Periodically, perhaps frequently, I rant about the IRS whistleblower program. Why does the IRS think it can operate as a “black box?” Why the over-application of rules against communicating with whistleblowers and under-application of rules that allow communication with whistleblowers? I believe the problem is embedded within the IRS culture. There’s an opportunity for the new IRS Commissioner, whoever that may be, to change the WO’s black box nature.
Recently, Taxpayers Against Fraud (TAF) posted a provocative message on its listserv. “If you were going to have coffee with this nameless, faceless future IRS Commissioner, what steps would you suggest that he or she take to change the culture at the IRS for the benefit of the IRS whistleblower program?
When I think about one change that a Commissioner could make to improve the culture of the IRS for whistleblowers, I think of proper application of 6103.
6103 is the rule that IRS folks cite when they don’t want to talk to a whistleblower reward claimant about the actions the IRS has taken in response to a whistleblower claim. 6103 prohibits improper communication but has about twenty exceptions, including at least three that would cover whistleblower communications. When I hear someone at the IRS say they cannot talk about a claim because of 6103, I complain about the overly broad application of the rule and the unnecessarily limited interpretations of the exceptions. I point out that whistleblower communications qualify as exceptions to 6103. Eventually, the IRS person and I acknowledge that the IRS person, for whatever reason, just doesn’t feel comfortable about communicating because of 6103, and we move on.
The situation has always bothered me, and I have it in the back of my mind whenever I am dealing with the Service. I’ve been to some events with IRS WO staff. I enjoy their company and like to hear their perspectives on the whistleblower program. Over lunch one time, an IRS employee explained that IRS employees are disciplined severely for violations of 6103. Even a whiff of a 6103 violation will make an employee’s life hell. The reaction of most anyone is to avoid anything that looks like a breach of 6103. The reaction is to overreact. Don’t tell anyone anything about anyone else’s tax file. Ever. No matter what.
This closed mouth strategy extends to whistleblowers who want information about the status of their claim. Because of 6103 and the history of severe discipline surrounding 6103 violations, people who work in the WO are often highly resistant to sharing information with whistleblowers. When I point out the exceptions to 6103, they see that I am correct, but there is no incentive for WO staff to risk running afoul of 6103. They won’t get any recognition for informing a whistleblower about a case; their communications may become part of a court case; and they might be investigated for a 6103 violation. The risk of keeping a whistleblower informed just isn’t worth it. It’s easier and safer for WO staff to keep quiet.
My suggestions to the new IRS Commissioner are to do some special trainings for WO staff on the exceptions to 6103, to exempt WO staff from disciplinary violations that could arise through communications with whistleblower claimants, and to incentivize IRS employees that work to take advantage of whistleblower information. The training, if conducted properly, could help WO analysts to evolve their understanding of 6103 exceptions and how they apply to whistleblower claimants. The exemption from disciplinary actions would help to lessen generalized fear associated with talking to whistleblowers about another file. The incentives are needed because there are many disincentives to IRS employees who want to make use of whistleblower information. Something needs to be in place that informs IRS employees that they will be rewarded for acting on whistleblower information, and these incentives need to extend beyond the staff of the WO.
A new IRS Commissioner could be important in changing the Service’s attitude toward whistleblower awards. The changes I suggest would be relatively easy and are fully within the power of the Commissioner. Too often, whistleblower advocates run to Congress and want more laws put in place because they believe new laws are the answer to the problems. The major problem I see with the IRS is not a dearth of rules but negative attitudes and a closed mouth culture. Good leadership is the way to change both.