Major Breakthrough in Tax Fraud Whistleblower Protections
President Trump signs Taxpayer First Act, including major IRS whistleblower reforms.
Washington, D.C. July 1, 2019 – Today, President Trump signed the Taxpayer First Act into law. This new bipartisan IRS reform creates for the first time anti-retaliation protections for tax fraud whistleblowers who file claims under the IRS whistleblower program. The Act closes a devastating loophole in corporate whistleblower protections. It also includes significant reforms to the IRS whistleblower reward law.
“The Taxpayer First Act closes the largest loophole in corporate 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. Whistleblowers have uncovered tens of billions of dollars in tax frauds yet lacked minimum job protections,” said leading tax fraud whistleblower attorney Stephen M. Kohn, partner at Kohn, Kohn & Colapinto.
The new anti-retaliation law contains vital protections, including:
- 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 partner at Zerbe, Miller, Fingeret, Frank & Jadav, and the National Whistleblower Center for several years promoting these reforms.
“Today’s IRS reform bill includes much-needed reform in the tax whistleblower program to allow improved and greater communication with tax whistleblowers. Currently, it can be frustrating for the whistleblower—who commonly gets little to no information about the status of her submission to the IRS. Today, Congress directs the IRS to open the kimono a little bit so that whistleblowers can know the key facts about their submission – such as whether the IRS has referred the matter for exam and whether the taxpayer has made a tax payment. The improved communication with the whistleblower will be a big help to the IRS whistleblower program — providing comfort to whistleblowers and encouraging new whistleblowers to come forward,” Zerbe said.
Mr. Kohn is available for interviews.