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The IRS Whistleblower Program gives financial rewards to individuals who come forward with actionable information regarding tax noncompliance that leads to collected proceeds for the government.

The program as we know it today has brought in more than $6 billion for the U.S. government and was created in 2006 through the Tax Relief and Health Care Act.

Congress modeled the IRS Whistleblower Program after the False Claims Act (qui tam), which allows for individuals to file a suit on behalf of the federal government in order to receive an award for the fraud they’ve disclosed that ultimately led to a financial loss for the government.

The IRS has paid informants dating back to 1867, however the passage of the Tax Relief and Health Care Act in 2006 and the enactment of Internal Revenue Code 7623(b) created the modern IRS Whistleblower Program that required several key things, including:

  • The creation of the IRS Whistleblower Office in order to administer the IRS Whistleblower Program;
  • Mandatory awards totaling 15% to 30% of collected proceeds recovered by the U.S. government; and
  • The right for tax whistleblowers to appeal IRS determinations to the U.S. Tax Court and subsequently the D.C. Circuit Court of Appeals.

Although these are basic requirements of the modern IRS Whistleblower Program, other factors are involved. For instance, the information brought forward by the whistleblower must have been used by the IRS to collect the proceeds at issue before an award can be distributed.

Further, filing what is called a Form 211 to the IRS Whistleblower Office under IRC Section 7623(b) cases are limited to proceeds where the amount of tax noncompliance involves at least $2 million.

The key for tax whistleblowers is bringing forward credible, timely, and actionable information that the IRS Whistleblower Office can use.

Matthew Beddingfield

Matthew Beddingfield

Matthew Beddingfield is a Senior Associate at Zerbe, Miller, Fingeret, Frank & Jadav LP.

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