The most common informants that lead to CI investigations are former spouses and fired employees. Informants can be paid rewards where the IRS proceeds with any administrative or judicial action based on information provided by an informant, the informant shall receive a reward based on the amounts collected. The reward will be at least 15 percent, and no more than 30 percent, of the collected amount plus interest.
If the informant qualifies under Federal Whistleblower laws, the amount of the reward will be determined by based upon a determination of the extent to which the information obtained from the Whistleblower substantially contributed to the administrative or judicial action and subsequent recovery of tax revenue. The reward may be reduced if it is determined that the claim was brought by an individual who planned and initiated the actions that led to an underpayment of tax or violation of the Internal Revenue Code. If the Whistleblower is subsequently convicted of criminal conduct arising from his or her role in the reported action themselves, any award will be denied. No award will be paid unless the information submitted to the IRS is submitted under penalty of perjury.
Reward claimants often send documentation to substantiate their claim with a completed Form 211 which includes an explanation as to how the information being reported came to the attention of the claimant, including the date(s) the information was acquired and a description of the claimants relationship to the person or entity which is the subject of the claim. CI special agents are not allowed to compromise the tax liability of an informant to obtain information about another taxpayer. A claim for reward may be filed by an executor, administrator, or other legal representative on behalf of a deceased informant if, before the informant’s death, the informant was eligible to file a claim for the reward. Certified copies of the letters testamentary, letters of administration, or other similar evidence must be attached to the claim for reward on behalf of a deceased informant to show the authority of the legal representative to file the claim.
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