IRS Whistleblower Program Improvement Act of 2021
Bill: H.R.4107 | Sponsor: Rep. Thompson, Mike (D-CA)
Policy area: Taxation

Summary:
IRS Whistleblower Program Improvement Act of 2021
This bill modifies provisions of the Internal Revenue Code relating to whistleblower protections. Specifically, the 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 2021''.

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, 2020.

SEC. 4. WHISTLEBLOWER PRIVACY PROTECTIONS.

    (a) In General.--Paragraph (4) of section 7623(b) of the Internal 
Revenue Code of 1986, as amended by section 2, is further amended--
            (1) by striking ``determination.--Any determination'' and 
        inserting ``determination.--
                    ``(A) In general.--Any determination'', and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Presumption of anonymity.--For purposes of 
                Rule 345(a) of the Tax Court Rules of Practice and 
                Procedure (as in effect on the date of the enactment of 
                the IRS Whistleblower Program Improvement Act of 2021), 
                and any successor rule, with respect to any action 
                under this paragraph there shall be a rebuttable 
                presumption that a whistleblower would be subject to 
                retaliation, physical harm, social and professional 
                stigma, or economic distress which outweighs the 
                counterbalancing societal interests in knowing the 
                whistleblower's identity.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to petitions filed under Rule 345(a) of the Tax Court Rules of 
Practice and Procedure 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 (5) 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 determination 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 determination.
                    ``(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 determination 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.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 7. RETENTION OF COLLECTED PROCEEDS TO FUND PROGRAM COSTS.

    (a) In General.--Section 7623 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Retention of Collected Proceeds to Fund Program Costs.--
            ``(1) In general.--The Secretary may retain annually up to 
        3 percent of the amount of proceeds collected as a result of 
        actions described in subsection (a) (including any related 
        actions) or from any settlements in response to such actions to 
        be used for program costs (within the meaning of section 
        6307(d)(2)) associated with administering the whistleblower 
        programs under this section, including reimbursing the 
        applicable divisions of the Internal Revenue Service for costs 
        associated with investigating whistleblower claims, except that 
        the amount so retained in any year shall not exceed 
        $10,000,000. The Secretary shall keep adequate records 
        regarding amounts so retained and used.
            ``(2) Coordination rules.--The amount credited as paid by 
        any taxpayer, and any award to a whistleblower, shall be 
        determined without regard to this subsection.
            ``(3) Adjustment for inflation.--In the case of calendar 
        years beginning after 2022, the $10,000,000 amount in paragraph 
        (1) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `2021' for `2016' in subparagraph (A)(ii) thereof.
        If any increase under the preceding sentence is not a multiple 
        of $10,000, such increase shall be rounded to the next lowest 
        multiple of $10,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to proceeds collected after the date of the enactment of this Act.

SEC. 8. 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.
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