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IRS Whistleblower Program: Billions Collected, but Timeliness and Communication Concerns May Discourage Whistleblowers

GAO-16-20 Published: Oct 29, 2015. Publicly Released: Nov 30, 2015.
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What GAO Found

The Internal Revenue Service (IRS) Whistleblower Office (WO) is responsible for processing thousands of tax whistleblower claims annually for two related whistleblower programs: for claims of $2 million or less, the 7623(a) program, and for claims over $2 million, the 7623(b) program. The whistleblower claim review process takes several years to complete, and GAO found that the WO is not using available capabilities to track and monitor key dates in its claim management system. Without available information on key dates related to award review and payments, the WO is unable to assess its performance against timeliness targets and risks unnecessarily delaying award payments.

Between fiscal year 2011 and June 30, 2015, the WO awarded over $315 million to whistleblowers—the bulk of which was for the 7623(b) claims, which were first paid in fiscal year 2011, 4 years after the program started. In a review of the 17 paid 7623(b) award claim files, GAO found that the WO made errors in determining some awards, resulting in over- and underpayments totaling approximately $100,000. In response to errors, IRS began corrective actions, including ensuring total collected proceeds are verified before making award payments. However, the WO has not documented this new procedure, putting it at risk of making additional errors in award payments.

Number of Whistleblower Awards, Proceeds Collected, and Award Amounts Fiscal Year 2011 to June 30, 2015


7623(a) claims

7623(b) claims


Total Awards




Total Collected Proceeds

$843 million

$1,039 million

$1,882 million

Total Award Amount

$54 million

$261 million

$315 million

Source: GAO analysis of IRS data. | GAO-16-20

The WO's communication with stakeholders, including whistleblowers, is limited due to delayed annual reports to Congress, incomplete data, and limited program information for whistleblowers. Delays in issuing the annual reports have resulted in last minute revisions that introduced discrepancies and inconsistent reporting periods that preclude year-over-year comparisons. The WO is addressing some data gaps and has published two fact sheets to provide more information to the whistleblower community; however, the fact sheets do not include information on key aspects of the program, such as time ranges for steps in the review process. Until changes are made to the annual report and fact sheets, the utility of these publications is limited.

IRS and the WO take steps to protect whistleblowers and the information they submit, but GAO found gaps in IRS and WO procedures. For example, the WO did not have documented controls in place for sending mail, and at least once sent sensitive mail to an incorrect address that also had a return address indicating the letter was from the WO. This potentially compromised the identities of whistleblowers. The WO has said it has since changed how they label return addresses, but has not documented this policy. Further, tax whistleblowers do not have statutory protections against retaliation from employers. IRS and the whistleblower community support such protections, noting that inadequate protections may discourage whistleblowers from coming forward.

Why GAO Did This Study

Tax whistleblowers who report on the underpayment of taxes by others have helped IRS collect almost $2 billion in additional revenue since 2011, when the first high-dollar claim was paid under the expanded program that pays qualifying whistleblowers a minimum of 15 percent of the collected proceeds. These revenues help reduce the estimated $450 billion tax gap—the difference between taxes owed and those paid on time.

GAO was asked to review several aspects of the whistleblower program. Among other things, this report (1) assesses the WO claim review process, (2) assesses how the WO determines awards, (3) evaluates how the WO communicates with external stakeholders, and (4) evaluates IRS's policies and procedures for protecting whistleblowers. GAO reviewed the files of all 17 awards paid under 26 U.S.C. § 7623(b) through June 30, 2015; reviewed IRS data; reviewed relevant laws and regulations, and the WO's policies, procedures and publications; and interviewed IRS officials, five whistleblowers that independently approached GAO, and nine whistleblower attorneys who were recommended by IRS or other attorneys.


Congress should consider providing whistleblowers with legal protections against retaliation from employers. GAO makes ten recommendations to IRS including, tracking dates, strengthening and documenting procedures for award payments and whistleblower protections, and improving external communications. IRS agreed with our recommendations.

Matter for Congressional Consideration

Matter Status Comments
To further encourage whistleblowers to provide information to IRS about serious tax noncompliance and to protect whistleblowers, Congress should consider legislation that would provide protections for tax whistleblowers against retaliation from their employers.
Closed – Implemented
On July 1st, 2019 the president signed the Taxpayer First Act into law. This law adds civil protections for whistleblowers who report suspected violations of tax laws or assist the IRS in actions related to underpayment of tax or violation of tax laws against retaliation from their employers. These legal protections give whistleblowers a right to file a claim in U.S. district court for relief from retaliatory actions, including reinstatement of their job, back pay, and other damages. These protections against retaliation from employers could further boost whistleblowers' confidence in the program and encourage more insiders with significant information on tax underpayment to come forward.

