On June 24, 2024, the Internal Revenue Service (IRS) Office of the Whistleblower issued its Annual Report covering collections and awards for FY 2023.

Among the key findings are:

• Whistleblowers awarded $88.7 million based on $337.9 million in collections
• New whistleblower cases filed: 6455
• Total backlog of cases: 30,135
• Backlog in cases evaluating whistleblower award qualification/amount: 4021
• Time Taken to Process Mandatory Awards (from claim filed to award paid): 11.29 years
• Amount of collections attributed to whistleblowers in the “backlog”: “Several billion dollars”
• Amount of taxes collected since the program initiated in 2007: $6.9 billion, plus additional billions attributed to whistleblowers but still being processed
• Amount of payments to whistleblowers since the mandatory program initiated in 2007: $1.2 billion. 

The $88 million awarded to whistleblowers in FY 2023 is significantly up from the $37 million awarded in FY 2022. The mark is still well below the $312 million awarded in FY 2018, however, a year in which the whistleblowers allowed the IRS to recover $1.44 billion in collections.

In the report, Office of the Whistleblower Director John Hinman notes that the IRS continues to receive “tremendous assistance” from both whistleblowers and the “practitioner community” and that whistleblower disclosures play an “Important component of effective tax administration,” “bolster(ing) the fair and effective enforcement of our nation’s tax laws, the success of our voluntary tax system, and our efforts to reduce the tax gap.”

While Hinman has sought to transform the program by adding staff and improving management systems, the fact that it takes an average of 11.26 years to process the payment of a mandatory whistleblower award, combined with the Office’s acknowledgment that there is a backlog of over 30,000 cases, demonstrates a clear need for legislative reform.

The bipartisan IRS Whistleblower Improvement Act should be an immediate priority within Congress. The bill, introduced in March 2023 by Senators Chuck Grassley (R-IA), Ron Wyden (D-OR), Roger Wicker (R-MS) and Ben Cardin (D-MD) makes a number of technical reforms to bolster the IRS Whistleblower Program.

Among the key reforms offered by the program are:

• The establishment of the presumption of anonymity. 
• Imposition of interest on delayed awards. 
• Institution of de novo review in award case appeals.
• Removal of budget sequestration for whistleblower awards.

By addressing some statutory loopholes undermining the program, these reforms would go a long way in getting the IRS Whistleblower Program back on track towards recovering billions of dollars from wealthy tax cheats.

Geoff Schweller also contributed to this article.