It is possible for a Whistleblower to enter into a Special Agreement with the IRS before they provide information to the IRS about another taxpayer who has underpaid tax, evaded tax, committed tax fraud, or otherwise violated the internal revenue code. These "Special Agreements" permit a whistleblower a mechanism to enforce a claim to a reward. The IRS typically reserves such treatment for large amounts of tax, or serious fraud.
Can I Qualify for a Special Agreement Award?
The IRS rarely suggests Special Agreements, and it falls upon the whistleblower to request the same. A Special Agreement creates real obligations for the IRS, and as such, negotiation and approval process of a Special Agreement can be difficult. When the IRS executes a Special Agreement, the Agreement typically provides the size of a reward the relator can expect when funds are recovered based on the quality of the information provided by the whistleblower.
The IRS generally denies rewards where:
(a) The information provided is without value;
(b) The information has already been disclosed to the IRS, exists in the public domain, or where the taxpayer identified s already under civil examination or criminal investigation with regards to the same;
(c) The whistleblower obtained, or is furnishing, the information while employed by the United States Treasury Department, or when the Informant is furnishing the information on behalf of such individual;
(d) The whistleblower obtained the information as part of his or her official duties as an employee of any other federal agency, or if the whistleblower is furnishing the information on behalf of such an individual;
(e) The whistleblower obtained, or is furnishing, the information while a State officer or member of a State body or commission having access to federal returns, copies or abstracts, or if the whistleblower is furnishing the information on behalf of such an individual;
(f) Payment would be contrary to State or local law; or
(g) The recovery is so small as to result in a reward payment of less than one hundred dollars ($100.00).
(h) Where a whistleblower was a participant in the scheme he or she is reporting, the whistleblower may be precluded from obtaining a recovery from the IRS based on the scheme.
What type of reward should I expect?
By law, rewards range up to 15% of amounts collected (including taxes, fines, and penalties but not interest).There is a maximum of $10 million in most cases. It is possible to negotiate these terms with the IRS. The IRS may agree to the percentage and the maximum amount of the potential award in the Special Agreement, prior to the disclosure of details, specifically the identity of the subject and the type of tax avoidance scheme(s) to the Government.
What Safeguards Ensure that my Identity will remain confidential? (Whistleblower Confidentiality)
Our office will serve as an intermediary with the IRS, so you don't identify yourself until an agreement is reached. If we are unable to reach satisfactory terms, and you decide not to pursue the claim, your identity will never be revealed to the IRS. A Special Agreement procedure provides for this mechanism as a matter of law.
The Special Agreement requires the whistleblower cooperate with the government, and a whistleblower may ultimately need to reveal his or her identity to the IRS. Where the identity is revealed, the IRS will normally agree that it will not further reveal the whistleblower's identity, unless required by law including by court order.
If the IRS ultimately recovers funds from the subject taxpayer and the whistleblower qualifies for a reward, the whistleblower will be obligated to disclose his or her name and identifying information to the IRS, prior to receiving any payments owed under the Special Agreement.
When Do I get Paid?
Payments under Special Agreements are made once the IRS determines the final amount due, including all taxes, fines and penalties, and collects the same from the Taxpayer. Depending on the complexity of the case, payments may take from six months to six years.
