In February, the IRS released its annual “IRS Whistleblower Program” report for 2015 and proposed that Congress put better whistleblowers protection laws in place. How are whistleblowers currently protected, and what’s missing from the government’s current efforts to protect whistleblowers? Here’s what you need to know.
What’s a Whistleblower?
An employee who discloses or tries to stop an illegal or questionable practice at his workplace is called a whistleblower. A good example of a whistleblower is the Watergate source who called himself “Deep Throat” (W. Mark Felt). The recent IRS report refers to a specific type of whistleblower – one who reports tax evasion or fraudulent returns.
The IRS report urged Congress to adopt two pending legislative proposals which would expand protection for tax whistleblowers.
- Protection from retaliation: A tax whistleblower can be putting his career at risk from a vindictive employer. A whistleblower may face retaliation by way of job obstruction or termination, financial impacts, or even in the form of physical harm.
- Sanctions on inappropriate disclosures: Sometimes whistleblowers go to the press before reporting tax fraud through proper channels. This behavior can result in improper exposure of taxpayer information.
Protecting tax whistleblowers protects all taxpayers by ensuring that everyone pays their share and that those who owe tax don’t defraud the government. It also encourages people to report fraud when they see it if they know they can’t be retaliated against, resulting in better tax collection.
Success of the IRS Whistleblower Program
The IRS report states that 99 awards were made to whistleblowers in 2015, totalling more than $103 million. A quote from the report about the program’s success:
“Since 2007, information received from whistleblowers has assisted the IRS in collecting over $3 billion dollars in tax revenue, and the IRS has awarded more than $403 million to whistleblowers.”
Current Federal Whistleblower Protection Acts
Although the IRS called for expanded protections, whistleblowers can already take advantage of current laws working in their favor. These include:
- The Sarbanes-Oxley Act (also called SOX), which ensures protection of whistleblowers who shed light on improper tax deductions from personal, non-business cash advances and purchases.
- The Dodd-Frank Act, which protects those who disclose tax fraud from retaliation if their employer has committed a federal offense.
Whistleblower Protection Efforts at the State Level
Many states also have laws protecting whistleblowers, either on the books or forthcoming in their legislatures. For example, the Oregon state legislature will soon consider House Bill 4067, which would protect whistleblowers who refuse to participate in illicit behaviors, including employees of nonprofits. It would also extend protections to board members.
In states like Alaska and Louisiana, employers who retaliate against whistleblowers can be charged fines up to $10,000 or even face imprisonment.
Limitations of Whistleblower Protection Laws
- Members of the United States Armed Forces are subject to the Military Whistleblower Protection Act of 1988 which is a separate set of laws than those affecting civilians. For example, oral disclosures are not protected and different rules apply if the person was on duty at the time.
- Employees who are employed by labor union may not be protected by some whistleblowing laws due to a 1982 Supreme Court ruling. If a person who works for a union uncovers corruption in its leaders, there is no law shielding them from retaliation by the union.
What Should You Do?
If you believe that you’ve been retaliated against by your employer for whistleblowing, the US Occupational Safety and Health Administration (OSHA) suggests you report it as quickly as possible and follow their guidelines, since there may be statutes of limitations to the laws that protect you.