IRS Whistleblower Program & Rewards

Reporting IRS Fraud

An individual who wants to report the underpayment of taxes under the whistleblower program must complete IRS Form 211 and send it to the Whistleblower Office at the Internal Revenue Service. Form 211 requests information about the whistleblower making the report; the entity allegedly underpaying taxes; any relationship between the whistleblower and the entity; and any alleged misconduct. Whistleblowers are asked to describe how they learned of the tax fraud, facts supporting the allegations and the amount believed to be owed to the government.

After submitting Form 211 to the IRS, it is first determined whether the claim exceeds $2 million. For claims involving less than $2 million in unpaid taxes or tax fraud, the information is forwarded to the Informant’s Claim Unit and handled under Section 7623(a). Rewards under Section 7623(a) are based on the discretion of the IRS. Information involving claims of more than $2 million are assigned a claim file number and notification is made to the whistleblower and/or his or her attorney. If an examiner needs clarification about the submission, or believes the whistleblower might have additional information, they will arrange an interview with the whistleblower.

Awards

At the conclusion of an investigation, the IRS Office completes a case file for processing as well as a claim file for the whistleblower award in conjunction with Form 11369. This form, the Confidential Evaluation Report on Claim for Reward, is sent to the IRS Whistleblower Office for determination of the award by the Director of the Whistleblower Office. Once the IRS has recovered the amount owed, the Initial Claim Evaluation (ICE) unit will ensure that the whistleblower has no outstanding tax returns or tax liability before issuing an award. For additional details, visit the IRS website for information about award determination proceedings or reduced rates of withholding.

Any award paid under the IRS Whistleblower Program is taxable income. The IRS will withhold tax from any payment to a U.S. citizen or resident. If a portion of the reward will be paid to an attorney, the whistleblower can file for a reduced income tax withholding to reflect the decreased tax obligation. Nonresident aliens who receive an award under the program will also be subject to withholding unless they are exempt pursuant to a U.S. income tax treaty. If an award is denied, an appeal can be filed with the United States Tax Court.

Remaining Anonymous

The IRS treats whistleblowers as confidential informants and protects their identity to the fullest extent permitted by the law. In one case, the United States Tax Court allowed a whistleblower to remain anonymous while appealing the determination of their award under § 7623. See Whistleblower 14106-10W v. Commissioner of Internal Revenue, 137 T.C. No. 15.

The IRS takes the privacy of individuals and entities submitting tax returns very seriously.

Even though confidentiality is protected, the IRS warns that a whistleblower might be identified as a witness and called to testify in judicial proceeding in certain cases. The IRS also has a policy that it will neither confirm nor deny the existence of a whistleblower in discovery requests where the whistleblower is not listed as a witness. However an adverse discovery ruling could lead to disclosure of information that might reveal the identity of the whistleblower.