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to strengthen the procedures for calculating award amounts and for the issuance of the preliminary award recommendations and award letters to whistleblowers. Such procedures should include, at minimum, a documented process for: (1) supervisory review prior to the director's concurrence, (2) verifying collected proceeds prior to an award payment for both the 7623(a) and 7623(b) programs, and (3) reviewing preliminary award recommendation and award letters to the whistleblower prior to their issuance.
Closed – Implemented
On October 6, 2016, IRS issued a procedural alert entitled "Approving Official's Responsibilities for Award Review." In this updated procedure, the award determinations and the preliminary award determination letters must be reviewed by a direct supervisor. These reviews are to ensure that the award has been calculated correctly and that the preliminary award recommendation letters to whistleblowers are accurate. In approving the awards and preliminary award recommendation letters, supervisors certify that they validated the amounts of the award recommendation and concur with the recommendation. These procedures are to ensure that all claims have at least two reviews prior to payment. Whistleblowers need to have confidence that their award letters and payments are accurate and fair. Having this updated procedure to require and improve upon supervisory review of these letters and awards will help prevent errors and strengthen the program.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to provide additional information in the annual report to Congress to better explain the statistics provided and the categories of claim review steps reported. Specifically, the report should (1) include correct, reliable data that reflect only the activities of the fiscal year of the report; (2) describe all status categories and clearly identify claim type in the tables; and (3) include an overall timeliness measure (by providing an average and range) to show how long claims take to go from submission of Form 211 to closure decision.
Closed – Implemented
The IRS Whistleblower Program Fiscal Year 2015 Annual Report to Congress, issued February 10, 2016, presented data that reflected the activities of the program by fiscal year, with yearly data covering full fiscal years. The report also included a glossary of terms to define the status categories used in the report. Further, the tables and charts included in the report were labeled by the claim type of the data presented. The report also provided overall timeliness information by including the average time from submission to award payment for some paid claims. The report does not include a range for the timeliness of these claims. IRS officials stated that including ranges for timeliness would be skewed by outliers, create confusion, and not provide valuable information.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to develop an additional or revised fact sheet about the whistleblower claim process and/or publish additional information on the IRS website. Such information should include (1) an outline of the entire claim review process, with an average time or time range for the various review steps; (2) a description of the key taxpayer rights that a taxpayer may exercise and how much time this may add to a claim's review; (3) examples to illustrate common circumstances that result in denials; and (4) items to include in a Form 211 submission, and suggestions for the types of documentation that are particularly helpful to the WO.
Closed – Implemented
In August 2016, IRS published a new fact sheet that outlines the whistleblower claim review process. IRS published a new fact sheet that includes key pieces of information including a flowchart of the entire claim review process, time ranges for each step in the process, key taxpayer rights that a taxpayer may exercise during the process, examples of why claims may be denied, and information on what to include when submitting a claim. IRS published the fact sheet to and included reference to it in three of the Whistleblower Office
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to develop a comprehensive plan for evaluating the costs and benefits of the pilot annual status letter program, including obtaining feedback from whistleblowers in the pilot regarding the usefulness of the letter.
Closed – Implemented
Whistleblower Office officials analyzed cost and benefit information on the pilot annual status letter program. They determined that the program should not be fully implemented because the costs and risks of the program outweighed any potential benefit. More than 29 percent of the letters sent in the pilot program sample were returned as undeliverable, increasing the risk of exposing the identity of a whistleblower. Whistleblower Office officials determined this was an unacceptable level of risk. Whistleblower Office officials also determined that the letters did not provide any information to whistleblowers that they did not already have. Further, they determined that fully implementing the annual status letter program would require 2.67 full-time equivalents, which can now be allocated to other responsibilities within the Whistleblower Office. As a result of this cost-benefit analysis and resulting termination of the pilot program, Whistleblower Office officials made other changes to procedures to allow for communication with whistleblowers during the award determination process to start up to 2 years earlier than previously allowed, effective August 1, 2016. Communicating relevant information earlier to whistleblowers will help address a common complaint by the whistleblower community about the lack of timely communication from the Whistleblower Office and could encourage more whistleblowers to come forward with information.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to establish a process to ensure whistleblower addresses are being properly updated in E-TRAK to ensure the WO does not send whistleblower mail to outdated or incorrect addresses. This process could include developing a change of address form specific to whistleblowers and including a blank copy of it in every correspondence with whistleblowers or referencing the importance of updating the WO with any address change in every correspondence with whistleblowers.
Closed – Implemented
