Trump’s IRS Chief Counsel Choice Not a Friend to Whistleblowers

President Donald Trump’s nomination of Donald Korb to return as IRS chief counsel would place a long-time critic of whistleblowers once again as the senior legal officer supervising approximately 1,700 IRS attorneys.

On the surface, Korb seems a strong choice to lead the IRS legal team. He worked for the agency early in his career, then later was the assistant to the IRS commissioner in the 1980s and served as IRS chief counsel from 2004 to 2008.

Korb was never a fan of whistleblowers. After the IRS whistleblower reward law was passed in 2006, Korb, as chief counsel, announced the “one-bite” rule: Once the IRS met with a whistleblower, “there will be no subsequent meetings or contacts with that person.”

Korb reasoned that multiple whistleblower interviews could expose the IRS to a claim that it was deputizing them, making them government agents. It appeared not to trouble Korb that other law enforcement agencies routinely interview whistleblowers multiple times, invariably without adverse consequences.

In 2009, the year after Korb left his position as chief counsel, his successor effectively repealed the rule.

The Chief Counsel’s Office announced a number of other rules in the wake of Korb’s departure that sharply restricted potential whistleblower rewards. These included a rule denying whistleblowers a share of refunds that their information successfully blocked, and a rule that precluded whistleblowers from receiving a share of any criminal fines. Both rules have since been abandoned, one quickly and the other after the courts and Congress weighed in.

In 2010, Korb unloaded on the very program he had previously overseen, describing the IRS whistleblower program as a “ticking time bomb” that had “the potential to be a real disaster for the tax system.” He said that “the IRS didn’t ask for these rules; they were forced on it by Congress,” adding “it is unseemly in this country to encourage people to turn in their neighbors and employers to the IRS.”

The reward law, which pays 15% to 30% of the recovery to anyone whose information leads to the collection of taxes and penalties, has returned more than $7 billion to the Treasury to date.

Korb would be returning to the IRS at a time when the tax gap is greater than ever. The IRS’s latest estimate is that there was about $688 billion in unpaid taxes in fiscal year 2021 alone. The government anticipates collecting only about $63 billion of that sum.

The tax gap also could be aggravated by a manpower gap. The IRS has lost 31% of its tax auditors and 20% of its total workforce.

The best way to avoid a tax revenue cliff is to supplement the IRS’s dwindling resources by deputizing whistleblowers, insiders who are willing to expose what goes on behind closed doors. That will require the IRS to nurture its whistleblower program and overcome the traditional hostility to whistleblowers that began with Korb’s previous tenure.

There may be cause for optimism. The IRS whistleblower program has begun to show signs of new life, due in large part to the efforts of John Hinman, who took over as director of the Whistleblower Office in May 2022. He implemented several key reforms to leverage high-value tips and speed up whistleblower awards.

One of our own whistleblower clients played a lead role in a recent tax case that recovered a record $263 million. Hinman’s office cut red tape delaying the award process and recommended the maximum 30% reward, which was larger than all IRS awards made in 2021 and 2022 combined.

Such amounts will surely attract many others to take the risks associated with whistleblowing, thereby multiplying the impact of the IRS’s increasingly scarce resources. But a hostile chief counsel could create new roadblocks and undermine this substantial progress.

At the hearing on the last chief counsel nominee in 2023, Sen. Chuck Grassley (R-Iowa) asked Marjorie Rollinson whether she would pledge “not to undermine or place additional burdens” on the IRS Whistleblower Office. We hope that Grassley—one of the authors of the IRS whistleblower law—will be equally firm with Korb to make sure he would use whistleblowers to help “collect America’s stolen money.”

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Eric Havian, Mike Ronickher, and Chris McLamb are partners at Whistleblower Partners.

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