IRS False Claims Act

Newly Enacted Whistleblower Law For IRS

The IRS has enacted it's own version of a "False Claims Act" now known as "Whistleblower Provision." This provision was enacted to help to detect underpayments of tax and bring to trial and punishment persons guilty of violating the internal revenue laws. This new provision applies to all taxpayers, but in the case of any individual, only if such individual's gross income exceeds $200,000 for any taxable year subject to such action, and if the tax, penalties, interest, additions to tax, and additional amounts in dispute exceed $2,000,000. If IRS proceeds with any administrative or judicial action based on information brought to their attention by an individual, such individual shall receive as an award or finder's fee of at least 15 percent but not more than 30 percent of the collected proceeds (including penalties, interest, additions to tax, and additional amounts) resulting from the action (including any related actions) or from any settlement in response to such action. The determination of the amount of such award by the Whistleblower Office shall depend upon the extent to which the individual substantially contributed to such action.

In the event the collection action is one which the Whistleblower Office determines to be based principally on disclosures of specific allegations, other than information provided by the whistleblower which results from a judicial or administrative hearing, from a governmental report, hearing, audit, or investigation, or from the news media, the Whistleblower Office may award such sums as it considers appropriate, but in no case more than 10 percent of the collected proceeds (including penalties, interest, additions to tax, and additional amounts) resulting from the action (including any related actions) or from any settlement in response to such action, taking into account the significance of the individual's information and the role of such individual and any legal representative of such individual in contributing to such action. This does not apply if the information resulting in the initiation of the action was originally provided by the whistleblower.

If the Whistleblower Office determines that the claim for an award is brought by an individual who planned and initiated the actions that led to the underpayment of tax then the Whistleblower Office may appropriately reduce such award. If such individual is convicted of criminal conduct arising from the role described in the preceding sentence, the Whistleblower Office shall deny any award.

For more information or if you believe that you have information that would qualify you as a potential whistleblower, please contact Begelman, Orlow & Melletz and ask for Len to find out if you qualify.