In a January 29, 2016 letter, the IRS Deputy Commissioner for Services and Enforcement said that the Whistleblower Office will emphasize in education materials, fact sheets, and other communications with whistleblowers the importance of whistleblowers providing updates to the IRS of any address changes, along with reminders of how to submit address changes to the Whistleblower Office. In August and September of 2016, IRS revised templates for standard letters sent to whistleblowers reminding them of the importance of updating their addresses with the Whistleblower Office and providing direction for how to do so. IRS also published a fact sheet for whistleblowers, which is available on, that provides information on how whistleblowers should notify the Whistleblower Office of any address change. In October 2017, the Whistleblower Office provided an updated procedural guide for Whistleblower Office staff which includes instructions for updating whistleblower addresses in E-TRAK at various points in the whistleblower claim review process. For example, Whistleblower Office staff are directed to verify address information with whistleblowers during any phone conversations. Further, address verification and update steps our outlined for other steps in the claim review process.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to formally document a procedure for return address labels for mail originating from the WO that states that external envelopes should not identify the WO as the sender of the correspondence.
Closed – Implemented
On March 4, 2016, the Director of the Whistleblower Office issued a memo to all whistleblower staff directing them to not identify or reference the Whistleblower Office in any way on the return address of envelopes when corresponding with whistleblowers or their representatives.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to record refund statute expiration dates in E-TRAK and monitor expiration dates routinely so that the award payment process can start as soon as the claims are eligible for payment.
Closed – Implemented
On April 18, 2016, the Whistleblower Office revised procedural guidance to require Whistleblower Office analysts to track the refund statute expiration date of whistleblower claims in E-TRAK.
Department of the Treasury To ensure timely and consistent information to Congress and the public, the Secretary of the Treasury should issue its Whistleblower Office annual report to Congress no later than January 31st each year covering the prior fiscal year.
Closed – Implemented
On February 10, 2016, the Secretary of the Treasury issued the IRS Whistleblower Program Fiscal Year 2015 Annual Report to the Congress. The report adopted a new reporting approach and presented data on the operations of the IRS Whistleblower Office and whistleblower program for each of the preceding three fiscal years, from October 1 through September 30. Presenting the data in this consistent format will allow for more consistent comparisons across years. The Secretary of the Treasury issued the Fiscal Year 2016 report on January 11, 2017 using the same revised format.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Whistleblower Office Director to implement a staffing plan for streamlining the intake and initial review process to make more efficient use of staff resources.
Closed – Implemented
On July 10, 2016, the IRS Whistleblower Office and the Small Business/Self Employed (SB/SE) operating division entered into an agreement to transfer a number of whistleblower claims process functions from the Whistleblower Office to SB/SE to streamline the intake and initial review process. This realignment gives SB/SE operational responsibility for the Initial Claim Evaluation unit, which performs the intake and initial review functions among other responsibilities, and will allow SB/SE to help ensure the resources of this unit are used efficiently and effectively. The agreement also includes expected time frames for a number of intermediate steps in the whistleblower claims review process. Whistleblower Office and SB/SE officials will meet at least quarterly, share operational data weekly, and within 6 months will evaluate the realignment and corresponding resource needs. Having a more streamlined staffing strategy will allow the Whistleblower Office to review more claims in a timely manner and get information to examiners more quickly to help IRS collect additional revenue.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Deputy Commissioner for Services and Enforcement to develop guidance for examiners in operating divisions to use in determining whether an Internal Revenue Code section 6103(n) contract with a whistleblower would be beneficial and outline the steps for requesting such a contract.
Closed – Implemented
On April 12, 2017, the Director of the Whistleblower Office provided guidance to the operating divisions that handle whistleblower claims on the availability and applicability of 6103(n) contracts. Specifically, the guidance outlines the principles and steps examiners and subject matter experts should use for considering, requesting, and entering into a section 6103(n) contract. The guidance also includes a sample 6103(n) contact. Such contracts with whistleblowers have the potential to allow whistleblowers to assist IRS in the timely and correct resolution of an issue. Providing such guidance to the operating divisions, along with a reminder of the importance of debriefing whistleblowers, will remind examiners of the tools available to them to maximize the usefulness of whistleblower information.
Internal Revenue Service The Commissioner of Internal Revenue should direct the Deputy Commissioner for Services and Enforcement to strengthen guidance and procedures to ensure whistleblower information is retained only in the proper file locations. Such procedures could include requiring management sign off of taxpayer file reviews to ensure all whistleblower information has been appropriately segregated and sent back to the WO.
Closed – Implemented
On October 3, 2016, the Director of the Whistleblower Office issued a memorandum to the commissioners of the IRS operating divisions that work on whistleblower claims outlining guidance on steps examiners must take to ensure whistleblower information is not retained in taxpayer files. The guidance expressly states that the examination activity file, workpapers, and standard case file should contain no information that would indicate the presence of a whistleblower or any information provided by a whistleblower. It also prohibits any use of shorthand reference to forms used by whistleblowers. The memo also outlines procedures whereby examiners and their supervisors are responsible for certifying that no whistleblower information is in the exam files when signing Forms 11369 when closing whistleblower claims.

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