IRS Whistleblower Program Improvement Act of 2023

Subjects: Taxation

Summary:  <p><strong>IRS Whistleblower Program Improvement Act of 2023</strong></p> <p>This bill modifies provisions of the Internal Revenue Code relating to whistleblower protections. Specifically, the bill	</p> <ul> <li>revises the standard for review of whistleblower awards in the Tax Court to require a<em> de novo</em> review standard (currently, the standard is abuse of discretion); </li> <li>exempts whistleblower awards from reductions due to budget sequestration; </li> <li>allows whistleblowers anonymity in proceedings before the Tax Court;</li> <li>modifies the Internal Revenue Service (IRS) whistleblower report to require inclusion of a list and description of the top 10 tax avoidance schemes disclosed by whistleblowers;</li> <li>requires the IRS to pay interest on whistleblower awards if not paid within one year of receipt of proceeds collected from whistleblower disclosures; and </li> <li>allows payment of the attorney fees of whistleblowers regardless of whether the whistleblower award was paid through the mandatory or the discretionary whistleblower award program.</li></ul>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 625 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                 S. 625

 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

                             March 2, 2023

   Mr. Grassley (for himself, Mr. Wyden, Mr. Wicker, and Mr. Cardin) 
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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``IRS Whistleblower Program 
Improvement Act of 2023''.

SEC. 2. STANDARD AND SCOPE OF REVIEW OF WHISTLEBLOWER AWARD 
              DETERMINATION.

    (a) In General.--Paragraph (4) of section 7623(b) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``appealed to'' and inserting ``reviewed 
        by''; and
            (2) by adding at the end the following: ``Any review by the 
        Tax Court under the preceding sentence shall be de novo and 
        shall be based on the administrative record established at the 
        time of the original determination and any additional newly 
        discovered or previously unavailable evidence.''.
    (b) Conforming Amendment.--The heading of paragraph (4) of section 
7623(b) of the Internal Revenue Code of 1986 is amended by striking 
``Appeal'' and inserting ``Review''.
    (c) Effective Date.--The amendments made by this section shall 
apply to cases under section 7623(b)(4) of the Internal Revenue Code of 
1986 which are pending on, or filed on or after, the date of the 
enactment of this Act.

SEC. 3. EXEMPTION FROM SEQUESTRATION.

    (a) In General.--Section 255 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 (2 U.S.C. 905) is amended--
            (1) by redesignating subsection (k) as subsection (l); and
            (2) by inserting after subsection (j) the following:
    ``(k) Awards to Whistleblowers.--An award authorized under section 
7623 of the Internal Revenue Code of 1986 shall be exempt from 
reduction under any order issued under this part.''.
    (b) Applicability.--The amendment made by this section shall apply 
to any sequestration order issued under the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) after 
December 31, 2022.

SEC. 4. WHISTLEBLOWER PRIVACY PROTECTIONS.

    (a) In General.--Paragraph (6) of section 7623(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(D) Whistleblower anonymity before the tax 
                court.--Notwithstanding sections 7458 and 7461, the Tax 
                Court shall grant a whistleblower's request to proceed 
                anonymously before the Court for all proceedings under 
                this section absent a finding by the Tax Court that a 
                heightened societal interest exists for disclosing the 
                whistleblower's identity, exceeding the normal interest 
                in knowing a petitioner's identity. Should the Tax 
                Court find that such a heightened societal interest 
                exists, such interest shall be balanced against the 
                potential harm disclosure could cause to the 
                whistleblower.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to petitions filed with the Tax Court which are pending on, or 
filed on or after, the date of the enactment of this Act.

SEC. 5. MODIFICATION OF IRS WHISTLEBLOWER REPORT.

    (a) In General.--Section 406(c) of division A of the Tax Relief and 
Health Care Act of 2006 is amended by striking ``such use,'' in 
paragraph (1) and inserting ``such use (which shall include a list and 
descriptions of the top tax avoidance schemes, not to exceed 10, 
disclosed by whistleblowers during such year),''.
    (b) Effective Date.-- The amendment made by this section shall 
apply to reports the due date for which are after the enactment of this 
Act.

SEC. 6. INTEREST ON WHISTLEBLOWER AWARDS.

    (a) In General.--Section 7623(b) of the Internal Revenue Code of 
1986 is amended by redesignating paragraphs (5) and (6) as paragraphs 
(6) and (7), respectively, and by inserting after paragraph (4) the 
following new paragraph:
            ``(5) Interest.--
                    ``(A) In general.--If the Secretary has not 
                provided notice to an individual described in paragraph 
                (1) of a preliminary award recommendation before the 
                applicable date, the amount of any award under this 
                subsection shall include interest from such date at the 
                overpayment rate under section 6621(a).
                    ``(B) Exception.--No interest shall accrue under 
                this paragraph after the date on which the Secretary 
                provides notice to the individual of a preliminary 
                award recommendation.
                    ``(C) Applicable date.--For purposes of this 
                paragraph, the applicable date is the date that is 12 
                months after the first date on which--
                            ``(i) all of the proceeds resulting from 
                        actions subject to the award recommendation 
                        have been collected, and
                            ``(ii) either--
                                    ``(I) the statutory period for 
                                filing a claim for refund has expired, 
                                or
                                    ``(II) the taxpayers subject to the 
                                actions and the Secretary have agreed 
                                with finality to the tax or other 
                                liabilities for the periods at issue, 
                                and either the taxpayers have waived 
                                the right to file a claim for refund or 
                                any claim for refund has been 
                                resolved.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect 180 days after the date of the enactment of this 
        Act.
            (2) Special rule.--In the case of a claim for a 
        whistleblower award under section 7623(b) of the Internal 
        Revenue Code of 1986 with respect to which, as of the date 
        described in paragraph (1)--
                    (A) the Secretary of the Treasury has not provided 
                notice to the individual of a preliminary award 
                recommendation as described in paragraph (5)(A) of such 
                section, as added by this Act, and
                    (B) the applicable date provided in paragraph 
                (5)(C) of such section, as so added, has passed,
        the applicable date for purposes of such paragraph (5)(C) is 
        the date that is 12 months after the date described in 
        paragraph (1).

SEC. 7. CORRECTION REGARDING DEDUCTIONS FOR ATTORNEY'S FEES.

    (a) In General.--Section 62(a)(21)(A)(i) of the Internal Revenue 
Code of 1986 is amended by striking ``7623(b)'' and inserting ``7623''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.
                                 &lt;all&gt;
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