The Internal Revenue Service Whistleblower Office pays rewards to whistleblowers who report on businesses and high-earning individuals who avoid paying the taxes they owe. As a whistleblower, you do not need to have direct knowledge of the fraud or underpayment of taxes, but you do need specific and credible evidence to warrant an IRS whistleblower investigation.
Once you submit a Form 211 and any other supporting materials to the IRS, the IRS will acknowledge receipt of your whistleblower complaint in writing. Although there can be exceptions, several years will pass from the time you submit a complaint to the time the business or person committing tax fraud is forced to pay.
During that time period, in most cases, the IRS is unable to share information with the whistleblower about the status of the investigation. Several laws protect the rights of taxpayers, and those who commit tax fraud will hire armies of attorneys to challenge most IRS actions. So be prepared to wait, potentially for several years.
If the information provided by a whistleblower to the IRS is “principally” based upon information already in the public domain, the IRS will pay you a discretionary amount up to 10 percent of the collected proceeds. Otherwise, you will receive 15-30 percent of collected proceeds in the event the IRS recovers an amount in excess of $2 million, under the IRS whistleblower law. The percentage of the whistleblower reward is based upon the extent of your contribution to the IRS investigation and recovery.
A determination by the IRS not to take action against the person or company you identify in your whistleblower complaint is not subject to review. A whistleblower cannot appeal that determination and cannot file a lawsuit against the tax avoider to collect taxes owed. In other words, when the IRS takes a pass, that’s usually the end of the story.
Importantly, the IRS will not release the name of the whistleblower at any point in the process. You should have confidence that your anonymity will be protected. This has been true since the beginning of the IRS whistleblower program. The IRS awarded $4.5 million in 2011 to an anonymous accountant in the first IRS whistleblower payment (22 percent of the recovered amount), and that whistleblower’s identity remains unknown.
Hagens Berman represents several whistleblower actions under the IRS Whistleblower Program, and marshals its significant nationwide resources and expertise in financial fraud matters – including attorneys who are also accountants and licensed forensic accountants – to best present whistleblower matters to the IRS.
