On Monday, the IRS released final regulations regarding disclosure of return information by the Treasury Department in connection with written contracts among the IRS, whistleblowers and, if applicable, their legal representatives (TD 9516).
The new IRS Whistleblower Office may determine during the course of an investigation that it needs the assistance of a whistleblower or the whistleblower’s legal representative and may determine that it has to disclose returns or return information in order for the whistleblower to be able to render assistance. Such disclosures are authorized for tax administration purposes by IRC § 6103(n).
The final regulations issued in TD 9516 describe the circumstances under which officers and employees of the Treasury Department may disclose return information to whistleblowers and, if applicable, their legal representatives, in connection with written contracts for services relating to the detection of violations of the internal revenue laws or related statutes.
The regulations specify that disclosures “shall be made only to the extent the IRS deems it necessary in connection with the reasonable or proper performance of the contract.” However, the regulations also say that “[d]isclosures may include, but are not limited to, disclosures to accomplish properly any purpose or activity of the nature described in section 6103(k)(6) and the regulations thereunder.” Section 6103(k)(6) authorizes disclosures for investigative purposes.
The regulations forbid the whistleblower from further disclosing or otherwise using the disclosed return information and subject them to civil and criminal penalties. The regulations also require whistleblowers to comply with any other safeguards the IRS may prescribe.
The final regulations are effective upon their publication in the Federal Register.
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