The IRS operates a whistleblower program to receive tips about tax frauds.
The IRS’s program has strictly applied dollars thresholds. The amount in dispute must exceed $2 million, and if the case deals with an individual’s tax liability, the individual’s annual gross income must exceed $200,000.
If the IRS acts on information provided by the whistleblower, and additional taxes, penalties or other amounts are collected, the IRS will award the whistleblower between 10 and 30 percent of the amount collected. However, the award may be reduced if the whistleblower “planned and initiated” the actions that led to underpayment of the taxes owed.
The IRS Whistleblower Process
IRS whistleblower claims tend to be processed very slowly. After a claim is submitted, the only information available to the whistleblower will be whether the claim is still open or has been closed. And unlike the False Claims Act, the IRS whistleblower law does not include an “agency forcing” mechanism: if the IRS declines to pursue the matter, that’s the end of the road. Unlike whistleblowers under the False Claims Act, IRS whistleblowers cannot file suit on their own.
IRS whistleblowers only get “one bite at the apple.” The IRS does not accept supplemental submissions or resubmissions. Accordingly, to maximize chances of recovery, if you are considering becoming an IRS whistleblower, you should seek legal representation before filing a claim.
Only individuals are eligible to become IRS whistleblowers. Entities (i.e., corporations, partnerships and associations) are not. In addition, the IRS does not accept claims submitted by U.S. Treasury Department employees; persons who obtained their information as part of their duties as a federal, state or local government employee; or by individuals required by federal law to disclose the information in the claim. Only the first whistleblower to report an alleged fraud is eligible. The information provided must be new information, meaning not already in the possession of the IRS. All IRS whistleblower claims must be submitted under penalty of perjury. The IRS also does not accept anonymous claims or claims filed under an alias.
If you have knowledge and solid evidence of tax frauds exceeding $2 million, please contact our whistleblower lawyers. Consultations are free and confidential.