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Part 25. Special Topics

Chapter 2. Information and Whistleblower Awards

Section 2. Whistleblower Awards

25.2.2  Whistleblower Awards

25.2.2.1  (12-30-2008)
Overview: Authority and Policy

  1. This section outlines the cross-functional procedures for working case files with a Form 211, Application for Award for Original Information.

  2. On December 20, 2006, the Tax Relief and Health Care Act of 2006 was enacted. Section 406 of the Act amends section 7623 of the Internal Revenue Code concerning the payment of awards to whistleblowers. The amendment made significant changes to the whistleblower program and also required the establishment of a Whistleblower Office within the Internal Revenue Service that has responsibility for the administration of the award program.

  3. The IRS has generally referred to persons who submit information under section 7623 as "informants" and referred to the program as the "Informant Claims Program." The IRS has also referred to such persons as "claimants" in published guidance, and the law now refers to the "Whistleblower Office" and "whistleblower program." Accordingly, the terms "claimant" and "whistleblower " will be used in this IRM except where the term "informant " appears in an office title or published document. However, no legal significance should be inferred based solely on the use of these terms in this IRM. The 2006 amendments re-designated the prior section 7623 as section 7623(a), which now includes interest in the collected proceeds, added new provisions as section 7623(b), and included program administration requirements that were not incorporated into the Internal Revenue Code.

  4. The application of new section 7623(b) is limited by certain dollar thresholds. To be eligible for an award under section 7623(b), the tax, penalties, interest, additions to tax and additional amounts in dispute must exceed in the aggregate $2,000,000. If the taxpayer is an individual, the individual’s gross income must exceed $200,000 for any taxable year at issue.

    Note:

    If the thresholds in 7623(b)(5) are not met, section 7623(a) authorizes, but does not require the Service to pay for information that result in the government’s recovery of taxes, penalties, interest, additions to tax, and additional amounts.

  5. The requirement that claims be paid from collected proceeds generally means that payment cannot be made for several years after the information is submitted, because the underlying taxpayer’s case (including any appeals) must be resolved.

  6. Effective July 1, 2008, the decision on the payment of an award and the percentage of the award, including those under section 7623(a), will be made by the Director, Whistleblower Office.

  7. Throughout this Section, policy covering pre-enactment claim files, claims submitted prior to December 20, 2006, will be referred to as such.

25.2.2.2  (12-30-2008)
General

  1. Section 7623(b) applies to new information not in the possession of the IRS on or after December 20, 2006. Supplemental or resubmitted information will not be considered for purposes of section 7623(b) unless its receipt prompts the IRS to take an administrative or judicial action that would not otherwise have been taken on the basis of the earlier-supplied information. Resubmission of information already in the possession of the Service prior to the date of enactment, does not qualify under 7623(b).

  2. Under section 7623(b), awards will be paid in proportion to the value of information furnished voluntarily with respect to proceeds collected, including penalties, interest, additions to tax and additional amounts. The amount of any award will be at least 15%, but no more than 30%, of the collected proceeds in cases in which the Service determines that the information submitted by the whistleblower substantially contributed to the Service’s detection and recovery of tax.

  3. If an action is based principally on allegations resulting from judicial or administrative hearings, government reports, hearings, audits, or investigations, or from the news media, an award of a lesser amount, subject to the discretion of the Whistleblower Office, may be provided; such an award, however, may not exceed 10% of the collected proceeds, including penalties, interest, additions to tax, and additional amounts resulting from the action.

  4. If the whistleblower "planned and initiated" the actions that led to the underpayment of tax, or to the violation of the internal revenue laws, the Whistleblower Office may reduce the award. If the whistleblower is convicted of criminal conduct arising from his or her role in planning and initiating the action, the Whistleblower Office must deny any award.

  5. Section 7623(b) applies with respect to any action in which the amount in dispute (taxes, penalties, interest, additions to tax, and additional amounts) exceeds $2 million. If the taxpayer is an individual, the individual's gross income must exceed $200,000 for any taxable year at issue in the action.

  6. The law requires the Whistleblower Office to analyze 7623(b) claims, and authorizes the Whistleblower Office to request assistance from the whistleblower or their counsel.

  7. Individuals are eligible for awards under 7623(b) based on collected proceeds, including penalties, interest, additions to tax, and additional amounts collected as a result of any administrative or judicial action resulting from the information provided.

