Taxation in the US: Tax evasion (Part Two)

Whistleblower program.

In addition to the methods of proof the IRS has developed, the Tax Relief and Health Care Act of 2006 created the IRS Whistleblower Office, which allows anonymous whistle blowers to receive 15 to 30 percent of any recovery by the IRS which comes to at least $2 million including all penalties, interests and any other monies collected from the government. The whistleblower program seeks information based on evidence and analysis which can provide a solid basis for further investigation rather than speculation and hearsay.

The program is designed to provide incentive to ordinary citizens to inform on tax cheats. The program provides far greater incentives for whistleblowers than previous programs because under prior programs the government was not required to compensate whistleblowers. Under this program, a taxpayer may file a lawsuit in court if he or she does not receive a deserved award.

Whistleblower Office.

Established by the Tax relief and Health Care Act of 2006, the IRS Whistleblower Offices processes tips received from eligible individuals who spot tax problems in their workplace, in their day-to-day personal business, or anywhere else. After determining the degree of credibility, an appropriate IRS office is assigned the case for further investigation. The IRS office assigned varies by the type of issue that the whistleblower alerted it to.

Individuals must meet qualifications to be eligible to receive the reward and must submit Form 211 with supporting documentation to the Internal Revenue Service Office in Ogden, Utah. To claim eligibility the individual must not be an employee of the Department of Treasury or have been an employee there when they obtained the information, must not have obtained the information through the individual’s official duties as an employee of the federal government, or who obtained the information based on a contract with the federal government. Whistleblower incidents happen in greater frequency in the private sector opposed to the government.

The reward can be worth between 15 and 30 percent of the total proceeds that the IRS collects. To claim the reward, the IRS must move ahead based on the information provided and the amount identified, including taxes, penalties, and interests, must be worth more than $2 million. A gross income of $200,000 or more is required if the taxpayer in question is an individual.

The Bipartisan Budget Act of 2018 added subsection 7623(c) which expanded the definition of proceeds for whistleblower awards and was applied to open whistleblower claims. The Taxpayer First Act was signed by President Trump on July 1, 2019. This law made changes surrounding the notification process to whistleblowers and increased protection against retaliation available to whistleblowers. The main goal of the legislation was to improve taxpayer service and to ensure that enforcement of the laws is done in a fair, impartial manner, ultimately supporting the continued success of the nation.