Exposing tax violations is a substantial act that takes courage. If you have uncovered significant tax noncompliance, you may be eligible to receive financial rewards through the IRS Whistleblower Program. At Whistleblower Partners, LLP, we recognize that understanding who qualifies can help you determine if your information could lead to a life-changing award.
The IRS pays rewards to eligible individuals who provide information leading to successful investigations. Key elements of this process involve:
- Reporting a violation covered by the IRS Whistleblower Program
- The violation must involve $2 million or more to receive a guaranteed award
- Specific eligibility restrictions apply
- Legal representation is recommended to navigate the process effectively
What Violations Are Covered?
Unlike many whistleblower programs, the IRS Whistleblower Program is not limited to fraud cases. Instead, whistleblowers can receive rewards based on any penalties, interest, additions to tax, and other amounts required under the Internal Revenue laws, and any proceeds arising from laws for which the Internal Revenue Service is authorized to administer, enforce, or investigate.
This means that the IRS not only covers tax fraud but also any tax underpayments, regardless of whether they are deliberate, plus the interest and penalties resulting from those underpayments.
In addition, whistleblowers can receive rewards for reporting violations relating to the filing of a Report of Foreign Bank and Financial Accounts (“FBAR”), which generally requires U.S. persons (including individuals and entities) to report their foreign bank accounts if the aggregate value of those foreign accounts exceeds $10,000. The penalties for willful FBAR violations can be severe—up to 50% of the balance of the accounts—and many of the largest IRS whistleblower rewards have involved FBAR violations.
If you have questions about whether your concern falls under the IRS Whistleblower Program, an experienced attorney can help.
What Makes Someone Eligible for an IRS Whistleblower Reward?
The IRS Whistleblower Program welcomes reports from most individuals who possess credible information about tax and FBAR violations. You do not need special qualifications, employment status, or expertise to file a claim, but only individuals—not legal entities—can do so.
However, there are a few exceptions to eligibility. Several categories of individuals are specifically excluded from receiving whistleblower awards, including:
- Individuals who learned of violations through official duties as federal employee
- Current employees of the Department of Treasury, even if they obtained the information before their employment
- People who obtained information through a federal government contract
- Individuals required by law to report the information
- Anyone filing a claim based on information obtained from an ineligible person
In addition, the IRS will deny a reward if the whistleblower is convicted of a crime arising from their role in planning and initiating the underlying violation. If the IRS determines the whistleblower planned and initiated the action, it can also reduce their award, even if they are not convicted of a crime.
The IRS can also reduce a whistleblower award—or pay no reward at all—if the whistleblower’s tip was principally based on specific allegations resulting from judicial or administrative hearings, from governmental reports, hearings, audits, investigations, or from the news media, unless the whistleblower was the original source of those allegations.
Finally, the IRS will not use information that is privileged, so attorneys and tax professionals should carefully consider whether the information they wish to report is privileged before filing a tip.
Is There a Minimum Dollar Amount of Required?
The IRS pays awards under two distinct whistleblower provisions under the U.S. Internal Revenue Code, with different dollar thresholds.
Section 7623(a) – Discretionary Program
No minimum amount is required. The IRS has complete discretion over award amounts, which are typically based on the value of information provided.
Section 7623(b) – Mandatory Program
For greater protections and mandated award percentages, the information must relate to cases where:
- Total tax, penalties, interest, and any additional proceeds at issue must exceed $2 million
- For individual taxpayers, gross income must exceed $200,000 for at least one relevant tax year
Section 7623(b) awards generally range from 15% to 30% of collected proceeds. Recent awards have reached tens of millions of dollars for whistleblowers who exposed major tax schemes.
Do You Need a Lawyer to Report Tax and FBAR Violations?
Legal representation is not required to file an IRS whistleblower claim. You can submit forms directly to the IRS Whistleblower Office without a lawyer’s assistance.
However, experienced legal counsel provides significant advantages, including:
- Strategic Guidance: Lawyers help present your information most effectively, maximizing your chances of a successful claim.
- Avoid Pitfalls: The IRS often applies its whistleblower rules a rigid and highly technical manner. A simple oversight at the outset of your case could cost you a reward years down the line. An experienced attorney can help spot those issues and prevent unjust outcomes.
- Proper Process Navigation: The whistleblower process takes years—sometimes over a decade. Lawyers handle communications with the IRS, keeping you informed throughout the investigation as much as possible.
- Protection and Advocacy: Lawyers ensure the IRS follows proper procedures and advocate for your interests during award determination.
Empowering Whistleblowers to Speak Out
The IRS Whistleblower Program offers substantial rewards to those who are willing to step up and expose tax and FBAR violations. Speaking up serves the public interest while potentially providing financial security for your future. With proper legal guidance, you can navigate this process with confidence and security.
Whistleblower Partners has deep experience with tax and FBAR claims. We recently obtained one of the largest whistleblower rewards in the IRS’s history, and our team includes a former Department of Justice tax attorney, a former member of the IRS whistleblower office, and a law professor specializing in complex tax shelters.
Contact our experienced whistleblower lawyers at Whistleblower Partners, LLP today to discuss your information confidentially. We can help you maximize your potential award while protecting your interests throughout the process.
