President Obama's proposed budget for fiscal
2014 includes good news for whistleblowers: Under his plan, the law finally
would protect people who report tax cheats to the U.S. Internal Revenue Service
Although the IRS Whistleblower Program has existed since
2006 - encouraging and rewarding tax-fraud tipsters - it has never explicitly
shielded whistleblowers from retaliation.
By contrast, the federal False Claims Act (FCA), a
classic whistleblower statute, includes a strong anti-retaliation provision
that offers victims remedies such as back pay, reinstatement, and special
damages including attorneys' fees.
Mr. Obama's budget, submitted last week to Congress, may
never become law. Both the U.S. Senate and the House of Representatives already
have passed their own budgets, and all three plans are radically different.
But only the White House is looking to protect IRS
whistleblowers and grow revenue by targeting tax dodgers. The President's plan
would boost overall IRS enforcement spending by $360 million, to $5.7 billion
in fiscal 2014. The administration expects that
each extra dollar spent will bring in $4 in revenue.
to the U.S. Department of the Treasury, Mr. Obama's plan would add
FCA-style anti-retaliation measures to Section 7623 of the tax code, the IRS
whistleblower provision. New language would outlaw retaliation against "lawful
acts . . . in furtherance of [a whistleblower claim] or other efforts to stop 1
or more violations" of the code.
Because 7623 currently offers no such protection, it "may
discourage whistleblowers from filing claims with the IRS," the Treasury
Though welcome, Mr. Obama's proposal is long overdue: It
was suggested in 2009, and again in 2012, by his own Treasury Department's
Inspector General for Tax Administration. Still, the ball is now in the hands
of Congress, where legislators recently strengthened the FCA.
The revamped FCA is a good model with proven results:
Whistleblower claims under the FCA rose almost 70 percent in the past year,
while IRS claims have stagnated; the IRS has announced only one significant
award in the past year.
Mr. Obama's budget also proposes tighter protections for
taxpayer information that is shared with whistleblowers during an IRS
the U.S. Department of Labor, meanwhile, the President proposes giving the
Occupational Safety and Health Administration - which enforces many
whistleblower laws - an extra $5.9 million to investigate whistleblower
And the Labor Department's Wage and Hour Division would
get $3.4 million to boost enforcement of the Fair Labor Standards Act and the
Family and Medical Leave Act.
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