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Internal Revenue Service (IRS)
The Whistleblower Office of the U.S. Internal Revenue Service (“IRS”), created through the Tax Relief and Health Act of 2006, rewards people who bring violations of federal tax law to the Office’s attention. IRS whistleblowers typically report tax evasion, underpayment or fraud.
IRS whistleblower incentives vary depending on such factors as the quality and extent of the provided information and the whistleblower’s own involvement in the alleged tax violation, but reward amounts generally fall into one of three categories:
- Larger Recoveries: Whistleblowers are generally entitled to 15 to 30 percent of any qualifying government recovery that exceeds $2 million. If the enforcement action targets an individual tax evader, the defendant’s annual gross income for the year in question must exceed $200,000.
- Smaller Recoveries: Whistleblowers are generally entitled to or when the defendant’s gas much as 15 percent of any qualifying governmentrecovery of less than $2 million, ross annual income for the year in question is less than $200,000. Of relevance to the latter scenario, this category caps the whistleblower reward in such cases at $10 million.
- Public Information: Whistleblowers who report information to the IRS that is already publicly accessible – for example, information gathered from news reports, judicial and administrative hearings, or governmental investigations or audits – may be eligible to collect a maximum of 10 percent of the government’s eventual recovery.
The “total governmental recovery” from which each of these types of whistleblower bounties is calculated encompasses the total amount of back taxes, interest, penalties and other fees collected as a result of the original report as well as the total amount recovered in related actions that develop as a result of the whistleblower tip.
Importantly, a whistleblower’s own contribution in the reported violation does not necessarily preclude the whistleblower from receiving a monetary reward (although, again, the IRS will likely consider this involvement when determining an incentive amount within the above-listed payment guidelines).
For more information on reporting tax fraud, underpayment or evasion through the IRS’ whistleblower program, or to discuss a potential violation, contact Justin Berger at (650) 697-6000.