While many people get the shivers when the IRS is mentioned, they may not know that the agency actually pays whistleblowers for reporting people or companies that do not pay their taxes. In many cases, if the information provided is used by the IRS to recover tax monies, the informant can be awarded up to 30 percent of the amount recovered. It turns out that being an IRS whistleblower can result in the IRS paying you money for a change!
Rule for receiving an IRS Whistleblower Award
The IRS is not looking for little fish. The purpose of their whistleblower program is to find what it calls a “significant Federal tax issue.” The IRS whistleblowing guidelines outline the specific circumstances in which an award can be received. However, simply stated, the two areas in which whistleblowing rewards may be awarded are:
- If total amount in dispute (included taxes, penalties and fees) exceed $2 million dollars -OR- in cases of individuals, their gross income must exceed $200,000.
- Cases that do not meet the previous thresholds may still have a reward but will be paid out at a lower percentage.
According to the guidelines, there are certain circumstances in which the whistleblower can dispute the outcome of their claim in Tax Court. It is best to refer to the aforementioned guidelines for specific details.
Where to Report Tax Fraud
The IRS Whistleblower hotline can be reached by calling 1-800-829-0433. In order to file a complaint the IRS will send you a form on which you must provide detailed information on your claim. The correct form can also be downloaded from the IRS website and then mailed in.
Problems With the IRS Whistleblower Program
Recent hearings in Congress have highlighted the fact that although many whistleblowers are handing over significant information to the IRS on billions in delinquent taxes, the IRS is slow to utilize the information and even slower to pay out the reward it has promised.
Senator Chuck Grassley is at the head of this criticism and says that the program is good, but the IRS is destroying its credibility by not following through on its promises. So while there is potentially a huge monetary benefit to being an IRS informant, currently the IRS whistleblower payouts are a little slow.
A Growing Problem
Tax fraud is a growing problem, but due to the nature of the system, it is also very hard to pin down. There are some numbers that the IRS that has released in regard to the extent of the money involved, but they admit they really have no idea how big the problem is in relation to real dollars. However in 2012 the IRS says they paid out over 700 million in fraudulent tax refunds. For whistleblowers, IRS rewards are the only motivation they may have for coming forward. If you think you would like to be a part of the IRS whistleblower program and you have credible information regarding tax fraud, then you may want to call their whistleblower hotline. Perhaps you will find yourself a few dollars richer for your trouble.