Juliet L. Fink published in the CPA JOURNAL: Taxation - Tax & Procedure, "An Overview of the IRS’s Whistleblower Program"

By Juliet Fink

The IRS whistleblower program has been around since the 1800s. In December 2006, the Tax Relief and Health Care Act made fundamental changes to the IRS whistleblower awards program and the relevant section of the relevant section of the relevant section of the tax code. The key change in the law was the addition of IRC section 7623(b), under which awards are no longer discretionary. Prior to the amendment, the IRS retained complete authority to determine whether a reward would be paid, absent an express and definite agreement setting forth the claim and amount of the payment. Such contracts are unnecessary following the 2006 amendments, an administrative or judicial as the IRS is obligated to pay a 15% to 30% award (of the collected proceeds) if it commences an administrative or judicial action against a taxpayer based on the tips furnished by the whistleblower [see IRC section 7623(b)(6)(A)]. 

In addition to providing greater incentives to whistleblowers, the Tax Relief and Health Care Act required the IRS to establish a Whistleblower Office for processing whistleblower award applications received on or after December 20, 2006. More recently, the U.S. Treasury Department issued new regulations, effective August 12, 2014, to implement IRC section 7623. Those regulations apply generally to claims that are open as of the effective date.

Initiating a Whistleblower Claim

Applications for whistleblower awards are made by submitting IRS Form 211, Application for Reward for Original Information, to the IRS Whistleblower Office. Among the other information requested under IRS Form 211, the whistleblower must provide: 1) specific and credible description of such documents and their location if not in the whistleblower’s possession; 3) a description of how the information forming the basis of the claim came to the whistleblower’s attention, how it was acquired, and the whistleblower’s relationship to the taxpayer; and 4) facts supporting the amount the whistleblower’s claims is owed by the taxpayer. 

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