IRS whistleblower program pays for recovered funds
Posted by mandyf on May 9, 2012
If you can use an extra $300,000 or so to make ends meet and happen to know a tax cheat, the IRS wants to talk to you. If it sounds like a sweet deal, it is – but there is a catch to it all. The first catch is a real doozie and it takes most people out of play in fact.
As most people know the IRS offers a reward to people that turn in tax cheats through their whistleblower program. Although it has been around for years, not too many people really became interested in it until 2006 when the IRS announced they were changing the rewards from paying 1%-15% of the recovered amount to a minimum of 15%. To sweeten the deal they even have the authority to pay up to 30% in some cases. Here’s the catch though – you have to turn someone in that has evaded paying at least $2 million in taxes.
The second catch is you can’t just supply a name, you need to provide legitimate key information that leads to a judgment being levied. The third catch is even if a person evaded $2 million in taxes, you are not necessarily going to get a $300,000 bounty. It is important to recall the IRS only pays out on the actual amount recovered. So for example if you turned in a $5 million tax cheat and the IRS only recovered $100,000, you would likely only get the $15,000 minimum reward.
Assuming that you get through that whole process and some or all of the money is recovered, don’t spend too much of your own money actually expecting a check from the IRS coming in to make up for it. According to Steve Whitlock who is the director of the IRS’s whistleblower program, they haven’t paid a reward out to anyone since the new law was passed. They do plan to pay claims, but he stated the best case scenario is that it takes several years to process a payment – with stress on the BEST case scenario.
Still it is worthwhile if you happen to have such knowledge. It helps the government recover lost money which it obviously cannot do on its own, it brings a cheat to justice, and it can put some folding style money in your pocket. You just have to be really patient. If you need a little inspiration, the highest confirmed total from a whistleblower is $780 million, and 40 to 50 legitimate tips are processed each month on average. There are cheats out there, you just have to find them.