Whistleblower Program for Reporting Tax Fraud to the Internal Revenue Service
The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 40 percent of the additional tax, penalty and other amounts it collects. The IRS Whistleblower Office was established by the Tax Relief and Health Care Act of 2006.
IRS Whistleblower Awards
The IRS awards two types of compensation to tax fraud whistleblowers:
- If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 40 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. This program allows the IRS whistleblower to appeal their award to Tax Court if they disagree with the outcome.
- The IRS also has a program for cases that do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less that $200,000. The whistleblower awards through this program are less, with a maximum award of 15 percent up to $10 million. However, under the rules for this program, whistleblowers can’t appeal the reward granted if they disagree with the IRS decision.
Types of Tax Fraud Covered by the IRS Whistleblower Program
IRS whistleblower cases can involve numerous types of fraud, but the most common generally involve:
- Non-filing: When a taxpayer, intentionally or negligently, fails to file a tax return on time.
- Underreporting: When a taxpayer understates their income or overstates their deductions, exemptions and credits on their return.
- Underpayment: When a taxpayer files their return, but fails to pay the amount due on time.
- Offshore Tax Haven Abuse: The creation of different types of offshore entities to conceal assets and income subject to tax by the United States, including foreign trusts, foreign businesses, offshore private annuities, offshore hedge funds, and offshore bank accounts.
- Tax Shelter Abuse: Multi-layer financial transactions that hide the owner of the money subject to tax by the United States, including IBC transactions, stock compensation transactions, lease in/lease out (LILO) transactions, and offsetting foreign currency option contracts.
- Money Laundering: Activities and financial transactions designed to hide the true source of money subject to tax by the United States, including money earned from illegal business activities such as ponzi schemes, securities fraud, and mortgage fraud.
- Employee Tax Abuse: Improper withholding of federal employment taxes, including schemes involving pyramiding, third party payers, and offshore employees.
Legal Help for Whistleblowers
The whistleblower lawyers at Gilman Law LLP have a broad range of experience with the IRS whistleblower program. If you’re looking for help exposing tax fraud, please contact the whistleblower lawyers at Gilman Law today for your free and confidential case evaluation by completing our online form on the left or call Toll Free at 1-888-252-0048.