But that doesn't mean that taxpayers will get paid quickly. )Īccording to the IRS, on average, in the last fiscal year, new submissions were processed within 21.3 days of receipt. (Birkenfeld got his money after serving 30 months in prison for his role helping billionaire real estate developer Igor Olenicoff hide $200 million offshore and evade $7.2 million in tax, even though Olenicoff himself got off on probation. The largest was the $104 million paid in 2012 to Bradley Birkenfeld for his role in blowing the whistle on Swiss bank UBS AG’s role enabling tax evasion by rich Americans. Since 2007, the Whistleblower Office made awards of $1.1 billion based on the collection of $6.6 billion. The average claim processing time-the time from the date a claim is received to the date an award is paid-for section 7623(b) award payments made during fiscal year 2022 increased by 1.3% from the prior year, while average claim processing time for section 7623(a) award payments increased by 14.9%. The lion's share of those awards were section 7623(b) awards with 26 awards paid totaling $34.5 million attributable to $152.7 million of proceeds collected. Awards paid as a percentage of proceeds collected increased from 14.7% in fiscal year 2021 to 21.9% in fiscal year 2022. That's slightly above the amount paid in fiscal year 2021-$36.1 million-although the total number of awards paid decreased from 179. In fiscal year 2022, the IRS paid whistleblowers 132 awards totaling $37.8 million from $172.7 million in proceeds collected. In 2019, the whistleblower law was further amended, including creating protections for whistleblowers against retaliation. The BBA 2018 also limited section 7623(b) to cases where the dispute proceeds exceed $2,000,000. The Bipartisan Budget Act of 2018 added a new subsection, which further defined proceeds as penalties, interest, additions to tax, and additional amounts provided under the law, as well as any proceeds arising from laws for which the IRS is authorized to administer, enforce, or investigate, including criminal fines and civil forfeiture, and violations of reporting requirements. The regulations also provided guidance on the determination and payment of awards and defined key terms. On August 12, 2014, the Treasury Department published final regulations providing guidance on submitting information, filing claims for awards, and the administrative proceedings applicable to claims for awards. In 1996, a clause was added allowing payments "for detecting underpayments of tax" as another basis for an informant award and making the payments from proceeds collected rather than appropriated funds.Ĭongress made significant changes in 2006 as part of the Tax Relief and Health Care Act of 2006. Under the original statute, the Secretary of the Treasury was empowered to pay such amounts as he deems necessary "for detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same." That language more or less remained the same for over 100 years. Whistleblower laws keep evolving, but at least one version of section 7623(b) has been on the books since 1867. If your tip does not meet the criteria under section 7623(b), the IRS can consider it for a discretionary program under section 7623(a). The IRS may opt not to pay-or to reduce the amount-if the tip is brought by an individual who "planned and initiated" the actions that led to the underpayment of tax or if the tip was based on information derived from a judicial or administrative hearing, a governmental report, hearing, audit, or investigation, or the news media. That means that the information must be specific and credible.Īs for the payoff? Typically, the IRS will pay an award of between 15% and 30% of the proceeds collected that are attributable to the whistleblower tip. The IRS must act on the tip and collect the underpayment resulting from the tip.
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