IRS Whistleblower Program FAQ
What is the goal of the IRS Whistleblower Program?
The goal of the IRS Whistleblowers Program is is to incentivize integrity and to bring law enforcement attention on schemes that defraud law-abiding taxpayers through illegal tax avoidance.
How long does it take before the IRS takes action on a case?
An IRS whistleblower case is likely to take many years to resolve itself, in part because large tax cases are complex, in part because tax cases are subject to appeal and protracted litigation, and in part because the IRS is encumbered by finite resources and weak management controls governing whistleblower tape.
Do you need a lawyer to file an IRS whistleblower claim?
In theory no, but in practice probably yes. The Internal Revenue Service has a legendary bureacracy and so far the Service seems to be more intent on denying whistleblower claims that in actually making awards. Tax matters are complex and with the IRS you are likely to get only "one bite at the apple," which means that any weakness or deficiency in your initial submission is likely to be fatal to your claim.
Can I just give the IRS a tip and have them look into the matter?
You can, but you will not get a whistleblower award in the end, nor will your telephone tip necessarily result in even a cursory investigation. The Internal Revenue Service is understaffed and overwhelmed, and so they are looking for cases that are based on a considerable amount of physical, well-presented evidence. The IRS whistleblower program is not a tip line, nor is it a vehicle for resolving personal or business disputes. Awards are being made on the basis of a whistleblower coming to the IRS with a considerable amount of solid information in hand. Examples of such evidence might include cashed checks,invoices,the numbers to hidden bank accounts, emails, internal audits, contracts, and video or audio tape that illuminates an illegal tax-avoidance scheme.
Do you need to be a U.S. citizen to obtain a whistleblower award?
You do not need to be a U.S. citizens to receive an award under the IRS whistleblower program.
Can you report fraud anonymously?
No, you cannot report fraud to the IRS anonymously, nor can an entity (a corporation, partnerhship or nonprofit) file a case. Only individuals can file IRS whistleblower cases. Having said that, IRS privacy laws are very strict and keep the IRS from disclosing the existence of whistleblowers or naming them upon settlement.
What if you are not the first person to report the tax fraud to the IRS?
The IRS pays awards to those who are first to file on an alleged fraud.
Do taxes have to be paid on IRS whistleblower awards?
Yes. In most cases, the IRS will automaticaly withold estimated taxes,but whistleblowers may submit an application for a reduced rate of withholding.