Who are Noncompliant Taxpayers?
The Internal Revenue Service (“IRS”) Whistleblower Office is the government body in charge of incentivizing employees and contractors who report entities that fail to pay taxes owed to the government. For the whistleblower’s specific information that leads to the IRS recovering of tax dollars, the IRS Whistleblower Office may offer the whistleblower 30% of the recouped taxes, interest, and penalties.
What are the Awards for IRS Informants?
The IRS Whistleblower Office has two kinds of rewards based on the amount in controversy:
(1) If the taxes, penalties, interest and related amounts in dispute exceed $2 million or the noncompliant taxpayer’s annual gross income is higher than $200,000, the IRS Whistleblower Office may pay the informant 15 to 30 percent of the amount the IRS enforcement unit was able to recapture.
(2) If the taxes, penalties, interest and related amounts in dispute are less than $2 million or the individual taxpayer gross income is less than $200,000, the IRS Whistleblower Office may pay the informant up to 15 percent up to $10 million.
For any questions about the tip information submittal process, the company’s tax-related violations, or the awards program, please contact our office for a free consultation. One of our dedicated attorneys will assist you in determining if there is a valid claim, and if so whether our firm would be able to help you collect your whistleblower share.
The following are recent events from the IRS Whistleblower Office:
- The Bipartisan Budget Act of 2018 added a new Internal Revenue Code subsection – 7623(c) that expanded the definition of proceeds for whistleblower awards. This applies to any open whistleblower claim.
- The Secretary of the Treasury reports to Congress each fiscal year on the use of Internal Revenue Code section 7623. The Whistleblower Office Report to Congress for the fiscal year ending September 30, 2017, was released on January 4, 2018.
- The Treasury issued final regulations to implement section 7623 effective on August 12, 2014: The regulations generally apply to claims that are open as of the effective date. Section 301.7623-4, which contains the rules for determining the amount and payment of awards, applies to claims for an award under section 7623(b) that are open as of August 12, 2014, and to information submitted after that date. The amount and payment of awards under 7623(a) for information received prior to August 12, 2014, will be paid under the rules described in the Internal Revenue Manual.
The IRS Whistleblower Office has channeled its programs towards the most egregious claims of violations of the IRS Code. However, some violations that may seem less significant may in actuality result in cover-ups or unlawful activity tied to much larger scale tax fraud. Therefore, it behooves those who are knowledgeable about potential tax fraud to speak with one of our attorneys so that the case can be appropriately brought to the IRS’ enforcement unit for investigation. The IRS Whistleblower Office has a dedicated Informant Claims Program (IRC 7623(a)) and specific Whistleblower Rules (IRC 7623(b)).