It’s no secret that the Internal Revenue Service is going to have a hard time doing its job given all the personnel and budget cuts. So, it’s no surprise that the tax agency is a big supporter of whistleblowers.
Help from the public in discovering tax misconduct will be a way to bridge the tax agency’s operational gaps.
Financial rewards for tax information: Currently, the IRS Whistleblower Office pays monetary awards to eligible individuals whose information is used by the agency.
The award percentage depends on several factors, but generally falls between 15 percent and 30 percent of the proceeds collected and attributable to the whistleblower's information.
In fiscal year 2024, the IRS Whistleblower Office established 14,926 award claims, an increase of 13 percent compared to the average of the prior four years.
Those awards totaled $123.5 million. The payments were based on whistleblower information that led to the collection of $474.7 million in tax due and other amounts recovered.
In the longer term, since the IRS Whistleblower Office issued its first award in 2007 through June 2025, the IRS has paid more than $1.3 billion in awards based on the successful collection of $7.5 billion from noncompliant taxpayers.
The biggest downside for whistleblowers is that awards can only be issued once a final determination can be made.
That means award payments cannot be made until the taxpayer has exhausted all appeal rights, and the taxpayer no longer can file a claim for refund or otherwise seek to recover the proceeds from the government.
IRS whistleblower history: The IRS has sought, and rewarded, tax whistleblowers since March 1867, when Internal Revenue Code (IRC) section 7623(a) authorized the Secretary of the Treasury to pay such amounts as deemed necessary "for detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same."
Things got official in 2006, when the tax code was revised, thanks to a provision in that year’s Tax Relief and Health Care Act, to established the Whistleblower Office within the IRS. That office was charged under the new IRC section 7623(b) with administering the new framework for the consideration of whistleblower submissions and to administer that framework.
The latest major change to the IRS Whistleblower Office came in 2019, when the Taxpayer First Act (TFA) amended the tax code’s whistleblower section and added new provisions to help improve the office’s service. The TFA also created protections for whistleblowers against retaliation.
Since then, advocates of a strong whistleblower system have been working to expand the protections.
Whistleblower Day efforts: Every July 30 supporters of improving and enhancing whistleblower opportunities, rewards, and protections commemorate the anniversary of the first U.S. whistleblower law passed by the Continental Congress in 1778.
That revolutionary era law declared it the duty of every citizen to report misconduct.
On National Whistleblower Day, the efforts of individuals who exposed wrongdoing within organizations, often at great personal and professional risk, are recognized.
So are efforts to strengthen the country’s whistleblower laws to better protect and support those who come forward with information about misconduct in both public and private sectors.
Those goals and the challenges and progress in meeting them are detailed during the annual National Whistleblowers Day events sponsored by the National Whistleblower Center (NWC) in Washington, D.C.
One of the leading supporters of such changes on Capitol Hill is Sen. Chuck Grassley (R-Iowa). Grassley elaborated on legislative efforts to strengthen whistleblower protections in a frequently asked questions page on his Senate office’s website.
Tax collector support: The IRS Whistleblower Office also issued its own statement celebrating today. It also noted that it has released its first multi-year operating plan that outlines strategic priorities, recent achievements, and current initiatives to advance the program.
Those efforts include streamlining award processes by building a new claim management system, working on a digital submission portal to make it easier to file whistleblower claims, and making direct deposit the eventual standard payment method for whistleblower awards.
“Whistleblowers serve as an invaluable deterrent against non-compliance with tax laws and are critical in our efforts to reduce the tax gap,” said acting Whistleblower Office Director Erick Martinez. “The IRS Whistleblower Office is committed to improving the efficiency and effectiveness of the IRS Whistleblower Program through improved service, responsiveness and modernization efforts.”
You also might find these items of interest:
- UBS whistleblower gets record $104 million reward for helping IRS
- Revolutionary sailors' report of misconduct led to first U.S. whistleblower law
- IRS Whistleblower Office awards more than doubled in FY23, but it still faces substantial backlog
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