A judge on the country’s highest tax court has ruled that whistleblowers who expose tax cheats to the U.S. government are entitled to receive more of the money recovered in these cases.
Through a 10-year-old federal program, whistleblowers who report tax evaders may stand to receive between 15 to 30 percent of the total amount the Internal Revenue Service (IRS) collects, as long as the evasion amounts to $2 million or more and the person committing the fraud earns at least $200,000 per year.
However, many whistleblowers had been receiving much less than what was owed to them, as the reward did not include the court fees and other penalties the evaders had to pay — in addition to the back-taxes. This recent ruling affirms that the whistleblower should receive a percentage of all of the collected proceeds, including the penalties and fees.
The case can be traced back to 2012, when the IRS tried to reduce the amount of money whistleblowers could collect through the program. This drew harsh criticism from U.S. Sen. Charles Grassley, who accused the IRS of treating whistleblowers unfairly.
The IRS announced that it would appeal the tax court’s ruling, claiming that officials were only following their interpretation of the law. However, this marks a positive step forward for those who have exposed tax fraud and have helped the federal government collect the money owed to it by tax evaders.
If you are aware of major tax fraud and would like to learn more about your options for serving as a whistleblower, speak with a knowledgeable Dallas attorney at Whistleblower Law for Managers today.