IRS settles whistleblower suit, special counsel reports

The Internal Revenue Service has reached a settlement with a California-based employee who blew the whistle on mismanagement by a contractor, the Office of Special Counsel announced Wednesday.

The case could have an impact on future cases involving the rights of employees to use government email to report problems.

Charles Adelberg, an economist based in San Jose, Calif., for the IRS’ large business and international division, was suspended for two weeks without pay after he used his private attorney to report to the agency’s inspector general charges of poor oversight and mismanagement by a contractor tasked with auditing major corporations. An OSC release said the inadequate audits could potentially have lost the government millions of dollars.

The IRS viewed Adelberg’s disclosure to his attorney as inconsistent with his statutory obligation not to disclose a taxpayer’s confidential information. He was suspended and then given new duties.

OSC determined that the tax service violated Adelberg’s First Amendment rights, as well as the 1989 Whistleblower Protection Act. Even if a public disclosure would have been unauthorized by law, OSC reasoned, Adelberg had a legal right to go to OSC or to the IG, a right that also encompassed the intermediate and subsequent disclosures to his attorney to obtain legal advice on the scope of his rights and potential risks as a whistleblower.

“Employees who have the courage to come forward with mismanagement claims should not have to risk their careers,” said Special Counsel Carolyn Lerner. “The goals of the WPA are better served if agencies do not penalize their employees for seeking advice and protection from counsel before putting their jobs on the line.”

Though the IRS disagreed that Adelberg’s First Amendment rights were violated, it agreed to settle the case under undisclosed terms. The settlement was consistent with OSC’s corrective action statute, and Adelberg has withdrawn his complaint.

IRS spokesman Dean Patterson told Government Executive that federal law prohibits the IRS from discussing specific taxpayers or situations.

To the whistleblower advocacy community, the Adelberg case is “extremely significant,” said Stephen Kohn, executive director of the National Whistleblowers Center. “An agency doesn’t have a right to intercept communications to the Office of Special Counsel and the inspector general or Congress because by statute employees have a right to communicate confidentially,” he said.

Kohn says the settlement could become relevant to another case for which he is lead attorney involving the Food and Drug Administration’s surveillance of emails of staff scientists concerned about allegedly lax approval processes for potentially ineffective medical devices.

Tom Devine, legal director for the Government Accountability Project, said the Office of Special Counsel is “establishing a new body of case law for interpreting the WPA.” Lerner is “right on the money to insist that disclosers going through government channels are exempt from qualifiers that restrict public whistleblowing,” such as details affecting national security and privacy.

“The IRS should be embarrassed,” he added, and has a “severe institutional problem because this is an elementary or kindergarten premise of the Whistleblowers Act going back to 1978.”

It has “always been the fallback position that whistleblowers work through IGs rather than sit passively and silently in the face of corruption,” Devine added. “And from the taxpayer’s perspective, the OSC is protecting the government worker who charges abuse by contractors, which is the Achilles’ heel of government spending.”