The IRS Whistleblower Program allows individuals to blow the whistle on federal tax fraud and to earn significant monetary awards for their efforts.
Anyone with “specific and credible” information concerning tax evasion or underpayment can file a claim with the IRS. To be eligible for an award, the IRS must collect a minimum of $2,000,000 from the offending company (which includes interest and penalties). If the case involves an individual taxpayer, the individual’s gross income must exceed $200,000 for the year in question. In addition, the tax issue usually must have occurred within the last three years of the filing of the incorrect tax return, or six years if the tax return understates income by at least 25%. There is an exception to these time limits where the tax return was filed with the intent to commit tax evasion.
In most instances, an IRS whistleblower will be someone with firsthand knowledge of a company’s illegal tax practices, such as an employee, accountant, or auditor, but this is not required to be an IRS whistleblower. The only individuals generally ineligible to receive an award are those who are federal employees and obtained the information through their job or if the individual is convicted of a crime related to the tax fraud in question.
The IRS is required to award a whistleblower between 15% and 30% of the amount recovered in most cases, but this is a wide range, especially when the amount recovered is many millions of dollars. To determine the specific percentage, the IRS Whistleblower Office will look at all relevant factors, with the biggest factor usually being the value of the information provided. The Whistleblower Office will also look at the following positive factors in calculating an award:
The Whistleblower Office will also take into account the following negative factors, which can cut against a higher percentage:
It is critically important to have an experienced IRS whistleblower attorney in order to get the highest award possible. Throughout the case, your attorney will make sure that you are maximizing the positive factors discussed above and ensure that you do not engage in any of the negative factors. When it comes time for the Whistleblower Office to calculate your reward, your attorney will prepare a memorandum for the Whistleblower Office detailing why you are entitled to the highest award possible. If you do not agree with the amount awarded by the Whistleblower Office, your attorney can appeal that decisions to the U.S. Tax Court to obtain a fair award.
If you suspect that a company is failing to properly pay taxes, you can blow the whistle on the practice by filing a claim with the IRS Whistleblower Program. We find the following steps are helpful in evaluating and preparing an IRS whistleblower claim.
Our firm has handled several high-profile IRS whistleblower cases, including a nearly $25 million dollar settlement from a publicly traded company which underpaid taxes. Our client, who was an independent auditor, blew the whistle on the company’s illegal practice and was awarded $5.3 million for his efforts. This case was a good example of how the IRS depends on auditors and accountants to hold unscrupulous businesses accountable. Without our client’s courage to step forward, the underpayment would have likely gone unnoticed.
We have successfully represented clients in whistleblower claims and litigation in districts across the United States. Our firm has offices in Atlanta GA, Brunswick GA, Alexandria VA, and Washington DC, and we frequently travel to other cities and states to help whistleblowers file claims and recover rewards. Contact our firm and we will let you know if we can help. If we are not the best firm for your case, we will let you know what lawyer or law firm would be right for your case and we will refer you to them at no additional cost to you.
If you think you may have personal knowledge of a company committing tax fraud by evading or underpaying taxes, contact our office now and speak with an experienced IRS whistleblower attorney. There is no cost or obligation, and the call is completely confidential.
The IRS Whistleblower Office made 169 awards to whistleblowers in 2020 which totaled more than $86 million. While this may seem high, this is actually the third year in a row that the number of awards has decreased. In 2018, the IRS awarded $312 million to whistleblowers, and in 2019, the IRS awarded $120 million.
The decrease in awards can be attributed, in part, to the lack of support in funding by Congress and the Department of Treasury. The IRS Whistleblower Office is relatively small (about 40 full-time employees) and takes a long time to process each claim. Currently, there are nearly 24,000 open claims and it can take the IRS more than 10 years to pay a claim. This means that billions of dollars in underpaid taxes are likely sitting in limbo. The hope is that Congress will place more emphasis on the IRS Whistleblower Office in the coming years and give it the funding and support that it deserves.
Despite the backlog of claims, there has been some good news for tax whistleblowers. In 2019, the Taxpayer First Act was signed into law which includes an anti-retaliation provision for tax whistleblowers. Prior to this, federal law offered little protection to tax whistleblowers. Those who have been retaliated against, however, must file a complaint with the Secretary of Labor within 180 days of the violation.
The Taxpayer First Act also allows for improved communication between the IRS and the whistleblower. In the past, the IRS would often only disclose to a whistleblower whether the claim was still open. Now, the Whistleblower Office is supposed to inform the whistleblower whether the claim has been referred to audit and whether the taxpayer has made a payment on the issues raised in the claim. This is a big win for tax whistleblowers, because the increase in communication should give whistleblowers a better idea about whether a claim will be successful and how long the IRS’s investigation might take. We suspect that the increase in protection and communication will likely lead to more whistleblowers stepping forward to alert the government to tax fraud.
Page Pate and his partner Jess Johnson are top notch! Both are brilliant attorneys with incredible integrity. Page represented me in a successful 5 year long Whistleblower False Claims Act Case. Despite his busy schedule and prestigious reputation as one of the best Federal Trial Lawyers in the US, Page was unbelievably polite, respectful and took the time to listen, explain the process in its entirety and answer any questions. Page saw the potential of my case where the others didn’t. He and Jess worked very long hours preparing the claim, researching, making phone calls and attending meetings with me to assist the DOJ. I am still thanking God every day for Page Pate and Jess Johnson and their belief in me and their ability to make a $25M case out of what other expert Qui Tam attorneys saw as impossible.