IRS Whistleblower Claims
The IRS is authorized to pay whistleblowers to report taxpayers who fail to pay the taxes they owe. The payouts can be substantial.
Congress authorized the IRS to pay up to 30% of amounts collected based on information provided by whistleblowers. Most payouts are substantially less than this. In many cases the IRS does not pay anything. This is primarily due to the IRS determining that the information is not relevant, the tax not being collected, or the submission not meeting the program requirements.
In other cases, it is due to the IRS and how it processes the claim. The IRS Whistleblower Office has drawn criticism from Congress and taxpayers for being inefficient and not paying awards when awards are deserved. As a result, the IRS Whistleblower Office has been reorganized several times and is still in a state of flux.
The IRS will typically act on relevant information that is submitted properly. Once it does, it will begin an audit of the taxpayer and it may assess additional tax, penalties, and interest. This process can take several years to complete. The IRS has very little authority to disclose to the whistleblower what is happening with the audit or the whistleblower claim. This is another area of concern that the IRS is working on.
Whistleblowers do have rights, however. This includes the right to contest some whistleblower claims that are wrongfully denied by the IRS.
We can help with this. We represent clients with IRS audit matters daily. Please contact us immediately if you have information that may support a whistleblower claim to see if we can assist with your claim.