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Types of Fraud
Finding companies or wealthy individuals who cheat the government with Tax Fraud has historically been an important part of the False Claims Act, however recent changes to the law have made it even more rewarding for whistleblowers. Prior to the changes, the IRS rarely paid any reward to whistleblowers and when they were paid it was only between 1 and 15 percent of the amount recovered.
The new part of the Tax Relief and Health Act of 2006 known as the tax fraud whistleblower law is modeled after the False Claims act in that it provides for the same reward as other whistleblower cases if the Tax Fraud meets certain criteria.
The main provisions of the law include:
- Whistleblowers may be rewarded 15 percent to 30 percent of the amount the IRS collects as a result of information about tax fraud provided to the IRS.
- To qualify, the whistleblowers must provide information about tax fraud or tax underpayments that exceeds $2 million (counting tax, penalties and interest).
- The annual income of an individual committing tax fraud must exceed $200,000.
- If a reward from the IRS does not adequately recognize a whistleblower’s contribution, the whistleblower may appeal the reward amount to the U.S. Tax Court.
- If the whistleblower initiated or planned the tax fraud, the IRS may reduce or deny a reward. A reward also may be reduced if the whistleblower’s allegations have been previously disclosed.
As in the old law, the IRS will keep the whistleblower’s identity confidential.
If you have any information about possible tax fraud or underpayment by a company or individual, contact us today for a confidential evaluation.