By Lynn K. Ching
The Internal Revenue Service (IRS) Whistleblower Awards Program pays money to people who blow the whistle on persons who fail to pay taxes they owe. Internal Revenue Code 7623 permits the IRS to pay an award of up to 30 percent of the tax, penalty, interest and other amounts it collects as a result of the whistleblower information – to anyone who provides information that leads to the detection and punishment of persons violating the federal tax laws.
In 2019, the IRS issued 181 whistleblower awards, totaling more than $102 million; in 2018, the IRS issued 217 awards, totaling more than $312 million; and in 2017, the IRS issued 242 awards, totaling more than $33 million.
The IRS Whistleblower Program provides for two types of awards:
Exceeds $2 million: If the taxes, penalties, interest and other amounts in dispute exceed $2 million, the IRS will pay an award of 15 percent (minimum) to 30 percent of the amount collected.
If the allegedly non-compliant taxpayer is an individual, the individual’s annual gross income must be more than $200,000.
If the whistleblower disagrees with the outcome of the claim, he or she can appeal to the United States Tax Court.
Less than $2 million: The IRS also has a whistleblower program for those who do not meet the $2 million dollar-in-dispute threshold, or for cases involving individual taxpayers with gross income of less than $200,000. The awards through this program are less, with a maximum award of 15 percent up to $10 million. In addition, the awards are discretionary and the whistleblower cannot dispute the outcome of the claim in Tax Court.
Filing a Whistleblower Claim:
To file a claim under the IRS’ Whistleblower Program, you must complete IRS Form 211, Application for Award for Original Information, and send the completed Form 211 to the following address:
1 Internal Revenue Service
1111 Constitution Ave., NW
Washington, D.C. 20224
Form 211 must be completed in its entirety and should include the following information, including:
- The date the claimant submits the claim
- Claimant’s name
- Name of claimant’s spouse (if applicable)
- Claimant’s contact information, including address with zip code and telephone number
- Claimant’s date of birth
- Claimant’s Taxpayer Identification Number (e.g., Social Security Number or Individual Taxpayer Identification Number) and Taxpayer Identification Number of claimant’s spouse, if applicable.
- Specific and credible information (not guesses) concerning the person(s) that the claimant believes have failed to comply with tax laws and which will lead to the collection of unpaid taxes. This information should include the following:
- The legal name of the person(s) (e.g., individual or entity), and any related person(s), that committed the violation of tax laws
- The person’s aliases, if any
- The person’s address
- The person’s Taxpayer Identification Number(s)
- A description of the amount(s) and tax year(s) of Federal tax claimed to be owed, and facts supporting the basis for the amount(s) claimed to be owed
- Documentation to substantiate the claim (e.g., financial data; the location of bank accounts, assets, books, and records; transaction documents relevant to the claim, etc); and
- Any and all other facts and information pertaining to the claim.
Lynn K. Ching is a partner and attorney at Diosdi Ching & Liu, LLP, located in San Francisco, California. Lynn may be reached at (415) 318-3990 or by email at firstname.lastname@example.org.
This article is not legal or tax advice. If you are in need of legal or tax advice, you should immediately consult a licensed attorney.