Final Regs. Issued on Disclosing Return Information to Whistleblowers

Regulations

The IRS released final regulations regarding the disclosure of return information by the Treasury Department in connection with written contracts among the IRS, whistleblowers, and, if applicable, their legal representatives (T.D. 9516).

The new IRS Whistleblower Office may determine during the course of an investigation that it needs the assistance of the whistleblower or the whistleblower’s legal representative and that it has to disclose returns or return information in order for the whistleblower to be able to render assistance. Such disclosures are authorized by Sec. 6103(n).

The final regulations issued in T.D. 9516 describe the circumstances under which Treasury officers and employees 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.”

The regulations forbid whistleblowers from further disclosing or otherwise using the disclosed return information and subjects them to civil and criminal penalties if they do so. The regulations also require whistleblowers to comply with any other safeguards the IRS may prescribe.

The final regulations were effective March 15, 2011.