The law firms of Gregg Polsky, PLLC, and Zerbe, Miller, Fingeret, Frank & Jadav announced a $35 million tax whistleblower award for their anonymous client. The whistleblower blew the whistle on a Fortune 500 company for tax underpayments.
“This is a big win for honest taxpayers who routinely report and pay the correct amount of tax that they owe under the tax code without the necessity of IRS intervention,” said Dean Zerbe, Senior Policy Analyst at the National Whistleblower Center and one of the lawyers on the case.
While the whistleblower received a significant award from the IRS Whistleblower Program, the wait time for the compensation was substantially longer than a decade. This highlights a major flaw within the IRS Whistleblower Program, the bureaucratic red tape that leads to significant delays in whistleblower rewards.
The delays are partly a result of an update to the Internal Revenue Manual (IRM) in 2024, which requires the whistleblower to wait until every related taxpayer’s case is fully adjudicated before receiving their monetary reward. This process can take more than a decade. In situations where the whistleblower is retaliated against or fired from their job for speaking the truth, they must receive their due compensation in a timely manner.
“While the IRS Whistleblower Office has recently made admirable strides in speeding up the process, I believe that additional improvements can be made along these lines. I strongly encourage Congress, Treasury, and the IRS to take whatever steps are necessary to ensure that awards are made to whistleblowers as quickly as possible,” said Greg Polsky, another lawyer on the case.
Zerbe also highlighted the importance of the IRS working closely with whistleblowers and their attorneys. “Now is the time for the IRS and Treasury to double down on ensuring that the IRS tax whistleblower program is hitting all cylinders. I am hopeful with the new leadership of Director Martinez, coupled with the dedicated and capable staff of the WBO, that the whistleblower program can realize its full potential,” said Zerbe.
The IRS Whistleblower Program has been highly successful, garnering nearly $7.5 billion for the Treasury since its establishment in 2006. In fiscal year 2024, the IRS paid around $123 million in awards to whistleblowers. This reward amount was out of $475 million collected by the agency that was attributable to whistleblower information.
Rewards play a crucial role in encouraging whistleblowers to report taxpayer fraud. Giving out these rewards in a timely manner should be a priority for the IRS Whistleblower Program.