How the law works

The tax whistleblower and reward provisions of the Tax Relief and Health Act of 2006 specifies how whistleblowers who provide the IRS with information about tax fraud or tax underpayments may qualify for a reward of 15 percent to 30 percent of the amount the IRS collects as a result of information about the tax fraud or tax underpayments provided to the IRS.

  • To qualify, the whistleblowers must provide information about tax fraud or tax underpayments that exceeds $2 million (counting tax, penalties and interest).
  • The annual income of an individual tax cheat must exceed $200,000.

Filing a tax whistleblower claim

The whistleblower must file a claim with the IRS to qualify for a reward. The IRS has gotten hundreds of whistleblower claims and isn’t required to investigate all of them, which is why whistleblowers retain counsel. Lawyers who have experience in dealing with the IRS on whistleblower claims and who are knowledgeable about the law are more likely to convince the IRS to investigate a claim.

  • The IRS will keep the whistleblower’s identity confidential as whistleblowers are covered by the previous existing law for confidential informants to the IRS.
  • IRS investigations and settlement of a case can take years.

For information about IRS rewards for tax whistleblowers see our whistleblower rewards page.

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