IRS Whistleblower Improvements Act of 2017

To amend the Internal Revenue Code of 1986 to reform provisions relating to whistleblowers. 1. Short title This Act may be cited as the IRS Whistleblower Improvements Act of 2017 2. Whistleblower reforms (a) Modifications to disclosure rules for whistleblowers (1) In general Section 6103(k) (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) 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) (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 (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) behavior described in paragraphs (1) through (4) of subsection (a) (II) a violation of paragraph (1) a violation of subsection (a) (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.

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.