While there are several laws at the federal and state level designed to protect a worker’s right to blow the whistle on discrimination, workplace safety violations, and healthcare fraud. There are also government laws that protect IRS whistleblowers as well. Unbeknownst to many, the IRS will share a portion of recovered revenue with the person who notifies the government about tax dodgers (thats you, the whistleblower!). This page was designed to offer some basic information about IRS whistleblower law and the rewards available.
We discuss the following topics:
- IRS whistleblower law/IRS whistleblower rewards
- IRS whistleblowers in the News
- Contacting an attorney
It’s important to remember that while certain legal subjects are discussed on this page, nothing contained here is intended as a substitute for speaking directly with a lawyer. Whistleblower law is complex (see our main page here), and a person should not proceed on such an endeavor without first consulting an attorney. If you have questions about IRS whistleblower law and collecting IRS whistleblower rewards, contact one of our attorneys to see how we can help.
IRS Whistleblower Law & Rewards
The IRS offers rewards to persons who provide “specific and credible information” to the IRS Whistleblower Office leading to the recovery of back taxes, penalties and interest.
There are two sections of the law that allow persons recover a portion of the money owed to the government:
- The first is found in the Internal Revenue Code § 7623(1)(b). This section states that if the IRS brings judicial or administrative action against a tax dodger based on information provided by another person, and the disputed amount exceeds $2 million, the whistleblower shall receive at least “15 percent but not more than 30 percent of the collected proceeds (including penalties, interest, additions to tax and additional amounts)” resulting from the action.
- Another section of the law, which applies to disputed amounts of less than $2 million, is in Internal Revenue Code § 7623 (2)(A). This portion of the law entitles the successful whistleblower to a smaller amount, typically a maximum of 15 percent of the recovered money.
We discuss IRS whistleblower rewards along with other whistleblower cases in this blog article. It details all the different types of whistleblower rewards available for all types of whistleblower cases.
IRS Whistleblowers in the News
In 2012 the government awarded an IRS whistleblower more than a million dollars. Though the case of Bradley Birkenfeld, a financier with Swiss Bank UBS, is not the story of a heroic whistleblower, it still highlights the basics of the IRS whistleblower law, and IRS whistleblower rewards.
In the early 2000s, Birkenfeld had helped American investors illegally evade taxes by helping them set up phony companies in order to conceal their money in secret Swiss bank accounts. According to the Los Angeles Times, Birkenfeld once helped an American client convert his money to diamonds, then smuggled the jewels across the Atlantic Ocean in a tube of toothpaste.
By 2007, Birkenfeld, perhaps struggling with a bout of conscience (or seizing new opportunities), cooperated with the United States Justice Department in an investigation into UBS’s activities. Birkenfeld provided detailed information to the IRS about UBS’s efforts to court wealthy Americans interested in evading tax payments. Though he ultimately pled guilty to conspiracy and served time in federal prison, Birkenfeld was awarded $104 million for his role in exposing UBS’s activities.
In another case, which concluded in 2011, an unidentified certified public accountant was awarded $4.5 million under the IRS’s whistleblower program. The CPA’s law firm announced the award, stating that the unidentified accountant was employed in-house at one of the nation’s largest financial service firms. According to Accounting Today, the CPA discovered $20 million in tax liabilities that had gone unreported.
While there is no guarantee that a person will receive the same awards as the IRS whistleblowers mentioned in this section, it could still be worth the effort to find out more about your specific case. If you believe you have information that could help the IRS recover money owed the government, contact our office to discuss your case.
Contacting an Attorney
IRS whistleblower law is complex, and as a result, a person seeking to help the government recover revenue should not attempt to go it alone. IRS whistleblowers should always have a competent lawyer representing their best interests and fighting for the biggest portion of the reward possible.
In addition to legal considerations, a lawyer will help the client navigate and deal with the vast, impersonal bureaucracy that is the federal government. If you have questions about IRS whistleblowers and rewards, contact our wrongful termination lawyers to see how we can help you. Stay vigilant!