The attorneys of Kohn, Kohn & Colapinto know firsthand the power of an effective IRS Whistleblower Program, having represented UBS whistleblower Bradley Birkenfeld in the landmark tax whistleblower case that upended the illegal Swiss banking system.

As part of its pro bono efforts, Kohn, Kohn & Colapinto has filed rulemaking petitions, testified at rulemaking hearings, filed amicus curiae briefs in precedent-setting tax whistleblower cases, and helped push for legislation to improve the efficacy of the IRS Whistleblower Program.

Currently, Kohn, Kohn & Colapinto is working pro bono to help advocate for the passage of the bipartisan IRS Whistleblower Program Improvement Act, which makes much-needed reforms to the IRS Whistleblower Program.

“An effective IRS Whistleblower Program is key to the efforts of the United State’s to hold wealthy tax cheats accountable to cut down on the tax gap. By addressing the statutory loopholes currently undermining the program, the IRS Whistleblower Improvement Act goes a long way in ensuring the program is effective,” explains KKC founding partner Stephen M. Kohn in an article calling for the bill’s passage.

IRS Whistleblower Program Rulemaking

On July 1, 2019, The Taxpayer First Act became law. The Taxpayer First Act closed loopholes in corporate whistleblower protections. For the first time, employees who expose tax fraud, which often include violations of the Bank Secrecy Act and anti-money laundering law, are protected from retaliation.

Summary of Taxpayer First Act anti-retaliation provisions:

  • The right to reinstatement and double back-pay;
  • No mandatory arbitration;
  • Expeditious administrative remedies with the right to go to federal court for a jury trial;
  • Compensatory damages such as special damage, attorneys fees, and costs, awarded only to a whistleblower who prevails in an employment case.

The Taxpayer First Act also enhances the existing IRS whistleblower reward program by permitting full and open communication between the IRS Whistleblower Office and whistleblowers. Due to a broad reading of other provisions in the tax code concerning taxpayer secrecy, before this amendment, this type of communication was regularly stifled. The change will facilitate the cooperation between whistleblowers and the IRS necessary to fully prosecute tax frauds.

Kohn, Kohn & Colapinto partners worked closely with whistleblower attorney Dean Zerbe, Senior Policy Analyst at the National Whistleblower Center, and the National Whistleblower Center for several years promoting these reforms.

The modern IRS whistleblower award law (Section 7623(b) of the Internal Revenue Code) was created in 2006 and championed by Senator Charles E. Grassley (R-IA). The law provides that whistleblowers are mandated to receive 15-30% of proceeds collected by the U.S. government due to the information given by the whistleblower. The IRS has also been extremely successful in protecting the confidentiality and anonymity of tax whistleblowers.

The below is a summary of what the IRS has collected over the last five years:

Total Amounts of Awards Amounts Collected Awards as Percentage
of Amounts Collected
FY 2018 $312,207,590 $1,441,255,859 21.7%
FY 2017 $33,979,873 $190,583,750 17.8%
FY 2016 $61,390,910 $368,907,298 16.6%
FY 2015 $103,486,236 $501,317,481 20.6%
FY 2014 $52,281,628 $309,990,568 16.9%

–
Source, 2018: IRS Whistleblower Program FY 2018 report
Frequently Asked Questions (FAQs): What is covered under the IRS tax whistleblower reward program?

Our Involvement in Rulemaking

June 5, 2014

Kohn, Kohn & Colapinto sent a letter to the Secretary of Treasury with an attached 55-page scholarly article co-authored by KKC partner Stephen M. Kohn and Dean Zerbe explaining in detail the illegality of a proposed rule concerning criminal reward disqualification.

A Kohn, Kohn & Colapinto attorney testified at an IRS hearing on the proposed rules. The KKC attorney outlined objections to proposed regulations’ definition of certain key terms, which narrow the scope and effectiveness of the whistleblower program far beyond the language of the 2006 law.

Kohn, Kohn & Colapinto filed a detailed 84-page brief in response to proposed whistleblower program rule changes published by the IRS. KKC noted that “many provisions are a step backward, and undermine the policy goals of the act and are without support in the underlying statute” and provided detailed analysis of specific proposed provisions.

KKC filed an extensive brief on behalf of the National Whistleblower Center before the IRS strongly urging it to reward whistleblowers who exposed criminal tax frauds.

Kohn, Kohn & Colapinto filed an extensive brief, on behalf of the National Whistleblower Center, arguing for an expanded definition of the types of proceeds collected by the IRS which are covered under the whistleblower law. Specifically, KKC explains that proceeds collected in relation to Foreign Bank and Financial Accounts (FBAR) violations are within the scope of the program.

Amicus Curiae Briefs

Bittner v. United States (2022)
Kohn, Kohn & Colapinto, alongside other law firms and the National Whistleblower Center, filed an amicus brief arguing for a “per account” approach to sanctions by the IRS, a highly technical issue that has large implications for the IRS Whistleblower Program. “By ruling in favor of a ‘per-account’ enforcement regime, the Court will align the law with the Congressional intent to effectively track illegal tax activities with the support of whistleblower tips,” the brief states.

Lissack v. Commissioner (2022)
Kohn, Kohn & Colapinto an amicus brief in the United States Court of Appeals for the D.C. Circuit arguing for a de novo standard of review in tax whistleblower award claim appeals. “A review of the statute through its legislative history and relevant context leaves no doubt that the meaning of the words in the statute’s text when adopted by Congress meant to provide for de novo review for [whistleblower award] claims,” the brief states.

Insigna v. IRS (2012)
Kohn, Kohn & Colapinto filed an amicus curiae brief in a major Tax Court case concerning the Tax Court’s ability to weigh in on the IRS’s delay of payments of rewards to whistleblowers. “To allow the IRS to delay indefinitely a decision on a mandatory award to a whistleblower, and that failure to act not be subject to review by the Court, would fatally undermine the public interest, Congressional policy, and the law,” the brief states.

Legislation

The Taxpayer First Act: Attorneys at Kohn, Kohn & Colapinto worked pro bono to help draft the bipartisan Taxpayer First Act, which was signed into law on July 1, 2019. KKC attorneys were asked to provide comments and suggestions to Congress’ efforts to strengthen the IRS Whistleblower Program. The Act provides protection to tax whistleblowers against retaliation and improves communication with tax whistleblowers about the status of their submission.

The IRS Whistleblower Program Improvement Act of 2023: The bipartisan IRS Whistleblower Program Improvement Act of 2021 offers a number of common sense reforms to the IRS Whistleblower Program. Kohn, Kohn & Colapinto is working pro bono to help see that Congress passes this much-needed bill. In an article, KKC founding partner Stephen M. Kohn outlines the necessity of the bill.

Rules for Whistleblowers - 3 Ways to Order

New Release

Rules for Whistleblowers

The ultimate guide to blowing the whistle and getting rewarded for doing what’s right.