The Reward
The IRS Whistleblower Program pays informants who report tax fraud resulting in the IRS collecting taxes, penalties, and interest. For cases involving more than $2 million in dispute, the whistleblower receives 15 to 30 percent of the amount collected. For smaller cases, the IRS has discretionary authority to pay up to 15 percent, capped at $10 million.
How to File a Claim
You file a whistleblower claim using IRS Form 211. The form requires specific information about the taxpayer you are reporting, the tax violations you believe have occurred, and the evidence supporting your claim. Vague allegations are not enough. The IRS wants documentation, financial records, and specific facts.
What Happens After Filing
The IRS Whistleblower Office reviews your claim and decides whether to pursue it. If they do, they assign the case to the appropriate IRS division for examination or investigation. The process is slow. Claims can take five to seven years or more to resolve because the IRS must complete its examination, assess the tax, and collect the money before paying the whistleblower award.
Protections for Whistleblowers
Federal law prohibits retaliation against IRS whistleblowers. If your employer retaliates against you for filing a whistleblower claim, you have legal remedies including reinstatement, back pay, and compensatory damages. A tax attorney helps structure the claim to maximize your protection and your potential award.
When to Use a Tax Attorney
Whistleblower claims involve complex legal and tax issues. A tax attorney helps you prepare a credible claim with sufficient evidence, navigate the IRS review process, negotiate the award amount, and handle the tax consequences of the award itself, since whistleblower awards are taxable income.