Ways to Maximize your Tax Whistleblower Reward from the IRS

The Ferraro Law Firm
Washington, D.C. — Miami, Florida

Ways to Maximize Your Award

At The Ferraro Law Firm, we recognize and respect the risks tax whistleblower clients take in stepping forward with information about tax underpayments and fraud to the IRS. Because of this, we believe that it is our job as your lawyers to do everything we can to both protect you and to obtain the maximum benefits from your claim.

Without divulging the specifics to our competitors, the general principles of maximizing award/reward determinations and appeals are as follows:

  • Step 1 — Provide as much information as possible about the tax underpayment. If the reporting person provides information and assistance to the IRS that is determined to be a substantial contribution to the collection of an underpayment of tax relating to that information, that person would be entitled to the maximum 30% reward of the amount collected. If possible, the whistleblower should be able to explain to the IRS the legal theory that gives rise to the underpayment, provide documentation or testimony that may be used to prove the underpayment, compute the tax underpayment, address the applicable periods of limitation, and identify where the IRS may look to gather additional evidence to prove the underpayment. In summary, a whistleblower should provide the IRS a roadmap for how to identify the underpayment and how to prove in court the extent of the underpayment.
  • Step 2 — Provide the information to the right IRS personnel. Persons should also carefully consider both the timing and to whom at the IRS they should report the underpayment of tax, as both factors are crucial in maximizing a reward. Simply reporting a potential underpayment to the local IRS office will not result in an award being paid to a tax whistleblower—a specific protocol must be followed.
  • Step 3 — Be prepared to challenge the IRS's determination of your reward amount. The determination of the amount of an award to be paid by the IRS Whistleblower Office can be appealed to the United States Tax Court. The best opportunity a person has to maximize his or her award is to submit the most substantial package of information possible to the IRS. This means that a tax whistleblower should report an underpayment or deceptive tax practice expecting to have to justify why they deserve the maximum award. To the extent possible, a person should initially provide the IRS with an explicit explanation of the issue that gives rise to the underpayment, as well as the facts that would support the adjustment to the taxpayer. In other words, a person would ideally hand the IRS the case with a bow tied around it.

Poorly developed or poorly presented information can lead to less than the maximum award or, more likely no reward at all. For tax attorneys who can help you report an underpayment correctly and potentially avoid a disappointing result, contact The Ferraro Law Firm.

A person who makes the IRS aware of an underpayment of tax can and should take every possible step under the law to increase both the odds that the IRS will pick up the case and the size of the award that they are entitled to under this program. Failure to do so can drastically reduce or even eliminate the ability to collect an award from the IRS.