The IRS has a tax whistleblower reward program to incentivize reporting of tax fraud and tax evasion. Through the program, whistleblowers may be able to recover rewards of a percentage of the total amount that the IRS recovers as a result of their reports. The attorneys at Swartz Swidler are able to assist whistleblowers who have inside knowledge of major tax fraud schemes by companies and wealthy individuals.
What is the tax whistleblower program?
In 2006, Congress passed the Tax Relief and Health Care Act. It created an IRS whistleblower office that exclusively works with whistleblowers. The office provides whistleblowers with a percentage of the monetary recoveries the government gets as a result of the whistleblowing. Several states also have their own whistleblower laws dealing with people and businesses that fail to pay their state taxes.
What makes up an IRS whistleblower case?
To receive a reward, whistleblowers must meet several requirements. They must be able to offer credible and specific evidence that the taxpayer is underpaying or avoiding paying a tax obligation to the government. The information must contribute to the government’s recovering a minimum of $2 million, including penalties and interest.
Since whistleblower rewards are only given when the recovered amounts are substantial, claims that are successful generally have involved huge schemes to avoid taxes, fraud by wealthy individuals, and corporate tax fraud.
Process of the IRS whistleblower program
The IRS whistleblower office is dedicated to working with whistleblowers. It has guidelines and regulations that whistleblowers must follow. If you have information to submit, you submit it to the whistleblower office using Form 211. You do not file a lawsuit in court. The experienced attorneys at Swartz Swidler are able to help whistleblowers to submit claims that connect their evidence to the law. Well-documented claims are stronger and stand better chances of being successful.
After you submit Form 211, the IRS will look at your evidence and decide whether it will take action. The IRS states that tax privacy laws keep it from disclosing the actions that it takes on whistleblower submissions. A whistleblower will typically only be interviewed one time by the IRS. You might not receive any more information until the agency has reached an agreement for the taxes to be paid or that the IRS has decided not to pursue a collection action. The only information that you will be able to get is whether the case remains open or if it has been closed. If it is closed and payable, the office will inform you and tell you the amount of your reward. IRS whistleblowers do not have the right to act as a party in an enforcement action that may be brought by the IRS against a defendant.
What is the IRS whistleblower reward?
If the IRS decides to act on your information and to pursue an enforcement action, you are guaranteed a minimum of 15% up to 30% of the total amount that it is able to recover. The recovery must exceed $2 million for you to be eligible for a reward. You will not receive a reward until the IRS is able to collect the penalties, taxes, and interest that it is owed.
Key features of the IRS whistleblower program
Whistleblowers who give information to the IRS during an already opened government investigation may still recover a reward as long as the information that they provide is useful and original. Original information is information that is not known publicly. However, this standard is flexible. People may still recover rewards if their information adds to what is publicly available. Relying on public information might reduce the amount of a reward that you might receive, however.
The IRS requires whistleblowers to disclose who they are to the agency when they submit information. However, you are able to submit your information secretly. The agency has a policy of protecting your identity when you blow the whistle. The IRS generally cooperates in working to ensure that the taxpayer does not learn that a whistleblower reported his or her tax fraud. If the IRS does decide to pursue an enforcement action, however, your identity may be disclosed. You must report a tax underpayment within three years of the incorrect tax return filing. If the return understates the income by 25% or more, you must report it within six years of its filing date.
Learn more by talking to the attorneys at Swartz Swidler
Whistleblower laws are complex. If you have inside knowledge that a taxpayer has defrauded the IRS or has engaged in tax evasion, you may be able to recover a whistleblower reward. Contact the Swartz Swidler today to learn about your potential claim.