The IRS Whistleblower Program’s annual report to Congress for FY 2015 shows the IRS paid more than $103 million to whistleblowers in FY 2015. That is a big increase, nearly doubling the amount in awards granted in FY 2014, which was $52 million.
The IRS Whistleblower Program was revised and expanded by Congress in 2006. The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.
Since 2007, information received from whistleblowers has helped the IRS collect more than $3 billion in tax revenue. More than $403 million has been awarded to whistleblowers during that time.
IRS Whistleblower Office director Lee D. Martin stated in the report:
It is without question that the Whistleblower Program makes an important contribution to the tax system, both by helping encourage compliance (through a deterrent effect on those who may otherwise engage in tax evasion or avoidance) and by contributing to tax gap reduction. In fact, submissions of valuable information have resulted in a wide range of audits and investigations yielding significant collections of unpaid taxes.
The increase in awards for 2015 appears attributable to the increase in the average award percentage issued to whistleblowers, as reported in The National Law Review. In FY 2015, whistleblowers received an average award of 20.6% of the tax underpayments collected by the IRS. This percentage award is far greater than the 16.9% in FY 2014 and 15.7% in FY 2013.
While the increase in percentage of awards is a positive sign for the program, the IRS received far fewer tips than in previous years. In FY 2015, the IRS received 12,078 tips from whistleblowers as compared to 14,474 in FY 2014. This decrease of 17% may be a result of the timely process of a tax whistleblower claim.