What This Bill Does
This bill changes how the IRS handles whistleblower awards and investigations. It modifies rules about how whistleblower award decisions can be reviewed in tax court, protects whistleblower privacy, and adds interest payments to delayed award decisions.
##
Who It Affects
People who report tax violations to the IRS and receive whistleblower awards. The Tax Court (the court that handles tax cases). The IRS.
##
Key Provisions
- Tax Court reviews of whistleblower award decisions will now be "de novo," meaning the court will completely re-examine the decision rather than just checking if it was handled properly, based on the original documents plus any new evidence discovered (Sec. 2)
- Whistleblower awards are protected from sequestration, meaning they cannot be cut if the federal government needs to reduce spending across agencies (Sec. 3)
- Whistleblowers can request to remain anonymous in Tax Court proceedings unless the court finds an important public reason exists that outweighs harm to the whistleblower (Sec. 4)
- Whistleblower awards will earn interest at the overpayment rate if the IRS does not provide a preliminary award recommendation within 12 months after all money from the violation has been collected and the case is resolved (Sec. 6)
- The IRS annual report on whistleblower activity must now include a list and descriptions of the top 10 tax avoidance schemes disclosed by whistleblowers that year (Sec. 5)
##
What Changes
If this bill becomes law, whistleblowers who wait longer for award decisions will receive additional interest payments. Their court cases will receive fuller review by judges rather than limited review. Whistleblowers can hide their identities in court. IRS reports will publicly identify major tax schemes caught through whistleblower tips.
##
Important Definitions
None defined in the bill text.
##
Effective Date
Different sections have different dates. The court review and privacy changes apply immediately to cases pending or filed on or after the date this act is signed into law. Interest on awards takes effect 180 days after the act is signed. Whistleblower award protection from spending cuts applies to orders issued after December 31, 2023.
I
118TH CONGRESS
1ST SESSION H. R. 1300
To amend the Internal Revenue Code of 1986 to modify and reform rules
relating to investigations and whistleblowers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 1, 2023
Mr. KELLY of Pennsylvania introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committee
on the Budget, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to modify
and reform rules relating to investigations and whistle-
blowers, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘IRS Whistleblower
4
Program Improvement Act of 2023’’.
5
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS
2
•HR 1300 IH
SEC. 2. STANDARD AND SCOPE OF REVIEW OF WHISTLE-
1
BLOWER AWARD DETERMINATION.
2
(a) IN GENERAL.—Paragraph (4) of section 7623(b)
3
of the Internal Revenue Code of 1986 is amended—
4
(1) by striking ‘‘appealed to’’ and inserting ‘‘re-
5
viewed by’’; and
6
(2) by adding at the end the following: ‘‘Any re-
7
view by the Tax Court under the preceding sentence
8
shall be de novo and shall be based on the adminis-
9
trative record established at the time of the original
10
determination and any additional newly discovered
11
or previously unavailable evidence.’’.
12
(b) CONFORMING AMENDMENT.—The heading of
13
paragraph (4) of section 7623(b) of the Internal Revenue
14
Code of 1986 is amended by striking ‘‘APPEAL’’ and in-
15
serting ‘‘REVIEW’’.
16
(c) EFFECTIVE DATE.—The amendments made by
17
this section shall apply to cases under section 7623(b)(4)
18
of the Internal Revenue Code of 1986 which are pending
19
on, or filed on or after, the date of the enactment of this
20
Act.
21
SEC. 3. EXEMPTION FROM SEQUESTRATION.
22
(a) IN GENERAL.—Section 255 of the Balanced
23
Budget and Emergency Deficit Control Act of 1985 (2
24
U.S.C. 905) is amended—
25
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS
3
•HR 1300 IH
(1) by redesignating subsection (k) as sub-
1
section (l); and
2
(2) by inserting after subsection (j) the fol-
3
lowing:
4
‘‘(k) AWARDS TO WHISTLEBLOWERS.—An award au-
5
thorized under section 7623 of the Internal Revenue Code
6
of 1986 shall be exempt from reduction under any order
7
issued under this part.’’.
8
(b) APPLICABILITY.—The amendment made by this
9
section shall apply to any sequestration order issued under
10
the Balanced Budget and Emergency Deficit Control Act
11
of 1985 (2 U.S.C. 900 et seq.) after December 31, 2023.
12
SEC. 4. WHISTLEBLOWER PRIVACY PROTECTIONS.
