In 2007, Bradley Birkenfeld, a former UBS banker, shocked the world by revealing the secrets of the Swiss bank system. Utilizing the Internal Revenue Service’s (IRS) tax whistleblower reward program, Birkenfeld was able to report the misconduct he witnessed. His actions were rewarded handsomely, with the IRS giving him a massive reward of $104 million.

Rule 18 provides a detailed explanation of the legislative history of the IRS program, its current form, the procedures for reporting under it, and the criteria for determining reward amounts. With more than 2,500 whistleblowers having reported wrongdoing so far, the IRS has disbursed over $1.05 billion in rewards and collected $6.4 billion in penalties through this program. This initiative continues to be an effective tool in the fight against tax evasion.

The IRS reward law is codified at 26 U.S.C. § 7623. IRS Notice 2008-4, 2008-1 C.B. sets forth procedures for submitting claims to the IRS Whistleblower Office. See also:

• Internal Revenue Manual, Part 25.2.2
• Final rules for IRS whistleblower program can be found at 26 C.F.R. § 301

Tax Court rules on filing whistleblower appeals:

• U.S. Tax Court, Rules 340-344

Tax Court decisions on whistleblower cases:

• Cooper v. Commissioner, 2010 Tax Court LEXIS 20, 135 T.C. No. 4 (July 8, 2010) (court can hear appeals filed by whistleblowers that challenge both the amount of an award or the denial of an award)
• Whistleblower 21276-13W v. Commissioner of IRS, 147 Tax Court 4 (Aug. 3, 2016) (Tax Court expands scope of “alternative remedy” provision) (Note: The commission does not approve of this ruling.)
• Whistleblower 21276-13W v. Commissioner of IRS, 144 Tax Court 290 (2015) (Form 211 need not be filed before whistleblower provides information to other parts of the IRS)

Articles and reports on tax whistleblower law:

• Dean Zerbe, “Shrink the Tax Gap by Strengthening the IRS Whistleblower Program,” Tax Notes State, Special Report (2021)
• Dean Zerbe, “A Legislative History of the Modern Tax Whistleblower Program,” Tax Notes Federal, Special Report (2020)
• Department of Treasury Inspector General for Tax Administration, “Deficiencies Exist in the Control and Timely Resolution of Whistleblower Claims” (Aug. 20, 2009)
• Department of Treasury Inspector General for Tax Administration, “The Informants’ Rewards Program Needs More Centralized Management Oversight” (June 2006)
• Dennis J. Ventry Jr, “Not Just Whistling Dixie: The Case for Tax Whistleblowers in the States,” Villanova Law Review 59, no. 3 (Aug. 2015)
• Dennis J. Ventry Jr., “Whistleblowers and Qui Tam for Tax,” 61 Tax Lawyer 357 (2007)
• Karie Davis-Nozemack et al., “Lost Opportunities: The Underuse of Tax Whistleblowers,” 67 Administrative Law Review 321 (2015)
• Government Accountability Office, IRS Whistleblower Program: Billions Collected, but Timeliness and Communication Concerns May Discourage Whistleblowers, GAO-16-20 (Oct. 2015)

Government Accountability Office, Offshore Tax Evasion:

• IRS has Collected Billions of Dollars, but May be Missing Continued Evasion, GAO-13-318 (Mar. 2013)
• Stephen Ohlemacher, “Tips on tax cheats skyrocket with bigger rewards,” Associated Press (Oct. 1, 2009)
• Barry Shlachter, “Tax Whistleblowers Stand to Reap Bigger IRS Rewards,” Star-Telegram.com (Apr. 14, 2010)
• John Koskinen, Commissioner, IRS, Prepared Remarks Before the U.S. Council for International Business-OECD, International Tax Conference (Washington, DC, June 3, 2014).

Bradley Birkenfeld, the most famous tax whistleblower, told his story in his book Lucifer’s Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy (Austin TX: Greenleaf Book Group Press, 2016)