Become an IRS Whistleblower: Your Step-by-Step Guide to Reporting Tax Fraud and Earning a Reward
Have you stumbled upon concrete evidence of significant tax fraud or evasion? Do you believe someone, or a company, is deliberately cheating the system, costing the U.S. government millions (or even billions) in uncollected taxes? If so, you might be in a unique position to do a great public service and, potentially, receive a substantial monetary award from the Internal Revenue Service (IRS).
This isn't about reporting a neighbor for claiming a few too many deductions on their personal taxes. The IRS Whistleblower Program is designed for major cases of tax non-compliance that result in significant uncollected tax revenue. If you have specific, credible, and original information about such wrongdoing, the IRS wants to hear from you.
Ready to learn how you can become an IRS whistleblower? Let's dive in!
 |
| How To Be A Whistleblower For The Irs |
Step 1: Engage and Assess Your Information
Before you do anything else, let's consider the information you have. Is it truly significant? Is it credible? Can you back it up? The IRS isn't interested in rumors or speculation. They need concrete evidence of substantial tax fraud or evasion.
-
What kind of tax non-compliance are you observing? Is it a business hiding income, an individual stashing money offshore, or a complex scheme designed to avoid taxes? The IRS Whistleblower Program covers a wide array of violations, including:
- Offshore tax havens and shell accounts
- Money laundering
- Pyramid schemes
- False reporting and fraudulent accounting
- Unreported income (including cryptocurrency)
- Overstated business expenses
- Estate tax fraud
- Abuse of tax-exempt organizations
-
Does the alleged tax non-compliance meet the IRS's thresholds for an award? For your information to qualify for a mandatory award under Section 7623(b) of the Internal Revenue Code, the following conditions typically need to be met:
- The amount in dispute (taxes, penalties, interest) must exceed $2 million.
- If the subject is an individual taxpayer, their gross income must exceed $200,000 for at least one of the tax years in question.
- Claims that don't meet these thresholds may still be considered under Section 7623(a), but awards are discretionary.
-
How did you obtain this information? The information must be "original." This generally means it's information you gained through independent knowledge or analysis, not solely from public sources. While you can provide information from public sources, your award percentage might be reduced. Crucially, the IRS does not condone or support illegal actions to obtain information.
Take a moment to seriously consider if your information aligns with these criteria. If it does, you're on the right track!
QuickTip: Revisit posts more than once.
Step 2: Gather and Organize Your Evidence
This is arguably the most crucial step. The stronger and more specific your evidence, the more likely the IRS is to pursue your claim. Think of yourself as building a compelling case.
-
What documents do you have?
- Financial records: Bank statements, ledger sheets, invoices, receipts, contracts, loan agreements.
- Communication records: Emails, text messages, internal memos, meeting minutes that show knowledge or intent of tax evasion.
- Corporate documents: Articles of incorporation, partnership agreements, shareholder agreements, financial statements.
- Any other tangible evidence that supports your claims.
-
Describe the alleged tax non-compliance in detail.
- Provide a clear and concise written narrative explaining the issue(s). Be specific about who, what, when, where, and how the tax fraud or evasion is occurring.
- Identify the taxpayer(s) involved, including their names, addresses, and any known tax identification numbers (e.g., SSN, EIN).
- Estimate the amount of uncollected tax, if possible, and explain how you arrived at that estimate. Even an educated guess can be helpful.
-
Note any missing documents or evidence. If there are documents that would strongly support your claim but are not in your possession, explain what they are and where the IRS might find them. For example, "Company X's general ledger for 2022, which I believe is kept at their main office on Elm Street, would show the manipulated expense accounts."
-
Explain your relationship to the subject. Briefly describe your connection (if any) to the person or entity you're reporting. This could be a former employee, business partner, client, accountant, or even a family member. This helps the IRS understand the context of your information.
-
Document how and when you became aware of the information. This establishes the originality of your information.
Remember, the IRS is looking for specific and credible information. The more detail and supporting documentation you can provide, the better.
Step 3: Consider Legal Counsel (Highly Recommended)
While you can file a whistleblower claim yourself, engaging an experienced IRS whistleblower attorney is strongly advised. Here's why:
- Expert Guidance: Whistleblower law is complex. An attorney can help you navigate the intricacies of the IRS Whistleblower Program, ensuring your claim meets all legal requirements and is presented in the most effective way.
- Protection of Your Identity: The IRS vows to protect the confidentiality of whistleblowers, but an attorney can act as an intermediary, further safeguarding your identity to the fullest extent permitted by law. They can file the claim on your behalf, often without disclosing your name directly to the IRS initially.
- Maximizing Your Award: An attorney can help you present your information in a manner that maximizes your potential award percentage (between 15% and 30% of the collected proceeds). They understand the factors the IRS considers when determining award amounts.
- Protection Against Retaliation: The Taxpayer First Act (TFA) provides certain protections against employer retaliation for whistleblowers reporting tax violations. An attorney can advise you on your rights and help you pursue a retaliation claim if necessary.
- Streamlined Communication: Your attorney can communicate directly with the IRS on your behalf, easing the burden on you and ensuring all communications are handled appropriately.
If you decide to retain legal counsel, you'll likely sign a Power of Attorney (IRS Form 2848) allowing them to represent you.
Tip: Highlight sentences that answer your questions.
Step 4: Submit Your Claim using IRS Form 211
Once you've gathered your evidence and decided on your approach (with or without legal counsel), it's time to formally submit your claim.
