Whistleblowers continue to play a dominant role in exposing financial wrongdoings. The U.S. IRS Whistleblower Program witnessed remarkable developments in fiscal year (FY) 2023, marked by a substantial increase in the total dollar amount of awards paid to whistleblowers despite a slight decrease in the number of awards issued. The IRS points out the program’s effectiveness in leveraging whistleblower-provided information to enhance tax compliance and enforcement.
Award Payments and Proceeds Collected
In FY 2023, the IRS paid 121 awards totaling $88.8 million, a significant increase from the 132 awards totaling $37.8 million paid in FY 2022. This impressive growth in the total dollar amount of awards is attributable to proceeds collected amounting to $338 million from whistleblower tips. Comparatively, the previous year saw proceeds collected of $152.7 million.
Breakdown of Awards Under IRC Section 7623
- IRC Section 7623(b): In FY 2023, 21 awards totaling $86.6 million were paid under this section, which resulted in proceeds collected of $326.3 million. This is an increase from FY 2022, which saw 26 awards totaling $34.5 million and proceeds collected of $152.7 million.
- IRC Section 7623(a): The number of awards paid under this section decreased to 100 awards totaling $2.2 million in FY 2023, down from 106 awards totaling $3.3 million in FY 2022. The proceeds collected also saw a decrease, from $20.0 million in FY 2022 to $11.7 million in FY 2023.
Claims and Processing Times
The number of claims related to awards surged to 1,234 in FY 2023, up from 396 in FY 2022, marking the highest number since the program’s inception in 2007. Despite this increase, the average claim processing time for IRC Section 7623(b) awards rose by 0.4%, and for IRC Section 7623(a) awards by 5.9%.
Submissions and Disclosures
The IRS Whistleblower Office received 6,455 submissions and established 16,932 claim numbers in FY 2023, compared to 5,084 submissions and 12,597 claim numbers in FY 2022. Furthermore, the office made 5,876 authorized disclosures to whistleblowers as mandated by the Taxpayer First Act (TFA), an increase from 4,115 disclosures in the previous year. The TFA requires the IRS to inform whistleblowers about the status and stage of their claims, ensuring transparency and encouraging participation.
Conclusion
The IRS Whistleblower Program’s performance in FY 2023 underscores its critical role in enhancing tax compliance through substantial financial incentives for whistleblowers. The significant increase in the total dollar amount of awards paid and the surge in related claims reflects the program’s robust mechanisms for utilizing whistleblower information to collect taxes and enforce compliance. The dedication of the IRS Whistleblower Office and related units is commendable and pivotal to these achievements.
