Created in 2006, the IRS Whistleblower Office provides financial compensation to conscientious individuals who provide information that leads to the recovery of unpaid taxes due to tax fraud. While these complex cases may take years to conclude, it can be time well spent in terms of justice and potential monetary reward.
Established as part of the Tax Relief and Health Care Act of 2006, the IRS Whistleblower Office provides rewards of 15 to 30 percent of the total proceeds collected as a result of the whistleblower’s information. Under the law codified at 26 U.S.C. §7623, there is no minimum recovery required in tax claims against corporations and other legal entities. However, in the case of tax liabilities of individuals, the law applies only if the individual’s gross income exceeds $200,000 for each taxable year at issue and only if the tax, penalties, interest, additions to tax, and additional amounts in dispute for the combined tax periods exceed $2 million.
Unlike qui tam claims filed under the Federal False Claims Act, tax whistleblower claims do not involve the filing of a suit against the responsible taxpayer (or tax evader). Rather, the whistleblower typically hires an attorney to research the tax issues in question, hire and advance the costs of experts in tax law and accounting, prepare forms and disclosures to be filed with the IRS Whistleblower Office, and to interface between the Office and expert witnesses for the duration of the investigation, which may require several years to conclude.
The types of tax claims that may be presented to the IRS Whistleblower Office are as varied and complex as the Internal Revenue Code itself. Areas of particular interest include:
In April 2011, the IRS Whistleblower Office paid out its first-ever reward — a check totaling $3.24 million after taxes, based on a 22 percent cut of the $20 million in taxes and interest that was recovered roughly four years after the whistleblower’s initial complaint. There are reportedly many high-quality whistleblower claims that have been filed since the new law was put into place in 2006 that remain under active investigation. It will be only a matter of time before those investigations begin to be concluded, tax liabilities begin to be collected, and large rewards to whistleblowers begin to be announced on a regular basis. However, potential whistleblowers should be aware that it may take years for the typical IRS whistleblower claim to reach a conclusion.
In selecting counsel to pursue a tax whistleblower claim, an important consideration may be the financial resources available to the whistleblower’s counsel to retain the very best experts in the fields of accounting and tax law to substantiate the whistleblower’s claims before the IRS Whistleblower Office. As a mid-size plaintiffs’ firm with a national presence, the lawyers of Waters Kraus Paul & Siegel routinely work with expert witnesses in all of their cases. We do not hesitate to secure the services of renowned experts in order to bring cases to successful resolution.
What is Qui Tam?
Under the Federal False Claims Act (FCA), whistleblowers have the power to save taxpayers billions of dollars each year by taking a stand against fraud. The U.S. False Claims Act allows private citizens to file suits on the government’s behalf when the government has been defrauded through any federally funded contract or program. The qui tam provisions of the False Claims Act allow these citizens to recover damages. A number of states and the city of Chicago also have laws similar to the False Claims Act to protect against fraud. To learn more about the different types of fraud … READ MORE
July 1, 2025 Recently released Department of Justice information confirms that whistleblower provisions in the False Claims Act (FCA) remain a powerful tool to reign in fraud, waste and abuse in government programs. 2024 False Claims Act Highlights: FCA lawsuits resulted in $2.9 billion in fines and recovered funds in fiscal year 2024. Of...
June 3, 2025 A $2.8 million False Claims Act settlement with Walgreens began in 2019 when two brave Waters Kraus Paul & Siegel whistleblower clients came forward with details about a pattern of Medicaid overbilling. The agreement announced by the U.S. Department of...
April 10, 2025 It’s a sad sign of the times when the lion’s share of the schemes intent on defrauding the federal government are in the healthcare arena. But as Principal Deputy Assistant Attorney General Brian M. Boynton underscored during the 2024 Federal...
Our Results
Historic settlement for over 1,300 survivors of clergy and adult abuse within the Roman Catholic Archdiocese of Los Angeles, marking a pivotal moment for justice.
A Philadelphia jury awarded a record verdict against ExxonMobil for failing to warn about cancer risks due to benzene in its petroleum products.
Private equity firm and co-defendants agree to pay $25M in Medicaid fraud case alleging mental health services provided by unqualified providers.
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