Tax Whistleblower Program
International Tax Whistleblower Representation
The passage of the Tax Relief and Health Care Act of 2006 by Congress made significant alterations to the tax whistleblower program, providing informants with much greater incentive to report knowledge of tax fraud to the IRS. Prior to 2006, the IRS had full discretion on payouts, and you could not appeal its determination of your reward. The new law substantially raises the maximum potential reward and creates an appeals process to ensure these awards are fairly determined.
Tax Whistleblower Program Provisions
If you provide the IRS with information about tax underpayment which results in the recovery of unpaid taxes, you can receive between 15% and 30% of the proceeds recovered by the IRS, including penalties and interest. The percentage you are awarded will be based on your contribution to the case. Therefore, to ensure that you maximize your tax reward, it is crucial that you provide the IRS with detailed information and continue to assist them throughout the investigation.
Your report should include:
- Documentation of fraudulent transactions:
- A solid paper trail: or
- Detailed evidence demonstrating tax fraud
Speculative disclosures based on circumstantial evidence may not qualify you for a reward under the tax whistleblower program. The IRS will maintain the confidentiality of your identity throughout the investigation. However, if you are required to testify in court, your identity may be made public.
The new guidelines put forth under the Tax Relief and Health Care Act of 2006 are intended to target large tax underpayments. Therefore, in order to qualify for the Tax Whistleblower Program, your knowledge must lead to the recovery of at least $2 million in taxes, penalties, and interest. If the tax evader is an individual, his annual gross income must exceed $200,000. There is no annual gross income requirement for corporations. Since there is no cap on the size of the reward, your percentage can be quite lucrative depending on the amount of the underpayment.
If your claim falls short of these requirements, it will be handled under the discretionary award statutes in place prior to 2006. You may still receive an award, but it is solely up to the discretion of the IRS.
What Types of Activities are Considered Tax Underpayment?
There are a variety of actions which may be considered tax underpayment and therefore would qualify under the whistleblower program, including:
- Deliberately underreporting or omitting income
- Claiming false deductions
- Hiding or transferring assets or income
- Overstating the amount of deductions
- Making false entries in records
- Failing to report income earned in a stock exchange
- Maintaining two sets of books
- Misusing trust account funds
- Abusing charitable deductions
If you have knowledge of a person or corporation who has underpaid on taxes due to one or more of these actions, it is crucial that you work with an experienced tax whistleblower attorney who can help you build your case. Your ability to maximize your rewards is dependent on your ability to provide the IRS with clear, compelling proof of the infraction.
Timeframe for Filing and IRS Tax Whistleblower Claim
IRS whistleblower claims are highly time sensitive. The statute of limitations for these cases varies a great deal with regard to the nature of the tax underpayment being reported. You need an experienced attorney to determine whether or not your claim is timely.
There is another important reason to act quickly. The IRS will only issue a reward to the first informant who provides them with information regarding any instance of tax fraud. Therefore, if someone else comes forward with information about the same tax violation before you do, you will not be eligible to earn a reward.
The Appeals Process
Payment of your award will not be made until the IRS collects all unpaid taxes, interest, and penalties related to your claim. At that time, you will be rewarded for your participation based on the value of your contribution to the investigation. If you feel that the award does not adequately reflect your contribution to the case, you may file an appeal with the Tax Court within 30 days.
Fighting Fraud Against the Government
Tax fraud affects all American citizens. Tax revenue is used to fund important government programs, and without this money, many of these programs would not exist. The attorneys at Kenney & McCafferty have dedicated their careers to fighting fraud against the government, and we are proud to have helped the IRS recover hundreds of millions of dollars in unpaid taxes. If you feel compelled to report the fraud you have witnessed, we will work tirelessly to ensure that your rights are protected and justice is served.
If you have knowledge of tax underpayment of more than $2 million, please contact our tax whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.
