Expand All  ]

IRS Whistleblower Program:

What is the IRS Tax Whistleblower Program?
The IRS Whistleblower Program was established to award an individual who provides information to the IRS about the underreporting or underpayment of tax by a taxpayer.

In December 2006, Congress significantly improved the IRS Tax Whistleblower Program by requiring mandatory award payments to whistleblowers who provided specific and credible information to the IRS that substantially contributed to the determination and collection of tax. The award is at least 15 percent but not more than 30 percent of the collected proceeds (including penalties, interest, additions to tax, and additional amounts). The amount in dispute (tax, penalties, interest, additions to tax, and additional amounts) must exceed $ 2,000,000 and if the taxpayer is an individual the individual's gross income must exceed $200,000 for any taxable year subject to such action.

Contact us, to discuss a possible Tax Whistleblower case.

How much does the IRS pay to a Whistleblower?
The IRS is required to pay whistleblowers who provide specific and credible information which substantially contributed to the IRS’ determination and collection of tax a range between 15% and 30% of the collected proceeds. The actual percentage depends on positive and negative factors attributable to the whistleblower. Currently, the IRS has established brackets for the awards as 15%, 18%, 22%, 26% and 30%.

A whistleblower should attempt to maximize this IRS determined percentage during the preparation of the claim, as well as throughout the process.

Contact us, for an evaluation of the likely percentage of your whistlblower claim.

How long does the process take?
Tax Whistleblower claims are complicated matters and take years (five to seven years on average) for the IRS to complete.

The length of time for a whistleblower’s claim to be completed varies based upon the quality of the claim submission, the taxpayer, tax issue, complexity of the issue, criminal ramifications, etc.

Contact us, to discuss your potential case. Our expertise can often help to shorten the duration of a claim.

Who is the ideal Tax Whistleblower?
The ideal tax whistleblower is an attorney, accountant (CPA), CFO, CEO, tax director, or any other individual with inside information and knowledge as to the taxpayer's underpayment of tax of $2,000,000 or more. The tax whistleblower typically has a close relationship with the taxpayer and is not a person who simply "believes," or "thinks" there is an underpayment of tax.

Contact us, to have us evaluate whether you are an ideal Tax Whistleblower.

Are documents necessary to support a Tax Whistleblower claim?
Documents are not required but certainly provide tremendous credibility to the factual allegations of the whistleblower about the underreporting and underpayment of tax. We can assist you in determining which documents in your possession are material and relevant which would provide credibility to your whistleblower claim.

Contact us, to have us evaluate whether you have documentation to boost the credibility of your whistleblower claim.

Can I provide documents I obtained from my employer?
There is a long-standing line of cases supporting the permissibility of the IRS to receive information from a private party even if the private party obtained the information in an illicit or illegal manner, so long as the government is a passive recipient of the information and did not encourage or acquiesce in the private party’s conduct. Note: IRS will refuse to accept or use privileged documents (i.e. a legal opinion) that may be submitted with the whistleblower claim.

Contact us, to have us evaluate whether you have documentation to boost the credibility of your whistleblower claim.

What does a Whistleblower need to have a "great" claim?
a. Ideally, a Whistleblower should have detailed information and documentation substantiating the underpayment of tax.

A Whistleblower that is not in possession of documentation that would support the factual allegations may provide other helpful information such as informing the IRS where such documentation may exist (i.e. vendors, banks, a second set of books, etc.) as well as witnesses that could provide corroboration of the whistleblower’s allegation or other facts that would be useful in an IRS examination.

Contact us, to discuss whether your Tax Whistleblower claim is a "great" claim.

What types of cases qualify under the Tax Whistleblower Program?
Typical cases include:

  • Corporate Fraud

  • Money Laundering

  • General Tax Fraud

  • Abusive Return Preparer

  • Loopholes and Tax Shelters

  • Non-Filer Enforcement

  • Employment Tax Enforcement

  • Unreported Income

  • Unreported Gifts

  • Errors on tax returns

  • Invalid Elections

    Contact us, to have us evaluate whether your claim is one that the IRS typically pursues.

  • confidentiality:

    Does the IRS have to know my name?
    Yes! The IRS will not pay an award unless the information provided by a whistleblower is submitted under penalty of perjury. The IRS has procedures and practices in place to protect the identity of whistleblowers. There is also the possibility that if the case proceeds to trial, the IRS reserves the right to call the whistleblower as a witness.

