The IRS Form 211, titled “Application for Award for Original Information,” is used by individuals to report violations of the tax laws and claim a reward based on the amounts collected by the IRS due to the provided information. Over time, there have been several changes to the IRS Form 211 and the process of claiming rewards.
Here are some of the changes and procedures regarding IRS Form 211 Rewards:
- Signature Requirement:
- A notable change is the requirement for the whistleblower’s original signature on the declaration under penalty of perjury. A representative cannot sign Form 211 for the whistleblower, and the form must be mailed to the IRS Whistleblower Office with supporting documentation1.
- Claim Analysis:
- When a whistleblower files more than one Form 211 with the Whistleblower Office, the office will analyze the Form 211 to determine whether it is a new submission or a supplemental submission that relates to an existing claim2.
- Acknowledgment and Evaluation:
- Acknowledgment letters should be sent to whistleblowers within 30 days of receipt of Form 211.
- Initial evaluation and classification should be completed within 90 days, encompassing case building and review by all necessary operating division classification functions.
- Subject Matter Experts (SME) or their designee(s), as applicable to the case type, should complete the review within 90 days of receipt.
- The Division Counsel offices should provide a determination on any material identified by an operating division as potentially tainted within 45 days of receipt.
- The Whistleblower Office should notify whistleblowers of an award decision within 90 days of determining that proceeds collected from an action have been fully collected3.
- Historical Requirement Change:
- Historically, there was no requirement for the whistleblower to sign a Form 211, but this changed with the Tax Relief and Health Care Act of 20064.
- Claim Handling:
- Communication or claims for rewards, Form 211, are to be referred to the appropriate Informant Claims Examiner Unit (ICE), as listed on the back of Form 211, and placed in a sealed envelope marked “To be opened by Informant Claims Examiner only”5.
These changes and procedures have been implemented to streamline the process, ensure the authenticity and seriousness of the claims, and to provide a structured and timely response to the whistleblowers.
The IRS’s former Form 211 Reward Program allowed individuals to claim a reward after providing information about underpayments of tax to the United States government. The reward was paid from amounts collected (other than interest) from the subject taxpayer, but payment was discretionary on the part of the IRS and awards were capped at $10 million. The new whistleblower program distinguishes between claimants reporting tax schemes involving more than $2 million and claimants reporting schemes involving lesser amounts. In general, the new law gives whistleblowers in larger dollars cases the ability to collect higher rewards and enforce their right to collect those rewards. The following guidance remains true for claims involving less than $2 million.
Who May Seek a Form 211 Reward?
You may be eligible to submit a Form 211 claim for a reward, unless:
(a) You were employed by the Department of the Treasury at the time you received or provided the Information; or
(b) You are a present or former federal employee who received the information in the course of your official duties.
If the whistleblower is deceased, an executor, administrator, or other legal representative may still file a claim for reward on behalf of the decedent so long as the decedent was eligible to file a claim before their death.
Amount of Form 211 Reward
Rewards range from 1% to 15% of amounts collected (including taxes, fines, and penalties, but not interest) up to a maximum of $10 million. The IRS will typically pay claims for reward based on its assessment of the value of the information furnished voluntarily by the whistleblower on his or her own initiative with respect to the taxes, fines, and penalties recovered. Factors considered by the IRS include the following:
(a) For specific and responsible information that caused the investigation or, in cases already under audit, materially assisted in the development of an issue or issues and resulted in the recovery, or was a direct factor in the recovery, the reward shall be 15 percent of the amounts the Service recovers, with the total reward not exceeding $10 million.
(b) For information that caused the investigation or, in cases already under audit, caused an investigation of an issue or issues, and was of value in the determination of tax liabilities although not specific, the reward shall be 10 percent of the amounts the Service recovers, with the total reward not exceeding $10 million.
(c) For general information that caused the investigation or investigation of an issue or issues, but had no direct relationship to the determination of tax liabilities, the reward shall be 1 percent of the amounts the Service recovers, with the total reward not exceeding $10 million.
(d) The IRS does not pay a reward if the recovery is so small as to call for a payment of less than $100.00 under the above formulas.
(e) The IRS does not preclude an informant who has received direct payment(s) for information, from filing a claim for reward for the same information. However, to prevent duplicate payments, the IRS will reduce the amount of any reward payment by the amount of the direct payment(s).
(f) A Form 211 reward is subject to repayment, in whole or part, if the collection on which it is based is subsequently reduced.
Payment is Discretionary
While the IRS states that it “will pay claims for reward” under specified circumstances, court decisions interpreting the statutes governing the Form 211 reward program have generally held that the payment of rewards is within the government’s discretion and cannot be compelled by persons providing information to the IRS.
Protection for Whistleblowers
The IRS has given formal assurances that it will not disclose the identity of whistleblowers to unauthorized persons.
If you have already provided information to the IRS under an identity other than your true name, you may still potentially claim a reward by providing proof during the claims process that you are the person who provided the subject information.
Confidentiality of Taxpayer Information
The IRS is prohibited by law from providing information to the whistleblower regarding specific actions taken by the Service with respect to the information provided by the whistleblower.
Timing
If the IRS conducts an investigation based on the information provided by the whistleblower, it may take two or more years before the investigation is concluded.
Source: Internal Revenue Service Publications