The IRS Whistleblower Program allows individuals to report significant tax fraud or underpayments to the Internal Revenue Service (IRS) in exchange for potential monetary rewards. Established under the Tax Relief and Health Care Act of 2006, the program aims to enhance tax law compliance and combat fraudulent activities.
Anyone with credible, specific, and original information about tax fraud can be a whistleblower. Eligible violations include:
Underreporting of income
Failure to file tax returns
False deductions or credits
Offshore tax evasion
Fraudulent tax shelters
The IRS Whistleblower Program offers:
Monetary Awards – Whistleblowers may receive 15% to 30% of the total collected proceeds if the IRS recovers over $2 million (or $200,000 for cases involving individuals).
Confidentiality – The IRS maintains whistleblower confidentiality, though anonymity is not guaranteed in all cases.
Protection Against Retaliation – While there are no explicit IRS protections, whistleblowers may be covered under other employment retaliation laws.
Gather Evidence – Collect relevant tax records, financial statements, or other documentation supporting the fraud claim.
Complete IRS Form 211 – Submit Form 211, Application for Award for Original Information, detailing the alleged tax fraud.
IRS Review & Investigation – The IRS evaluates the claim, determines if an investigation is warranted, and may pursue enforcement actions.
Recovery & Award Determination – If the IRS recovers funds based on the whistleblower’s information, the whistleblower may receive a reward.
Appeal Rights – Whistleblowers may appeal an award decision to the U.S. Tax Court if they disagree with the determination.