    We prepare every claim such that the “file speaks for itself” and client testimony is often not necessary. As part of our analysis of your potential case, we will advise you whether we belive your testimony will be necessary, so that you can factor this in to your decision to proceed.

    Contact us, to discuss how we can use the IRS procedures to protect your identity from disclosure.

    Does the IRS Tax Whistleblower program provide for whistleblower protection?
    No. I.R.C. § 7623 does not provide protection to a whistleblower from retaliation by the taxpayer.

    To date, the experience of the TWLF is that the IRS takes additional steps to protect the identity of the whistleblower, especially in those situations where the whistleblower is still employed by the taxpayer.

    Contact us, to discuss how we can use the IRS procedures to protect your identity from disclosure.

    Why is confidentiality important as a Tax Whistleblower?
    This depends upon the facts of your particular situation. A tax whistleblower may be subject to retaliation by the taxpayer (i.e., you could be sued for your actions if the taxpayer discovered your name). Additionally, some tax whistleblowers fear criminal retaliation by the taxpayer. Therefore, TWLF advises our clients that confidentiality is extremely important and we will take all steps necessary to protect the identity of a tax whistleblower.

    Contact us, to discuss the importance of confidentiality.

    How might a tax whistleblower’s identity be disclosed to the taxpayer?
    There are only three parties that are aware that a whistleblower filed a claim, (i) the whistleblower, (ii) the whistleblower's attorney, and (iii) IRS personnel.

    1. Clients are taking a great risk and may be entitled to a large award. It is nautral to want to share this information with others. However, we advise our clients not to disclose to anyone, including family and friends, the existence of their whistleblower claim unless absolutely necessary. When a whistleblower’s identity is known to a taxpyer, it is usually due to the actions of the whistleblower.
    2. We are confident in the practice and procedures employed by TWLF to ensure that the identity of our clients will not be disclosed. Our representation of our clients is structured so that all communications by the IRS is to our office and that there is no direct communications by the IRS with our client. This ensures that phone calls, email, fax, or written correspondence will not be sent to the whistleblower’s workplace or home, which could expose their status as a whistleblower. In addition, all communications with our clients will be through some agreed method whether it is a secret email account, burn phones, encrypted emails, etc.
    3. Section 7623 does not provide any protections regarding the identification of whistleblowers. Treasury and the IRS, however, are very sensitive to the legitimate concerns whistleblowers have with protecting their identities. Treas. Reg. § 301.7623–1(e) provides that “[n]o unauthorized person will be advised of the identity of an informant.” The proposed regulations reaffirmed the commitment of Treasury and the IRS to safeguard the identity of whistleblowers who submit information under section 7623. The IRS will use its best efforts to: (i) prevent the disclosure of a whistleblower’s identity; and (ii) notify a whistleblower prior to any disclosure.

      The informant privilege allows the Government to withhold the identity of a person that provides information about violations of law to those charged with enforcing the law. The informant privilege is held by the Government, not the informant, and is not an absolute privilege. There may be instances when, after careful deliberation and high-level IRS approval, the disclosure of the identity of a whistleblower may be determined to be in the best interests of the Government. Nonetheless, in such cases, the IRS first carefully considers and weighs the potential risks to the whistleblower and the Government’s need for the disclosure, and looks for alternative solutions.

    Contact us, to discuss ways to prevent the disclosure of your identity.

    Why does a taxpayer care about the identity of a tax whistleblower?
    Typically, taxpayers who believe that they are a target of an IRS audit or investigation because of a tip, are often curious as to the identity of the informant. While not every taxpayer in this position presents a danger of retaliation, it is nonetheless important to safeguard against the disclosure of a tax whistleblower's identity. Taxpayers seldom think of the employee that is no longer employed as being the whistleblower due to the passage of time. However, if the identity of the whistleblower is known to the taxpayer, the taxpayer may bring a lawsuit against the whistleblower for perhaps no reason other than harassment causing unecessary stress and expense to the whistleblower.

    Contact us, to discuss ways to prevent the disclosure of your identity.

    Does the IRS dislcose my identity to a taxpayer?
    No. The IRS has policies and proceduresin place to ensure that they do not make an errant disclosure. Furthermore, TWLF can assist you in utilizing additional measures to ensure that the IRS does not disclose your identity.

    Contact us, to utilize the IRS procedures to prevent the disclosure of your identity.

