The IRS Program for Protecting Whistleblowers
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The IRS Whistleblower Office gives financial compensation to qualified persons whose information is utilized by the IRS. The percentage of the award that is given varies, but it often ranges from 15 to 30 percent of the money that was obtained thanks to the information from the whistleblower. Awards cannot be given until all appeal rights have been exhausted and the taxpayer is no longer able to file a claim for a refund or otherwise attempt to recover the proceeds from the government. This is because awards can only be issued once a definitive decision can be reached.
Under the IRS Whistleblower Protection Act, anyone who reports to the IRS in-depth information regarding substantial tax fraud or other tax crimes by their employers or others may be eligible for protection and rewards. The IRS Whistleblower Office oversees the program.
The expanded IRS whistleblower program and its fundamental elements were established by the Tax Relief and Health Care Act, passed by Congress in 2006. The bipartisan Taxpayer First Act of 2019 was passed, and it added stronger, and newer protections for IRS whistleblowers.
Are rewards available to IRS whistleblowers?
Tax whistleblowers who submit information to the IRS may be rewarded with 15% to 30% of the money the IRS obtains. The amount identified by the whistleblower (including taxes, fines, and interest) must exceed $2 million for these rewards to be paid under the statute. If the taxpayer is an individual, their gross income must be at least $200,000.
It will be the duty of the Whistleblower Office to evaluate and examine any incoming tips. Once their level of trustworthiness has been established, the matter will be forwarded to the relevant IRS office for additional examination.
The IRS requires whistleblowers to report tax fraud or underpayments of taxes exceeding $2 million (after deducting interest, fines, and taxes) to be eligible for a prize. Furthermore, if the allegations pertain to a specific individual, their yearly income must surpass $200,000.
The IRS may challenge the prize amount to the US Tax Court if the whistleblower feels it does not fairly compensate them for their efforts.
The IRS may lessen or refuse a prize if the IRS whistleblower planned or started the tax fraud. The amount of an IRS whistleblower prize could potentially be lowered if the charges made by the whistleblower were previously made public.
What protections exist for IRS whistleblowers?
With some restrictions, the IRS will protect the anonymity of tax whistleblowers. Whistleblowers who suffer job retaliation—such as dismissal, demotion, harassment, or having their pay reduced—may file a lawsuit to recover damages such as reputational harm and emotional distress in addition to double back pay and legal fees under the IRS Whistleblower Protection Act.
Additionally, the legislation forbids the implementation of arbitration clauses mandating the arbitration of retaliatory claims.
Disclosure: Some of the links in this article may be affiliate links, which can provide compensation to me at no cost to you if you decide to purchase. This site is not intended to provide financial advice and is for entertainment only.