It has been stated that death and taxes are the only guarantees in life. While these aren’t the most appealing topics, it turns out that you can make money if you share certain information about the latter with the IRS.
That’s because the IRS will pay you to be a tax whistleblower. The Whistleblower Office has awarded $1.1 billion based on the information that led to the collection of $6.6 billion in additional revenue since 2007.
If you’re interested in finding out more, here we will examine how the IRS could pay you to be a tax whistleblower — but how difficult it is to earn this award.
How To Be an IRS Tax Whistleblower
The IRS offers rewards for information on tax evasion and other noncompliance that allows the government to collect additional revenue. The IRS Whistleblower Office is explicitly looking for claims about credible information on tax underpayments or violas of revenue laws. The proceeds collected from this information could qualify for an award to the whistleblower who filed the claim.
If you feel you have any information that could lead to the IRS collecting additional tax revenue, then you should fill out this form. The document, known as Form 211, must be mailed in with supporting documentation and evidence to the following address:
Internal Revenue ServiceWhistleblower Office – ICE1973 N Rulon White Blvd.M/S 4110Ogden, UT 84404
What To Report to the Whistleblower Office
The IRS Whistleblower Office shares its official report to Congress every fiscal year. These were the most common tax issues that were reported in 2022:
- Underreporting income
- Failure to file taxes
- Wage under-reporting
- General allegations of fraud
- Tax fraud
- False dependent exemptions
- Employee vs. subcontractor issues
- Rental income
- Capital gains tax
- Offshore issues
If you feel that you have any information on tax issues and you have supporting documentation, then you should submit your claim.
How To Get the Reward
If you want to increase your chances of getting the tax whistleblower reward, you must collect all the correct documents. This means that you will have to find proof that could tie the taxpayer in question to the allegation being made. This is where things get challenging because you may not have supporting documents, and the IRS can’t count on speculation alone.
To get this award from the IRS, you have to file your claim and then wait to see how the Whistleblower Office proceeds. From there, you must wait for the office to build a case and then collect this additional revenue from the taxpayer. Then, this taxpayer will have time to exhaust all options regarding appeals. Once this process is settled, you could be awarded anywhere from 15% to 30% of the collected proceeds.
The office has also stated that the percentage of proceeds will drop if you provide publicly available information or if you intentionally set up the noncompliance of the taxpayer in question. The financial compensation is often categorized as a section 7623(a) or 7623(b) award.
How Much Does the IRS Payout?
It’s worth mentioning that the IRS releases information about whistleblowers and tax collection publicly. For the fiscal year 2022, the IRS paid out 132 awards to tax whistleblowers with a total of $37.8 million. This dollar amount was a percentage of the $172.7 million that the IRS was able to collect from taxpayers due to whistleblower information. It’s worth mentioning that the IRS Whistleblower Office had 5,084 submissions come in, and they built 12,597 claims for the year.
The IRS paid out $36.1 million to whistleblowers in the fiscal year 2021, so the dollar amount went up in 2022. This proves that the IRS dishes out a decent amount to tax whistleblowers who provide helpful information.
How Difficult Is It To Get the Award?
It’s important to note that getting a reward from the IRS isn’t easy, and you will need to understand certain tax-law intricacies and IRS regulations.
Here’s what you need to know about the criteria for collecting an award from the Whistleblower Office:
- Your information must be connected to an alleged infraction where the funds in question exceed $2 million.
- If the subject of your information is an individual, this person’s gross income must be over $200,000 for the taxable year of the alleged infractions.
Your information has to meet this criterion for you to be eligible for an award. If you do feel like you have the knowledge that could lead to the IRS collecting additional revenue based on tax non-compliance, here’s the critical information that you need to know about getting the reward:
- New submissions were processed within 21.3 days of receipt.
- It takes about 68 days for the award payment to proceed once all of the requirements have been met.
Here’s where things get tricky. The IRS doesn’t pay the award until the taxpayer in question has utilized all appeal rights. This means that the IRS will often not make award payments for many years from when the whistleblower filed the initial complaint. The IRS will typically pay an award of about 15% of the collection of proceeds with a maximum of 30% of the proceeds.
While there are better side hustles and options out there for building an income stream, you could get paid by the IRS to be a tax whistleblower if you feel you have credible information. It’s essential that you get your documents in order before submitting a claim so that you don’t report any inaccuracies. Good luck!
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