Section 1 Short title
This Act may be cited as the “IRS Whistleblower Program Improvement Act of 2023”.
IRS Whistleblower Program Improvement Act of 2023
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, 2022.
Sec. 4 Whistleblower privacy protections
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.”
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
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 (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.”
Effective date—
In general— The amendments made by this section shall take effect 180 days after the date of the enactment of this Act.
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)—
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
the applicable date provided in paragraph (5)(C) of such section, as so added, has passed,
Sec. 7 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.