The IRS has historically had the discretion to award whistleblowers who report tax fraud, and in 2006, the IRS established the Whistleblower Office to standardize and oversee the expanded IRS whistleblower program. In 2012, the IRS paid whistleblowers for information relating to 128 cases, 12 of which involved IRS recovery in excess of $2 million dollars. The total paid to whistleblowers during 2012 was $125 million.
Examples of tax fraud that may qualify for awards under the IRS whistleblower program include:
- False statements on tax returns;
- Nonpayment of employer payroll tax;
- Fraudulent tax accounting;
- Unreported income or assets;
- False or exaggerated deductions;
- Undeclared foreign accounts;
- Illegal tax shelters; and
- Improper use of charitable funds or trusts.