Penalties: New Proposed Regulations Flesh out IRS Whistleblower Program

By Bryan C. Skarlatos and Joseph Septimus
Journal of Tax Practice & Procedure
December 2012 - January 2013 Edition

In 2006, Congress breathed new life into the IRS Whistleblower Program by enacting Code Sec. 7623. Code Sec. 7623(a) codified the IRS’s pre-existing discretionary authority to pay awards to whistleblowers. Code Sec. 7623(b) requires mandatory awards to whistleblowers, of between 15 and 30 percent of the amount collected, under limited circumstances. Generally, awards are mandatory when a whistleblower provides information relating to amounts in dispute that exceed $2 million and, if the information is provided with respect to a taxpayer who is an individual, the taxpayer must have gross income in excess of $200,000 for the tax year at issue. If these thresholds are not met, the whistleblower may still be eligible for a discretionary reward under Code Sec. 7623(a).

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