ATTORNEY NEWSLETTER
How The IRS Whistleblower Program Works
How The IRS Determines Rewards
How Whistleblowers Apply For Rewards
Subject to certain thresholds and limitations, the Internal Revenue Service (IRS) rewards people who blow the whistle on corporations and individuals who fail to pay the tax that they owe. I.R.C. § 7623(b). In Fiscal Year 2022, the IRS paid whistleblowers 132 awards totaling $37.8 million from proceeds collected of $172.7 million. The total dollar amount of awards paid increased from FY 2021 when $36.1 million in awards were paid. A recent Tax Court case, discussed below, explains what the IRS considers in determining the amount of any reward. While any type of tax fraud may be the basis of an IRS whistleblower application but one primary form of tax avoidance is offshore schemes that shelter income from U.S. taxation. These schemes also often violate other federal laws, including banking law. See, e.g., Reports of Foreign Bank and Financial Accounts Act (FBAR) (31 U.S.C. § 5314); Foreign Account Tax Compliance Act (FATCA) (26 U.S.C. § 1471 et seq.). Evans Law Firm, Inc. represents individuals with credible information of offshore tax avoidance schemes or other tax fraud and can help you submit information of tax fraud and all related violations of the law to the government and present your evidence with a goal toward a reward if the IRS recovers. If you have credible information of tax fraud, call us today at (415)441-8669. Our toll-free number is 1-888-50EVANS (888-503-8267).
Whistleblower Reward Determination[1]
A recent Tax Court decision explains the factors considered by the IRS in determining the amount of a reward for a whistleblower who has supplied the government with information leading to a recovery of taxes. In Luu v. Comm’r, T.C. Memo 2022-126, Dkt. No. 714-20W (Dec. 28, 2022), a whistleblower appealed a preliminary reward determination by the IRS Whistleblower Office (WBO) after his information led to an audit and recovery of over $2 million in taxes for unreported income and underpaid payroll taxes by a family-owned retail supermarket and poultry farm operation. In reviewing the IRS preliminary reward determination, the Tax Court outlined the bases for its appellate review: (1) whether the record in the administrative claim file reflects how the WBO relied on evidence found in the administrative record in making its award determination; (2) whether the record reflects how the WBO considered relevant positive and negative factors in making its award determination; (3) whether the record reflects that the WBO followed proper administrative procedures and considered the whistleblower’s arguments. If, in its review, the Tax Court finds that the WBO’s determination was not arbitrary, capricious, an abuse of discretion, or otherwise not in violation of law, the Tax Court will likely sustain the determination.
How An IRS Whistleblower Case Works
The IRS program sets forth a detailed procedure for submitting whistleblower information. Individuals start a case by submitting a Form 211 “Application for Award for Original Information” under penalty of perjury. A whistleblower may not bring an independent action if the IRS decides not to pursue an action. However, the whistleblower may be eligible for an award if the IRS does successfully pursue a judicial or administrative action based upon the information submitted. Where the collected proceeds exceed $2 million or, if the taxpayer is an individual and their gross income exceeds $200,000, the IRS is required to pay an award to the whistleblower, provided other statutory qualifications are met. The range of such an award is typically between 15 percent and 30 percent of the amount collected.
Protection From Retaliation
Employees who discover their employer’s tax evasion maneuvers are protected from retaliation by their employers. See 26 U.S.C. § 7623. Despite this protection, employers may still retaliate. If they do, employees can fight back. Evans Law Firm, Inc. can represent you in any suit for employer retaliation in addition to representing them before the IRS with their whistleblower claim. Remedies for wrongful retaliation by an employer include reinstatement, double back pay, interest, and attorneys’ fees and costs for bringing your lawsuit. See 26 U.S.C. § 7623.
Contact Us
Ingrid M. Evans represents individuals with credible, original information of any kind of tax fraud, including offshore tax avoidance measures, and use of foreign corporations and accounts to avoid taxation or the like. Ingrid can be reached at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our toll-free number is 1-888-50EVANS (888-503-8267). Ingrid also handles whistleblower actions under the Financial Reform, Recovery, and Enforcement Act (FIRREA/FIAFEA), the Commodities Futures Trading Commission Whistleblower Program, the Securities and Exchange Commission Whistleblower Program, False Claims Act cases, the FINRA Whistleblower Office and the California False Claims Act.
[1] Evans Law Firm, Inc. was not involved in the reported case in any way.
