The IRS Whistleblower Program v. SEC Whistleblower Program
/There are a number of whistleblower award programs in which an individual may be compensated for assisting the government in collecting taxes, penalties and/or compensation for fraud committed by individuals and businesses (i.e., IRS, SEC, CFTC, False Claims, etc.). Many question the differences in two of the newer programs, of IRS Whistleblower Program and the SEC Whistleblower Program which this blog will try to identify the fundamental differences between the IRS and SEC whistleblower programs.
It should be noted that any statistics below were obtained from the latest annual reports sent to Congress. The SEC Annual report for the fiscal year 2018 (Fiscal year ended September 30, 2018) is dated November 15, 2018. The IRS Annual Report for 2018 (Fiscal year ended September 30, 2018) is not yet completed, and therefore statistics from the IRS Annual Report for 2017 (Fiscal year ended September 30, 2017) issued in January 2018, are used.
| Internal Revenue Service (IRS) | Securities Exchange Commission (SEC) | |
|---|---|---|
| When did WB program begin? | 2006 - Tax Relief and Health Care Act Of 2006 (major revision to the law) | 2010 – Dodd Frank Bill |
| Anonymity | Claim must identify the individual WB (no anonymity to the WB) to IRS. | Claim may be submitted by the attorney on behalf of the WB (WB may remain anonymous) to SEC. |
| Sequestration | Reduces awards for “sequestration” (In 2011, sequestration was used in the Budget Control Act of 2011 as a tool in federal budget control….it appears that only IRS WB awards are still reduced for “sequestration” (i.e. 6.2% in 2019). Note: IRS employees have not been furloughed in years due to sequestration) | No reduction of SEC awards for sequestration. Note, no other governmental (i.e. FCA (False Claims Act), SEC, CFTC, states (NY), etc.) whistleblower program reduces the payment of awards for sequestration other than IRS. |
| Claim filing | Must be submitted in paper format and mailed. | May be submitted in paper format or in an electronic format. |
| Protection to the WB | None | Yes, WB is protected from retribution. |
| Assignment of Claim | Claim # may be assigned by agency in matter of weeks/months. | Claim # will be assigned instantaneously. |
| Public’s perception | Thought by practitioners and public that the IRS is not behind the program and IRS Executives (including the IRS Chief Counsel Office) strive to minimizes awards | Thought by public and practitioners that the SEC fully supports the program. Encourages WB to come forward with inside information |
| Average # of years from claim filing to Award Pmt. | 6-8 years | 2-5 years |
| Number of claims filed | Total Claims filed 4,428 (FY 2017) Total Claim numbers Assigned 11,946 (FY 2017) | Total Claims filed 5,282 (FY 2018) |
| Number of Claims Paid | 242 (FY 2017) | 13 (FY 2018) |
| Amount of Award paid | $34 million (FY 2017) | $168 million (FY 2018) |
| Amount Collected | $191 million (FY 2017) | Unknown |
| Number of Employees | 76,832 | 4,600 |
| Waiting period | IRS waits a minimum of two years after collecting the tax before paying award. | SEC does not have a waiting period after collection of penalty. |
| Disclosure of Information | IRS, despite a change in the regulations to allow communications to the whistleblower as to the status of the whistleblower claim, does not disclose the status of the claim, other than informing the WB that the Claim “remains open”. | The SEC will update the whistleblower as to the status of the claim |
| Priority of WB Claims | The IRS does not prioritize WB claims often letting the three year statute of limitations expire. WB Claim issues that are to be audited are put in the queue with other cases to be audited. | SEC prioritize the WB claims so that the claim can be immediately investigated. |
| Interest on the award | None. The IRS does not pay interest on the award despite that there is a debtor creditor relationship and the IRS delays payment of an award for years. | None. |