  8. If the thresholds in 7623(b) are not met, section 7623(a) authorizes, but does not require, the Service to pay for information relating to underpayments of tax that result in collection of proceeds.

  9. The Whistleblower Office will inform the claimant in writing regarding any award decision or determination.

25.2.2.3  (12-30-2008)
Submission of Information for Award under Sections 7623(a) or (b)

  1. Individuals submitting information under section 7623(a) or (b) must complete IRS Form 211, Application for Award for Original Information, which is available on http://www.irs.gov and send the completed Form 211 to:

    Internal Revenue Service
    Whistleblower Office
    SE: WO
    1111 Constitution Ave., NW
    Washington, D.C. 20224

  2. Information submitted under section 7623 must be accompanied by an original signed declaration under penalty of perjury, as follows:

    I declare, under penalty of perjury, that I have examined this application and my accompanying statement and supporting documentation and aver that such application is true, correct and complete, to the best of my knowledge.

  3. The requirement to submit information under penalty of perjury precludes submissions by:

    1. a person serving as a representative of the claimant, or

    2. an entity other than a natural person.

  4. The requirement to submit information under penalty of perjury also precludes submissions made anonymously or under an alias. Until further guidance is issued, claims for awards may not be submitted electronically or by fax.

  5. Joint claims must be signed by each claimant and each claimant must sign the claim under penalty of perjury.

  6. Some whistleblower submissions present legal and policy issues that can preclude the use of some or all of the information offered by the whistleblower. Whistleblowers may also mistakenly submit claims for award directly to Service field personnel, despite instructions to send all Forms 211 to the Whistleblower Office. In such cases, to protect the integrity of any taxpayer investigation or examination, Service personnel should not act on the underlying tax noncompliance issue presented by the whistleblower prior to forwarding the claim to the Whistleblower Office. Any and all information should be forwarded to the Whistleblower Office.

  7. A whistleblower may be represented by counsel during any proceeding by filing a properly executed Form 2848, Power of Attorney and Declaration of Representative.

  8. If available information is not provided by the claimant, the claimant bears the risk that such information may not be considered by the Whistleblower Office in making any award decision or determination. If documents or supporting evidence are known to the claimant but are not in his or her possession or control, the claimant should describe these documents and identify their location to the best of his or her ability.

25.2.2.3.1  (12-30-2008)
Information to be included with IRS Form 211

  1. The Form 211 must be completed in its entirety and should include the following information:

    1. The date the claimant submits the claim;

    2. Claimant’s name;

    3. Name of claimant’s spouse (if applicable);

    4. Claimant’s contact information, including address with zip code and telephone number;

    5. Claimant’s date of birth;

    6. Claimant’s Taxpayer Identification Number (e.g., Social Security Number or Individual Taxpayer Identification Number) and Taxpayer Identification Number of claimant’s spouse, if applicable.

  2. In addition to the information shown above, the Form 211 must include specific and credible information concerning the person(s) that the claimant believes will lead to the collection of unpaid taxes. This information should include the following:

    1. The legal name of the person(s) (e.g., individual or entity), and any related person(s), that failed to pay taxes;

    2. The person’s aliases, if any;

    3. The person’s address;

    4. The person’s Taxpayer Identification Number(s);

    5. A description of the amount(s) and tax year(s) of Federal tax claimed to be owed, and facts supporting the basis for the amount(s) claimed to be owed;

    6. Documentation to substantiate the claim (e.g., financial data; the location of bank accounts, assets, books, and records; transaction documents or analyses relevant to the claim); and

    7. Any and all other facts and information pertaining to the claim.

  3. Finally, the Form 211 must include an explanation of how the information that forms the basis of the claim came to the attention of the claimant, including the date(s) on which this information was acquired, and a complete description of the claimant’s present or former relationship (if any) to the person that is the subject of the claim (e.g., family member, acquaintance, client, employee, accountant, lawyer, bookkeeper, customer). If the claimant identifies multiple person(s) as the subject of a claim, describe his or her relationship to each person.

