New Whistleblower LawPowerful New IRS Whistleblower Program

The IRS Whistleblower Program underwent several changes following the enactment of the Tax Relief and Health Care Act of 2006, and further amendments were made with the signing of the Taxpayer First Act on July 1, 2019. Here are the key updates post-2006, including the changes made by the Taxpayer First Act:

  1. Establishment of Whistleblower Office: The Whistleblower Office was established as a result of the Tax Relief and Health Care Act of 2006 to process tips from individuals who notice tax problems in their workplace or elsewhere​1​​2​.
  2. Award Percentage: The Tax Relief and Health Care Act of 2006 set an award range of 15% to 30% of the total proceeds that the IRS collects, should the IRS proceed based on the information provided by the whistleblower​2​.
  3. Notification Process: The Taxpayer First Act, signed in 2019, introduced changes to the notification process for whistleblowers. Now, the IRS Whistleblower Office will notify the whistleblower when a case they provided information for has been referred for audit or examination, and again when a payment has been made by the taxpayer the whistleblower identified. However, these notifications do not guarantee an award will be issued​3​.
  4. Protection Against Retaliation: The Taxpayer First Act also made provisions for the protection of whistleblowers against retaliation​3​.
  5. Claim Status Update: Whistleblowers or their representatives can request information on the status and stage of their claim by submitting written requests, and the IRS Whistleblower Office will provide written responses to these requests​3​.

These amendments serve to enhance the effectiveness and transparency of the IRS Whistleblower Program, and to provide better protection and communication for whistleblowers.


On December 20, 2006, the President signed the Tax Relief and Health Care Act of 2006 (“the Act’).

Section 406 of the Act dramatically strengthens the IRS’s whistleblower program, by increasing available rewards and creating a reliable enforcement mechanism for whistleblowers to collect them.

Under existing rules, the maximum award generally available to whistleblowers has been 15% of funds recovered by the IRS (including taxes and penalties).

Section 406 establishes a floor of 15% and increases the cap to 30%, in those cases where the IRS pursues an administrative or judicial action against a taxpayer based on information brought to its attention by the whistleblower.

Moreover, while whistleblowers were unable to enforce their claims to awards under the old program (unless they had a contract with the IRS), the new legislation provides that payments to qualified whistleblowers are mandatory, and it permits whistleblowers to appeal IRS award determinations to the Tax Court.  If they are successful, whistleblowers will be permitted to take an above-the-line deduction for attorney’s fees and costs paid by them to recover their award.

The new program is limited to claims against taxpayers whose gross annual income exceeds $200,000 and whose potential indebtedness for taxes, penalties, and interest is greater than $2 million.

The statute also places a 10% cap on awards to whistleblowers in certain cases where there have been prior public disclosures of their allegations. Rewards can also be reduced if whistleblowers planned and initiated the actions that led to the underpayments of tax.

The statute provides for the creation of a Whistleblower Office within 12 months to handle incoming whistleblower claims, and it requires the Secretary to report annually to Congress on the results.   The law applies to information provided on or after the date of the Act’s enactment.

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