-
Complete IRS Form 211, "Application for Award for Original Information." This is the official form for reporting tax fraud and applying for a whistleblower award.
- Fill out all sections accurately and thoroughly.
- The form requires a detailed description of the alleged tax non-compliance and how you obtained the information.
- You must personally sign the form under penalty of perjury. Even if you have an attorney, they cannot sign this form for you.
-
Attach all supporting documentation. Organize your evidence clearly and attach it to Form 211. Refer to specific documents within your narrative to make it easy for the IRS to follow.
-
Mail your completed Form 211 and attachments to the IRS Whistleblower Office.
- The IRS does not currently accept faxed or electronic submissions of Form 211.
- The correct mailing address is: Internal Revenue Service Whistleblower Office – ICE M/S 4110 1973 N. Rulon White Blvd. Ogden, UT 84404
-
Keep a copy of everything you submit for your records.
Step 5: The IRS Review and Investigation Process
After you submit your claim, the waiting game begins. The IRS Whistleblower Office will process your claim and determine how to proceed.
-
Initial Review (Generally 30-90 days): The Whistleblower Office will review your submission to assess its credibility and determine if it meets the eligibility criteria for an award. They'll decide whether to reject it or categorize it under Section 7623(a) or (b).
- If rejected: You will typically receive a letter explaining the reason for denial.
- If pursued: Your claim will be assigned to the appropriate IRS office for further investigation.
-
Limited Communication: Due to strict confidentiality rules, the IRS will provide very limited updates on the status of your claim. They generally won't share specific details about their investigation. You can request a written update on the general status (e.g., "open" or "closed") by mail, but don't expect frequent detailed reports. The process can take years (often 5-7 years, or even longer for complex cases) as the IRS investigates, potentially audits the taxpayer, and goes through administrative and judicial appeals.
-
Investigation and Collection: If the IRS decides to pursue your claim, they will investigate the matter. This may involve audits, inquiries, and potentially legal action against the taxpayer. An award is only paid if the IRS collects proceeds (taxes, penalties, interest, and other amounts) directly attributable to the information you provided.
Step 6: Award Determination and Payment
This is the ultimate goal for many whistleblowers.
- Award Recommendation: If your information leads to the collection of proceeds, the IRS Whistleblower Office will make a preliminary award recommendation.
- Award Notification: You will be notified by mail of the final award determination.
- For Section 7623(b) cases (those meeting the $2M/$200K thresholds), the award is generally between 15% and 30% of the collected proceeds.
- The exact percentage depends on factors like the significance of your information, the extent of your assistance, and whether the information was publicly available.
- Appeals: If you disagree with the award determination, you have the right to appeal the decision to the United States Tax Court.
- Payment: Awards are paid after the IRS has collected the proceeds and the taxpayer has exhausted all appeal attempts. This can take a significant amount of time.
Blowing the whistle on tax fraud can be a lengthy and complex process, but for those with valuable information and the patience to see it through, the rewards can be substantial, both financially and in terms of contributing to the integrity of the tax system.
Tip: Absorb, don’t just glance.
10 Related FAQ Questions
How to know if my information is valuable enough for an IRS whistleblower reward?
Your information is generally considered valuable if it's specific, credible, and leads to the IRS collecting at least $2 million in tax, penalties, and interest from a taxpayer, or if the individual taxpayer has a gross income exceeding $200,000 for any relevant year.
How to protect my identity as an IRS whistleblower?
While the IRS has strict confidentiality rules, hiring an IRS whistleblower attorney is the most effective way to protect your identity. Your attorney can submit the claim on your behalf, acting as an intermediary between you and the IRS.
How to gather evidence without breaking the law?
It's crucial not to engage in any illegal activities to obtain information. The IRS does not condone or support illegal actions. If you know where evidence exists but cannot legally obtain it, describe it to the IRS and indicate its location.
How to submit IRS Form 211?
You must mail the completed IRS Form 211, along with all supporting documentation, to the IRS Whistleblower Office at the address provided in Step 4. Electronic or fax submissions are not accepted for Form 211.
QuickTip: Look for patterns as you read.
How to check the status of my IRS whistleblower claim?
You can request a written status update by mailing a request to the IRS Whistleblower Office. Include your claim number and confirm you are the whistleblower or an authorized representative. Do not expect detailed investigative updates due to confidentiality.
How long does it take to receive an IRS whistleblower award?
The process can be lengthy, often taking 5 to 7 years or even longer, as it involves IRS investigation, potential audits, and the taxpayer's right to administrative and judicial appeals before any proceeds are collected and an award can be paid.
How to appeal an IRS whistleblower award decision?
If you disagree with the IRS's award determination, you have the right to appeal the decision to the United States Tax Court.
How to report tax fraud anonymously if I don't qualify for an award?
If your information doesn't meet the award thresholds, or you prefer not to seek an award, you can report tax fraud using IRS Form 3949-A, Information Referral. While not designed for awards, it allows you to report suspected non-compliance.
How to report misconduct by an IRS employee or tax professional?
To report misconduct, waste, fraud, or abuse by an IRS employee or tax professional, you should contact the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484. You can remain anonymous when reporting to TIGTA.
How to know if I am protected from retaliation as an IRS whistleblower?
The Taxpayer First Act (TFA) provides protection against employer retaliation for employees who report underpayment of taxes or other potential federal tax law violations to the IRS, Department of Justice, Congress, or their employer. If you experience retaliation, you can file a complaint with OSHA within 180 days of the retaliatory action.
 |
