The IRS Whistleblower Program was enacted as a part of the Tax Relief and Health Care Act of 2006. This act established the IRS Whistleblower Office that works with individuals who provide tips that lead to the discovery of IRS tax code violations. If you are interested in learning about how the IRS Whistleblower Program works, bring your questions to an experienced dually licensed California Criminal Tax Defense Attorney and CPA. The Tax Law Offices of David W. Klasing have extensive knowledge of how the IRS Whistleblower Program works, and we are here to explain how it is used to combat tax fraud and actions you should take if you feel you are at risk of being the subject of one.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
The IRS Whistleblower Program is a major deterrent for taxpayers who believe they could openly commit tax fraud and get away with it. As mentioned, the IRS Whistleblower Office accepts tips that would aid them in uncovering incidents of tax fraud. In return for their information, the whistleblower would receive a substantial reward from the IRS. However, there are some stipulations that a whistleblower must follow if they wish to recover a reward for their information.
One of the most important factors to note about tax whistleblowing is that the IRS is not interested in every instance of tax fraud. Instead, the IRS wants information about taxpayers who have committed tax code violations that amount to at least $2 million in tax debt, which also includes penalties and interest assessed by the IRS. As a result, the majority of whistleblower cases involve large corporations or high-wealth individuals that commit tax fraud.
There are a variety of tax fraud issues that may be addressed with the IRS Whistleblower Program:
These are just a few ways that a person or company may commit tax fraud and find itself as a target of a whistleblower complaint.
The IRS Whistleblower Office only handles whistleblower cases, which should tell a taxpayer how serious the agency is when it comes to the evasion or underpayment of taxes. Of course, this does not mean that all reports of tax fraud will be investigated. The Whistleblower Program is not intended to be used as an avenue to seek vengeance on a corporation or to handle personal disputes. It is also important to have clean hands yourself when making one. You’re very likely to get in trouble yourself if you helped perpetuate the fraud in any way.
When blowing the whistle on a person or business committing tax fraud, the whistleblower must use IRS Form 211. When submitting information to the IRS, the whistleblower cannot support their claim with a mere educated guess. The IRS Whistleblower Office is looking for tips that are supported by substantial information. For example, if a whistleblower is alleging that a company is underreporting their income, they may require documentation that shows discrepancies in their income reporting history. For this reason, a whistleblower should consider retaining a California whistleblower attorney to help gather evidence to support their claim. This could make it easier to link their evidence to tax code regulations that were violated by the individual or business that committed tax fraud, which would make it more likely for a whistleblower to be rewarded.
There are some instances where the IRS Whistleblower Office will not process a claim:
This is not an exhaustive list. The IRS could reject a whistleblower claim under other circumstances.
After the submission of Form 211, the IRS will examine the evidence presented by the whistleblower to determine whether it is sufficient to support an audit or enough for the case to be referred to the U.S. Department of Justice.
Note that filing a Form 211 does not mean that the whistleblower will be involved in all aspects of the case. The IRS will likely interview the whistleblower once and will later inform them when the case has concluded and the amount of money for which the case was settled.
If a whistleblower claim is successful, the whistleblower will receive a reward between 15-30% of the taxes recovered from the target of the complaint. This could be a significant windfall for a whistleblower and provides a great incentive for a person to come forward with information against a non-compliant taxpayer. This means that taxpayers who engage in open tax fraud should beware that they could be the subject of a whistleblower case if they do not handle their tax debt legally and appropriately.
If you wish to know more about the IRS Whistleblower Program, you should call our California Tax Lawyers today. The legal team at the Tax Law Offices of David W. Klasing has years of experience helping our clients navigate complex tax law issues. We know that facing tax fraud allegations especially where the IRS Whistleblower Program has been alerted is incredibly stressful, and we would like to offer our expertise to guide you through the process. To arrange a confidential consultation with a member of our legal team, call us at (800) 681-1295. You could also gain more information about consultation options on our website.