The US Internal Revenue Service (IRS) has its own whistleblower program that rewards whistleblowers with financial compensation to encourage individuals to report tax fraud and tax underpayment. Like claims brought under the False Claims Act, IRS whistleblowers are also protected from employer retaliation for taking whistleblower actions. If you have evidence of tax fraud, or other types of fraud against the US or California state government and are considering filing a whistleblower claim, contact the California IRS whistleblower lawyers of Tycko & Zavareei LLP today for a free legal case review.
What is the IRS Whistleblower Reward Program?
According to the US Department of the Treasury, the “tax gap,” or the difference between taxes that are owed and what have been collected, totals around $600 billion each year. Under the IRS Whistleblower Program, tax whistleblowers are entitled to receive between 15 and 30 percent of the funds the IRS collects if:
- The whistleblower provides evidence that causes the IRS to take action
- The amount of tax money in dispute exceeds $2,000,000 for an entity or $200,000 for an individual
- The IRS successfully collects owed tax money as a result of the whistleblower action
What Types of IRS Fraud Can be Reported?
In general, tax fraud can be described as an intentional attempt to evade taxes or defraud the IRS by submitting false information on a tax return. Types of tax fraud committed by companies and individuals include:
- Intentionally underreporting or failing to report income
- Claiming false tax deductions or credits
- Transferring or hiding income or assets
- Making fraudulent record entries
- Moving money to a foreign bank to avoid reporting income, otherwise known as offshore tax havens
- Setting up shell bank accounts and moving money through these accounts to gain tax benefits
- Hiding the source of illegally-gained money by moving it to businesses or foreign banks
- Operating a business illegally under a tax-exempt status
- Creating false payroll tax returns or failing to file payroll tax returns
- Paying workers off the books and misclassifying employees
How Are California IRS Whistleblowers Protected?
The Taxpayer First Act (TFA) protects whistleblowers who come forward and report tax fraud and other tax crimes against the IRS. Like the False Claims Act, the TFA protects whistleblowers from retaliation from their employer as a result of reporting an IRS violation. Types of retaliation prohibited include firing, demoting, suspending, harassing, threatening, or otherwise discriminating against an employee who files a whistleblower complaint.
If discrimination does occur, the qui tam relator is entitled to relief including reinstatement, twice the amount of back pay plus added interest, litigation costs, attorneys’ fees, and in some cases, special damages for reputational harm and emotional distress. If you have experienced retaliation as a result of reporting tax fraud or for becoming a California IRS whistleblower, contact the qui tam lawyers of Tycko & Zavareei LLP to learn about your options for legal recourse.
How Do I File an IRS Whistleblower Claim?
Before filing a tax fraud whistleblower complaint, it may be in your best interest to consult with an experienced whistleblower lawyer who can guide you through the legal process and ensure you complete all forms correctly and send the necessary documents. The qui tam lawyers of Tycko & Zavareei LLP have represented whistleblowers across the country in recovering defrauded funds and unpaid taxes.
In order to file a tax fraud complaint, the whistleblower must fill out the “Application for Award for Original Information,” IRS form 211. This form asks the whistleblower to list evidence and reasons why they believe the information provided will lead to the collection of unpaid taxes. The whistleblower should send the completed form to the IRS Whistleblower Office with a “Form 2848: Power of Attorney.”
The IRS Whistleblower Office will then review the evidence and decide whether to pursue the claim. If the claim is denied, the whistleblower will receive a denial letter, and if it is approved, the whistleblower is authorized to receive updates on the investigation.
IRS Whistleblower Program Success
Since the IRS Whistleblower Program began, it has issued over $1 billion in rewards to whistleblowers. In 2020 alone, the IRS Whistleblower Office gave 169 whistleblower rewards totaling over $86 million. Some notable whistleblower rewards include:
- In 2011, an anonymous accountant received a $4.5 million whistleblower reward for reporting tax fraud at a Fortune 500 company
- In 2012, an anonymous whistleblower received a $38 million reward for reporting a corporate tax avoidance scheme
- Also in 2012, a former international banker, Bradley Birkenfeld, was given the largest IRS whistleblower reward to date of $104 million for reporting a Swiss bank for helping its customers avoid taxes
Contact Our California IRS Whistleblower Attorneys
At Tycko & Zavareei LLP, our team of whistleblower attorneys is made up of former US Department of Justice Prosecutors and private practice qui tam lawyers with ample experience handling whistleblower lawsuits and knowledge of the government investigation process. Our qui tam lawyers have represented whistleblowers across the country who have helped the government in recovering over $7 billion.
Our qui tam attorneys are committed to helping whistleblowers shed light on tax fraud and other types of fraud, including healthcare fraud, government contract fraud, and securities fraud. If you have evidence of IRS fraud, contact the California IRS whistleblower lawyers of Tycko & Zavareei LLP today for a confidential legal consultation.
