The Process of Submitting A Whistleblower Claim
When to Report Tax Fraud to the IRS
Knowledge of tax fraud should be reported to the government as soon as it is discovered. The IRS only pays awards to individuals who are the first to file a claim.
When reporting a violation of the tax laws, whistleblowers should be mindful that the IRS is interested only in the following:
- Tax law violations committed by businesses or corporations for which the amount in dispute exceeds $2 million; and
- Tax law violations committed by individuals whose annual gross income exceeds $200,000 per year, and for whom the disputed amount exceeds $2 million.
The IRS considers these categories of primary importance because they have a greater impact on the overall tax system and can be indicative of larger schemes to defraud.
Once an individual decides to blow the whistle, he/she should retain a lawyer who is experienced in representing whistleblowers. Though the IRS Whistleblower Program does not require a whistleblower to have a lawyer, retaining an experienced lawyer is an important factor in the success of a whistleblower claim. The Law Office of Jeffrey M. Haber has this experience.
How to Submit An IRS Whistleblower Complaint
To report a violation of the tax laws under the IRS Whistleblower Program, an individual must fill out IRS Form 211, the application for Award for Original Information. IRS Form 211 requires a whistleblower to:
- state the facts relevant to the alleged violation;
- explain why the conduct constitutes a violation of the tax laws;
- describe how he/she learned of or obtained the information that supports the claim; and
- describe the amount owed by the alleged violator.
The IRS is looking for submissions that are based on a substantial amount of physical, well-presented evidence. Examples of such evidence includes cashed checks, invoices, the numbers to hidden bank accounts, emails, internal audits, contracts, and video or audio tape that reveals an illegal tax-avoidance scheme. The IRS is not interested in tips, speculation or involvement in business disputes.
The completed Form 211, along with evidence or other documentation supporting the claim, must be submitted under penalty of perjury to the IRS Whistleblower Office. The process may take many years. Awards will be paid only if the IRS is successful in pursuing the claim and has collected the money it is due.
Communication With The IRS After The Submission Of A Claim
After a whistleblower submits IRS Form 211, the IRS will investigate the submission to determine if the claim is worth pursuing. This determination will be based, in large part, on the nature of the tax violation alleged, the quality of evidence presented by the whistleblower, and the alleged amount of money at issue.
While the investigation is pending, the IRS will not communicate about the progress of the case, unless additional information is needed, and will not respond to inquiries other than to state whether the case is still open or has been closed. If a case is closed and the IRS has determined that the whistleblower qualifies for an award, the IRS will inform the whistleblower of that fact and the amount of the award. If the whistleblower does not receive an award in a case involving more than $2 million or an individual with more than $200,000 in gross income, the whistleblower may appeal the award denial to the U.S. Tax Court.
Tax matters are complex. Under the IRS Whistleblower Program, whistleblowers are likely to get only “one bite at the apple,” which means that any weakness or deficiency in the submission is likely to be fatal to the claim. A well put together claim, therefore, can make the difference. The Law Office of Jeffrey M. Haber can help you package and present your claim to maximize the likelihood of a favorable review by the IRS.