The Internal Revenue Service (IRS) has awarded $11.9 million to an anonymous whistleblower for providing instrumental information that led to an enforcement action against an unnamed Fortune 500 company. The IRS recovered $55 million in unpaid taxes, interest, and penalties, giving the whistleblower 22% of the recovered amount.
The IRS whistleblower program allows qualified whistleblowers to receive 15 to 30% of the funds collected in enforcement actions. The whistleblower program helps the IRS pursue big companies who aren’t paying the appropriate amount of taxes. In certain cases, monetary recovery also includes fines or penalties assessed for knowingly failing to properly pay taxes.
The IRS Whistleblower Program was initiated in 2007 and established that qualified whistleblowers could receive a minimum of 15% to a maximum of 30% of collections when tax, penalties, interest, and other proceeds recovered over one or more tax years totals at least two million dollars. The exact amount awarded will depend on how much and what type of information was provided and if that information could otherwise be found elsewhere. More helpful and previously unknown information may lead to a higher award.
Whistleblower Representation by Attorneys
IRS whistleblowers are allowed to remain anonymous but must be represented by an attorney. Whistleblowers who are willing to have their identity known may submit information directly to the IRS. The IRS has some leeway to decide how much to award the whistleblower. Whistleblower attorneys may be able to highlight specific and significant contributions made by a whistleblower they represent which can result in a higher award.
In the recent case of $55 million recovered, the IRS had initially awarded only 15% but the whistleblower’s attorneys were able to identify contributions that the individual had made toward the case and the IRS adjusted the award percentage higher to 22%. This was based on detailed insider knowledge and information about specific instances of the company’s failure to pay taxes.
Other Whistleblower Programs
The IRS Whistleblower Program is similar to other qui tam whistleblower programs including the False Claims Act which handles Medicare and Medicaid fraud and the SEC Whistleblower program which covers violations of federal securities laws such as Ponzi schemes, insider trading and market manipulation.
Since its inception, the IRS whistleblower program has recovered over $6.6 billion from actions initiated by whistleblower reports. This includes award payouts to more than 2,500 whistleblowers of over $1.1 billion.