Many whistleblowers incorrectly believe that (i) there must be fraud, and (ii) that the IRS can go back and audit as many years for which they have specific and credible information.
The first misconception is that fraud is required for the IRS to take action under the whistleblower program. In fact, the IRS will pay an award for information that leads to an action (administrative or judicial) with respect to any underpayment of tax, including an innocent mistake by a taxpayer. There does not need to be fraud; only the collection of proceeds as a result of the IRS action.
The second misconception is that the IRS will go back as many years as necessary to enforce the law and collect the tax. However, the statute of limitations prevents the IRS from auditing taxpayers after a set number of years have passed.Read More