Source: https://freemanlaw.com/irs-whistleblower-awards-brief/
Timestamp: 2020-03-28 17:13:55
Document Index: 12737168

Matched Legal Cases: ['§ 7623', '§ 7623', '§ 7623', '§\u202f1906', '§\u202f1209', '§\u202f406', '§\u202f41108', '§\u202f1405']

IRS Whistleblower Awards in Brief | Freeman Law
During Fiscal Year 2015, the IRS awarded whistleblowers more than $103 million (before sequestration). That is a significant portion of the more than $403 million it has awarded since the whistleblower program was substantially strengthened in 2007. And since that time, the Service has collected more than $3 billion in tax revenue based on whistleblower information—in other words, the program has been a resounding success.
The payment of tax whistleblower awards is governed by 26 U.S.C. § 7623. That section, and the governing framework, was significantly changed by The Tax Relief and Health Care Act of 2006, which added section 7623(b) to the Code. Under the whistleblower program, a taxpayer who submits actionable information that allows the IRS to proceed with administrative or judicial action can be entitled to an award equal to amount between 15 to 30 percent of the resulting proceeds. See 26 U.S.C. § 7623(b)(1).
Whistleblower awards come in two flavors: A submission may qualify for an award under section 7623(a) or (b). If the submission does not meet the criteria under section 7623(b), the IRS generally only considers it for an award under its pre-Act discretionary authority (now section 7623(a)). Thus, satisfying section 7623(b) and its regulations can be quite important.
Qualification for an award under section 7623(b) requires that the information be:
Signed and submitted under penalties of perjury;
In fiscal year 2015, there were 19 award payments that involved 49 section 7623(b) claims. (The average whistleblower submission contains information relating to three taxpayers, so each submission results in an average of three claims.)
A whistleblower may submit information on an IRS Form 211, Application for Award for Original Information. After the IRS Whistleblower Office makes a final decision regarding a whistleblower’s section 7623(b) claim, an unhappy claimant has the right to appeal that final decision to the United States Tax Court within thirty days. See 26 U.S.C. § 7623(b)(4).
Section 7623 provides as follows:
(a) In general The Secretary, under regulations prescribed by the Secretary, is authorized to pay such sums as he deems necessary for—
(1) In general If the Secretary proceeds with any administrative or judicial action described in subsection (a) based on information brought to the Secretary’s attention by an individual, such individual shall, subject to paragraph (2), receive as an award at least 15 percent but not more than 30 percent of the proceeds collected as a result of the action (including any related actions) or from any settlement in response to such action (determined without regard to whether such proceeds are available to the Secretary). The determination of the amount of such award by the Whistleblower Office shall depend upon the extent to which the individual substantially contributed to such action.
In the event the action described in paragraph (1) is one which the Whistleblower Office determines to be based principally on disclosures of specific allegations (other than information provided by the individual described in paragraph (1)) resulting from a judicial or administrative hearing, from a governmental report, hearing, audit, or investigation, or from the news media, the Whistleblower Office may award such sums as it considers appropriate, but in no case more than 10 percent of the proceeds collected as a result of the action (including any related actions) or from any settlement in response to such action (determined without regard to whether such proceeds are available to the Secretary), taking into account the significance of the individual’s information and the role of such individual and any legal representative of such individual in contributing to such action.
(3) Reduction in or denial of award If the Whistleblower Office determines that the claim for an award under paragraph (1) or (2) is brought by an individual who planned and initiated the actions that led to the underpayment of tax or actions described in subsection (a)(2), then the Whistleblower Office may appropriately reduce such award. If such individual is convicted of criminal conduct arising from the role described in the preceding sentence, the Whistleblower Office shall deny any award.
(4) Appeal of award determination Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).
(5) Application of this subsection This subsection shall apply with respect to any action—
(c) Proceeds For purposes of this section, the term “proceeds” includes—
(1) Anti-retaliation whistleblower protection for employees No employer, or any officer, employee, contractor, subcontractor, or agent of such employer, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment (including through an act in the ordinary course of such employee’s duties) in reprisal for any lawful act done by the employee—
(A) to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of the Treasury, the Treasury Inspector Generalfor Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or
(A) In general A person who alleges discharge or other reprisal by any person in violation of paragraph (1) may seek relief under paragraph (3) by—
(iii) Burdens of proof An action brought under subparagraph (A)(ii) shall be governed by the legal burdens of proof set forth in section 42121(b) of title 49, United States Code, except that in applying such section—
“behavior described in paragraph (1)” shall be substituted for “behavior described in paragraphs (1) through (4) of subsection (a)” each place it appears in paragraph (2)(B) thereof, and
“a violation of paragraph (1)” shall be substituted for “a violation of subsection (a)” each place it appears.
(B) Compensatory damagesRelief for any action under subparagraph (A) shall include—
(Aug. 16, 1954, ch. 736, 68A Stat. 904; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 104–168, title XII, § 1209(a), July 30, 1996, 110 Stat. 1473; Pub. L. 109–432, div. A, title IV, § 406(a)(1), Dec. 20, 2006, 120 Stat. 2958; Pub. L. 115–123, div. D, title II, § 41108(a)–(c), Feb. 9, 2018, 132 Stat. 158; Pub. L. 116–25, title I, § 1405(b), July 1, 2019, 133 Stat. 998.)