The Internal Revenue Service (IRS) recently collected a settlement valued at $263 million. This settlement ended an offshore tax evasion scheme. The IRS Whistleblower Rewards Program identifies taxpayers who owe more taxes than they currently pay. The tax evasion scheme had been running for over a decade and was one of U.S. history’s largest IRS whistleblower settlements.
The anonymous whistleblower who reported the tax evasion will receive a staggering $74 million reward. This is among the highest ever paid by the IRS, with the largest awarded being a $790 million recovery to a banker who blew the whistle on a Swiss bank’s tax evasion scheme. The reward-for-information program incentivizes individuals to come forward with substantial information that could assist the IRS in recovering lost tax revenue and ensuring compliance with tax laws.
Understanding the IRS Whistleblower Program
The IRS Whistleblower Program incentivizes individuals to report instances of tax fraud and misconduct within the tax system. Established under the Tax Relief and Health Care Act of 2006, the program allows whistleblowers to receive a monetary reward if their information leads to a successful enforcement action, resulting in recovered tax revenue. The reward for qualifying whistleblower information is between 15 and 30 percent of the total proceeds the government collects.
Whistleblowers can file reports related to underreported income, fraudulent tax filings, and other illegal tax-related activities. This initiative aims to uncover tax evasion and encourage citizens to participate in maintaining tax integrity, ultimately fostering a fairer tax system for all. The program pays eligible whistleblowers significant monetary incentives for whistleblowers to report any person, corporation, business, trust, partnership, or entity underreporting taxes due to fraud, questionable tax strategies, or unintentional errors. In 2023, the IRS collected $338 million from whistleblower cases, a clear indication of the IRS’s commitment to maintaining a fair tax system.
Who Is Eligible to Submit an IRS Whistleblower Claim
Submitting an IRS whistleblower claim involves a structured process that allows individuals with knowledge of tax fraud or significant tax law violations to report their findings. To initiate the claim, you will need to complete Form 211, “Application for Award for Original Information.” This form requires a detailed description of the alleged tax wrongdoing, including specific information about the taxpayer involved, the types of violations, and any supportive documentation that can substantiate the claims. It’s essential you provide as much information as possible to increase the chances of your claim being accepted and investigated by the IRS.
Once the form is submitted, the IRS will review your claim to determine its validity and potential for enforcement action. You can remain anonymous, an important protection for those concerned about retaliation or privacy. Suppose the IRS takes action based on the information you provided. In that case, you may be eligible for a monetary reward, which will be a percentage of the amount collected from the taxpayer.
Contact a Whistleblower Attorney in New York
If you are aware of one or more tax evasion schemes, you can pursue compensation as a whistleblower. Whistleblowers need to follow the strict requirements outlined in the IRS Whistleblower Rewards Program. The skilled IRS whistleblower attorneys at Lipsky Lowe are prepared to help you navigate the whistleblower process and pursue the most compensation possible. If you’ve already been awarded an unfairly low sum, we can help you take legal action. Don’t hesitate to contact Lipsky Lowe to schedule a complimentary, no-obligation case evaluation.
About the Author
Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today.