How do Whistleblowers get paid?
Whistleblowers can get paid by the IRS under section 7623(a) and section 7623(b). Section 7623(a) authorizes the Secretary to pay awards to whistleblowers for information in detecting underpayments of tax or detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws. Importantly, the payment of an award under section 7623(a) is entirely up to the discretion of the Secretary and is not mandatory. The amounts payable under section 7623(a) are paid from the proceeds of amounts collected by the IRS by reason of the information provided by the whistleblower.
Section 7623(b), on the other hand, provides whistleblowers with a mandatory award if the provisions of that section are satisfied. Whistleblowers are entitled by law to an award of between 15 to 30 percent of the proceeds collected by the IRS if:
- The Secretary proceeds with any administrative or judicial action against the taxpayer,
- based on information brought to the Secretary’s attention by the whistleblower, and
- the tax, penalties, interest, additions to tax, and additional amounts in dispute exceed $2,000,000.
The amounts payable under section 7623(b) are paid from the proceeds of amounts collected by the IRS by reason of the information provided by the whistleblower. The determination of the amount of the award to the whistleblower depends upon the extent to which the whistleblower substantially contributed to the action taken by the IRS. The IRS Whistleblower Office uses a series of positive and negative factors to guide that determination.
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