The Claims Filing Process
Whistleblowers who submit a claim under section 7623(a) or (b) must complete IRS Form 211, Application for Award for Original Information, in order to qualify for the whistleblower reward. If the whistleblower fails to submit Form 211 with the claim, then the whistleblower will not be eligible to receive a reward. (A claim can be submitted on Form 3949A, Information Referral, if the whistleblower wants to report tax fraud but is not seeking a reward.) A completed Form 211 must be signed under penalties of perjury and should include the following information:
- The claimant’s name, address, date of birth, social security number, and contact information;
- Specific and credible information concerning the person(s) who failed to comply with the laws, which will lead to the collection of the unpaid deficiency, and documentation to substantiate the claim; and
- An explanation of how the claimant obtained the information and a description of his or her relationship to each person who is the subject of the claim.
In addition to Form 211, submissions should include a detailed summary of the facts and supporting evidence from the informant, supporting documents, and a list of witnesses or people involved, including their contact information. If the whistleblower lacks certain documents that will prove the violation, it is important to describe with specificity those documents to the IRS and identify the location of the documents to the best of his ability. Failing to provide available or known information may affect the amount of the reward the informant can receive. The more information a whistleblower can provide to the IRS, the more likely the IRS is to initiate an investigation.
Once Form 211 is filed, the Whistleblower Office will evaluate the information provided by the whistleblower and determine whether the case is worth pursuing. Additional details and information may be requested by the Whistleblower Office. The initial evaluation of the information the whistleblower provides can take a few months to perform, depending on the complexity of the issues. If accepted, the IRS will assign the case to an IRS revenue agent and case manager, who will conduct an examination of the person or company alleged to have violated the tax laws. The examination process can take more than one year depending upon the complexity of the issues. Most examinations are settled with the taxpayer, and very few of the cases go to litigation. If the IRS collects all amounts owed in the case and the matter is officially closed, the Whistleblower Office will determine the amount of the reward that the whistleblower can recover. A whistleblower will receive at least 15% of the proceeds collected and may receive up to 30% of the amounts collected depending upon the information provided and substantial contributions made by the whistleblower. It is important to remember that the IRS will not release the award until there has been a final determination and collection of tax liability (including tax, interest, penalty, additions to tax, and additional amounts). Whistleblowers can speed up the process by accepting payment for what the IRS has already collected and agreeing to waive their right to unsettled subsequent collections.
If you have information about a person or corporation that committed tax fraud, you could be eligible for a reward of up to 30% of the amount of back taxes, penalties and interest collected by the IRS. Contact Michael S. Bigin or Laurence J. Hasson for more information.