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IRS triples its initial award to whistleblowers

On Behalf of | Sep 23, 2022 | Uncategorized

The IRS announced on September 8 that two whistleblowers received a reward of $8.8 million for their information in collecting $35 million in corporate income taxes. This amount triples the amount initially awarded to the two.

As we wrote earlier this year, the IRS’s collections prompted by whistleblowers fell dramatically in the fiscal year 2021 — $245 million collected and $36 awarded to whistleblowers, down from 2018’s $1.441 billion collected and $312 million awarded. There have also been complaints about the long delays in payouts.

They appealed the initial award

The two whistleblowers (not represented by this firm) provided insider information about corporate tax evasion to the IRS about a specific unnamed company, assisting investigators in their investigation. The initial award was the bare minimum. The whistleblowers and their legal team appealed the award, which whistleblowers can do. The revised number is just over 25%, which is much better but falls short of the allowed maximum of 30%.

Hopeful signs from Treasury

This appeal is generally hailed as good news and hopefully a start of a trend to get the IRS back on track as an effective tool for catching tax cheats. It also comes at a critical time because it received substantial funding from the Inflation Reduction Act (IRA), which enables the agency to step up its staffing and enforcement.

The bipartisan Whistleblower Program Improvement Act of 2021 offers several commonsense reforms, but it has yet to pass. Nevertheless, winning this appeal and the new funding from the IRA could mean more money to whistleblowers.