After years of facing criticism for its handling of the IRS program and a dearth of rewards, two law firms have now announced payouts in the last month by the IRS whistleblower program. Both have expressed optimism that the Internal Revenue Service is starting to get on track with the investigation and payment of rewards based on tax whistleblower tips.
Unlike the SEC, the IRS does not typically announce payouts due to privacy issues. Instead, it issues an annual report to Congress which details the number of tips received and the number of payouts annually. The one exception was the $104 million award to Brad Birkenfeld, which the IRS confirmed pursuant to a waiver signed by Birkenfeld.
The most recent announcement involves the payout of rewards to three clients of a local Philadelphia law firm in cases of corporate tax fraud. The rewards were paid out under section 7623(b), which is the mandatory whistleblower reward program developed in 2006-2007 at the direction of Congress. The rules were finalized last year.
The latest announcement indicated that their three clients helped the IRS acquire more than $48 million for the U.S. Treasury because of the information provided about the tax noncompliance. The IRS program pays between 15 and 30 percent to eligible whistleblowers as a reward.
In a letter this summer to Senator Chuck Grassley concerning the IRS program sent from IRS Commissioner John Koskinen, former Director Stephen Whitlock estimated that 6 to 12 awards would be paid out in FY2015. Prior to this year, there had only been 12 payouts under the mandatory program. However, the office has repeatedly emphasized that process can take 5 to 7 years to reach a successful enforcement action and whistleblower reward.
If you have questions about this or another aspect of the IRS whistleblower program rewards, feel free to contact one of our tax whistleblower attorneys via our contact form or by calling 1-800-590-41