25.2.2.4  (12-30-2008)
Initial Review of the Form 211 by the Whistleblower Office

  1. Upon receipt of the Form 211, the Whistleblower Office will conduct the following review based on the scenarios in the table below:

    Is the claim complete? Does the Form 211 contain all the required information?
    If no, the Whistleblower Office may correspond with the whistleblower for the missing information. The correspondence will inform the whistleblower that if a reply to the request is not received within 45 days, the Whistleblower Office will assume the whistleblower is no longer interested in an award for information.
    Is the claim a potential 7623(b)?
    If no, the whistleblower and/or representative will be notified that the claim has been forwarded to the Informant’s Claims Unit in Ogden Compliance Center for processing. (See 25.2.2.5 below.)  
    If the claim is a potential 7623(b) the whistleblower and/or representative will be notified of the claim number and the name of the analyst in the Whistleblower Office assigned the claim file. For 7623(b) claim files, the analyst in the Whistleblower Office will monitor the claim file until final resolution of the tax claim file and a determination on the whistleblower’s award.

25.2.2.5  (12-30-2008)
Processing of the Form 211 7623(a) Claim for Award

  1. If it is determined that a whistleblower’s claim is below the $2 million threshold of section 7623(b), it will be forwarded by the Whistleblower Office to:

    Internal Revenue Compliance Center
    Informants Claims Unit (ICE)
    1973 N. Rulon White Blvd.
    MS 4110 – ICE
    Ogden, UT 84404

  2. Upon receipt of the information, the Informant Claims Unit will determine whether the application is complete. If all the necessary information is present, the Informant Claims Unit will input the claim information onto the database and notify the whistleblower and/or representative of the receipt of the information and claim number. The whistleblower will be notified that if an investigation is initiated, it could take several years until final resolution of all tax matters, and at the conclusion of their review, they will only be able to tell whether or not the information provided met the criteria for an award.

  3. If the submission is incomplete, the whistleblower will be contacted by the Informant Claims Unit to obtain the missing information. If no response is received within 45 days, the claim will be dismissed. If multiple entities are listed on a single Form 211, each entity will receive a claim number and the whistleblower will be notified.

  4. In claims where a whistleblower submits more than one Form 211, each Form 211 will receive a claim number and the whistleblower will be notified of the claim number associated with each form. If multiple entities are listed on a single Form 211, each entity will receive a claim number and the whistleblower will be notified.

  5. The claim file will be forwarded for classification to the appropriate Operating Division. The Operating Division classifier will review the information to determine the following:

    1. Will the information provided materially contribute to identification, development or resolution of taxpayer liability or collection?

    2. Is the taxpayer currently under audit?

    3. Does the whistleblower offer information that may be relevant to exam issues (past, current or prospective)?

    4. Does the whistleblower offer information that may be relevant to collection issues (past, current or prospective)?

    Note:

    When claims are submitted on multiple taxpayers (whether on one Form 211 or multiple forms), all claims will be forwarded to classification at the same time.

  6. Whistleblowers whose claims do not meet the criteria for an award are sent a 1010 Letter.

  7. If classifier determines that the whistleblower’s information warrants referral for examination, the Informant Claims Unit will establish the case on AIMS, input an ICE indicator on each return established on AIMS for tracking purposes and forward a copy of Form 211, Application for Award for Original Information, supporting allegations, returns requested by the classifier for alleged tax violator and an evaluation package, Form 11369, to the appropriate group or subject matter expert in accordance with the operating divisions’ instructions.

    1. For cases that are selected for examination, the Informant Claims Unit in Ogden will be notified to input AIMS Activity Codes. For selected returns, the Informant Claims Examiner will input an AM424 to establish on AIMS. Claim files will be suspended two (2) weeks for AIMS to be established.

    2. For returns already established on AIMS, the Informant Claims Examiner will input a "1" indicator (ICE). This prevents anyone from closing the Case.

    Note:

    Only the Informant Claims Unit can have the "1" indicator removed and will do this after the Form 11369 and case file is provided by the agent/officer.

    Reminder:

    Whistleblowers’ communications are confidential. All whistleblower claims, reports and information shall be transmitted in a double sealed confidential envelope marked "To Be Opened By Addressee Only" with Document 6441 as the cover sheet.

  8. The Informant Claims Unit will monitor the case for the Exam closing using IDAP at a minimum of 120 day intervals.

  9. If at any time the amount in dispute (taxes, penalties, interest, additions to tax, and additional amounts) rises to $2 million or more, the Whistleblower Office must be notified immediately at WO@irs.gov. The law provides that awards will be paid from collected proceeds and from "related actions." If the initial IRS action on the whistleblower’s information is expanded to include additional taxpayers or modules, AIMs controls are required for those additional taxpayers or modules. The Informant Claims Unit should be contacted to have the "1" indicator added to any additional taxpayers or modules. Contact the Whistleblower Office for guidance. Additional taxpayers or modules may also raise the aggregate amount in dispute over $2 million requiring contact with the Whistleblower Office.

