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IRS Whistleblower Actions

In 2006, Congress passed a tax whistleblower law establishing a program for individuals to report tax fraud, tax underpayments, and other violations of the Internal Revenue Code to the Internal Revenue Service (IRS). As with the SEC and CFTC, individuals may not file a False Claims Act qui tam lawsuit on behalf of the IRS. Instead, individuals may report tax violations to the IRS and receive a portion of the recovery if the IRS uses the information in an enforcement action. A whistleblower may receive between 15 to 30 percent of the taxes, penalties, interest, and other recovery collected by the IRS if (1) the amount in dispute (including taxes, penalties, interest, and additional amounts) exceeds $2 million, and (2) in the case of an individual taxpayer who commits a violation, the taxpayer earns over $200,000 per year. For cases that do not meet these thresholds, whistleblowers may still recover a smaller, discretionary award.