Know Someone Who is Not Paying Their Income Tax? The IRS Will Pay You to Tattle

In an effort to encourage you to turn in tax evaders, the IRS is offering a pretty nice cash incentive.

From the IRS:

The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.

Who can get an award?

The IRS may pay awards to people who provide specific and credible information to the IRS if the information results in the collection of taxes, penalties, interest or other amounts from the noncompliant taxpayer.

The IRS is looking for solid information, not an “educated guess” or unsupported speculation. We are also looking for a significant Federal tax issue – this is not a program for resolving personal problems or disputes about a business relationship.

What are the rules for getting an award?

The law provides for two types of awards. If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. If the whistleblower disagrees with the outcome of the claim, he or she can appeal to the Tax Court. These rules are found at Internal Revenue Code IRC Section 7623(b) – Whistleblower Rules.

The IRS also has an award program for other whistleblowers – generally those who do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less that $200,000. The awards through this program are less, with a maximum award of 15 percent up to $10 million. In addition, the awards are discretionary and the informant cannot dispute the outcome of the claim in Tax Court. The rules for these cases are found at Internal Revenue Code IRC Section 7623(a) – Informant Claims Program, and some of the rules are different from those that apply to cases involving more than $2 million.

If you decide to submit information and seek an award for doing so, use IRS Form 211. The same form is used for both award programs.

More Information
What Happens to a Claim for an Informant Award (Whistleblower)Procedures used and the criteria followed to identify and process informant cases

History of the Whistleblower/Informant ProgramHistorical information on the evolution of the concept of paying for leads from its inception up to the current law followed today

Whistleblower LawA brief synopsis of what the new whistleblower law entails. This is the most significant change to the Services’ approach to informant awards in 140 years

How Do You File a Whistleblower Award ClaimStep by step procedures to follow to file an informant claim for award

Confidentiality and Disclosure for WhistleblowersThe rules governing confidentiality of informant information

IRC Section 7623(b) – Whistleblower RulesThe requirements of the new rules enacted in IRC Section 7623(b), the Whistleblower Program

IRC Section 7623(a) – Informant Claims ProgramThe requirement of the rules governing claims that do not meet the requirements of the provisions in the whistleblower program under IRC Section 7623(b). These claims are part of the Informant Claims Program

IRS Form 211Application for Award for Original Information

News Release IR-2007-201Procedure Unveiled for Reporting Violations of the Tax Law, Making Reward Claims

Notice 2008-4 Guidance to the public on how to file claimsClaims Submitted to the IRS Whistleblower Office under Section 7623

Whistleblower Office At-a-Glance

2008 Report to Congress on the Whistleblower Program

Reporting other information to the IRS

If you have information about tax noncompliance but are not interested in an award, or you have other information you believe may be of interest to the IRS:

For information on how to Report Suspected Tax Fraud Activity, if you have information about an individual or company you suspect is not complying with the tax law, and you do not want to seek an award . You can remain anonymous

The IRS sets professional standards for attorneys, certified public accountants and enrolled agents who represent taxpayers before the IRS. To learn more about those professional standards, or how to report a violation, see Office of Professional Responsibility At-a-Glance – Report Circular 230 Violations – email OPR@irs.gov

Report Fraud, Waste and Abuse to Treasury Inspector General for Tax Administration (TIGTA), if you want to report, confidentially, misconduct, waste, fraud, or abuse by an IRS employee or a Tax Professional, you can call 1-800-366-4484 (1-800-877-8339 for TTY/TDD users). You can remain anonymous.

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