IRS Whistleblowers Could Recover More Rewards

The IRS modified its rules last year which seemingly made it even more difficult for whistleblowers to collect rewards on reports of uncollected taxes to the IRS. Whistleblowers and their attorneys have tried, unsuccessfully, for years to ensure that significant rewards are paid to IRS whistleblowers who help the government collect unpaid taxes.

Thankfully, on January 14, 2011, the IRS reversed its previous position and made it more likely that whistleblowers could collect rewards when reporting tax evasion to the IRS.

Senator Charles Grassley (R-Iowa) has long been a champion of exposing government waste and recently sponsored legislation that helped whistleblowers to have an incentive to identify tax fraud. Grassley noted that the IRS was undermining its own procedures by not allowing whistleblowers to collect on certain types of tax fraud.

Through Senator Grassley's work, along with private counsel for a number of whistleblowers, the IRS has modified its policy and now gives rewards for a much more broad list of tax fraud schemes.

As an example, the IRS received tips on 5,678 cases in 2009 and only paid rewards on 110 of them. This low reward rate has created a decline in the number of whistleblowers willing to come forward. With the new policies in place, Senator Grassley and officials at the IRS feel confident that more potential whistleblowers will come forward.

IRS Reverses Position, Which Could Benefit Whistleblowers, Washington Post, January 15, 2011