IRS Award Percentages: A Guide to Award Factors

• Timeliness: Reporting the tax issue promptly to the IRS can boost your award.
• New information: Providing previously unknown tax information to the IRS is valued.
• Difficult to detect: Revealing tax evasion that is hard for the IRS to uncover can increase your award.
• Clear and helpful information: Providing organized, easy-to-understand information can positively impact your award.
• Cooperation: Working closely with the IRS during the investigation can increase your award.
• Identifying assets: Revealing hidden assets that can be used to pay taxes can increase your award.
• Complex connections: Explaining how different transactions are related can increase your award.
• Taxpayer behavior change: If your information leads to the taxpayer correcting their mistake, your award may increase.

• Delay in reporting: Waiting to report the tax issue can negatively impact your award.
• Involvement in wrongdoing: If you were involved in the tax evasion, your award may be reduced or denied.
• Profiting from wrongdoing: Benefiting from the tax evasion can negatively impact your award.
• Hindering the IRS: Actions that obstruct the IRS investigation can reduce your award.
• Disobeying IRS instructions: Failing to follow IRS guidelines can negatively impact your award.
• Breaching confidentiality: Violating the confidentiality agreement can reduce or deny your award.
• Providing false information: Lying to the IRS will likely result in no award.

By understanding these factors, whistleblowers can better assess the potential value of their information and increase their chances of receiving a substantial award.

Example 1

A whistleblower named Alex worked for a company called Corp. Alex believed that Corp had cheated on their taxes in 2006 by claiming a tax credit they shouldn’t have. Alex gave the IRS documents and information to support their claim. These documents were hard to find and explained why Corp shouldn’t have gotten the tax credit. Alex also talked to the IRS and answered questions about Corp’s finances. The IRS investigated it and agreed with Alex. They found that Corp had indeed cheated on their taxes and made them pay the money back.

Example 1 – Negative Award Factors

Alex did a good job. The information that he gave was helpful and hard to find. Because of this, he could get a higher award, maybe 22% of the money the IRS collected from Corp. But, if Alex had done something wrong, like not following IRS rules and wasting their time, their award could be less. It might go down to 18% or even 15% of the money collected. This is why it’s important to hire an attorney with experience in filing the proper documentation on time, in order to maximize award potential.

Example 2

Bob worked for a company called Finance Help. This company was helping its clients cheat on their taxes. Bob figured this out and told the IRS. He gave them lots of proof and information about how the company was hiding the money. The IRS didn’t know about this before, and it was hard to find out on their own.

Example 2 – Negative Award Factors

Bob did a great job. He gave the IRS really important information that helped them catch the bad guys. Because of this, he could get a big reward, maybe 30% of the money the IRS collects. But, if it turns out Bob was also cheating with the company, his reward could be smaller. It might go down to 26%, 22%, 18%, or even 15% of the money collected. Again, hiring an attorney who knows the rules will help determine the potential award amount before you decide to blow the whistle.