IRS Whistleblower Claims

IRS Whistleblower Claims

In addition to federal and state False Claim Act cases, there are other laws that also provide that whistleblowers should be paid a percentage of any recovery for disclosing fraud – for a variety of different agencies.

One of the agencies that have its own whistleblower program is the Internal Revenue Service. As we’ve written before, the IRS pays individuals who disclose that entities haven’t paid the taxes they owe the federal government. Some whistleblowers may be awarded up to 30% of the amount recovered which includes the tax, the interest, and penalties.

There are two types of the award both of which are contingent on the amount recovered.

  • Whistleblowers may be paid between 15 to 30% if the recovery is $2 million or more or the taxpayer who failed to pay the correct amount earns $200,000 or more yearly
  • Otherwise, the IRS may pay up to 15% up to $10 million.

Types of IRS fraud

Most cases of IRS fraud that can generate a whistleblower award are:

  • Not filing returns. This includes not filing intentionally and not filing due to some type of negligence
  • Not reporting the full amount that is due. Many cases involve individuals and businesses that undervalue their income or overvalue their deductions, credits, and exemptions
  • Offshore tax shelter abuses. This includes complicated schemes to hide taxes through offshore accounts, foreign trusts, offshore hedge funds and other schemes.
  • US tax abuses. These abuses can include stock compensation transactions, complicated leasing arrangements, and many other types of illegal transactions

When the IRS may deny a whistleblower award

Whistleblowers may not be eligible for an award, according to the IRS, if:

  • “The informant is an employee of the Department of Treasury or is acting within the scope of his or her duties as an employee of any Federal, State, or local Government.
  • The individual is required by federal law or regulation to disclose the information, or the individual is precluded by federal law or regulation from making the disclosure.
  • The individual obtained or was furnished the information while acting in his or her official capacity as a member of a State body or commission having access to such materials as Federal returns, copies or abstracts.
  • The individual had access to taxpayer information arising out of contract with the federal government that forms the basis of the claim.
  • The claim is found to have no merit or the claim lacked sufficient specific and credible information.
  • The claim was submitted anonymously or under an alias.
  • The claim was filed by a person other than an individual (e.g., corporation or partnership)
  • The alleged noncompliant taxpayer is an individual whose gross income is below $200,000.”

If you would like to report IRS whistleblower fraud, contact our Federal False Claims attorneys today for a free consultation.