  10. At the conclusion of the examination on a section 7623(a) case, the examiner should prepare two files:

    1. A complete case file for regular processing through the appropriate Case Processing function, and

    2. An award claim file to be sent to the Ogden ICE Unit for processing of the claim for award. This file, along with Form 11369 (Confidential Evaluation Report on Claim for Reward) should be sent to the following address:

      Internal Revenue Service
      Whistleblower Office
      c/o Campus Compliance Operations, Ogden
      1973 N. Rulon White Blvd. MS/4110
      Ogden, UT 84404

  11. The award claim file should contain the following documentation:

    1. Form 11369, Confidential Evaluation Report on Claim for Reward for each taxpayer with the exception of jointly filed returns for which one joint form should be completed; a completed Form 11369 is required prior to transfer or assignment, closing from the group, or routing to Appeals. Do not include a copy of the Form 11369 or any reference to a whistleblower in the case file to Appeals. The form must be approved by the Group/Team Manager.

    2. Copies of all examined returns, substitutes for return prepared during the examination, and/or secured returns prepared by the taxpayer. For LMSB returns, a copy of the first few pages of the affected returns, including Schedule J and any additional tax returns that were examined as a result of the whistleblower information.

    3. Copy of the computation section of the RAR (Form 4549 and relevant computations) for all returns examined as a result of the whistleblower information.

    4. Copy of the RAR sections that reflect the issues impacted by the information provided by the whistleblower.

    5. Special Agent’s Report (if applicable) attached to Form 3949;

    6. Copy of the examination plan for issues impacted by the information provided by the whistleblower.

    7. A schedule of the adjustments impacted by the information provided by the whistleblower and the effect of these adjustments for each year included in the RAR for taxable income, credits, and net tax liability.

    8. Copy of the information provided by the Industry Subject Matter Expert and Counsel. This includes any advice, direction or guidance that was received.

    9. The information provided by the whistleblower or subsequently obtained.

    10. Any other information that may assist the Whistleblower Office in making the award determination.

    Note:

    All of the above items will be included in a confidential envelope marked "ICE COPY" and forwarded directly to the Ogden ICE Unit prior to the closing of the case. Some Operating Divisions have established procedures that deviate from this process to ensure cases are appropriately reviewed.

  12. The Whistleblower Office will be notified once the award claim file is received in the Informant Claims Unit. The entire award claim file will be reviewed by the Whistleblower Office for an award decision. During the review by the Whistleblower Office, it may be necessary to contact the RA/SA/RO team to obtain additional information or to visit the team to review related files. Communication protocol developed between the Operating Divisions and the Whistleblower Office will be followed regarding how the team will be contacted.

  13. Once an award decision is made, the whistleblower will be notified by the Director, Whistleblower Office.

  14. If the audit is not fully paid by the taxpayer and there are unresolved balance due liabilities, the Ogden ICE Unit will check IDRS and the Integrated Collection System (ICE) to see if there is an open field Collection case already assigned.

    1. If there is a revenue officer (RO) assigned the case, the ICE Unit will contact the RO forwarding any relevant information included in the whistleblower information.

    2. If there is not a revenue officer assigned; the ICE Unit will notify the SME for the Collection Operating Division who will determine what actions should be taken.

25.2.2.6  (12-30-2008)
Processing Form 211 7623(b) Claim for Award

  1. If it is determined that the claim is a potential section 7623(b) claim, the Whistleblower Office will review the submission for fraud potential and possible review by Criminal Investigation Division. If Criminal Investigation Division decides not to pursue, the claim will be returned to the Whistleblower Office.

  2. If the claim file is not referred to Criminal Investigation Division, the Operating Division’s Subject Matter Expert (OD’s SME) will be contacted and the claim file forwarded for evaluation of the information to determine whether it may materially contribute to identification, development or resolution of taxpayer liability or collection issues.

  3. The SME consults with Operating Division Counsel to identify any potential legal issues in developing the issues presented by the whistleblower, and may decide to obtain additional subject matter expertise for a team analysis of the matter. The initial legal advice should address possible limitations on interactions with the whistleblower and other issues including the potential application of privileges.

