The Case
On April 7th, 2011, the Internal Revenue Service Whistleblower Office issued the first-ever whistleblower reward to an Egan Young client in a case filed after Congress mandated mandatory rewards in tax whistleblower cases over four-and-a-half years ago. The reward paid totals more than $4.5 million.
IRS Tax Whistleblower Program
In 2006, Congress passed the Tax Relief and Health Care Act which made significant alterations to the tax whistleblower program, providing informants with much greater incentive to report knowledge of tax fraud to the IRS. For example, prior to 2006, the IRS had full discretion on reward payouts, and whistleblowers could not appeal its reward determinations. The new law not only made rewards mandatory in certain definable circumstances, but substantially raised the maximum potential reward while creating an appeals process to ensure that whistleblower rewards are fairly determined.
Tax Fraud
Tax fraud is the willful violation of one’s legal responsibility to pay mandatory taxes to the government in order to secure unfair or unlawful gains. The IRS may impose civil fraud penalties of up to seventy-five percent on amounts due and owing as a result of civil tax fraud. If the evidence of a criminal intent to defraud the government is strong enough, the government may also bring criminal charges that could result in additional fines and penalties.
