Rewarding Whistleblowers for Disclosing Tax Violations to the IRS

In 2006, Congress revamped the IRS’s program for rewarding informants who disclose tax violations. The first beneficiary of the new program was a CPA, who received a $4.5 million reward when he discovered and disclosed a tax liability greater than $20 million at a large national financial services firm. The discussion below provides an overview of the program, the requirements for disclosure, certain confidentiality rules for financial advisors, and protections under the law.

How It Works

Under the IRS Whistleblower Reward Program, an individual who exposes tax fraud can receive an award ranging from
15% to 30% of the proceeds recovered by the IRS. To qualify for an award, the tax, penalties, interest, additions to tax, and additional amounts in dispute must exceed $2 million; if the allegedly noncompliant person is an individual, the individual’s gross income must exceed $200,000.

“Rewarding Whistleblowers for Disclosing Tax Violations to the IRS.” The CPA Journal (December 2012)