Under the IRS Whistleblower Reward Program, an individual who exposes tax fraud can receive an award ranging from 15 percent to 30 percent of the proceeds recovered by the IRS. It is essential that you notice the word “recovered.”
You may whistle all you want, but until the money is recovered you get “thank you.”
To qualify for an award, the tax, penalties, interest, additions to tax, and additional amounts in dispute must exceed $2,000,000. Who has that kind of money floating around? Who knows someone with that type of dough? I think this may be a bit out of reach for many of us, but in case you do these are the rules.
Should the individual in lieu of a company be the allegedly noncompliant entity, the individual’s gross income must exceed $200,000.
After the IRS completes an investigation, the Whistleblower Office will issue a final determination regarding the whistleblower’s award amount. If the whistleblower feels that the award does not adequately reflect his or her contribution, the whistleblower may appeal the IRS’s decision to the Tax Court within 30 days. I would be interested to know how far you get with that appeal.
The IRS will maintain the confidentiality of the whistleblower’s identity throughout the initial investigation process. If, however, the whistleblower’s testimony is needed in a judicial proceeding to further the IRS’ investigation, the whistleblower’s identity may be revealed.
Other federal and local laws, however, may provide tax fraud whistleblowers with protection – therefore, it is recommended that you consult with an attorney regarding your rights and protections as a whistleblower. Or you may consider being on alert to move your residence at any given time.
The statute of limitations for making a disclosure under the IRS Whistleblower Reward Program is three years from the time the tax return was filed, but if the disclosure concerns an omission in excess of 25 percent of the gross income stated in a tax return filed with the IRS, the statute of limitations extends to six years. The statute of limitations does not apply where a false or fraudulent tax return was filed with the intent to commit tax evasion.
In plain English, you may need professional tax advice to see if you are within the correct timeframe.
IRS investigations can take years to complete, but a detailed disclosure can shorten the process. Payment of awards will not be made until there is a final determination of the tax liability that is owed to the IRS and the owed funds are collected by the IRS.
I am of the opinion that this Whistle Blower Program may not pay off until you run out of air. Your grandchildren may profit from it, but I do not suggest you go shopping too early.
Alma M Scarborough, enrolled agent, may be reached via www.taxhitlady.com or taxhitlady@sbcglobal.net.
