On September 18, the Washington Post reported that three anonymous whistleblowers were awarded $74 million by the Internal Revenue Service (IRS) for providing information about a large-scale tax evasion scheme which led to the IRS recovering $263 million from a single individual.
Through the IRS Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful IRS action, are eligible to receive monetary awards of 15-30% of the money collected thanks to their disclosure.
The $74 million award is one of the largest in the history of the IRS Whistleblower Program and nearly equals the total amount awarded to whistleblowers in the 2023 Fiscal Year. During FY 2023, the IRS awarded $88.7 million to whistleblowers based on the $337 million the agency was able to collect due to whistleblower disclosures.
“The IRS appreciates the valuable assistance it has received from whistleblowers and the tremendous support the whistleblower practitioner community provides to the IRS Whistleblower Program,” wrote IRS Whistleblower Director John Hinman in the program’s report for FY 2023. “Whistleblower information that the IRS can act on is an important component of effective tax administration as it bolsters the fair and effective enforcement of our nation’s tax laws, the success of our voluntary tax system, and our efforts to reduce the tax gap.”
Over the past several years, the total amount awarded to whistleblowers and collected by the program have dipped. Back in FY 2018, the IRS awarded $312 million to whistleblowers. At the same time, the time taken to process mandatory awards has increased, as of FY 2023 it is up to an average of 11.29 years. There is also a total backlog of 30,135 cases.
Whistleblower advocates believe that awards like the one announced today demonstrate the importance of the program and the need for reforms which address the delays plaguing the program.
Whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto, who represented UBS whistleblower Bradley Birkenfeld in the largest IRS whistleblower award case, is calling on Congress to pass the bipartisan IRS Whistleblower Improvement Act. The bill makes a number of technical reforms to the IRS Whistleblower Program.
“As the US tax gap continues to balloon, the need for effective tax enforcement becomes more profound,” Kohn writes in an op-ed calling for the bill’s passage. “For the IRS Whistleblower Program to play a central role, Congress needs to institute the essential reforms found in the IRS Whistleblower Improvement Act. The program has demonstrated its worth, and it badly needs these fixes to function effectively.”
National Whistleblower Center, where Kohn serves as Chairman of the Board, has published an Action Alert allowing whistleblower supporters to write to Congress calling for the passage of the IRS Whistleblower Improvement Act.
Join NWC in Taking Action:
Further Reading:
They exposed a tax cheater. They’ll share a $74 million reward.
Advocates Continue to Push for IRS Whistleblower Program Reform
Bipartisan Bill Offers Critically-Needed Reforms to IRS Whistleblower Program