Alerting the internal revenue service (IRS) with information that you believe a person or business has violated the tax law is provided for under the IRS Whistleblower Protection Laws. The whistleblower has the potential of receiving a hefty reward if the information provided culminates in the IRS collecting the taxes and finds that the information provided “substantially contributed to the collection of tax.” The award is based on a percentage of the amount collected ranging from 15 to 30 percent.
How to file a claim under IRS whistleblower protection laws
There are certain criteria that the alleged IRS taxpayer violator must meet in order for the IRS to accept the whistleblower claim for investigation:
- The total amount for collections, including unpaid taxes, interest and penalties must exceed $2 million.
- Individual taxpayers who are reported must have gross earnings in excess of $200,000 for the taxable year that is under investigation.
If you believe the person or company you are reporting meet these criteria, your report must be filed on a specific IRS form and include:
- As estimate of the amount of taxes you believe is owed.
- A summary of all the facts upon which you base your claim.
- An explanation of how you gained your knowledge of the alleged violation.
Your claim must be filed under penalty of perjury. If the IRS decides to pursue the claim and determines you played any part in the company decision to underpay taxes, you will not receive any reward and may be criminally prosecuted for those actions.
Although the IRS pledges to protect the identity of the whistleblower as much as possible, you may be called to testify in a judicial hearing if you are deemed to be “an essential witness.” If the IRS determines in cannot proceed without your testimony, it will notify you and give you the option of remaining anonymous and not pursuing the case, thereby giving up any claim to a reward.
After filing the claim, you will not be privy to any information concerning IRS actions against the taxpayer or any specific information about the status of the case. You will only be told whether the case is open, denied, closed and payable and the amount of the award that you can expect to receive. It may take years for you to collect your reward since the reward is not paid until the entire amount of the taxes, interest and penalties in question have been collected.
The process is complicated and you need the assistance of attorneys who are dedicated to representing whistleblowers. At the Bothwell Law Group, we have the experience you need for filing your claim under the IRS whistleblower protection laws. We work diligently to pursue your claim and protect your identity. Contact us today.