Section 1 Short title
This Act may be cited as the “IRS Whistleblower Program Improvement Act of 2021”.
IRS Whistleblower Program Improvement Act of 2021
A BILL
To amend the Internal Revenue Code of 1986 to modify and reform rules relating to investigations and whistleblowers, and for other purposes.
Sec. 2 Standard and scope of review of whistleblower award determination
by striking “appealed to” and inserting “reviewed by”, and
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.”.
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”,
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
In general— Section 255 of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905) is amended—
by redesignating subsection (k) as subsection (l); and
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.”
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
In general— Paragraph (4) of section 7623(b) of the Internal Revenue Code of 1986, as amended by section 2, is further amended—
by striking “determination.—Any determination” and inserting “determination.—
“(A) In general—Any determination”
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.”
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
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),”.
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
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.”
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
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.”
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
In general— Section 62(a)(21)(A)(i) of the Internal Revenue Code of 1986 is amended by striking “7623(b)” and inserting “7623”.
Effective date— The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act.