Qui Tam

Informants are helping the IRS catch fraudsters

By Brian F. LaBovick

The New IRS announcement released on December 19, 2007 details procedures of the IRS Informant Award program for information regarding underpayment of taxes. Since  December 2006, the IRS has received about 80 claims, half of those submitted in just the last two and a half months. I imagine these statistics will go even higher in the coming months. Why is this important in a qui tam blog? Under the new procedures, the amount of the qui tam award will be at least 15%, but no more than 30%, of the collected proceeds in cases in which the Whistleblower Office determines that the information submitted by the informant substantially contributed to the collection of tax. The award percentage can be reduced depending upon the circumstances. See the IRS guidelines for specifics.

Another interesting thing to note, is that eligibility for an award under the new procedure requires the dispute to exceed $2 million for any taxable year for a corporation and an individual with a gross income in excess of $200,000 for any taxable year in question.

IRS informants should also read  IRS Notice 2008-04 and Form 201, since it gives guidance on filing  claims under Internal Revenue Code section 7623 as amended by the Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432 (120 Stat. 2958) (the Act) enacted on December 20, 2006.

In a recent WSJ article, Tipster Rewards Require Patience by Tom Herman, there was recently a  claim filed by a Florida based law firm that alleges a large international company underpaid its U.S. taxes by more than $2 billion, including penalties and interest. This case could make history if turns out to be true.

It is nice to see that qui tam laws can help the government capture money from fraudsters and pay what is owed to the government. Whistleblowers do not be afraid to speak up, if you have proof of a company not paying corporate taxes, you could be rewarded for your information, if the information can help the IRS build a case against a tax fraudster. 

Full post as published by Whistleblower Law Blog on December 26, 2007 (boomark / email).