    How might a tax whistleblower disclose his identity to a taxpayer?
    It is difficult for some tax whistleblowers to maintain their own confidentiality. Potentially millions may be paid to the tax whistleblower, and it is exciting to talk about and imagine what to do with the potential award. Nevertheless, we advise our clients to never talk to anyone, even family members, about a case in the Tax Whistleblower Program.

    Contact us, to discuss ways to prevent your inadvertent disclosure of your identity.

    benefits of hiring TWLF:

    Should I represent myself?
    No. You need attorneys with IRS, tax and Tax Court litigation expertise to prepare and present your claim to the IRS to maximize the potential acceptance of your claim into the IRS whistleblower program.

    Contact us, to discuss how TWLF can maximize the acceptance of your claim into the IRS Whistleblower Program.

    Should I hire a non-tax attorney to represent me?
    No. You need attorneys with IRS, tax and Tax Court litigation expertise to prepare and present your claim to the IRS to maximize the potential acceptance of your claim into the IRS whistleblower program.

    Contact us,to discuss how TWLF can maximize the acceptance of your claim into the IRS whistleblower program.

    Why Hire TWLF to represent me?
    TWLF has extensive experience with and superior knowledge of IRS files, practices, procedures, and organization, which will provide you the following advantages:

  • Increasing the likelihood of acceptance of your Tax Whistleblower Claim;

  • Increase the award paid to you;

  • Evaluation of other potential risks;

  • Ensuring your Confidentiality;

  • Representation in Tax Court to appeal the IRS’ determination.

    Contact us, to discuss the benefits of hiring TWLF.

  • Can I file the Whistleblower Claim myself or have my accountant file my claim?
    Yes, you may file the claim yourself. The Form 211 simply needs to be completed and filed at the address on page 2 of the form. Although it states that it takes 45 minutes to complete, we find that TWLF will spend hundreds of hours putting the claim package together in an effort to maximize the award and minimize the time.

    The IRS will accept a claim prepared by your accountant. However, you should be aware pursuant to I.R.C. § 62(a)(22) only attorney fees are deductible above the line (i.e. to determine Adjusted Gross Income) and therefore are not subject to limitations or alternative minimum tax.

    Contact us, to discuss how TWLF can assist you in filing your IRS whistleblower claim.

    How will TWLF increase the likelihood of acceptance of my Tax Whistleblower Claim?
    As attorneys with tax and IRS expertise, we are in the best position to frame your Tax Whistleblower Claim in a manner that will maximize the credibility of your Claim. Our extensive background with the IRS rules, regulations and procedures (as former IRS attorneys) and Tax law will enable us to prepare your claim and present your facts and issues to avoid automatic rejection by the IRS.

    Contact us, to discuss how TWLF will enhance your claim.

    How will TWLF increase the award payable to me?
    IRS has a set formula for awards, namely, the IRS starts the award at 15%, and will increase the award to 22% or 30% based on positive factors in the case. However, the IRS will reduce the award to 26% or 18% based upon negative factors that are present. Given TWLF’s extensive background dealing with the IRS and knowledge of tax laws, TWLF will assist you in achieving the positive factors to increase the award payable to you while at the same time minimizing the negative factors that might be present in your case.

    Contact us, to discuss how TWLF will increase the award payable to you.

    What other risks will TWLF evaluate on my behalf?
    TWLF will walk you through the IRS Whistleblower Program and successful acceptance of your tax Whistleblower claim. TWLF will also evaluate whether your claim can be filed at a state level, if your claim can be submitted with the SEC or other regulatory agency, and whether you have any potential liability.

    Every claim is evaluated by TWLF for other issues that might affect our clients, such as our client’s involvement in initiating and planning the underpayment of tax, criminal involvement by our clients (i.e. aiding and abetting, conspiracy, etc.), whether the information is subject to a privilege (i.e. attorney client privilege, etc.), whether the documentation is stolen (note, IRS will receive stolen documents in a passive capacity), violation of non-disclosure contract, etc.

    Contact us, to discuss how TWLF can help me evaluate other risks.

    How will TWLF ensure my confidentiality?
    TWLF has successfully implemented a number of procedures to prevent the disclosure of our client’s identity as well ensure that their case remains confidential.

    The methods employed will depend on your set of circumstances.

    Contact us, to discuss which methods would be employed in your situation.