Progress with the New IRS Rewards Program for Tax Whistleblower Cases

We have been working with the IRS to bring information about large tax cheating to the IRS’s attention, so that clients can participate in the new IRS Whistleblower rewards. The IRS officials sound excited to have this new tool at their disposal, and we are happy to help our whistleblower clients obtain the new rewards. Our latest one deals with fraud in the Hurricane Katrina relief effort, where the public and government have been cheated out of what appears to be many millions of dollars.

We find it especially exciting when a qui tam whistleblower client also has information that qualifies the client to participate in the new IRS whistleblower rewards. This new IRS law enacted in late December 2006 provides for rewards to the whistleblower of 15 to 30% of the government’s recovery of taxes, interest, and penalties when income has been under-reported or underpaid.

You might be interested to know that the new IRS whistleblower program is different than the qui tam provisions of the False Claims Act, the main tool the government has had to date for combating fraud. The IRS whistleblower program permits payments of up to 10% of the government’s recovery, even when the whistleblower is not an “original source” of the information.

We are excited to offer this service to our whistleblower clients and potential clients. We already feel like we have a “leg up” in helping clients because, as former federal prosecutors, we use that experience to advise our whistleblower clients on criminal law issues. After all, many times our clients have been uncomfortably close to the fraud they are reporting. Now, we can offer this third area of experience-the IRS whistleblower rewards program.

We think the increase in rewards to IRS whistleblowers is an excellent change in the law, which we will use to benefit our clients.