  4. The SME insulates any resulting examination or investigation from improperly obtained information or other potential "taints" that could compromise the tax case. If the SME reviews information that cannot be used in the examination or investigation, the integrity of the tax case is preserved by withholding that information from the auditor or investigator, and by ensuring that the SME does not advise or supervise the examination or investigation.

  5. Unless the SME determines that a debriefing is unlikely to result in information that would be material to the evaluation of the submission, the SME will debrief the whistleblower. A debriefing may yield additional information that the whistleblower did not recognize as relevant to the taxpayer’s matters, information about the credibility of the whistleblower, information relevant to legal issues that can affect the use of documents, and leads to other sources of information. A debriefing may also clarify the whistleblower’s submission.

  6. The SME makes a determination whether to pursue the lead offered by the whistleblower.

    1. If the lead does not appear productive, the Operating Division SME completes a Form 11369 and returns the file to the Whistleblower Office analyst assigned the case.

    2. If the lead appears to be productive, Operating Division Counsel is given the opportunity to identify potential legal limitations on the use of the information. If there are no legal limitations, the case is forwarded for examination, and the Whistleblower Office analyst monitors case status until the examination is resolved.

    3. For cases that are selected for examination, the Informant Claims Unit in Ogden will be notified by the Whistleblower Office analyst assigned the case to input AIMS Activity Codes. For selected returns, the Informant Claims Examiner will input an AM424 to establish on AIMS. Indicator "1" will be immediately input after AM424. Claim files will be suspended two (2) weeks for AIMS to be established.

    4. For returns already established on AIMS, the Informant Claims Examiner will input a "1" indicator (ICE). This prevents anyone from closing the case. Only the Informant Claims Unit can remove the "1" indicator and will do this after instructions from the Whistleblower Office Analyst.

    5. If the lead contains information that could enhance an existing collection case, the Ogden ICE Unit should check IDRS and ICE to determine if there are existing unpaid balance due liabilities. If there are, the SME for the Collection Operating Division should be contacted. The SME will make a recommendation on the usefulness of the information and what actions should be taken to share the information with Collections.

  7. If the Operating Division Counsel identifies potential legal limitations on the use of the information, he/she drafts a risk analysis. The Operating Division Counsel’s risk analysis is reviewed by Headquarters Chief Counsel. Upon completion of the Risk Analysis, the Operating Division Commissioner or delegate will decide whether the risks of acting on the information are outweighed by the potential return and the potential risk of not acting.

  8. If the decision is made not to pursue the case, a Form 11369 is completed and the case file is routed to the Whistleblower Office analyst assigned the case. The Whistleblower Office will then notify the whistleblower.

  9. At the conclusion of the examination, the examiner should prepare two files:

    1. A complete case file for regular processing through the appropriate Case Processing function, and

    2. An award claim file sent to the Whistleblower Office Analyst assigned the case.

  10. The award claim file should contain the following documentation:

    1. Form 11369, for each taxpayer with the exception of jointly filed returns for which one joint form should be completed; a completed Form 11369 is required prior to transfer or assignment, closing from the group, or routing to Appeals. Do not include a copy of the Form 11369 in the case file to Appeals. The form must be approved by the Group/Team Manager.

    2. Copies of all examined returns, substitutes for return prepared during the examination, and/or secured returns prepared by the taxpayer. For LMSB returns, a copy of the first few pages of the affected returns, including Schedule J and any additional tax returns that were examined as a result of the whistleblower information.

    3. Copy of the computation section of the RAR (Form 4549 and relevant computations) for all returns examined as a result of the whistleblower information.

    4. Copy of the RAR sections that reflect the issues impacted by the information provided by the whistleblower.

    5. Special Agent’s Report (if applicable) attached to Form 3949;

    6. Copy of the examination plan for issues impacted by the information provided by the whistleblower.

    7. A schedule of the adjustments impacted by the information provided by the whistleblower and the effect of these adjustments for each year included in the RAR for taxable income, credits, and net tax liability.

    8. Copy of the information provided by the Industry Subject Matter Expert and Counsel. This includes any advice, direction or guidance that was received.

    9. The information provided by the whistleblower or subsequently obtained.

    10. Any other information that may assist the Whistleblower Office in making the award determination.

      Note:

      All of the above items will be included in a confidential envelope forwarded to the Whistleblower Office analyst assigned the case.

