How Does the IRS Whistleblower Statute Work?

The federal IRS [Internal Revenue Service] tax whistleblower statute financially rewards individuals providing "tips" to the IRS about tax evasion or fraud, IF a claim is timely filed.  IRS whistleblower cases are highly secret.


What's important for filing an IRS Whistleblower Claim?

IRS whistleblowers need to file a formal claim with the Internal Revenue Service. These claims must thoroughly describe and research the facts about the "tax cheats" and enable agents to follow up in an investigation. The more useful information you provide, the more likely the claim will be diligently investigated. Names, witnesses, and critical financial information are important to provide.

Ferreting out a "tax cheat" is not an easy nor obvious business.IRS tax whistleblowers cannot assume that "the government already knows it." Tax agencies are particularly bound by secrecy statutes and rules and cannot easily share information with those federal, state or local law enforcement officers investigating other legal violations by the same individuals or companies.

An IRS tax whistleblower claim is completely independent of other whistleblower claims. Reporting an SEC claim, for example, will not cause the IRS to investigate the tax issues of the company. Likewise, filing a federal or state False Claims Act qui tam action is a separate process from filing an IRS tax whistleblower claim.  

The most favorable IRS whistleblower statute has a minimum amount in controversy of $ 2 million. The $ 2 million threshold amount includes unpaid taxes and penalties, and interest imposed upon the non-paying taxpayer.  There are other claims procedures for rewarding those who blow the whistle on tax amounts below the $ 2 million threshold.

Together with the claim or "tip form," an IRS whistleblower must fill out and sign important IRS form documents so that your attorney can follow up with information on the client's behalf.

New York State has a similar tax whistleblower statute to the federal IRS whistleblower statute. The New York Attorney General's Office welcomes whistleblowers reporting unpaid taxes. Because New York is the center of so much global commerce and the location of many corporate headquarters, thousands of American corporations and individuals are required by law to pay tax to the State of New York. 

One of the benefits of being an IRS tax whistleblower is that not only can you be awarded a percentage of the amount due the government, but you can normally do so anonymously. Your identity will never be publicly disclosed--unless you want it to be made public. 

The IRS statute allows international tax whistleblowing. Tax whistleblowers can report funds which have been kept overseas to avoid paying U.S. taxes, including in the infamous "Swiss bank accounts." Citizens of non-U.S. foreign countries are also eligible to report failure to pay U.S. or New York State taxes--tax whistleblowers need not be American citizens.

Our democracy depends upon honesty and the integrity of our tax collection is vitally important. Without honest people paying taxes and brave ones reporting tax cheats, we will soon find that we do not have the roads, bridges, police, schools, and other institutions so important in our modern society. 

Under the applicable law of some states, this website is an advertisement. The hiring of an attorney is an important decision that should not be based solely upon advertisements, certifications, or specializations. Please note that the material on this website is general information only, and not offered as legal advice on any matter. This website will not be responsible for any action or failure to act in reliance upon information on this website or any third-party website that may be accessible through a link on this website. In addition, our operation of this website is not intended to create, and will not create, an attorney-client relationship with you. Listing of related or included practice areas herein reflects a focus of an attorney's practice and does not constitute or imply a representation of certification or specialization.