The office of Senator Chuck Grassley (R-IA) issued a press release yesterday announcing that the Senator had received a response from IRS Commissioner John Koskinen to questions Senator Grassley had submitted to the record after a February hearing on the IRS budget. Senator Grassley’s question is presented below in three parts with Commissioner Koskinen’s responses following each part.
Q. “First, the payments to whistleblowers have slowed to a trickle at best. This is whistleblowers waiting for payment where dollars have been collected and the holdup is with the IRS processing and checking the boxes for a payment. Often it is the whistleblower office waiting for someone in the field, or in senior management to move paper. I ask that that your office review all whistleblower cases pending payment and bring the Drano to unclog the holdup.”
A. “I have discussed with the Director of the Whistleblower Office the pace of award payments under section 7623, and have verified that he has made timely processing of claims for which an award is payable a top priority. Awards cannot be paid until the relevant taxpayer audit or investigation is completed (including any appeals), proceeds are collected, and the statute of limitations for filing a refund claim has expired. When those preconditions are met, the Whistleblower Office moves as quickly as possible to notify the whistleblower of a proposed award, obtain comments on the proposal, and make an award decision. To date, the Whistleblower Office has paid 12 awards under section 7623(b). The Director estimates that six to twelve additional 7623(b) awards will be paid in FY 15.”
Q. “Second, I again find myself frustrated with an IRS Chief Counsel office that seems to wake up every day seeking ways to undermine the whistleblower program both in the courts and the awards. I am especially concerned that chief counsel is throwing every argument it can think of against whistleblowers in tax court. It appears at times that the Chief Counsel’s office thinks its job is to come up with hyper technical arguments and seek to deny awards to whistleblowers who have risked their lives to uncover big time tax cheats. I ask that your office and the director of the whistleblower office review the chief counsel’s wasteful and 16 harmful litigation positions that undermine the whistleblower program and go directly against your support for the whistleblower program.”
A. “With respect to your second point, the IRS Office of Chief Counsel is responsible for defending the determinations of the IRS in the U.S. Tax Court, including those of the Whistleblower Office. The Office of Chief Counsel coordinates with the Whistleblower Office in defending its determinations before the Tax Court to ensure that Chief Counsel’s litigating positions are consistent with the program’s goals as well as the statutory and regulatory framework. In most cases before the Tax Court, the record of the case is sealed to protect both whistleblower and taxpayer interests. As a result, I cannot comment on specific arguments made in defending particular Whistleblower Office determinations that are subject to an order of the Tax Court sealing the record. The positions taken by the Office of Chief Counsel support the IRS’s administration of the law.”
Q. “Third, with tight budgets at the IRS it is all the more imperative that the IRS works with whistleblowers and their counsels on cases. The IRS criminal investigators have had great success using whistleblowers to go after banks and terrorist organizations, but the IRS civil division still hasn’t gotten the message of working with whistleblowers. I note that the IRS hasn’t been shy about paying outside law firms big money to help it in big examinations, yet ignores the possibility of harnessing whistleblowers and their lawyers who won’t cost the IRS a dime from its budget.”
A. “The suggestion that the IRS can do more to work with whistleblowers and their counsel is one that the IRS takes seriously. In a memorandum dated August 20, 2014, the IRS’s Deputy Commissioner of Services and Enforcement reinforced previous guidance on the importance of thorough debriefing of whistleblowers during the evaluation of their submissions. After the IRS begins an investigation based on whistleblower information, section 6103 provides limited authority to interact with a whistleblower since disclosure of taxpayer information would be necessary to gather additional information while pursuing the audit or investigation.”
With respect to Commissioner Koskinen’s response to the second question above, he surely drafted his response before the recent Tax Court decision in Whistleblower 21276-13W v. Commissioner, 144 T.C. No. 15, where the IRS Office of Chief Counsel took the position that petitioners were not award eligible because they failed to submit their Forms 211 before providing information to the IRS – a position that was shot down by the Tax Court as contrary to the requirements of section 7623. In his press release, Senator Grassley also commented on the outcome of that case stating:
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