Over a decade after the IRS’s Whistleblower Office was established, whistleblowing is alive and well. According to its annual report to Congress, while the IRS rejected more than 12,000 whistleblower claims in FY 2016, it also paid 418 awards totaling more than $61 million.1 As the number of claims increases, so does the likelihood that attorneys will find themselves in an ethical tangle as they consider whether they can appropriately pursue monetary awards for reporting malfeasance by their clients. While the IRS’s rules do not preclude attorneys from participating, IRS Chief Counsel Notice 2010-004 makes clear that “[u]nder no circumstances is it appropriate” for the IRS to accept information about a taxpayer from an informant who is “that taxpayer’s representative in any administrative matter pending before the IRS,” and the Internal Revenue manual recognizes that “whistleblower information…subject to a valid claim of privilege, may create risks if used by the IRS.”2
The possibility of ethical quagmires for putative attorney-whistleblowers is driven home by a recent ruling by the District of Columbia Court of Appeals Board on Professional Responsibility. On Aug. 30, 2017, the board recommended the suspension of former General Electric in-house counsel Adriana Koeck for her disclosure of confidential GE data to multiple authorities and the press as part of purported whistleblowing activity. The sanctions against Koeck are a stark reminder of the risks attorneys face in blowing the whistle on their employers or clients.
