In the U.S., a small percentage of taxpayers (i.e., individuals, businesses, trusts, and estates) underreport and fail to pay up to $400 billion in taxes every year, according to a study released by the Internal Revenue Service (“IRS”).  The IRS Whistleblower Office pays money to people who report persons who fail to pay or underreport their taxes.  If the IRS Whistleblower Office uses an IRS whistleblower’s information and successfully recovers against the tax evader, the IRS whistleblower might be rewarded up to 30 percent of the total recovery. 

IRS Whistleblower Office

The IRS Whistleblower Office was established by a particular federal whistleblower law, the Tax Relief and Health Care Act of 2006.  It processes tips received from IRS whistleblowers and determines if they are true. The IRS Whistleblower Office was created to give people incentives to blow the whistle on people who were evading their taxes. The IRS Whistleblower Office collected $1.4 billion from tax evaders in

2006 alone.         

IRS Whistleblower Rewards Program

Enacted by Congress in 2006, the IRS Whistleblower Rewards Program encourages IRS whistleblowers to come forward with information that they have about individuals or corporations committing tax fraud against the government.  If the allegations are determined to be true and an amount of at least two million dollars are due to IRS in owed taxes, penalties, and fees, the IRS whistleblower is entitled to 15 to 30 percent of that amount, which is determined at the IRS Whistleblower Office’s discretion.  The IRS Whistleblower Rewards Program allows IRS whistleblowers to appeal the IRS’s discretionary decision to a tax court if they believe they are entitled to more compensation.  The previous whistleblower laws only allowed IRS whistleblowers to seek rewards up to 15 percent of the amount recovered by the IRS.  However, the IRS was under no legal obligation to compensate people who came to them with information about tax evasion. 

Limitations on IRS Whistleblower Rewards Program

The new whistleblower provisions do not apply to tax evaders whose gross incomes do not exceed $200,000.00 for any taxable year and when the tax penalties and interest in dispute do not exceed $2 million. Nonetheless, for cases where whistleblowers have information about unreported or under-reported income and the tax obligations due are in excess of $2 million, the new IRS whistleblower provisions enacted by Congress clearly encourages IRS whistleblowers to report tax fraud.

IRS Whistleblower Lawyers

The attorneys at Bernstein Leibhard are experienced in representing plaintiffs in IRS whistleblower lawsuits.  They are able to provide information and advice in reporting tax fraud to the IRS Whistleblower Office.  If you think you may have a IRS whistleblower case, contact one of our IRS whistleblower lawyers today.    

Published November 17, 2011 by