On December 3, 2019, the Internal Revenue Service (IRS) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) signed a Memorandum of Understanding formalizing procedures to process whistleblower reward claims under internal revenue laws administered and enforced by the TTB.
TTB is a bureau of the Treasury Department. It administers provisions of the Internal Revenue laws that impose a federal excise tax on distilled spirits, wine, beer, tobacco products, as well as firearms and ammunition.
According to a press release last week, the TTB sees utilizing the whistleblower award program as “another tool to fight for the level playing field that our law-abiding industry members expect and deserve.
The TTB will administer whistleblower awards under Internal Revenue laws as part of a cooperative effort with the IRS to provide consistency to whistleblower awards.
Individuals must directly submit a whistleblower claim to the IRS by completing the IRS Form 211, Application for Award for Original Information. The IRS may pay awards to people who provide specific and credible information to the IRS if the information results in the collection of proceeds.
Through the IRS Whistleblower Office, informants can receive a whistleblower award of up to 30 percent of the additional tax, penalty, and other amounts it collects if the IRS uses the information provided by the whistleblower.
Under federal law, there are two types of IRS whistleblower awards:
Section 7623 (b) of the Internal Revenue Code (IRC) provides for rewards of 10 to 15 percent of the amount collected if the total amounts of penalties and taxes exceed $2 million. If the case deals with an individual, his or her annual income must be greater than $200,000.
IRC Section 7623 (A) allows for a maximum award of 15% for cases that do not meet the $200,000 individual annual income or for cases that have $2 million in total disputes thresholds.
In 2018, the IRS Whistleblower Program reported the recovery of a record-breaking $1.441 billion in unpaid taxes, penalties, and interest collected from violations reported by tax fraud whistleblowers, with over $312 million in awards paid to whistleblowers.
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