As of August 2016, new policies have been put into place regarding whistleblowers reporting instances of fraud and other illegal tax activity to the IRS. The reporting party will now be entitled to a full share of the collected proceeds from the case, including all applicable fines and penalties, as this article on Accounting Today reports.
This new policy decision was made during the case Whistleblower 21276-13W v. Commissioner, in which a husband and wife reported illegal activity to the IRS. The defendant was found guilty and required to pay fees amounting over $16,000,000. The husband and wife who reported the defendant were initially denied their claim because they had not filed their Forms 211 before the proceeds were collected. The couple appealed this rejection and the courts determined they were entitled to 24% of the entire amount collected from the defendant. This court decision has made the determination that whistleblowers are entitled to a share of all the collected proceeds, including all amounts paid to the government, not just tax restitution. Future cases will use this decision as a landmark.
The precise percentage a whistleblower will get may vary in individual cases. What has been decided concretely is that collected proceeds will be defined as any amount collected by the government from the guilty taxpayer. This may include non-monetary assets. This is good news for any whistleblowers out there who have information to deliver to the IRS. Thanks to this new court decision, anybody with information to report on criminal tax activity may expect a larger reward for their efforts.
The official documentation on the court case can be found here.