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IRS Whistleblower Program

Whistleblowers have collected more than $1.3 billion to date for providing the IRS with specific, timely, and credible information about tax law violations.

Established by the Tax Relief and Healthcare Act of 2006, the IRS Whistleblower Program provides substantial monetary awards to individuals, including foreign citizens, who report U.S. tax law violations to the IRS.

 

The violations, which can be committed by individuals or corporate entities, commonly include underreported income; falsified deductions; failure to file; money laundering; offshore issues; and fraudulent filings, for example, misreporting facts related to employee status, rental income, or capital gains.

Remarkably, since its launch, the IRS Whistleblower Program has collected more than $7.5 billion in proceeds, and has paid over $1.3 billion in whistleblower awards. The momentum shows no signs of slowing, because of significant incentives to report. Consider that in FY2024, the IRS paid $123.5 million in whistleblower awards, an increase of 39% over the prior year.

Whistleblower awards can be massive, ranging from 15% to 30% of the monetary sanctions collected by the agency at the conclusion of a matter. In addition, to further encourage whistleblowers to report misconduct, the IRS makes every effort to keep whistleblower identities confidential. The program also provides significant anti-retaliation protections for employee whistleblowers. 

Based on the sheer size of recoveries, the agency prioritizes tips that implicate large corporations and partnerships, high net worth individuals, and perpetrators of complex schemes. In fact, for a matter to be eligible for an IRS whistleblower award, the monetary sanction (penalties, tax and interest) must meet a $2 million threshold. In addition, when reporting violations committed by an individual, the bad actor must have earned a gross income over $200,000 in one of the tax years at issue. 

To qualify for an award, the whistleblower must provide original, specific and timely information that is not already known to the IRS, unless that information provides additional insight for an ongoing investigation. But building a strong whistleblower submission goes beyond sending in an online form. Timing matters. It’s important to file as soon as possible to streamline the agency’s investigative process. Also, supporting information, including documents and records, can be extremely helpful to the investigation. This is tricky terrain and prospective whistleblowers should consult with an attorney to determine when and how to put forth the strongest whistleblower submission.

The Employee Whistleblower

In addition to financial incentives, a whistleblower who reports federal tax law violations is entitled to significant employment protections. Under the Taxpayer First Act enacted in 2019, no employer, officer, employee, contractor, subcontractor, or agent of an employer, may retaliate against an employee for reporting federal tax fraud or violations of federal tax laws to the IRS or their employer.  If the employer does retaliate against an employee for reporting, the employee is entitled to reinstatement, lost wages, restored benefits and other relief. Here again, timing matters. Complaints must be filed within 180 days after the retaliatory conduct.

Unlike other federal whistleblower programs, the IRS does not permit anonymous reporting. That said, the agency works hard to protect whistleblowers’ identities.

Top IRS Awards & Recoveries

  • In the largest award to an individual, Bradley Birkenfeld, a former banker and wealth manager at UBS, received a $104 million award for reporting the misuse of offshore accounts held in Switzerland by U.S. citizens.
  • In 2024, three whistleblowers shared a $74 million award for exposing a long-running offshore tax evasion scheme, which resulted in a $263 million settlement.
  • The IRS paid $38 million to a whistleblower for providing information about a tax avoidance scheme perpetrated by one of the nation’s largest corporations.
  • Two whistleblowers received more than $17.5 million for exposing a corporate tax fraud scheme that enabled the government to recover $74 million. The case was an important victory for whistleblowers insofar as the U.S. Tax Court upheld the award in 2017, confirming that whistleblower awards are based on all collected proceeds, including criminal fines and other penalties. 
  • The IRS awarded an accountant $4.5 million for reporting a significant tax liability at a Fortune 500 company – information that the company initially ignored.
  • An unnamed, anonymous Wall Street banker received a $2 million award for uncovering a tax avoidance scheme by Illinois Tool Works.

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