Whistleblowers Help IRS Identify Noncompliance

Each year, the IRS receives thousands of tips from individuals who identify taxpayers who may not be abiding by U.S. tax laws. John Hinman, Director, IRS Whistleblower Office, recently talked about the importance of whistleblower information in identifying noncompliance and reducing the tax gap.

But did you know that many whistleblowers receive financial rewards for their information? The IRS Whistleblower Office ensures that claims are reviewed by the appropriate IRS business unit, determines whether an award should be paid, and ensures payment is sent. In fact, the IRS has paid over $1.05 billion in over 2,500 awards to whistleblowers since 2007.

Further, Hinman stated that according to the IRS’s Large Business and International (LB&I) division, whistleblowers have provided invaluable insight into violations perpetuated by large corporations, wealthy individuals, and their financial planners, resulting in over 900 criminal tax cases.

Individuals with information on noncopliance can file a Form 211, Application for Award for Original Information, to submit information and be considered for an award. Typically, the more specific, credible, and timely the claim the more likely is will be referred to one of the IRS’s operating divisions for further review. A subject matter expert may contact the whistleblower to ensure the IRS fully understands the information submitted and will notify whistleblowers when a case for which they provided information is referred for audit or examination.

The IRS takes the protection of whistleblower identity very seriously and prevents the disclosure of a whistleblower’s identity, and even the fact that they have provided information, to the maximum extent that the law allows. Additionally, whistleblowers are protected from retaliation by their employers under a law passed in 2019. Finally, Hinman noted that going forward, the Whistleblower Office team will continue to make improvements to this important program, raise awareness about the program for potential whistleblowers, and look for ways to gain internal efficiencies to move cases forward as quickly as possible.

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