  11. The entire award claim file will be reviewed by the Whistleblower Office for an award determination. During the review by the Whistleblower Office, it may be necessary to contact the RA/SA/RO team to obtain additional information or to review related files. Communication protocol developed between the Operating Divisions and the Whistleblower Office will be followed regarding how the team will be contacted.

  12. Once an award determination is made, the whistleblower will be notified by the Director, Whistleblower Office.

25.2.2.7  (12-30-2008)
Confidentiality of the Whistleblower

  1. The IRS will protect the identity of the whistleblower to the fullest extent permitted by the law. Under some circumstances, such as when the whistleblower is an essential witness in a judicial proceeding, it may not be possible to pursue the investigation or examination without revealing the whistleblower’s identity. These circumstances are rare, and the Service will consult with the whistleblower before deciding whether to proceed in such a case.

    Note:

    Contact with a whistleblower does not constitute a Third Party Contact under Section 7602(c).

25.2.2.8  (12-30-2008)
Evaluation Report on Claims for Award - Form 11369

  1. The Form 11369, Confidential Evaluation Report on Claim for Award, documents the whistleblower’s contribution to the assessment and collection of taxes, penalties and interest. The form and attachments will assist the Director, Whistleblower Office, in making award determinations.

  2. This form must be completed for all Whistleblower Claims and is in addition to the normal claim file report or documents required by the functional area. All sections of the form must be completed and required documents attached. Incomplete forms will delay removal of the ICE Indicator.

  3. If during the examination, the claim file is transferred to another operating division or examiner, Question 15 of the Form 11369 must be completed and approved by the manager.

  4. If the taxpayer elects to go to Appeals, do not include a copy of the Form 11369, Confidential Evaluation Report on Claim for Award, or any reference to a Whistleblower Claim in the case file forwarded to Appeals. The original evaluation report and documentation outlined above should be forwarded to Ogden Informant Claims Unit for 7623(a) claims or the Whistleblower Office Analyst assigned the case for 7623(b) claims. The Whistleblower Office will monitor the activity on the taxpayer’s case in Appeals and upon completion of the Appeals case will obtain a copy of the appeals officer’s report and tax computation.

  5. The Whistleblower Office will determine the appropriate award percentage for all claims. After receipt of the collected proceeds, the whistleblower and their Counsel, if a Power of Attorney is on file, will be notified of their right to appeal to Tax Court within 30 days of such determination.

  6. If there is both a criminal investigation and a civil examination related to the whistleblower’s claim the special agent and cooperating revenue agent will prepare the Form 11369. The special agent will forward the report, through his/her group manager, to the Chief, Criminal Investigation, for routing to the Informant Claims Unit in Ogden.

  7. For Collection cases that involve a whistleblower claim:

    1. The Revenue Officer (RO) must complete any applicable portions of Form 11369 and forward the file to his or her group manager for approval.

    2. The file should contain: Form 11369 (with any applicable items completed), a summary memorandum or copy of a portion of the Integrated Collection System (ICS) history that contains a summary entry detailing how the whistleblower’s information aided in any collection made; copies of any returns secured; and any other documents which may assist the Whistleblower Office in making a decision on the award and its amount.

    3. The group manager will forward the approved file under proper security protection to the Informants Claims Unit in Ogden.

25.2.2.9  (12-30-2008)
Award Computation

  1. Effective July 1, 2008, the Director of the Whistleblower Office assumed the responsibility for all award determinations and percentages. Claims will be considered under the law and policies in place at the time the information was submitted. Supplemental information will not be considered as a new claim unless its receipt prompts the IRS to take an administrative or judicial action that would not otherwise have been taken on the basis of the earlier-supplied information.

25.2.2.9.1  (12-30-2008)
Award Computation - Section 7623(a)

  1. For award claims filed prior to December 20, 2006 and after December 20, 2006 if the amount in dispute is less than $2 million and if the taxpayer is an individual, the individual’s gross income must be below $200,000 for all tax years at issue, the Service will pay awards to whistleblowers as follows:

    1. For specific and responsible information that caused the investigation or, in claim files already under audit, materially assisted in the development or identification of an issue or issues and resulted in the recovery, or was a direct factor in the recovery, the award shall be 15 percent of the amounts recovered, with the total award not exceeding $10 million.

    2. For information that caused the investigation or, in claim files 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 award shall be 10 percent of the amount recovered, with the total award not exceeding $10 million.

