The IRS Whistleblower Program Explained

Dozens of federal and state laws provide protections and compensation for whistleblowers in the U.S. And for good reason. Whistleblowers help to prevent illegal activities, such as waste, fraud, and abuse, that drain government resources.

Since 1867, the Treasury Department has been authorized to pay whistleblowers for detecting illegal activities regarding the payment of taxes. In 2006, the IRS was mandated by Congress to provide eligible whistleblowers 15% to 30% of the funds recovered.

If you have detailed knowledge that someone is defrauding the IRS or another federal agency, you should talk to the IRS whistleblower and False Claims Act (FCA) attorneys at Nix Patterson today for a complimentary case review.

What Is an IRS Whistleblower?

The IRS can pay individuals who provide original information to the agency about tax law violations or underpayment of taxes. No tax fraud has to be proven to receive a whistleblower award because the law also covers tax underpayment. Also, whistleblower rewards may be based on civil forfeitures, criminal penalties, and related IRS reporting requirements.

What Is the IRS Whistleblower Program?

The IRS has a Whistleblower Office that offers compensation to eligible parties whose information is acted upon by the agency. The compensation percentage depends on many factors but usually is between 15% and 30% of the money recovered.

Awards are issued after a final determination for the case, and award payments can only be sent once the person has used all of their appeal rights. They cannot file a refund claim or obtain proceeds from the federal government.

How Do You Submit an IRS Whistleblower Claim?

If you want to submit a whistleblower claim to the IRS, you must file Form 211, Application for Award for Original Information, and check that it has the following information:

  • A detailed description of the tax noncompliance that is alleged.
  • Information supporting the claim, including ledger sheets, bank records, receipts, emails, contracts, bank account numbers, etc.
  • Description of documents that support evidence that the whistleblower does not have in the submission and where they are located.
  • How and when the person became aware of the information that led to the claim.
  • A description of the person’s relationship to the claimed subject, such as a sibling, parent, client, employee, attorney, bookkeeper, customer, etc.
  • The whistleblower’s signature on the document under penalty of perjury.

While most taxpayers can file an IRS whistleblower claim, specific individuals are ineligible for an award:

  • Employees of the Treasury Department
  • Someone who got the information through their official duties as a federal government employee
  • Someone who is mandated by federal law to provide the information
  • Someone who got access to the information from a federal government contract

Are There Retaliation Protections in an IRS Whistleblower Case?

No, the IRS whistleblower law does not state anything about anti-retaliation protections. The only remedy for an IRS whistleblower is to receive an award. However, you could still be protected under other state and federal laws that ban retaliation against whistleblowers.

Can the IRS Whistleblower File Anonymously?

No, but IRS privacy laws are strict and prevent the IRS from disclosing the identity of whistleblowers or naming them when the case is settled. However, if giving up the whistleblower’s identity is vital to continue an investigation, the agency will tell the whistleblower before doing so.

Also, even if the whistleblower played a role in the fraud, they can still be a whistleblower and get an award. For instance, if you are convicted of helping taxpayers underpay their taxes, you could still blow the whistle on the financial institution you worked for.

Does the IRS Whistleblower Deal With Fraudulent Payment Claims to the U.S. Government?

No. The FCA covers fraudulent claims for payments that are submitted to the U.S. government. In addition, the FCA deals with illegal activities, including filing false information about what products sold to the government cost or billing Medicaid for services that weren’t provided.

Does the IRS Program Deal With Securities Fraud?

No. The Dodd-Frank Wall Street Reform and Protection Act deals with securities fraud. You can receive a reward if the SEC or other government agency recovers at least $1 million based on the information you provide. Also, the program does not deal with government waste or mismanagement, so speak to your attorney if you have a tip to report that involves government waste.

How Successful Is the IRS Whistleblower Program?

Between 2007 and 2020, The IRS has recovered about $6 billion and has paid whistleblowers more than $1 billion. In 2020, the IRS recovered $472 million and gave out 169 awards for $86 million. The data shows that IRS whistleblower tips and rewards are powerful incentives for them to speak up. But, of course, it also helps to have an IRS whistleblower attorney assemble your case.

Contact the IRS Whistleblower and FCA Attorneys at Nix Patterson Today

If you think someone has engaged in fraud or related activity involving the IRS, contact our IRS whistleblower and FCA attorneys at Nix Patterson. Our attorneys can help with whistleblower cases involving the IRS and other federal agencies.

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