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July 31, 2014 Tax Fraud

Overview of the Internal Revenue Service Whistleblower Program

The False Claims Act, which was enacted in the 1800s, has proven so wildly successful over the years that several other federal agencies and state governments opted to enact similar legislation. One such program, implemented by the IRS, is designed to help curtail the effects of tax fraud and evasion, and incentivizes whistleblowers willing to come forward with information on these issues. If you are aware of tax fraud and believe you may have a possible whistleblower case, we encourage you to speak with one of our tax fraud whistleblower attorneys as soon as possible.

Eligibility Criteria

The IRS’s whistleblower program is somewhat similar to the False Claims Act, but can be differentiated based upon its required criteria to file a case. Unlike the False Claims Act, tax fraud relators must be able to show that their total case, including penalties, fines, and interest, is in excess of a certain dollar amount.

Under current laws, the relator must be able to show that the possible fraudulent individual or business is likely indebted to the IRS in excess of $2 million. In addition, the targeted taxpayer must earn a gross annual revenue of at least $200,000. Cases that do not meet these eligibility criteria will generally be dismissed.

Other Nuances of the Law

The IRS program also contains various other nuances that distinguish it from similar whistleblower programs. For instance, federal statute mandates that a successful whistleblower must receive a portion of the recovery. In other words, it is not within the IRS’s discretion to award a portion of the amount recovered.

Second, the IRS allows relators in certain circumstances to rely on public data or information as the basis of their claim. Under the rules, a relator may be eligible for a reduced award not to exceed 10 percent if the information provided to the IRS was based on:

  • Judicial or administrative hearings;
  • A government investigation or subsequent report;
  • Media, or;
  • The relator’s actual involvement in the tax fraud scheme.

Unlike the False Claims Act, a private whistleblower is not permitted to continue with his or her case in the event the IRS declines to prosecute. If the IRS decides the case is without merit or does not wish to intervene on other grounds, the case must conclude.

The law contains several other disqualification factors that work to eliminate certain claims from being filed. For instance, Department of Treasury employees or those who are required by law to report tax fraud are exempt from filing under the IRS program. Also, if the relator files his claim anonymously or derived the information pursuant to federal employment (or contract work), the claim will be denied.

Contact a Reputable Whistleblower Attorney Today

If you are aware of excessive tax fraud and are considering filing a whistleblower action, we encourage you to contact Berger Montague P.C. today. Our experienced attorneys will put their knowledge of the IRS whistleblower laws to work on your case, and will work diligently to help you obtain the maximum possible recovery.