What is covered under the IRS whistleblower reward program?
Is the IRS whistleblower program limited to paying rewards for tax frauds?
No. The largest misconception concerning the IRS whistleblower program is that it only covers tax frauds. The IRS whistleblower law covers a wide range of misconduct, and also includes the non-criminal underpayment of taxes.
Prior to 2018, what violations are covered under the IRS whistleblower law?
The original tax IRS whistleblower law covered tax frauds and underpayment of taxes. However, there was widespread disagreement as to the scope of the law, and whether or not the law covered criminal tax frauds and/or sanctions paid for IRS-related infractions.
The law firm of Kohn, Kohn and Colapinto, working with the National Whistleblower Center and tax attorney Dean Zerbe led the fight to clarify the tax whistleblower law. In 2017, they won a landmark ruling in Tax Court broadening the scope of the tax whistleblower law. The Department of Treasury appealed this ruling. While the case was under appeal Congress amended the law to include any law or regulation for which a form is filed with the IRS, or is within the jurisdiction of the IRS criminal division.
In 2018 Congress amended the tax whistleblower law to broaden the scope of coverage explicitly. In response to that law, the Department of Treasury dropped their appeal of the Tax Court case.
What violations are now covered as a result of the 2018 amendments to the IRS tax law?
The 2018 amendment to the IRS whistleblower tax law created an explicit definition to the types of “collected proceeds” for which a whistleblower could obtain a reward. The law clarified the scope of the whistleblower reward provision to include payment for monies collected by the United States for tax frauds, tax evasion, tax underpayments, the violation of any law or regulation within the jurisdiction of the IRS criminal division, or the violation of the requirements set forth in any form that a taxpayer or bank was required to file with the IRS.
According to the plain language of the 2018 amendments, and the legislative history of those amendments, whistleblowers could obtain a reward even if the violation was not directly related to tax, and the violator did not owe any back taxes.
What are the precise terms of the 2018 tax whistleblower law amendment?
The 2018 amendment defines the scope of the tax whistleblower reward provision as follows:
SEC. 41108. CLARIFICATION OF WHISTLEBLOWER AWARDS.
(a) DEFINITION OF PROCEEDS.—
(1) IN GENERAL.—Section 7623 is amended by
adding at the end the following new subsection:
‘‘(c) PROCEEDS.—For purposes of this section, the term ‘proceeds’ includes—
‘‘(1) penalties, interest, additions to tax, and additional amounts provided
under the internal revenue laws, and
‘‘(2) any proceeds arising from laws for which the Internal Revenue Service is
authorized to administer, enforce, or investigate, including—
‘‘(A) criminal fines and civil forfeitures, and
‘‘(B) violations of reporting requirements.’’
Where can I obtain more information about the 2018 amendments to the IRS whistleblower law?
The New Whistleblower’s Handbook contains extensive information on IRS whistleblower program (See Rule 7: Tax Cheats and the IRS Qui Tam. Get a Reward!). You can also learn more here: Big Win for Tax Whistleblowers.
However, the 2018 amendments were enacted shortly after the Handbook was published.
For a tax-deductible donation of $50.00 or more, you can obtain a copy of the Handbook from the National Whistleblower Center. All proceeds for these sales are donated to the National Whistleblower Center.
Where can I obtain legal assistance in filing an IRS whistleblower case?
Please fill out one of the Kohn, Kohn and Colapinto’s consultation request form describing your case.
What are the limits of this FAQ? Is there a disclaimer concerning the information presented here?
Whistleblower laws are complex. There are several qui tam or reward laws that can result in a whistleblower obtaining a multi-million-dollar judgment. Each of these laws has specific filing requirements. Additionally, there are over 50 different federal anti-retaliation laws designed to protect whistleblowers from discrimination. Again, each of these laws has various lengths of statutes of limitation, filing procedures, and definition of a protected disclosure.
These FAQs give whistleblowers an overview of significant whistleblower qui tam, reward, or anti-retaliation laws. They are not comprehensive. If you believe you may have a whistleblower case, you should contact an attorney and obtain specific advice based on the facts of your case. You cannot rely only on the information in this FAQ to determine whether or not you have a valid claim.
A critical resource for those thinking of blowing the whistle is The New Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself (Lyons Press 2017). The Handbook contains a detailed discussion on all major whistleblower laws and has extensive citations to legal cases and statutes the protect whistleblowers. It is an invaluable resource.
Because of the complexity of the whistleblower laws, we disclaim all liability in respect to actions taken or not taken based on the contents of this FAQ. The FAQ is a summary guide to understanding your rights. You should contact an attorney with expertise in whistleblowing before you make a disclosure. You must know your rights before you “blow the whistle,” so you can ensure that your conduct will be protected.
Can the whistleblower attorneys working at Kohn, Kohn and Colapinto help me?
The whistleblower law firm of Kohn, Kohn and Colapinto has a straightforward intake process. It is available here. Every intake is confidential, and the information provided protected under the attorney-client privilege. A senior partner at Kohn, Kohn and Colapinto reads each intake submission.
The intake process is free of charge.
Unfortunately, KKC receives many more requests for assistance then it can handle and must turn away many qualified whistleblowers. If KKC cannot represent you, you still may have a solid case.
If KKC believes you may have a case with which it can help you, you will receive a follow-up call or email to obtain more information and determine whether or not our firm can represent you. Until you have a signed written agreement with the firm, we are not your attorneys (although all of the information you provide to us is privileged and confidential). Almost all of our cases are on a contingency fee basis.