IRS issues $4.5 million reward to tax whistleblower

The Associated Press is reporting that the IRS has issued a whistleblower reward to an in-house accountant at a financial services firm. This accountant became a whistleblower for the Internal Revenue Service (IRS), providing inside information about the firm’s lapse in tax compliance. The tip resulted in the IRS collecting over $20 million in back due taxes, interest and penalties. The IRS awarded the whistleblower $4.5 million dollars (based on 22%), and issued a check for $3.24 million (after withholding).

Sen. Charles Grassley helped create the IRS Whistleblower Office in 2006. Referring to this award, he told the Associated Press that, "it ought to encourage a lot of other people to squeal." 

"Whistleblower programs have been incredibly successful in the arena of health care and defense spending, and now they are being tried as a weapon against tax cheats and Wall Street scoundrels," said Patrick Burns, president of Taxpayers Against Fraud.

This award follows a $1.1 million award the IRS issued last month. That award was under the prior discretionary program. The new award is the first under the mandatory reward program created in the 2006 law. In both cases, the whistleblowers chose to stay anonymous.

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