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Friday, July 13, 2007

IRS Now Authorized to Reward Whistleblowers

Thomas Poulin - Copyright ©2007

On February 2, 2007, The Internal Revenue Service named Stephen A. Whitlock as director of its new Whistleblower Office, where he will be responsible for administering the program designed to receive information that helps uncover tax cheating and to provide appropriate rewards to whistleblowers. In late December, President Bush signed the Tax Relief and Health Care Act of 2006 which includes reforms aimed at strengthening tax fraud detection. The new law contains whistleblower reward provisions similar to the federal False Claims Act. The IRS is authorized to pay rewards to whistleblowers for informing the IRS of underpayments of tax and bringing to trial and punishing persons guilty of violating the internal revenue laws. Amounts are paid based on a percentage of the tax, fines, and penalties actually collected by the government based on the information provided by the whistleblower.

The law rewards individuals who provide information regarding violations of the tax laws to the government that involve an individual whose gross income exceeds $200,000 for any taxable year, which includes tax, penalties, and interest of over $2 million.

The whistleblower reward is between 15% and 30% of the amount actually collected by the government, including penalties, interest, additions to tax and additional amounts if the IRS moves forward with an administrative or judicial action based on information brought to the IRS’s attention by an individual, or reaches a settlement. The reward depends on how substantial the whistleblower's contributions were to the IRS action. Under certain specified circumstances, the provision permits awards of lesser amounts. The new law also allows payment of the whistleblower’s attorneys’ fees and costs.

The law also creates a Whistleblower Office within the IRS to administer the reward program. The government estimates that the new law will raise $32 million over five years and $182 million over ten years.

Lawyers at Robins, Kaplan, Miller & Ciresi L.L.P. are currently representing whistleblowers and investigating claims on behalf of whistleblowers who allege underpayments to and fraud on the government. If you wish to consult with a lawyer who handles whistleblower cases, please call Tom Poulin at 202.736.2748.

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