It's a Good Day for Whistleblowers as IRS Steps Up International Tax Enforcement Efforts

criminal tax investigationIt may come as no surprise that the Internal Revenue Service (IRS) operates a Whistleblower program.  Recent legislative and agency changes may make whistleblowing a more profitable pursuit.

 

In its recent annual report to Congress, the IRS Whistleblower program posted results that include:

 

  • In 2017, the program approved 242 awards to whistleblowers. The awards totaled $33.9 million.  Since 2007, whistleblowers have aided the IRS in collecting $3.6 billion, while the program has paid out $499 million.
  • The total number of awards, and the amount of awards, declined by approximately half between 2016 and 2017.
  • Staffing numbers in the Whistleblower office have declined significantly since 2015. The Initial Claim Evaluation Unit, with a staff of 24, did not operate after 2015.

 

To bolster its international criminal tax investigations, the IRS is developing a 10-person team of specialists who will focus only on its growing caseload of global tax cases.  According to The Wall Street Journal, budget and staffing decline at the IRS has limited the number of cases the agency can pursue.  Notes Don Fort, Chief of the IRS Criminal Investigations Unit, “This group allows us to be more strategic…it’s borne out of dwindling resources in any given program area.”

 

The new team will add to the international investigation that occurs in 25 national IRS field offices and in ten IRS offices abroad.

 

As the IRS doubles-down on the profitable business of foreign bank account fraud and offshore taxes, the Whistleblower program got a recent assist from the Bipartisan Budget Act of 2018.  Among the amendments introduced by Senator Charles Grassley of Iowa was language that defined funding sources for IRS whistleblowers.

Information must be specific and credible

 

So what is the IRS looking for from a whistleblower on domestic or international tax issues?  Individuals who provide “specific and credible” information to the IRS may be in line to receive as much as 30 percent of the tax, penalties, and fines that are collected as a result of the tipster, depending on the dollar value of the tax crime.

 

IRS criminal tax investigations that net over $2 million make for a more lucrative whistleblower payday.  For individuals who file fraudulent tax documents, the IRS sets a minimum gross income of $200,000 as the benchmark for a whistleblower reward. 

 

Taking a tip to the IRS is not a whispered midnight phone call, either.  Whistleblowers hoping for a payoff must have extensive or inside knowledge of the tax fraud, and be able to provide a credible, supportable claim on an Application for Award for Original Information.

 

Foreign-held assets can be a smart part of your wealth management plan.  Because of the high dollar amounts involved, the IRS is strategically positioning itself to take advantage of non-compliant taxpayers who purposefully or mistakenly miss reporting deadlines or prepare fraudulent tax returns.

 

As the prospect of payoff for a tip-off increases, so will the number of employees or others who may take an interest in your business or personal tax matters.  Ensure your tax issues are comprehensively well managed, and if you face a tax controversy, seek the advice and representation of an experienced tax attorney.

 

Skilled criminal tax defense in Cleveland

 

With offices in Cleveland and Chicago, the tax attorneys at the law firm of Robert J. Fedor Esq., LLC help you understand your options and deliver aggressive representation if you are notified of a criminal tax audit or other tax matter.  Whether you face a personal or corporate tax challenge, we can help.  Call us at 800.579.0997 or contact us today.

 

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