Special Counsel Announces Settlement for IRS Whistleblower

The Office of Special Counsel (“OSC”) issued a press release on Wednesday announcing that a settlement had been reached between the Internal Revenue Service (“IRS”) and Charles Adelberg, an IRS employee who reported concerns about what he perceived as gross mismanagement of an IRS contractor.  Adelberg was subsequently suspended for two weeks without pay.  The OSC determined the suspension was a violation of Adelberg’s First Amendment rights.  Despite disagreeing with the OSC’s legal conclusion, the IRS reached a settlement agreement with Mr. Adelberg.

Adelberg, an economist based in San Jose, California, worked in the Large Business and International Division of the IRS.  He disclosed the alleged mismanagement to the IRS Inspector General (“IG”) through a private attorney.  When reporting the disclosure to his attorney, he cited by name the corporation involved.  The attorney then named the corporation in his March 2007 correspondence to the IG on the matter. The IRS viewed Adelberg’s disclosure to his attorney as inconsistent with his statutory obligation not to disclose a taxpayer’s confidential information, and suspended him as a result. 

The OSC explained in its press release, however, that in so doing, the IRS violated Adelberg’s First Amendment rights as well as the Whistleblower Protection Act (WPA). The OSC press release stated that “Even if a public disclosure would have been unauthorized by law, Adelberg had a legal right to go to OSC or to the IG.”  It therefore concluded that “his legal right also encompassed the intermediate and subsequent disclosures to counsel to obtain legal advice on the scope of his rights and potential risks as a whistleblower.” Special Counsel Carolyn Lerner noted, “Employees who have the courage to come forward with mismanagement claims should not have to risk their careers.” Lerner continued, “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.”

Tom Devine, legal director for the Government Accountability Project, said that Lerner was “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.