The Tax Relief and Health Care Act of 2006 established the Whistleblower Office of the Internal Revenue Service (“IRS”). According to the IRS, the Whistleblower Office is responsible for assessing and analyzing incoming tips to maintain the integrity of the U.S. federal income tax system. Moreover, the Whistleblower Office pays monetary awards to eligible individuals whose information is used by the IRS. That is, taxpayers can personally benefit by providing to the IRS credible evidence of tax underpayments or violations of the internal revenue laws.
Overview of the Whistleblower Office
John Hinman serves as the new director of the Whistleblower Office. In a recent article released by the IRS, he provided a general overview of the Whistleblower Office as follows:
Our nation’s tax system is built on the principle of voluntary compliance. When this principle is observed, taxpayers file tax returns and pay their taxes timely and accurately without the need for compliance activity by the IRS. Voluntary compliance is aided by the knowledge that non-compliance with tax laws will be addressed through examinations, collection activities, criminal investigations and other tax enforcement work. The IRS uses increasingly sophisticated data analytics and other methods to detect non-compliance with tax laws, but we can’t find it all by ourselves. We need help from whistleblowers – people with firsthand knowledge of non-compliance who are willing to share what they know with us so we can investigate it when warranted.
The IRS Whistleblower Office was established by the Tax Relief and Health Care Act of 2006. Each year, the IRS receives thousands of award claims from individuals who identify taxpayers who may not be abiding by our nation’s tax laws. My office ensures that award claims are reviewed by the appropriate IRS business unit, determines whether an award should be paid and the percentage of any award, and ensures that approved awards are paid.
Since the inception of the Whistleblower Office in 2007, the IRS has paid more than $1.05 billion in over 2,500 awards to whistleblowers. The information provided by these individuals led to the successful collection of over $6.39 billion from non-compliant taxpayers. The awards paid to whistleblowers generally range between 15 to 30 percent of the proceeds collected and attributable to their information.