Tax Whistleblower Rewards
Before the new tax whistleblower law was enacted in December 2006, the IRS rarely paid rewards to tax fraud informants, and the rewards it paid were small: just 1 percent to 15 percent of the amount the IRS recovered. Under the 2006 law, the IRS must pay whistleblowers 15 percent to 30 percent of the recovery if the case involves more than $2 million.
Tax whistleblowers should keep in mind:
- The IRS gets hundreds of tax whistleblower claims annually, but has the resources to investigate only a percentage of those claims. To help convince the IRS that their claims are worth investigating, many whistleblowers choose to hire attorneys who have experience advocating for whistleblowers with the IRS.
- The IRS pays a reward to a whistleblower only after it completes an investigation into the tax fraud or tax underpayments, collects all amounts owed in the case and the matter officially is closed.
- If the whistleblower initiated or planned the tax fraud, the IRS may reduce or deny a reward.
- Whistleblowers’ rewards may be reduced or they may be denied if the whistleblowers’ allegations have been previously disclosed by another source.
If a reward from the IRS fails to recognize the whistleblower’s contribution, the whistleblower may appeal the reward amount to the U.S. Tax Court.
If you would like to know how Phillips & Cohen can help you with your case and the IRS, please fill out our tax fraud case evaluation form. This is the fastest way to get a detailed response. You can also email or call us.