A website of information for those considering blowing the whistle

IRS Whistleblower Case News

The IRS rewards individuals who report major tax evasion for both, the federal government and the state governments.

WHISTLEBLOWER 101: UNDERSTANDING THE IRS WHISTLEBLOWER PROGRAM

What is It?

Each year billions of dollars in taxes are fraudulently withheld from the Internal Revenue Service (IRS) by companies and individuals alike, which eventually has a damaging trickle-down effect on the average citizen. To fight tax evasion, the United States government has implemented the IRS Whistleblower Program to safeguard a person’s rights and help restore balance to the system. The program offers anonymity to those who step forward to report illegal schemes and tax violations as well as offers considerable monetary awards.

Tax evasion includes, among other things, failure to pay taxes in a state where income was earned; failure to pay federal income taxes by both businesses and individuals; maintaining two sets of books regarding income and expenditures.

What Sort of Reward?

The whistleblower may receive between 15-30% of the actual money recovered by the government if the taxes, penalties, interest and other amounts in dispute exceed $2 million; or if the case deals with an individual, the individual’s annual gross income exceeds $200,000.

The IRS also has an award program for whistleblowers who do not meet the thresholds of $2 million in dispute or $200,000 annual gross income. The maximum award through this program is 15% of the amount collected, up to $10 million.

However, the amount can be increased based on:

  • the time-frame taken to submit a case by the whistleblower;
  • the thoroughness of documents forwarded along with the claim.

The final determined amount can be quite substantial. A whistleblower in the famous case involving global financial company, UBS, received an astounding $104 million-dollar award. Should a whistleblower disagree with the value of the award, his/her legal counsel can appeal it to the United States Tax Court.

Be advised that the award is taxed by the IRS!

What Sort of Protections Do You Get?

A person’s identity is securely protected by law the moment a case is presented to the IRS, throughout the examination process. If the decision is appealed to the United States Tax Court, individuals may be called as witnesses and required to attend judicial proceedings wherein they may need to be identified or the court may order the release of their identities.

How to File a Case?

A person need not be a U.S. citizen or even in the direct employ of the company being reported in order to submit a case to the IRS and be eligible to collect a reward but persons are encouraged to file as soon as possible as there may be a provisional statute of limitations period of 3 years. Once the case is successfully submitted, the IRS will issue a claim number.

The services of an attorney are not mandatory but legal assistance is recommended. A lawyer will aid in completing relevant forms and arranging the necessary documents in an easily understandable format. Plus, the accompanying documents serve as supporting evidence to the allegations being made and can be very burdensome for a single person to handle.

Conclusion

Remember:

  • Ensure a claim number is obtained from the IRS as proof of submission.
  • Keep in mind that when dealing with big companies, the court process can be quite lengthy.
  • Privacy concerns over the level of interaction between the IRS office and the whistleblower can make communication seem non-existent.

Click here to learn about some of the largest tax evasion cases.

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