IRS Whistleblower Program: Tax Fraud Tip Guide
The IRS whistleblower program pays awards of 15 to 30 percent of additional taxes collected based on whistleblower information. Mandatory awards apply when the disputed amount exceeds $2 million or when alleged offenders have annual income over $200,000. The program has paid over $1.2 billion since 2007 including the famous $104 million Bradley Birkenfeld UBS award. This guide covers eligibility, filing, and the long award process.
Prerequisites
- Specific information about tax fraud or evasion
- Understanding the multi-year award timeline
- Legal representation strongly recommended
Determine Eligibility
For mandatory awards under Section 7623(b), the disputed tax amount must exceed $2 million or the alleged offender must have annual income over $200,000. Below these thresholds, discretionary awards under 7623(a) may apply but are not guaranteed. Information must be specific enough to enable IRS investigation.
Gather Documentation
Collect specific evidence including names, taxpayer identification numbers if available, dates, amounts, methods of evasion, and any supporting documents. Obtaining documents through legal means is essential. Stolen documents or unauthorized access to systems can disqualify your tip and create legal liability for you.
Consult Experienced Counsel
Tax whistleblower law is complex and the long timeline makes professional representation valuable. Many tax whistleblower attorneys work on contingency, taking a percentage of any award. Verify attorney experience with IRS Section 7623 cases specifically, as general tax law experience does not necessarily translate.
File Form 211
Submit Form 211 to the IRS Whistleblower Office. Anonymous filing is permitted through legal representation. Include detailed allegations, supporting documentation, identifying information about the taxpayer, and your relationship to the information. Working with experienced counsel improves the quality of the submission.
Wait Through Investigation
IRS investigations typically take years. Whistleblowers have limited communication with the IRS during this time. The IRS may interview you for additional information. Patience is essential. The award process from initial tip to payment typically takes 5 to 10 years. Some cases take longer.
Receive Award if Successful
Awards are paid only after the IRS collects additional taxes based on the whistleblower information. Award amounts range from 15 to 30 percent of collected amounts. Awards are subject to ordinary income tax. Some attorney fees may be deductible. The largest award to date was $104 million paid to Bradley Birkenfeld for UBS tax shelter information.