President Donald Trump’s recent nomination of Donald Korb to the position of IRS chief counsel could send waves through the whistleblower community due to Korb’s historical stance on whistleblower activity. Korb, a seasoned legal veteran associated with the IRS since early in his career, held the office of IRS chief counsel from 2004 to 2008. Yet, his relationship with the IRS’s whistleblower program has been one of criticism and constraint.
In 2006, after the IRS whistleblower reward law was enacted, Korb established what became known as the “one-bite” rule. According to this rule, once the IRS met with a whistleblower, there would be no further meetings or contact. Korb justified the rule by suggesting multiple interviews could result in whistleblowers being perceived as government agents, a precaution that appeared unfounded as other agencies manage multiple whistleblower interactions without such repercussions. The rule was discontinued in 2009, shortly after Korb’s tenure ended, by his successor who sought to foster a more cooperative environment for whistleblower contributions.
The IRS’s whistleblower program, which incentivizes informants with 15% to 30% of the tax recoveries stemming from their information, has been notably successful, bringing in over $7 billion to date. But some fear that Korb’s return might usher in renewed administrative hurdles that could stifle this success. The IRS faces other pressing challenges, as well, such as the documented manpower shortage that might impact its ability to reduce the tax gap, estimated at $688 billion in unpaid taxes for fiscal year 2021 alone.
Nonetheless, efforts to revitalize the whistleblower program have shown promise. Under John Hinman, who became director of the Whistleblower Office in May 2022, reforms were enacted to expedite processing and improve outcomes. One standout case saw an insider’s tip leading to a $263 million tax recovery, with the whistleblower awarded a significant reward that exceeded the cumulative awards of prior years.
Senator Chuck Grassley (R-Iowa), a longstanding advocate for whistleblower protections, has raised concerns about the potential impact of a chief counsel hostile to such initiatives. During a recent Senate hearing, Grassley pressed the nominee Marjorie Rollinson to affirm her commitment to avoiding additional bureaucratic hurdles for whistleblowers. Many anticipate that if Korb’s nomination proceeds, similar assurances will be sought to safeguard the efficacy and integrity of whistleblower contributions to IRS operations, ensuring they remain a vital tool in closing the nation’s tax gap.