Big Win for Tax Whistleblowers

In a recent decision, the U.S. Tax Court ruled for the first time that whistleblowers are entitled to a portion of criminal fines and civil forfeitures in addition to a portion of the taxes collected by the Government.  The Court awarded $17.8 million to two whistleblowers who came forward with information that lead to a guilty plea and payment of over $74 million in tax restitution, criminal fine, and civil forfeitures to the Government. The Court’s decision that the amounts used to calculate the award include all proceeds collected by the Government from the taxpayer will allow whistleblowers to receive an award regardless of whether the Government pursues the tax violators in civil or criminal procedures.

Under the IRS whistleblower award program, people who have knowledge of tax violations can file confidential claims with the IRS and receive between 15% and 30% of the amount recovered by the Government.  In fiscal year 2015, the IRS paid 99 awards totaling more than $103 million.