The United States’ history of rewarding whistleblowers dates back to the Civil War when Abraham Lincoln instituted a program of offering an incentive to those who reported on the fraud being perpetrated against the government by defense contractors. Since that time a variety of government agencies have initiated their own whistleblower programs that encourage U.S. taxpayers to report wrongdoing when they become aware of it, and reward them when their claim is proven.
Among the most successful of the whistleblower programs is the one instituted by the U.S. Department of Treasury, which provides awards to tax whistleblowers who report tax evasion. In 2018 that agency was able to collect over $1.4 billion dollars in taxes as a result of these reports and responded by paying out $312 million. In 2019 that number fell but was still significant: over $616 million dollars were collected by the treasury after whistleblowers reported evasion, and those whistleblowers collectively received $120 million.
IRS Whistleblower Program Rewards Honest Taxpayers
New to this year’s IRS whistleblower program is the clarification that whistleblowers can be awarded for reporting violations of the rules regarding undeclared foreign bank accounts as well as criminal fines for tax fraud. FBAR collections accounted for $110 million of the $616 million collected in 2019. When taxpayers report nonpayment facilitated by offshore accounts, it benefits the government and other taxpayers, allowing the collection of monies owed that can then be used to provide vital government services. Notably, foreign nationals are also eligible for these awards, and many of those who reported FBAR violations in 2019 and received whistleblower awards were from outside of the United States.
If you are aware of tax evasion and want to become a whistleblower, you should be aware that the IRS has specific requirements about the submission of claims. The agency insists that submissions contain specific information, and prefers that supporting paperwork is included. Speculative rewards are frowned upon. The whistleblower reports that are of the greatest interest to investigators are those dealing with tax fraud, failure to report income, failure to file a tax return, offshore accounts, and tax evasion by large businesses.