A concerted effort by the IRS to improve its whistleblower reporting program is showing benefits to both sides. IRS whistleblowers collected $312 million in fiscal 2018, a huge increase over the $33.9 million received in the prior year. The IRS collected $1.4 Billion from the tips provided by these whistleblowers.
In order to collect an award, a whistleblower must provide information that is:
- Signed and submitted under penalties of perjury,
- Related to an action in which the proceeds in dispute exceed $2,000,000, and
- Related to a taxpayer, and for individual taxpayers only, one whose gross income exceeds $200,000 for
at least one of the tax years in question.
If the information meets the above conditions and substantially contributes to an administrative or judicial action that results in the collection of proceeds, the IRS will pay an award of between 15-30 percent of those proceeds. The award percentage decreases for cases based principally on information disclosed
in certain public sources or when the whistleblower planned and initiated the actions that led to the tax law
One of the frustrations for whistleblowers is the timing, as an award generally takes years to be realized. Even after a claim is validated by the IRS, there is a significant delay while the taxpayer exhausts all appeal rights and until the taxpayer can no longer file a claim for refund or otherwise seek to recover the
proceeds from the government.