On December 29, the Internal Revenue Service (IRS) Whistleblower Office released its Fiscal Year 2020 Annual Report. The report highlights the central role whistleblowers have played in IRS enforcement efforts and the degree to which whistleblowers have been correspondingly rewarded. According to the report, in fiscal year 2020, whistleblower disclosures helped the IRS collect over $472 million from tax law violators, and the IRS issued over $86 million in awards to 169 whistleblowers. However, the report also documents issues with extremely long delays in processing whistleblower claims, which whistleblower advocates argue undermines the effectiveness of the program. On average, the IRS Whistleblower Office currently takes 10.79 years to process a claim.
The IRS Whistleblower Office was created in 2006 with the passage of the Tax Relief and Health Care Act. The Office issues whistleblower awards to individuals who provide specific and credible information to the IRS that “results in the collection of taxes, penalties, interest or other amounts from the noncompliant taxpayer.” Awards are issued in cases where the funds in dispute exceed $2 million or, in cases dealing with an individual, when the individual’s annual gross income is more than $200,000. In these cases, whistleblowers are entitled to an award of 15-30% of the funds collected. According to this year’s annual report, since 2007, the IRS Whistleblower Office has issued over $1 billion in whistleblower awards based on cases that resulted in the total collection of $6.14 billion in back taxes, interest, penalties, and criminal fines and sanctions.