IRS Whistleblower Program Pays Money To Those Who Report Tax Evasion

IRS Whistleblower Program Rewards  

On December 20, 2006, Internal Revenue Code Section 7623 was amended to provide greater awards for individuals who report on tax cheats to the IRS in cases that exceed $2,000,000 in taxes owed to the IRS. 

In response to the amendment, the IRS established the IRS Whistleblower Office, which pays money to people who provide information to the IRS about noncompliant taxpayers. 

Under the new program, the IRS will reward those who snitch on noncompliant taxpayers by paying up to 30% of the additional tax, penalty and other amounts the IRS is able to collect from the delinquent taxpayer.

Tax Tips On Tax Evaders Now Bring More Money

While the IRS will continue awards tips on tax evasion as previously set forth in the Code*, the IRS is now required to provide awards in certain cases. 

The IRS will pay a minimum of 15 percent up to a maximum of 30 percent of the amount collected based on original information provided by the whistleblower, with no dollar limit if:

• the taxes, penalties, interest and other amounts in dispute exceed $2 million, and
• in the event that the delinquent taxpayer is an individual, the taxpayer’s annual income exceeded $200,000.

In addition, the amended code section allows the whistleblower to appeal any proposed award that meets these requirements to the Tax Court in an attempt to recover a larger award.

Requirements for the Program

 Amount in dispute with penalties and interest exceeds $2,000,000;

• If the noncompliant taxpayer is an individual, his or her income for the year must exceed $200,000; and
• In order to qualify for the above awards, the tax snitch may not have planned and initiated the conduct.

*The original program continues to apply in cases that do not meet the above requirements.  Under the original program, the IRS reserves the sole discretion to determine whether to issue an award. In the event an award is issued, it is capped at 15% or $10,000,000. This program does not allow for an appeal.

Don’t wait while the interest and penalties you owe to the IRS continue to mount. Contact the tax attorney at the Strom Law Firm, LLC today for a free consultation to discuss how we can help you put your IRS tax debt behind you.