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Sep 19, 2014 by |

New IRS Whistleblower Regulations Provide Increased Eligibility and Awards for Whistleblowers

ATTORNEY NEWSLETTER

On August 12, 2014, the Internal Revenue Service (IRS) released its latest amendments to the IRS whistleblower program. The goal of the changes is twofold: increase participation in the program, and improve returns to the United States Treasury. To that end, one of the very first changes was an expansion of those having standing to sue.

Presently, to sue as an IRS whistleblower, one would have to have knowledge that the tax cheat earned at least $200,000 per year, and also failed to pay at least $2,000,000 to the IRS. The catch is that state and municipal employees having such information were denied the opportunity to sue as IRS whistleblowers. With the August 12 change, both state and city employees are no longer denied participation.

Unlike whistleblowers suing under the False Claims Act (aka the “Lincoln Law”), IRS whistleblowers do not file suit in the United States District Court, but instead file with the Whistleblower Office. There is a 30 day window in which the IRS whistleblower must respond to one of three scenarios set forth by the Whistleblower Office: (1) preliminary award determination; (2) preliminary denial letter; or (3) preliminary award recommendation letter. To facilitate this, whistleblowers are provided with a detailed report that they may review from the Whistleblower Office. In the event of an adverse ruling, the whistleblower may appeal to the Tax Court.

As for award amounts, the IRS redefined “collected proceeds,” which will have the likely effect of increasing award amounts by including net operating losses and carryovers in their calculations. Furthermore, the latest changes provide for incremental payouts based on the amount of the IRS recovery, starting at a minimum of 15%, and working incrementally from 18%, 22%, 26%, to a maximum of 30%. As always there are mitigating factors, the most obvious including whether or not the IRS can make the recovery of under reported tax funds, and what role if any the whistleblower played scheme to defraud the government.

The Evans Law Firm, Inc. handles qui tam (whistleblower/false claims) lawsuits, employment and retaliation litigation, consumer class action fraud, banking/insurance fraud, personal injury, and elder abuse cases. If you think you or someone you know has a whistleblower claim, contact The Evans Law firm, Inc. for a free and confidential consultation at 415-441-8669 or via email at info@evanslaw.com.

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