IRS Whistleblower Award

Learn What You Need to Know About Seeking an Award from the IRS Whistleblower Office

The Internal Revenue Service (IRS) is one of several federal agencies that have whistleblower award programs. Under the IRS award program, eligible whistleblowers can receive awards ranging from 15% to 30% of the amount recovered in cases involving proceeds in dispute of $2 million or more.

Are you eligible to seek an IRS whistleblower reward?

The IRS Whistleblower Office pays monetary awards when the agency relies on a whistleblower’s information to pursue a successful enforcement action under the nation’s tax laws. In criminal enforcement cases, whistleblowers can also receive awards paid out of the defendant’s criminal fines. If you are interested in seeking a monetary award for reporting tax fraud or tax evasion to the IRS, our attorneys can assess your eligibility and then file a whistleblower complaint with the IRS on your behalf if warranted.

The History of the IRS’s Whistleblower Award Program

The IRS whistleblower program has changed dramatically over the past 25 years. The changes made during this time period have largely focused on providing stronger protections for whistleblowers and ensuring that whistleblowers can collect monetary awards when warranted. Here are some of the key statutory provisions that protect IRS whistleblowers today:

Tax Relief and Health Care Act of 2006 (26 U.S.C. Section 7623(b))

The enactment of the Tax Relief and Health Care Act of 2006 (TRHCA) was the start of the overhaul of the IRS whistleblower program. The TRHCA enacted 26 U.S.C. Section 7623, which remains the foundation of the IRS whistleblower program today.

Bipartisan Budget Act of 2018

The Bipartisan Budget Act of 2018 (BBA) amended 26 U.S.C. Section 7623 to clarify the types of cases covered under the IRS whistleblower program. It did so by defining the term “proceeds,” which is the term used to determine what types of funds can be used to calculate and pay whistleblower awards. Under the BBA, “proceeds” include tax, interest, penalties, criminal fines, civil forfeitures, and other monies owed due to tax payment or reporting violations.

Taxpayer First Act of 2019

The Taxpayer First Act of 2019 (TFA) reinforced the protections afforded to eligible whistleblowers under the IRS whistleblower program. Under the TFA, IRS whistleblowers are not only entitled to stringent confidentiality protections; but, in the event that an employer discerns a whistleblower’s identity, the TFA prohibits the employer from engaging in any form of retaliatory adverse employment action.

Award Determinations and Award Percentages Under the Internal Revenue Code

In its current form, the IRS whistleblower program allows for awards to be paid in a wide range of circumstances. With that said, there are limits, and whistleblowers must ensure that they strictly comply with the IRS whistleblower program process in order to establish and maintain their eligibility. With this in mind, here are some of the key factors for determining if a whistleblower may be eligible to receive an award from the IRS Whistleblower Office:

• Evidence of a Violation of Federal Law – IRS whistleblowers must report an apparent violation of the nation’s internal revenue laws. Whistleblowers can report tax evasion, tax fraud, underreported gross income, tax underpayments, and all other types of federal tax violations.
• Specific and Credible Information – IRS whistleblowers must be able to provide “specific and credible information” about tax noncompliance. While whistleblowers don’t necessarily need to provide conclusive proof of a violation, they must provide sufficient information to demonstrate that further investigation and possible administrative or judicial action is warranted.
• Timely Contacting the Appropriate IRS Office – While reporting many forms of federal fraud involves filing a qui tam complaint under the False Claims Act, tax whistleblowers must contact the appropriate IRS office—the IRS Whistleblower Office. Along with meeting the IRS Whistleblower Office’s substantive reporting requirements, whistleblowers must also strictly comply with the office’s timing and procedural requirements for reporting tax non-compliance.

Under Section 7623 of the Internal Revenue Code, whistleblowers who help the IRS pursue successful enforcement actions are entitled to an award calculated as between 15% and 30% of the amount the IRS collects. The specific percentage of the collected proceeds a whistleblower is entitled to receive is determined based on factors including (but not limited to):

• The value of the original whistleblower submission
• Whether the whistleblower provided any additional requested assistance
• Whether the whistleblower voluntarily provided additional assistance
• The importance of the case to fair and efficient tax administration
• The extent to which the case helped close the federal tax gap

When a client of ours is entitled to a mandatory award, we work with the IRS on behalf of our client to secure an award that adequately reflects our client’s level of involvement and the importance of the case to the federal government. We help our clients seek the largest possible percentage of the proceeds collected, and we diligently pursue our clients’ award claims until the IRS decides how much it is willing to pay.

The IRS Has More Than $1.3 Billion in Whistleblower Awards Paid According to Latest Annual Report

Since overhauling its whistleblower award program pursuant to the Tax Relief and Health Care Act of 2006, the IRS has paid more than $1.3 billion to eligible whistleblowers. This includes awards paid following settlements, judicial or administrative hearings, US tax court litigation, and criminal tax fraud prosecutions in federal court resulting in the recovery of approximately $7.4 billion.

In the IRS’s most-recent fiscal year (at the time of writing), it paid whistleblower awards totaling $123.5 million to whistleblowers who assisted with the recovery of approximately $474.7 million. This reflects an average award percentage of 26%, and it also represents a substantial increase from the previous fiscal year.

This is consistent with the overall trend we have seen of the IRS—and various other federal agencies—increasingly working with whistleblowers to uncover all forms of fraud, waste, and abuse. When the IRS determines that enforcement action is warranted based on a whistleblower complaint, it does not hesitate to take action, and it does not hesitate to issue awards to deserving individuals.

FAQs: Engaging an IRS Whistleblower Law Firm to Help You Come Forward

Speak with a Senior IRS Whistleblower Attorney in Strict Confidence

Are you interested in speaking with an IRS whistleblower attorney? If so, contact us today. To schedule a free and confidential consultation with a senior attorney at Oberheiden P.C., call us at 866-320-3959 or tell us how we can reach you online now.