IRS whistleblowers who provide information about tax fraud or tax underpayments that exceed $2 million to the Internal Revenue Service can do so confidentially and receive awards.
The IRS awarded a Phillips & Cohen whistleblower client $20 million for his help in exposing an abusive tax shelter involving billions of dollars. This is one of the largest publicly announced awards from the IRS whistleblower program. The IRS also has awarded the Phillips & Cohen client two separate whistleblower awards: one for $2 million and another for $1.1 million.
The IRS whistleblower program provides rewards to individuals who report to the IRS detailed information about significant tax fraud or other tax violations by their employers or others. The program is administered by the IRS Whistleblower Office.
The Tax Relief and Health Care Act, a law passed by Congress in 2006, created the expanded IRS whistleblower program and specifies certain provisions for the program:
- Whistleblowers may receive a reward of 15 percent to 30 percent of the amount the IRS collects as a result of information about tax fraud provided to the IRS.
- To qualify, the whistleblowers must provide information about tax fraud or tax underpayments that exceeds $2 million (counting tax, penalties and interest).
- The annual income of an individual tax cheat must exceed $200,000.
- If a reward from the IRS fails to recognize the whistleblower’s contribution, the whistleblower may appeal the reward amount to the U.S. Tax Court.
- If the whistleblower initiated or planned the tax fraud, the IRS may reduce or deny a reward. A whistleblower reward also may be reduced if the whistleblower’s allegations have been previously disclosed.
- The IRS will keep the identities of whistleblowers confidential. However, in certain, limited cases, it may be required to reveal a whistleblower’s identity, such as if ordered to do so by a court.
...If the IRS ever wants to put an end to Wall Street tax shelter schemes, they are going to need the help of Wall Street insiders to get the information and the expertise that it will take.
Phillips & Cohen partner Edward H. Arens recently won an important victory in US Tax Court for an IRS whistleblower client. The decision will benefit IRS whistleblowers who challenge IRS award determinations.
Phillips & Cohen attorneys are recognized as experts by the news media on the IRS whistleblower program.
Erika A. Kelton, Larry Zoglin, Arens and Emily Stabile of Phillips & Cohen and attorney Andrea Hasegawa are the authors of Tax Whistleblower Laws and Programs, which is part of Bloomberg BNA’s Tax Management Portfolios. The portfolios are considered the gold standard in the legal world for those dealing with tax matters.
In addition, Kelton and Arens have written many articles on the IRS whistleblower program. For instance, Arens wrote an article detailing some of the problems with the IRS Whistleblower Program, with some ideas on how to fix it.
Kelton explained how California could easily create an effective tax whistleblower program in her article, “Bridge the Tax Gap: Bring in the Whistleblowers,” and would greatly benefit from it.
For a comprehensive list of articles by Phillips & Cohen attorneys about the IRS whistleblower program, see below.
If you are aware of a tax fraud and would like to consult with a whistleblower attorney to discuss your options, please contact us for a free, confidential review of your case.
Articles by Phillips & Cohen attorneys about the IRS whistleblower program include:
- “Giving credit where credit is due: requiring the IRS to properly attribute its recoveries to whistleblowers” By Edward Arens – Bloomberg BNA: Tax Management Memorandum – September 1, 2017
- “IRS should use whistleblowers, not collection agencies, to close the tax gap” by Erika Kelton – The Hill – May 5, 2017
- “IRS whistleblower programs show signs of improvement, but still has a long way to go” by Erika Kelton – Phillips & Cohen – January 21, 2017
- “IRS whistleblower program has more problems than the GAO found” by Edward Arens – Accounting Today – December 12, 2015
- “Opinion: Bridge the tax gap: bringing in the whistleblowers” by Erika Kelton – Capitol Weekly – May 6, 2010