The Claims Filing Process
The IRS Whistleblower Program
Whistleblowers who provide information about tax fraud or tax underpayments that exceed $2 million to the Internal Revenue Service (“IRS”) can do so confidentially and receive awards for doing so.
A little-noticed provision of the Tax Relief and Health Care Act of 2006 created a whistleblower rewards program for individuals informing the IRS of tax fraud and other misconduct. The law provides monetary rewards in cases where the potential amount owed to the IRS by businesses, in combination for back taxes, penalties, interest and additions to tax, exceeds $2 million. If the tax cheat is an individual, that person’s gross income for the applicable year must also exceed $200,000.
The rewards under the Act are substantial. Tax whistleblowers can receive a minimum reward of 15% and a maximum reward of 30%. If, however, the IRS determines that the whistleblower’s information was not the original source of information but still contributes to the additional collection, the reward is capped at 10%.
PUBLIC INFORMATION MAY BE USED BY THE WHISTLEBLOWER
Unlike other the False Claims Act and SEC Whistleblower Program, whistleblowers reporting IRS fraud may seek an award for bringing publicly-available information to the attention of the IRS if the information results in the recovery of additional taxes. Such information includes trial testimony and evidence, results of state and local investigations, and information published in the news media. Under these scenarios, the whistleblower may receive a reward of up to 10% of the IRS recovery.
PROTECTING THE CONFIDENTIALITY OF THE WHISTLEBLOWER
The IRS will protect the identity of the whistleblower to the fullest extent permitted by the law. Under some circumstances, such as when the whistleblower is an essential witness in a judicial proceeding, it may not be possible to pursue the investigation or examination without revealing the whistleblower’s identify. In those instances, the IRS will inform the whistleblower before deciding whether to proceed in such cases.
There are many substantive differences between the IRS Whistleblower Program and the government’s whistleblower programs under the Federal Claims Act and Dodd-Frank Act. Because of the IRS Whistleblower’s specific procedural requirements, IRS whistleblowers should retain an experienced counsel.
If you have information concerning tax fraud and want to know your rights as an IRS whistleblower, the attorneys at Bernstein Liebhard can help. Our attorneys will help you navigate the IRS Whistleblower Program to ensure that you comply with the program’s requirements. Contact Michael S. Bigin or Laurence J. Hasson for more information.