The Internal Revenue Service’s Whistleblower Program creates a procedure for whistleblowers with knowledge of possible violations of U.S. tax laws to confidentially share their information with the IRS.
The IRS’s Whistleblower Program incentivizes whistleblowers to come forward. If the government collects money from an individual or entity, the whistleblower who came forward is entitled to an award of between 15 percent and 30 percent of the total amount recovered.
The IRS Whistleblower Program was created by Congress as a part of the Tax Relief and Health Care Act of 2006. The program is administered by the IRS Whistleblower Office.
Our attorneys have experience helping whistleblowers navigate preparation of whistleblower submissions and dealing with award applications. We have also helped whistleblowers challenge the IRS in court when their award applications are denied.
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Whistleblowers submit information to the IRS on Form 211 to the IRS Whistleblower Office. No “case” is filed in court like whistleblowers under the False Claims Act. And if the IRS declines to pursue the matter, unlike the FCA the whistleblower has no right to pursue the matter themselves.
The IRS will review the information and potentially ask to interview the whistleblower. After that, the IRS will decide whether to pursue an audit, enforcement proceeding, or other action. Due to strict confidentiality rules, the whistleblower may not hear any other updates until after the IRS has decided not to pursue the matter or collect additional taxes or penalties.
If the IRS obtains a monetary recovery greater than $2 million, then a whistleblower who contributed information that led to that recovery can apply for a reward. The award ranges from between 15% and 30% of the IRS’s recovery.
If a whistleblower disagrees with the amount of their award, or an award is denied altogether, that decision can be appealed in U.S. Tax Court.
Even though the law says that whistleblowers remain confidential and defendants may not retaliate against them, sometimes wrongdoers mistreat whistleblowers for raising their concerns, working with a lawyer, or contacting the government.
IRS whistleblowers are generally protected from retaliation by their employers based on their reporting of U.S. tax law violations. Retaliation claims by an IRS whistleblower need to be reported to the Department of Labor. If the matter is not resolved within 6 months, a whistleblower can file federal court. Whistleblowers who suffer retaliation may be entitled to reinstatement (if relevant), two times back pay, special damages, and attorney’s fees.