Background and Purpose
Launched to combat significant tax fraud and noncompliance, the IRS Whistleblower Program incentivizes individuals to report actionable violations by offering financial rewards.
Its mission? To recover unpaid taxes, deter fraudulent behavior, and bolster the integrity of our tax system.
Over time, the program has adapted to address emerging enforcement challenges, solidifying its role as a cornerstone of fiscal transparency and accountability.
Key Eligibility Criteria
To participate in the program and qualify for rewards, whistleblowers must meet specific requirements:
- Original Information: The whistleblower must provide specific, original details regarding tax evasion or fraud that are not publicly available.
- Monetary Threshold: The information should lead to the recovery of a significant amount of unpaid taxes, generally meeting or exceeding a predefined financial threshold.
- Voluntary Disclosure: The individual must voluntarily come forward without being compelled by external forces.
- Non-Participation in the Offense: The whistleblower should not have been involved in the fraudulent activity reported.
These criteria ensure that the program rewards only those submissions that are both credible and valuable to tax enforcement efforts.
Benefits and Potential Awards
The IRS Whistleblower Program stands out for its financial incentives, making it a compelling option for those with valuable information:
- Award Calculation: Whistleblowers may receive a percentage of the total amount recovered by the IRS as a result of their tip. This percentage is typically determined based on the significance of the information and the overall recovery.
- Incentive to Report: The financial reward, which can be a substantial sum, serves as an incentive for individuals to come forward with information that might otherwise remain hidden.
- Encouraging Compliance: By offering these awards, the program not only compensates the whistleblower but also reinforces the broader goal of enforcing tax compliance and deterring fraud.
Legal Protections and Confidentiality
The program prioritizes whistleblower safety with robust safeguards:
- Confidentiality Guaranteed: You can report anonymously or through an attorney, ensuring your identity remains protected throughout the process.
- Anti-Retaliation Protections: Federal laws shield you from workplace retaliation or other reprisals, offering peace of mind when stepping forward.
- Access to Legal Guidance: Partnering with experienced counsel—like the team at Dilendorf Law Firm—helps you navigate the process confidently, safeguarding your rights while maximizing your contribution to tax justice.
Through these protections, the IRS Whistleblower Program creates a safe environment that fosters the reporting of fraud, thereby contributing to a fairer and more accountable tax system.
The Process Explained
Navigating the IRS Whistleblower Program is a carefully structured journey designed to protect your rights and ensure a thorough review of your claim.
Below is a clear breakdown of the process:
Step-by-Step Filing Process
- Initial Consultation and Case Assessment
Begin with a confidential meeting with our legal team to discuss your claim and evaluate its eligibility. We will review your situation and help determine the best approach for gathering and organizing the necessary documentation.
If we accept your case, our services are offered on a contingency basis, meaning you pay only if we succeed.
- Evidence Compilation and Documentation
Collect and organize all relevant materials—financial records, emails, internal reports, and other documentation that supports your claim. Our team is here to assist you in ensuring that all evidence is properly compiled and securely stored.
With your documentation in hand, we work with you to create a comprehensive narrative that clearly outlines the alleged tax irregularities. The submission is tailored to align with IRS guidelines while safeguarding your privacy and legal interests.
- Secure Submission to the IRS
Once your file is complete, we manage the secure delivery of your information to the designated IRS office. Every detail is presented accurately and confidentially to meet all program requirements.
After submission, the IRS undertakes an initial review of your claim. If additional information is needed, our team will help you promptly provide the necessary clarifications.
At Dilendorf Law Firm, we’re here to streamline your IRS whistleblower journey with clarity, protection, and unwavering support.
Partnering with you every step of the way, we ensure you’re equipped with the knowledge and confidence to navigate your case with peace of mind.
Relevant Statutes and Case Law
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- 26 U.S.C.A. § 7623: This statute authorizes the IRS to pay awards to whistleblowers who provide information leading to the detection of underpayments of tax or violations of internal revenue laws.
- 26 C.F.R. § 301.7623–1: This regulation outlines the general rules for submitting information and filing claims for awards. It specifies that the Whistleblower Office may pay awards for information necessary for detecting underpayments of tax or violations of internal revenue laws (Stone v. Commissioner of Internal Revenue, 86 F.4th 1320 (2023)).
- 26 C.F.R. § 301.7623–2: This regulation defines key terms such as “action,” “proceeds based on,” and “collected proceeds,” and explains how the IRS determines whether to proceed based on the information provided by a whistleblower.
- 26 C.F.R. § 301.7623-4: This regulation details the process for determining the percentage of collected proceeds to be awarded to a whistleblower, considering both positive and negative factors (Smith v. Commissioner of Internal Revenue, T.C. Memo. 2024-65 (2024)).
- Lissack v. Commissioner of Internal Revenue: This case clarifies that the IRS must take action on the specific tax issues identified by the whistleblower for the whistleblower to be entitled to an award. The whistleblower’s information must substantially contribute to the IRS’s recovery of underpayments.
- Whistleblower 14376-16W v. Commissioner of Internal Revenue: This case reiterates that awards are mandatory if the IRS proceeds with an administrative or judicial action based on the whistleblower’s information and collects proceeds as a result.
- Villa-Arce v. Commissioner of Internal Revenue: This case confirms that the Tax Court has jurisdiction over appeals regarding whistleblower awards and that the IRS must collect proceeds based on the whistleblower’s information for an award to be granted.
- Whistleblower 972-17W v. Commissioner of Internal Revenue: This case emphasizes that the whistleblower’s information must substantially contribute to the portion of an examination that results in the collection of proceeds for the whistleblower to be entitled to an award.
These statutes and cases collectively provide a comprehensive framework for understanding the eligibility, submission process, and determination of awards for IRS whistleblowers.
Contact Us
For more information or to learn about your rights as a crypto whistleblower, reach out to Dilendorf Law Firm at (212) 457-9797 or via email info@dilendorf.com to guide you through the process and protect your interests.
Resources
- History of the Whistleblower Program
- Whistleblower Office annual reports
- Additional important considerations when submitting a whistleblower claim
- Whistleblower | Contents of Directory whistleblower
- S.625 – IRS Whistleblower Program Improvement Act of 2023
- IRS Whistleblower Office celebrates National Whistleblower Day; over $7 billion in collected proceeds thanks to whistleblowers
- Publication 5251 (Rev. 9-2022)
- Whistleblower Office at a glance
- The Whistleblower Law
- Internal Revenue Service
