According to the annual report of the Internal Revenue Service (IRS) to Congress, the IRS paid whistleblowers a total of $53 million in 2013 for turning in people who cheated on their taxes.
The report titled “Fiscal Year 2013 Report to the Congress on the Use of Section 7623” says in its executive summary that the IRS is required to pay awards “if information an individual provides substantially contributes to the collection of tax, penalties, interest, and other amounts when the amounts in dispute are more than $2 million.”
The $55 million was divided between 122 awards, with an average award of $435,000. Tips led the IRS to collect more than $367 million in taxes, interest, and penalties.
As IRS.gov states, “The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.”
The report also notes that claims recorded in the Whistleblower Office have increased dramatically since 2006, with a total of 9268 claims being filed in 2013 for a total of 51,390 since legislation was passed in 2006 changing laws governing the whistleblower process and award amount. The 2013 total claims amount was up slightly from 2012.
It can take years to receive an award, however, with 40 awards being paid in full for claims filed pre-2007. There are also other reasons for closing claims, such as “allegations unclear,” “issues below threshold for IRS action,” and “insufficient time remaining on state of limitations.”
The report does note that “The law does not provide for whistleblower protection” when referring to section 7623. Whistleblowers are subject to retaliatory action, including “job-related action,” “physical harm” or “damage to economic interests.” Although it is in the best interest of the IRS to protect the identity of whistleblowers, identities may come to light in court proceedings.
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