‘‘DETERMINATION.— 

15 ‘‘(A) IN GENERAL.—Any determination’’, 

16 and 

17 (2) by adding at the end the following new sub18 paragraph: 

19 ‘‘(B) PRESUMPTION OF ANONYMITY.—For 

20 purposes of Rule 345(a) of the Tax Court Rules 

21 of Practice and Procedure (as in effect on the 

22 date of the enactment of the IRS Whistleblower 

23 Program Improvement Act of 2021), and any 

24 successor rule, with respect to any action under 

25 this paragraph there shall be a rebuttable preVerDate Sep 11 2014 03:16 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2055.IS S2055

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1 sumption that a whistleblower would be subject 

2 to retaliation, physical harm, social and profes3 sional stigma, or economic distress which out4 weighs the counterbalancing societal interests in 

5 knowing the whistleblower’s identity.’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to petitions filed under Rule 345(a) 

8 of the Tax Court Rules of Practice and Procedure which 

9 are pending on, or filed on or after, the date of the enact10 ment of this Act. 

11 SEC. 5. MODIFICATION OF IRS WHISTLEBLOWER REPORT. 

12 (a) IN GENERAL.—Section 406(c) of division A of the 

13 Tax Relief and Health Care Act of 2006 is amended by 

14 striking ‘‘such use,’’ in paragraph (1) and inserting ‘‘such 

15 use (which shall include a list and descriptions of the top 

16 tax avoidance schemes, not to exceed 10, disclosed by 

17 whistleblowers during such year),’’. 

18 (b) EFFECTIVE DATE.— The amendment made by 

19 this section shall apply to reports the due date for which 

20 are after the enactment of this Act. 

21 SEC. 6. INTEREST ON WHISTLEBLOWER AWARDS. 

22 (a) IN GENERAL.—Section 7623(b) of the Internal 

23 Revenue Code of 1986 is amended by redesignating para24 graphs (5) and (6) as paragraphs (6) and (7), respectively, 


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1 and by inserting after paragraph (5) the following new 

2 paragraph: 

3 ‘‘(5) INTEREST.— 

4 ‘‘(A) IN GENERAL.—If the Secretary has 

5 not provided notice to an individual described in 

6 paragraph (1) of a preliminary award deter7 mination before the applicable date, the amount 

8 of any award under this subsection shall include 

9 interest from such date at the overpayment rate 

10 under section 6621(a). 

11 ‘‘(B) EXCEPTION.—No interest shall ac12 crue under this paragraph after the date on 

13 which the Secretary provides notice to the indi14 vidual of a preliminary award determination. 

15 ‘‘(C) APPLICABLE DATE.—For purposes of 

16 this paragraph, the applicable date is the date 

17 that is 12 months after the first date on 

18 which— 

19 ‘‘(i) all of the proceeds resulting from 

20 actions subject to the award determination 

21 have been collected, and 

22 ‘‘(ii) either— 

23 ‘‘(I) the statutory period for fil24 ing a claim for refund has expired, or 


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1 ‘‘(II) the taxpayers subject to the 

2 actions and the Secretary have agreed 

3 with finality to the tax or other liabil4 ities for the periods at issue, and ei5 ther the taxpayers have waived the 

6 right to file a claim for refund or any 

7 claim for refund has been resolved.’’. 

8 (b) EFFECTIVE DATE.—The amendments made by 

9 this section shall take effect on the date of the enactment 

10 of this Act. 

11 SEC. 7. RETENTION OF COLLECTED PROCEEDS TO FUND 

12 PROGRAM COSTS. 

13 (a) IN GENERAL.—Section 7623 of the Internal Rev14 enue Code of 1986 is amended by adding at the end the 

15 following new subsection: 

16 ‘‘(e) RETENTION OF COLLECTED PROCEEDS TO

17 FUND PROGRAM COSTS.— 

18 ‘‘(1) IN GENERAL.—The Secretary may retain 

19 annually up to 3 percent of the amount of proceeds 

20 collected as a result of actions described in sub21 section (a) (including any related actions) or from 

22 any settlements in response to such actions to be 

23 used for program costs (within the meaning of sec24 tion 6307(d)(2)) associated with administering the 

25 whistleblower programs under this section, including 


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1 reimbursing the applicable divisions of the Internal 

2 Revenue Service for costs associated with inves3 tigating whistleblower claims, except that the 

4 amount so retained in any year shall not exceed 

5 $10,000,000. The Secretary shall keep adequate 

6 records regarding amounts so retained and used. 

7 ‘‘(2) COORDINATION RULES.—The amount 

8 credited as paid by any taxpayer, and any award to 

9 a whistleblower, shall be determined without regard 

10 to this subsection. 

11 ‘‘(3) ADJUSTMENT FOR INFLATION.—In the 

12 case of calendar years beginning after 2022, the 

13 $10,000,000 amount in paragraph (1) shall be in14 creased by an amount equal to— 

15 ‘‘(A) such dollar amount, multiplied by 

16 ‘‘(B) the cost-of-living adjustment deter17 mined under section 1(f)(3) for the calendar 

18 year in which the taxable year begins, deter19 mined by substituting ‘2021’ for ‘2016’ in sub20 paragraph (A)(ii) thereof. 

21 If any increase under the preceding sentence is not 

22 a multiple of $10,000, such increase shall be round23 ed to the next lowest multiple of $10,000.’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to proceeds collected after the date 

3 of the enactment of this Act. 

4 SEC. 8. CORRECTION REGARDING DEDUCTIONS FOR AT5 TORNEY’S FEES. 

6 (a) IN GENERAL.—Section 62(a)(21)(A)(i) of the In7 ternal Revenue Code of 1986 is amended by striking 

8 ‘‘7623(b)’’ and inserting ‘‘7623’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to taxable years ending after the 

11 date of the enactment of this Act. 

Æ 


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