Reward Amounts for Reporting Tax Fraud

The Tax Relief and Health Care Act of 2006 specifies that rewards for informants be equal to at least 15% and as much as 30% of the total taxes, penalties and interest collected by the IRS however to qualify for the higher percentages covered under the new statute an individual must report tax fraud that results in the recovery of back taxes, penalties and interest totaling at least $2 million. In cases where the taxpayer is an individual, their taxable income must exceed $200,000. If the tax fraud does not meet the above threshold the informant may still be entitled to a reward however the amount of the reward is not covered under the new statute. Regardless of the amount of the tax fraud the IRS does have some discretion in limiting or denying cash rewards. If this happens, and a whistleblower believes that the IRS acted wrongly, an appeal can be made to the US Tax Court. Without detailed knowledge of the inner workings of the IRS and Tax Law an appeal would be an arduous task with a disappointing outcome.

The attorneys at Parker Waichman LLP take care of the entire appeal process for their clients allowing our clients to focus on their day to day lives not the specifics of income tax fraud law.