Are you eligible to qualify as an IRS whistleblower?

“Qui tam” is short for a Latin phrase that roughly translates to “he who brings an action for the king as well as for himself.” If you have information regarding tax fraud, including the underpayment of federal taxes or deceptive tax practices, you may be entitled to an award. To qualify, whistleblowers must provide information about tax fraud, deceptive tax practices, or tax underpayments by individuals or businesses:

• Whose gross annual income exceeds $200,000, and
• Who potentially owe taxes, penalties and interest greater than $2 million.

Is the process confidential?

It is important to know that the IRS will keep the whistleblower’s identity confidential. The IRS pays awards after it completes its investigation into the tax fraud or tax underpayments, collects the amounts owed, and officially closes the case. A person who knows of fraud against the IRS should retain a lawyer to file a lawsuit under seal (meaning that it is kept secret during the initial phase) against the company or person committing the fraud against the government.

What happens once a report is made to the IRS on my behalf?

If the IRS pursues an administrative or criminal claim against a taxpayer based on information brought by a whistleblower, the whistleblower is entitled to an award. These rules apply:

• The Whistleblower will receive between 15% to 30% of the amount recovered by the government as a result of the information disclosed by the whistleblower.

• • There is a 10% cap on whistleblower awards where there have been prior public disclosures of the allegations.
  • Awards can also be reduced if the whistleblower planned and initiated the tax fraud or underpayment.

After the initial claim is filed and the IRS has accepted your claim, the attorneys at Smith Mullin will represent you in connection with your claim of tax fraud. The investigative process by the IRS may be lengthy, and Smith Mullin will actively track the case progress, represent your interests and keep you informed.

How we help?

Smith Mullin has the expertise and discretion to handle each case with confidentiality, precision, and sensitivity. In some cases, we will seek protections for whistleblowers that require immunity from criminal prosecution because of their involvement in the case. IRS fraud cases are generally highly technical and complex. In some cases relators have been paid millions of dollars. Smith Mullin’s attorneys will see that your claim is properly investigated and assembled for presentation to the IRS. With the focus and expertise of Smith Mullin we will seek to maximize your award.

What is the process?

First: Contact Smith Mullin and provide as much information as possible about the tax underpayment, deceptive tax practice, or fraud during a consultation with one of our attorneys. Smith Mullin will assist you in:

• Explaining to the IRS the legal theory that exposes the underpayment or fraud;
• Providing documentation or statements that may be used to prove the underpayment;
• Identifying where the IRS may investigate further to gather additional evidence to prove the case.

Smith Mullin will work closely with you to draft the “roadmap” for the IRS that will clearly identify the underpayment of tax and put forward the strongest case to achieve the best potential for a significant award of money to our client.

First in reporting gets the largest award: Don’t wait to report. If you wait too long to report the tax fraud, tax underpayment or deceptive tax practice, someone else could file the claim before you, or the IRS may discover the fraud itself. This may disqualify you from receiving a portion of any recovered taxes or significantly reduce any potential award.

Second: Smith Mullin will present clearly organized and well-crafted information to the right IRS personnel. Reporting a potential underpayment to the local IRS office often will not result in an award being paid to a tax whistleblower. Specific processes and procedures must be followed. Poorly crafted complaints and improper presentation can lead to less than the maximum award or, in some cases, no award at all. Generally, the statute of limitations on assessments for these claims is three years from the time the fraudulent return was filed. Fortunately, many corporate taxpayers agree to extend this period in hope of resolving the case prior to litigation. If your information exceeds the three-year window contact us immediately to discuss the statute of limitations concerns.

Third: Smith Mullin is prepared to challenge the IRS’s determination of your award amount. The determination regarding the amount of the award to be paid by the IRS Whistleblower Office may 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. Smith Mullin has the experience to do that.