IRS Whistleblower Program: Who Qualifies and How it Works

Big news this week: an IRS whistleblower earned $104 million in rewards for turning in tax cheats based on knowledge he gained as a Swiss banker.

Pretty slick. If you know any tax evaders and want to doing something similar, read on…

Note: Yes, I realize that it’s extremely unlikely that any of you will have this sort of knowledge but… It still makes for interesting reading (at least to me).

So who qualifies and how does this work?

For starters, the IRS “may pay awards to people who provide specific and credible information to the IRS if the information results in the collection of taxes, penalties, interest or other amounts from the non-compliant taxpayer.” They go on to state that they’re looking for solid info, not educated guesses or speculation.

There are two types of awards. In general terms, if the amount recovered exceeds $2 million and the taxpayer (non-payer?) has an annual gross income of at least $200k, the tipster is eligible for 15-30% of the money collected as a result of their information. These submissions are processed under IRC 7623(b).

In cases where less than $2 million is in question and/or the taxpayer has an annual gross income of less than $200k, IRC 7263(a) applies. This regulation allows for a maximum award of 15% (capped at $10 million), at the discretion of the IRS.

Honestly, I don’t understand why the annual gross income of the accused comes into play. If I turn in a deadbeat and the IRS recovers $3 million, why does it matter how much the cheater earned in any particular year? I guess they have their reasons.

To file a claim, you need to complete and submit IRS Form 211. Also note that all claims are submitted under penalty for perjury, so don’t go making stuff up in hopes of snagging some cash or getting someone in trouble.


Leave a Comment