IRS Whistleblower Law
The IRS whistleblower program has been available to citizens since 1867. The law allows the Treasury Department to pay for information that results in the collection of taxes owed and penalties from taxpayers who violate the tax code. The IRS must use the information to collect taxes and penalties for the whistleblower to receive an award.
Other People Are Reading
-
The Facts
-
Citizens can always provide information to the IRS regarding noncompliance with the tax law, but the whistleblower law will pay for that information if it is used to collect taxes and penalties from the offender.
An analyst within the whistleblower office of the IRS will determine whether the information provided is valid and whether the office will pursue the offender, according to the IRS.
Awards
-
Awards for the successful collection of taxes and penalties range from 15 to 30 percent, according to Attorney Paul D. Scott. The IRS determines the percentage paid to whistleblowers. If there has been a public disclosure regarding the information, the award is capped at 10 percent. The award can also be reduced if the whistleblower was involved in the actions that caused the violation of the tax law. The award is not paid if there is a conviction for participation by the whistleblower in the underpayment of taxes.
-
Types of Awards
-
The IRS allows awards for information regarding amounts of at least $2 million or individuals with a gross income of $200,000 or more. For those who have information that does not meet the financial requirements, the IRS has an informant program that caps the award at 15 percent, according to the IRS.
Appeals
-
The whistleblower law allows informants to appeal the decision regarding awards. If the whistleblower disagrees with the outcome of the process, the appeal is made to the tax court. It can take years for a case to be processed and come to a conclusion, according to the IRS.
The whistleblower can take a deduction on her taxes to cover court costs in a successful appeal, according to Attorney Scott.
Informant Programs
-
Citizens may offer information to the IRS without the benefit of an award. The IRS will keep the identity of the informant anonymous in all cases when possible. It may not be possible to keep the identity of a whistleblower anonymous in cases when testimony is necessary, according to the IRS.
-
References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
