It’s often said that a good deed is its own reward, but getting an actual reward for your good deeds is nice, too. When people think of getting rewarded for their good deeds by the IRS, they usually think about tax deductions for their charitable contributions, but that’s not the only way. With the IRS Whistleblower Program, people who observe criminal tax activity and come forward about it may be eligible to receive award money!
What is the IRS Whistleblower Program?
Under the 2006 Tax Relief and Health Care Act, the federal government created the IRS Tax Whistleblower Office and Rewards Program to improve the investigation of tax violations by individuals and businesses and help the federal government combat tax fraud and evasion.
The IRS Whistleblower Office runs its whistleblower program to enable taxpayers like you to confidentially send tips on tax fraud and other illegal tax activity by individuals or businesses to the IRS and potentially receive monetary rewards.
Its responsibilities include processing claims, coordinating with IRS investigators and law enforcement, protecting the identities of whistleblowers, and paying out rewards to whistleblowers with meritorious claims.
Do whistleblowers get paid by the IRS?
When you participate in the IRS Whistleblower Program, you may get paid by the IRS for it, and here’s how:
When the IRS investigates a whistleblower claim and finds evidence of wrongdoing, the amount that they can recover from the perpetrator (in the form of back taxes, penalties, interest, etc.) typically determines the reward amount. Usually, that award is between 15% and 30% of the amount recovered.
For example, in 2021, the IRS Whistleblower Office processed 645 claims of criminal tax activity and issued awards to their respective whistleblowers for 179 of them. In total, the IRS collected over $245 million, with the awards totaling over $36 million. That’s an average of about 14.7% of proceeds collected for a whistleblower award.
It’s important to note that if you receive a whistleblower award from the IRS, that money is considered taxable income and is subject to normal tax reporting and withholding.
Blowing the whistle on federal tax crimes isn’t guaranteed to net you a payout. It’s up to the IRS Whistleblower Office to decide whether a claim merits an award and, if so, the reward amount. If your whistleblower claim merits an award, though, the IRS is diligent about payment.
Who can be an IRS whistleblower?
Anyone can be an IRS whistleblower, as long as you did not obtain the information in your claim through official duties as a federal government employee or contractor or an employee of the US Department of Treasury.
Aside from that, all you need to be eligible for the IRS Whistleblower Program is to have information about a violation of federal tax law that meets the IRS Whistleblower Office’s criteria for a meritorious claim.
To be specific, the IRS is interested in investigating tax claims against individuals who:
- Have violated tax laws
- Owe the IRS at least $2 million in taxes, penalties, interest, etc.
- Have a gross income exceeding $200,000 for at least one of the tax years in question
To submit a valid IRS whistleblower claim, you must be able to:
- Provide specific, credible information not based on publicly available information
- Submit your claim promptly using the official IRS whistleblower form
- Provide basic contact information so you can assist in the IRS investigation, if necessary
- Follow the procedures set forth by the IRS
Is it safe to be an IRS whistleblower?
Throughout history, whistleblowing has been risky, though not without its rewards (sometimes monetary, sometimes simply the reward of a clean conscience or a moral victory). Today, many laws protect whistleblowers from retaliation. In addition to existing laws, the IRS takes protecting the identities of whistleblowers very seriously so people like you can be safe and feel comfortable throughout the investigation process.
You can take further steps to protect your identity and minimize the risk of reprisal by using a trusted and qualified attorney to submit your claim.
How to File a Whistleblower Complaint with the IRS
For whistleblowers in other fields, there might be an anonymous tip line or some other such avenue for submitting complaints or claims. However, as one can easily imagine, the IRS is far more bureaucratic and detail-oriented.
To report suspected federal tax fraud, you must fill out and submit Form 211: Application for Award for Original Information and include any necessary supporting materials. You can find this form on the IRS Whistleblower Office’s website. An IRS whistleblower attorney can help you navigate this process.
Let’s look at the information you must provide for your whistleblower claim:
Filling Out and Submitting IRS Form 211
Filing a whistleblower claim and completing IRS Form 211 requires detailed information. This information helps the IRS Whistleblower Office determine whether or not your claim has merit and demands further investigation.
Form 211 only has one page worth of material to fill out, and the IRS estimates that filling it out takes about 45 minutes on average if you have the information you need on hand. The information it asks for includes:
- Information about the individual or business you are reporting
- The amounts owed and related tax years
- Pertinent facts of the case
- Documentation and proof of the claim
- An explanation of how you know about the tax violation
- Your relationship to the subject of the claim
- Further information about yourself
If you have documents in your possession that support your claim, such as copies of books and records, ledger sheets, bank records, etc., include them with Form 211. If you know of but do not possess or control such evidence, describe them and their locations.
Once you’ve completed IRS Form 211, you need to mail it and copies of any necessary supporting documents to the IRS Whistleblower Office via certified mail:
Internal Revenue Service
Whistleblower Office – ICE
1973 N Rulon White Blvd.
Ogden, UT 84404
Do You Need a Tax Whistleblower Law Firm?
If you’ve observed a federal tax crime, we recommend contacting an IRS whistleblower attorney. A tax law firm with experience helping whistleblowers like you can guide you through the process of submitting a claim to the IRS Whistleblower Program, including:
- Ensuring that the tax activity you observed is worth reporting
- Determining if you are eligible for the program
- Collecting information about the illegal tax activity for IRS Form 211
- Helping you understand and navigate the IRS Whistleblower Office process
- Helping you protect your identity and understand your rights as a whistleblower
- Assisting you in cooperating with any IRS investigation of your claim, if necessary
If you’re interested in doing your civic duty and helping the IRS crackdown on tax crime — and perhaps even get a reward for it, reach out to the tax experts at Wiggam Law at (404) 233-9800 or schedule a consultation online.