IRS Whistleblower Program Collects Record $1.4B, Awards $312M

The Internal Revenue Service’s Whistleblower Program collected a record-breaking $1.4 billion in taxes, penalties and interest in 2018, up from $190 million the previous year, with whistleblowers getting $312 million in awards — a big jump from $33 million in 2017 awards.

The data, which comes from the IRS Whistleblower Program’s 2018 annual report to Congress, proves the “IRS program is now working and working remarkably well,” said Stephen Kohn of the whistleblower law firm Kohn, Kohn and Colapinto.

Whistleblowers that Kohn and Dean Zerbe of Zerbe, Miller, Fingeret, Frank & Jadav represent as co-counsels account for nearly $725 million of the tax dollars brought into the Treasury through the whistleblower program last year, Kohn said, with KKC clients receiving $158 million of the $312 million in awards announced by the IRS.

The IRS recently issued two award letters totaling $88 million to whistleblowers that are represented by one or both law firms, Zerbe points out. That total includes an award of more than $62 million to a group of “courageous whistleblowers who exposed significant corporate tax evasion,” the largest tax whistleblower award ever reported for a group whistleblower filing.

The award resulted in over $400 million in taxes and interest recovered by the Treasury, he added.

The modern IRS whistleblower award law (Section 7623(b) of the Internal Revenue Code) was created in 2006 and championed by Sen. Charles Grassley, R-Iowa, who’s now chairman of the Senate Finance Committee.

The law provides that whistleblowers are mandated to receive 15% to 30% of proceeds collected by the U.S. government due to the information given by the whistleblower, and that they remain anonymous.

The recent bipartisan “qui tam” amendment to the IRS whistleblower program by Grassley and Sen. Ron Wyden, D-Ore., ranking member on the Senate Finance Committee, “has been critical to ensuring that the whistleblower program is effective in going after illegal offshore accounts,” Kohn added.

He cited a recent $26 million award letter to a joint client “who blew the whistle on secret bank accounts of billionaires — bringing back over $100 million to the Treasury.”

The amount of “hidden dollars that have been brought to light thanks to the IRS whistleblower program makes it all the clearer that foreign countries — as well as our own states — that want to be serious about going after big-dollar secret stashes of cash need to implement a robust whistleblower award program,” the attorneys said.

— Check out IRS’ Dirty Dozen: 12 Tax Scams to Avoid — 2018 on ThinkAdvisor.