IRS Ramps Up Whistleblower Effort

by Kurt Schulzke on January 16, 2008

Ever thought of becoming a tax collector? Practically anyone can take a shot at it these days, thanks to a little known provision in the Tax Relief and Health Care Act of 2006.

On January 14, 2008, the IRS issued “interim guidance” for blowing the whistle under its new program. The rewards for a successful whistleblower can be substantial — 15 to 30 percent of the tax the IRS collects in response to private information provided by a whistleblower who is not also a participant in the fraud.

Claimants who draw attention to public evidence of fraud — extracted by the claimant from judicial or administrative proceedings, government reports, hearings, audit or investigation, or the media — can also get an award up to 10 percent of the amount collected.

If the IRS denies a claim, the whistleblower can appeal to the U.S. Tax Court. Awards are fully taxable, but attorney fees and costs paid by or on behalf of the claimant are deductible above-the-line (for AGI) but only up to the amount of the award.

If you think that you may have a claim and would like to discuss how best to go about presenting it to the IRS, feel free to call.