An Overview of the IRS's Whistleblower Program

Juliet L. Fink, JD

The IRS whistleblower program has been around since the 1800s. In December 2006, the Tax Relief and Health Care Act made fundamental changes to the IRS whistleblower awards program and the relevant section of the relevant section of the relevant section of the tax code. The key change in the law was the addition of IRC section 7623(b), under which awards are no longer discretionary. Prior to the amendment, the IRS retained complete authority to determine whether a reward would be paid, absent an express and definite agreement setting forth the claim and amount of the payment. Such contracts are unnecessary following the 2006 amendments, an administrative or judicial as the IRS is obligated to pay a 15% to 30% award (of the collected proceeds) if it commences an administrative or judicial action against a taxpayer based on the tips furnished by the whistleblower [see IRC section 7623(b)(6)(A)].