For someone who observes criminal tax activity or knows of someone who has committed a tax crime, the Internal Revenue Service has a Whistleblower Office for reporting any violations of the federal tax law. The office may pay award money to those who “blow the whistle;” the reward is based on several factors, including the tax, penalties, and interest owed.
The IRS Whistleblower Office
The IRS Tax Whistleblower Office and Rewards Program were created in December 2006 under the Tax Relief and Health Care Act. The office assesses and analyzes tips received from people who spot tax issues in their workplace or other situations. Investors look for specific, credible information about significant tax problems – not tips resulting from personal problems, business conflicts, or other minor disputes. To qualify for a whistleblower reward, the claim must be against taxpayers whose gross income is at least $200,000 and whose violation (taxes, penalties, and interest) is at least $2 million for any taxable year.
Filing a Whistleblower Claim
To make a claim, the informant must file a Form 211: Application for Award for Original Information with the IRS Whistleblower Office. In addition to basic contact information for both the person making the claim and the person accused of violating the tax law, the claimant must also provide specific and credible information related to the case. This includes: a description of the amounts owed and related tax years, the pertinent facts of the case, any documentation or proof of the claim, and an explanation of how the whistleblower knows about the tax violation and his or her relationship to the subject of the claim. Once the whistleblower has completed Form 211 and its supporting materials, they need to mail the documents to the IRS Whistleblower Office in Washington, DC.
The Whistleblower Office looks for solid, supported information about significant Federal tax issues. Once the office determines whether the information meets those requirements and is credible, the case will be assigned for further investigation. The Whistleblower Office will make the final determination about whether an award will be paid and the amount of that award. Typically, the award is proportionate to value of the information and the amount that the IRS is able to collect from the noncompliant taxpayer (the amount of taxes, penalties, and interest). The whistleblower may receive between 15% and 30% of the amount recovered by the IRS. That award percentage could be reduced in certain circumstances. Any whistleblower award would be subject to normal tax reporting and withholding.
Since Congress enacted the Whistleblower Rewards Program, informants have come forward with information on tax violations amounting to tens of millions of dollars. In some cases, hundreds of millions of dollars. In 2018 alone, the IRS collected an additional revenue of $1.4 billion through its Whistleblower program. In turn, the office awarded more than $312 million to those whistleblowers.
Consult an Atlanta Tax Attorney
If you know about a possible tax violation or have more questions about the IRS Whistleblower Rewards Program, please contact Wiggam & Geer at (404) 609-1300 or by visiting our website. One of our experienced Atlanta tax lawyers or Atlanta tax settlement attorneys would be happy to speak with you. Our firm represents individuals in matters before the Internal Revenue Service, the Georgia Department of Revenue, and other state tax departments. We are dedicated to helping resolve client tax issues and putting minds at ease.