IRS Whistleblower Program
Report an SEC violation and
Whistleblower Reward Laws
False Claims Act
SEC Whistleblower Program
IRS Whistleblower Program
CFTC Whistleblower Program
Table of Contents
The Internal Revenue Service’s whistleblower office incentivizes people to report tax evasion and other tax law violations.
The IRS Whistleblower Program rewards whistleblowers by paying 15 to 30% of government recoveries that result from the whistleblower’s reporting to the IRS Whistleblower Program.
History of the IRS Whistleblower Program
The IRS Whistleblower Program was formally established in 2006 to encourage individuals to report tax fraud and other violations of U.S. tax laws. Although there were earlier efforts to offer rewards for reporting tax evasion dating back to the 19th century, the program gained significant traction with the Tax Relief and Health Care Act of 2006. This law created a formal structure for whistleblower claims, offering financial incentives for individuals who provide information that leads to the collection of unpaid taxes. Under the program, whistleblowers can receive between 15% and 30% of the collected proceeds if the case involves over $2 million in tax underpayment.
The program has undergone several changes over the years to enhance its effectiveness, including the addition of anti-retaliation protections and procedural updates. High-profile cases, such as the 2014 award of $104 million to a whistleblower who exposed offshore tax evasion, have highlighted the program's potential impact and increased awareness of its benefits. Today, the IRS Whistleblower Program is an important tool for identifying and addressing tax fraud, encouraging greater compliance with tax laws.
Elements of a Claim under the IRS Whistleblower Program
To qualify for an award, whistleblowers must provide specific and credible evidence showing that a taxpayer is avoiding or underpaying taxes owed to the federal government, whether through fraud or other means, and that information must significantly contribute to the government's recovery of at least $2 million, including interest and penalties.
Since whistleblower rewards are only granted when substantial amounts are recovered, successful claims typically involve large-scale tax avoidance schemes, corporate tax fraud, or fraud by high-net-worth individuals.
The IRS Whistleblower Program Process
The IRS has a dedicated Whistleblower Office that exclusively handles whistleblower submissions. Whistleblowers must follow specific regulations and guidelines, submitting their information using IRS Form 211 rather than filing a complaint in federal court.
Experienced whistleblower attorneys can assist in strengthening claims by connecting the whistleblower’s evidence to applicable tax laws. A well-documented submission is more likely to prompt IRS action and maximize potential rewards.
Once the Form 211 is submitted, the IRS evaluates the evidence to determine whether to initiate an audit or enforcement action. However, due to strict tax privacy laws, the IRS cannot disclose the status or actions taken on a whistleblower’s submission. Typically, the whistleblower is interviewed only once and may receive no updates until the case is either closed or a payment agreement is reached. The Whistleblower Office will only confirm whether a case is still open or closed. If a case is closed and payable, the whistleblower will be informed of the outcome and the reward amount.
Unlike the False Claims Act, the IRS Whistleblower Program does not allow whistleblowers to participate directly in enforcement actions, and if the IRS declines to pursue a case, there is no avenue for the whistleblower to take independent legal action.
The IRS Whistleblower Reward
Whistleblowers in the IRS Whistleblower Program are entitled to financial rewards ranging from 15% to 30% of the total amount collected by the IRS, including taxes, penalties, and interest, as a result of the information provided. To qualify for this reward, the case must involve more than $2 million in tax underpayment. If the taxpayer involved is an individual, their gross income must exceed $200,000 in at least one of the tax years in question. The exact percentage of the reward depends on the significance and usefulness of the information provided, as well as the level of cooperation from the whistleblower.
Key Features of the IRS Whistleblower Program
Under the IRS whistleblower law, whistleblowers who provide original and useful information during a pre-existing government investigation can still qualify for a reward. Although the information should generally be original and not publicly known, the program allows for some flexibility. If a submission enhances publicly available information in significant ways, the whistleblower may still be eligible for a reward, though reliance on public sources could reduce the reward amount.
Whistleblowers must disclose their identities to the IRS when submitting a claim, but the submission can be made confidentially. The IRS has strong policies to protect whistleblower identities, often taking steps to prevent the targeted taxpayer from discovering that a whistleblower was involved. However, if the case progresses, the whistleblower’s identity may be disclosed, either during the investigation or before a reward is issued following the conclusion of the case.
Tax underpayment must generally be reported within three years of the filing of the incorrect tax return, or six years if the return understates income by 25% or more. If fraud is involved, there is no time limit for reporting.
Anyone, regardless of citizenship, can receive an award under the IRS Whistleblower Program. If a whistleblower disputes the award amount, they can appeal to the Tax Court. Additionally, whistleblowers are typically protected from employer retaliation for reporting tax violations.
