Federal Law

In December of 2006, President George W. Bush signed into law the Tax Relief and Health Care Act of 2006, a bill authorizing the Internal Revenue Service to pay rewards to whistleblowers.  Secton 406 of the Tax Relief and Health Care Act of 2006 (PDF) provides for whistleblower reforms, and is the law under which the IRS Whistlblower program was created. 

The IRS whistleblowers law, modeled on the False Claims Act, provides for two types of awards.

  • If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, that person's annual gross income must exceed $200,000. If the whistleblower disagrees with the outcome of a claim, he or she can appeal to the Tax Court. The rules governing this part of the program are found at Internal Revenue Code IRC Section 7623(b) - Whistleblower Rules.
     
  • The IRS also has an award program for whistleblower cases which do not meet the $2 million threshold, or for cases involving individual taxpayers with gross incomes of less that $200,000. The awards under this program are less, with a maximum award of 15 percent, up to $10 million. In addition, the awards are discretionary, and the informant cannot dispute the outcome of the claim in Tax Court. The rules for these cases are found at Internal Revenue Code IRC Section 7623(a) - Informant Claims Program, and some of the rules are different from those that apply to cases involving cases in excess of $2 million.
     
  • The form for submitting information, and seeking an award for doing so, is IRS Form 211. The same form is used for both of the above-described IRS whistleblower awards programs.