13
(a) IN GENERAL.—Paragraph (6) of section 7623(b)
14
of the Internal Revenue Code of 1986 is amended by add-
15
ing at the end the following new subparagraph:
16
‘‘(D) WHISTLEBLOWER
ANONYMITY
BE-
17
FORE THE TAX COURT.—Notwithstanding sec-
18
tions 7458 and 7461, the Tax Court shall grant
19
a whistleblower’s request to proceed anony-
20
mously before the Court for all proceedings
21
under this section absent a finding by the Tax
22
Court that a heightened societal interest exists
23
for disclosing the whistleblower’s identity, ex-
24
ceeding the normal interest in knowing a peti-
25
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS
4
•HR 1300 IH
tioner’s identity. Should the Tax Court find
1
that such a heightened societal interest exists,
2
such interest shall be balanced against the po-
3
tential harm disclosure could cause to the whis-
4
tleblower.’’.
5
(b) EFFECTIVE DATE.—The amendments made by
6
this section shall apply to petitions filed with the Tax
7
Court which are pending on, or filed on or after, the date
8
of the enactment of this Act.
9
SEC. 5. MODIFICATION OF IRS WHISTLEBLOWER REPORT.
10
(a) IN GENERAL.—Section 406(c) of division A of the
11
Tax Relief and Health Care Act of 2006 is amended by
12
striking ‘‘such use,’’ in paragraph (1) and inserting ‘‘such
13
use (which shall include a list and descriptions of the top
14
tax avoidance schemes, not to exceed 10, disclosed by
15
whistleblowers during such year),’’.
16
(b) EFFECTIVE DATE.—The amendment made by
17
this section shall apply to reports the due date for which
18
are after the enactment of this Act.
19
SEC. 6. INTEREST ON WHISTLEBLOWER AWARDS.
20
(a) IN GENERAL.—Section 7623(b) of the Internal
21
Revenue Code of 1986 is amended by redesignating para-
22
graphs (5) and (6) as paragraphs (6) and (7), respectively,
23
and by inserting after paragraph (4) the following new
24
paragraph:
25
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS
5
•HR 1300 IH
‘‘(5) INTEREST.—
1
‘‘(A) IN GENERAL.—If the Secretary has
2
not provided notice to an individual described in
3
paragraph (1) of a preliminary award rec-
4
ommendation before the applicable date, the
5
amount of any award under this subsection
6
shall include interest from such date at the
7
overpayment rate under section 6621(a).
8
‘‘(B) EXCEPTION.—No interest shall ac-
9
crue under this paragraph after the date on
10
which the Secretary provides notice to the indi-
11
vidual of a preliminary award recommendation.
12
‘‘(C) APPLICABLE DATE.—For purposes of
13
this paragraph, the applicable date is the date
14
that is 12 months after the first date on
15
which—
16
‘‘(i) all of the proceeds resulting from
17
actions subject to the award recommenda-
18
tion have been collected, and
19
‘‘(ii) either—
20
‘‘(I) the statutory period for fil-
21
ing a claim for refund has expired, or
22
‘‘(II) the taxpayers subject to the
23
actions and the Secretary have agreed
24
with finality to the tax or other liabil-
25
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS
6
•HR 1300 IH
ities for the periods at issue, and ei-
1
ther the taxpayers have waived the
2
right to file a claim for refund or any
3
claim for refund has been resolved.’’.
4
(b) EFFECTIVE DATE.—
5
(1) IN GENERAL.—The amendments made by
6
this section shall take effect 180 days after the date
7
of the enactment of this Act.
8
(2) SPECIAL RULE.—In the case of a claim for
9
a whistleblower award under section 7623(b) of the
10
Internal Revenue Code of 1986 with respect to
11
which, as of the date described in paragraph (1)—
12
(A) the Secretary of the Treasury has not
13
provided notice to the individual of a prelimi-
14
nary award recommendation as described in
15
paragraph (5)(A) of such section, as added by
16
this Act, and
17
(B) the applicable date provided in para-
18
graph (5)(C) of such section, as so added, has
19
passed,
20
the applicable date for purposes of such paragraph
21
(5)(C) is the date that is 12 months after the date
22
described in paragraph (1).
23
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS
7
•HR 1300 IH
SEC. 7. CORRECTION REGARDING DEDUCTIONS FOR AT-
1
TORNEY’S FEES.
2
(a) IN GENERAL.—Section 62(a)(21)(A)(i) of the In-
3
ternal Revenue Code of 1986 is amended by striking
4
‘‘7623(b)’’ and inserting ‘‘7623’’.
5
(b) EFFECTIVE DATE.—The amendment made by
6
this section shall apply to taxable years ending after the
7
date of the enactment of this Act.
8
Æ
VerDate Sep 11 2014
22:37 Mar 16, 2023
Jkt 039200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\H1300.IH
H1300
kjohnson on DSK79L0C42PROD with BILLS