H.R. 7959 — IRS Whistleblower Program Improvement Act

This section cites the Act as the “IRS Whistleblower Program Improvement Act” and includes standard provisions referencing amendments to the Internal Revenue Code of 1986, defining the Secretary as the Secretary of the Treasury or the Secretary's delegate, and providing a table of contents.

This section revises the Tax Court review process for IRS whistleblower award determinations under IRC §7623(b)(4)—which provides for awards of 10%-30% of collected proceeds exceeding $2 million—by (1) replacing "appealed to" with "reviewed by" and adding a de novo standard based on the administrative record at the time of the original determination plus any newly discovered or previously unavailable evidence, and (2) changing the paragraph heading from "Appeal" to "Review." The amendments apply to petitions pending on or filed on or after the date of enactment.

This section authorizes a whistleblower to elect anonymity before the Tax Court in proceedings under the IRS whistleblower award program (i.e., IRC §7623(b)), notwithstanding general disclosure requirements, unless the court finds that a societal interest in disclosure outweighs potential harm to the whistleblower. The provision applies to petitions pending or filed on or after enactment.

This section modifies the annual IRS whistleblower report to require inclusion of a list and descriptions of the top tax avoidance schemes, not to exceed 10, disclosed by whistleblowers during the fiscal year. The requirement applies to reports for fiscal years ending after enactment of this Act.

This section establishes interest on whistleblower awards under IRC §7623(b) (i.e., awards of at least 15%—and up to 30%—of collected proceeds exceeding $2 million from information on substantial tax violations) if the IRS Secretary does not provide notice of a preliminary award recommendation before the applicable date. Interest accrues from that date at the overpayment rate under §6621(a) until notice is provided; the applicable date is 12 months after all proceeds are collected and either the refund claim period expires or taxpayers and the Secretary finalize liabilities (with waiver or resolution of refund claims). The provision takes effect 180 days after enactment, with a special rule deeming the applicable date as 12 months after that date for pending cases where it has already passed and no notice has been given.

This section expands the above-the-line deduction for attorney's fees and court costs related to whistleblower awards (i.e., under IRC §7623, which incentivizes reporting of tax underpayments) to all such awards under §7623 (from only §7623(b), which covers larger awards of 15%-30% of collected proceeds). The change applies to taxable years ending after enactment.