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Do You Need an IRS Whistleblower Lawyer?

Do You Need an IRS Whistleblower Lawyer?
  • Are you a whistleblower who has uncovered tax fraud?

  • Have you been punished — or fired — for refusing to agree to illegal accounting?
  • Are you standing up for justice, but wondering whether there is any reward?

The Internal Revenue Service's whistleblower program pays rewards to employees and others who expose large-scale tax fraud — and a variety of other laws, including the Sarbanes-Oxley Act, may offer protection against any retaliation by the employer. For a whistleblower to qualify for an award, the amount in dispute must exceed $2 million. Depending on the circumstances, employers may be forced to compensate whistleblowers for any harm they suffered.

The Employment Law Group® law firm is experienced in assisting and protecting whistleblowers.  Our attorneys have represented a wide range of individuals, including in-house counsel, portfolio managers, chief financial officers, senior accountants, and other executives, as well as employees from all walks of life. The claims that we have brought on behalf our clients include concealing income, overstating deductions, and other types of tax fraud.  We are based in Washington, D.C., but we take cases nationwide.

IRS awards under the whistleblower program range from 15% to 30% of the proceeds recovered by the IRS. The various other whistleblower laws which can protect employees from retaliation generally provide “make-whole” relief, under which an employee may be entitled to job reinstatement; back pay for lost wages; front pay for future lost wages; litigation costs and attorney fees; and other compensatory damages.

As with all legal claims, deadlines are crucial. The deadline to report tax fraud can be as short as three years. However, claims of retaliation brought under other laws could have deadlines as short as 180 days. It’s best to contact an attorney as soon as possible — before blowing the whistle is best.

FREQUENTLY ASKED QUESTIONS
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How much is an IRS whistleblower reward?

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 $2,000,000 and, if the allegedly noncompliant person is an individual, the individual’s gross income must exceed $200,000.

What sorts of fraud can be reported?

Examples include companies or individuals committing tax fraud by:

  • Deliberately underreporting or omitting income
  • Claiming false tax credits or deductions
  • Hiding or transferring assets or income
  • Overstating the amount of deductions
  • Making false entries in records
  • Failing to report income earned from investments
  • Maintaining two sets of books or financial records
  • Misusing trusts
  • Abusing charitable deductions

If the IRS recovers money, who decides what the reward is?

After the IRS completes an investigation, the IRS Whistleblower Office will issue a final determination regarding the whistleblower’s award amount. If the whistleblower feels that the award does not adequately reflect his or her contribution to the case, the whistleblower may appeal the IRS’s decision to the Tax Court within 30 days.

How does the IRS protect whistleblowers who report tax fraud?

The IRS keeps the whistleblower’s identity secret throughout the initial investigation process. If a whistleblower’s testimony is needed in a judicial proceeding, however, the whistleblower’s identity may be revealed.  Other federal and local laws may provide tax fraud whistleblowers with protection from workplace reprisals — the exact laws will depend on circumstances. To maximize your protection ut’s best to consult a lawyer before blowing the whistle.

How quickly do I need to file an IRS whistleblower disclosure?

The statute of limitations for making a disclosure under the IRS Whistleblower Reward Program is three years from the time the fraudulent tax return was filed, but if the disclosure concerns an omission in excess of 25% of the gross income stated in a tax return filed with the IRS, the statute of limitations extends to six years. The statute of limitations does not apply where a false or fraudulent tax return was filed with the intent to commit tax evasion.

How long does an IRS investigation last?

IRS investigations can take years to complete, but a detailed whistleblower disclosure can shorten the process. Payment of awards will not be made until there is a final determination of the tax liability that is owed to the IRS — and until those funds are collected by the IRS.

The IRS’ Whistleblower Law vs. the False Claims Act

The objective of the IRS’ whistleblower law and False Claims Act may be similar but there are some significant differences between the two. An IRS whistleblower has to go through a very different process for reporting the fraud when compared to the False Claims Act whistleblower. Unlike the latter, a lawsuit is not initiated by the whistleblower. Instead, the report of fraud or violation is addressed directly by the IRS Whistleblower Office and the dispute may be appealed in the Tax Court. The IRS’ whistleblower law applies to individuals whose gross income exceeds specified limits. For the False Claims Act, no monetary thresholds are applicable.

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