Sunday Read: Bittner v. United States

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Supreme Court (“SCOTUS”) decisions have long impacted whistleblower laws. From determining whether blowing the whistle is a First Amendment Right (yes, it is) to whether employees who report internally are recognized by the Securities and Exchange Commission (no, they are not), SCOTUS decisions have shaped whistleblower law. The decisions of the Court determine can help more whistleblowers come forward and bring strong whistleblower protections into being. They can also discourage whistleblowers, and lead to disaster.

This week, we discuss a Supreme Court case which has the power to determine the success of the Internal Revenue Service Whistleblower Program. Bittner v. United States, is currently before the Court and National Whistleblower Center (“NWC”) filed an amicus brief supporting the United States and effective whistleblower programs.

Existing IRS Rules Impact U.S. Economic and National Security

The Bank Secrecy Act (“BSA”) is a crucial tool available to the U.S. government in its effort to combat and prosecute tax and regulatory fraud. These frauds deprive the U.S. government of tax dollars, which hurts taxpayers who are honest. The harms also relate to the law enforcement, and the government’s ability to hold violators accountable. The BSA, among other things, mandates the filing of a Report of Foreign Bank and Financial Accounts (“FBAR”) by certain U.S. persons. The FBAR is intended to provide the U.S. government with a readily available and transparent snapshot of a U.S. taxpayer’s foreign bank accounts on an annual basis. This information can be used to assist the U.S. government in identifying or tracing funds that are used for illicit purposes or in identifying unreported income held abroad.

Global tax enforcement efforts have been leveraged to address the establishment of sophisticated offshore structures (i.e., shell, shelf, and trust companies) a pivotal component of which are the establishment of offshore or foreign bank accounts. International bodies such as the Financial Action Task Force (“FATF”). With the passage of the PATRIOT Act, Congress commissioned several studies on the filing of FBARs by U.S. taxpayers. The reports required by the PATRIOT Act discovered considerable non-compliance for FBAR filings and recognized that a significant number of taxpayers were intentionally failing to file FBARs in order to conceal income. The PATRIOT Act indicated that FBARs could be an additional “national security arsenal” and useful in conducting activities to protect against international terrorism.

Whistleblowers are the Key to Effective Enforcement

Whistleblowers provide valuable information to the IRS, including reports of FBAR violations. The IRS Whistleblower Office pays awards to whistleblowers in cases where original information leads to “detecting underpayments of tax or detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving the same.” Reforms to the IRS whistleblower program requiring mandatory awards for claims meeting certain monetary thresholds “almost immediately” increased the number of whistleblower submissions.

Whistleblowers have proven to be a crucial and efficient piece of the enforcement framework at the IRS. John Hunman, Director of the IRS Whistleblower Office, explained in 2022 that: “Since the establishment of the Whistleblower Office, information from whistleblowers has resulted in over 900 criminal tax cases ranging from a licensed medical physician who underreported income to a large multi-national financial institution and its U.S. taxpayer clients who hid assets overseas.”

From 2007 to 2020, the IRS Whistleblower Office collected more than $5.9 billion in sanctions and made awards in the amount of more than $1 billion.

Per-account vs. Per-form?

Whistleblower awards are often restricted to tips where the penalty crosses a certain dollar amount. That means that in order to be eligible for an award, the amount of money they government recovers has to be large. At the heart of the Bittner case is a question about whether the IRS was correct to use the successful strategy of considering violations on a “per-account” violation. This question is highly technical and will have a major impact on whistleblowers. It will undermine the IRS program if the Court rules that the IRS can only pursue violations of a “per-form” violation. “per-form” violations will only allow the IRS to penalize wrong doers for each violation independently — resulting in much smaller fines. However, a “per-account” method has allowed the IRS to address major frauds and issue large penalties which result in whistleblower rewards. Rewards motivate more whistleblowers to come forward and deter crime. This is why NWC submitted an amicus in support of the “per-account” approach.

Join the movement, support NWC:

NWC has a long legacy of submitting amicus briefs when whistleblower issues are a factor in Supreme Court cases. This advocacy is critical to stopping disastrous decisions. Donor support makes this important work possible, thank you!

There are no Supreme Court Justices with a background in whistleblower protection, and that is where NWC steps in. Please consider donating today because your support is essential to NWC’s continued fight for whistleblowers.



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National Whistleblower Center is the leading nonprofit working with whistleblowers around the world to fight corruption and protect people and the environment.