    3. For information that causes the investigation or investigation of an issue, but had no direct relationship to the determination of tax liabilities, the award shall be 1 percent of the amounts recovered, with the total award not exceeding $10 million. No award will be paid if the recovery was so small as to call for payment of less than $100.00 under the above formulas.

    4. In a claim file when two or more whistleblowers individually provided original information leading to the recovery of additional tax, penalties, and fines from the same taxpayer, each whistleblower’s claim for award should be judged on its own merits. The individual awards should be considered in accordance with the criteria, computation formulas, and limitations stated above.

25.2.2.9.2  (12-30-2008)
Award Computation - Section 7623(b)

  1. For claims filed after December 20, 2006, under the statutory requirement of 7623(b) awards will be paid in proportion to the value of information furnished voluntarily with respect to proceeds collected, including taxes, penalties, interest, additions to tax and additional amounts. The amount of the award will be at least 15% but no more than 30% of the collected proceeds in claim files in which the Whistleblower Office determines that the information submitted by the whistleblower substantially contributed to the IRS’ detection and recovery of taxes, penalties, interest, additions to tax, and additional amounts. If the whistleblower planned and initiated the actions that led to the underpayment of tax or detection and bringing to trial and punishment of persons guilty of violating the internal revenue laws or conniving at the same, the Whistleblower Office may reduce the award. (Further guidance will be forth coming.)

25.2.2.10  (12-30-2008)
Funding Rewards

  1. For claims filed prior to December 20, 2006, whistleblower awards are paid out of taxes, penalties, and fines collected by reason of the information provided, as authorized by Internal Revenue Code section 7623, as amended by section 1209 of the Taxpayer Bill of Rights 2, Public Law 104.4–168.

  2. For claims filed after December 20, 2006, awards are paid out of the proceeds collected, including penalties, interest, additions to tax and additional amounts.

  3. Claims for Award are paid as soon as administratively possible. Upon receipt of the memo from the Whistleblower Office reflecting the percentage for the award, the Informants’ Claims Examiner will:

    1. Place the claim file in a suspense file.

    2. Monitor taxpayer’s account for payment

  4. Once collections have been made, the ICE Unit will prepare the allowance memorandum for the approval of the Director, Whistleblower Office.

25.2.2.11  (12-30-2008)
Award Payments

  1. Whistleblower awards currently are paid from funds available from the collection of tax assessments resulting from information provided by whistleblowers. Office of Management and Budget (OMB) apportions the amount of whistleblower payments based on prior year actual expense. The whistleblower payments cannot legally exceed the amount apportioned by OMB. Corporate Performance Budget (CPB) requests additional apportionment where payments are expected to exceed the apportionment. To ensure compliance with Law, CPB will track and approve posting of payments to the Informant Awards account (20x5433.1).

25.2.2.11.1  (12-30-2008)
Award Payment Roles and Responsibilities

  1. The Whistleblower Office (WO) will provide the Ogden Campus Informant Claims Examination (ICE) Unit with the amount of any awards that are able to be paid immediately.

  2. Ogden ICE Unit will:

    1. Provide the Whistleblower Office with the amount of any awards that are to be paid and the amount in the account both before and after any reward is paid.

    2. Obtain CPB approval of the availability of funds for each award payment prior to processing the payment.

  3. Revenue Financial Management (RFM) will:

    1. Produce an SF 133 based on a TIER file report for Informant Payments using CFO Vision.

    2. Transmit copies of the SF 133 to CPB and the Ogden Campus Ice Unit.

  4. Corporate Performance Budget/Budget Execution Office (CPB) will:

    1. Reconcile the SF 133 with the Informant Awards tracking spreadsheet.

    2. Submit an apportionment request (SF 132) for additional amounts to OMB when actual expected award payments are expected to exceed the available funding.

    3. Approve and track all informant awards prior to payment.

25.2.2.11.2  (12-30-2008)
Award Payment Procedures

  1. The Ogden ICE Unit will monitor the taxpayer’s account and confirm the collection of funds from the taxpayer.

  2. The Ogden ICE Unit will email the information on the amount of awards to be paid out to the CPB mailbox with the cc to the Director of the Budget Execution Office

    Note:

    This information does not require taxpayer information to be included.

  3. CPB will enter the amount of the request on a tracking sheet that incorporates data from the SF 133 report for Informant Payments.

  4. CPB will approve the request if funding is available.

  5. If the available apportionment falls below an appropriate amount. CPB will contact the Whistleblower Office to ascertain the amount to request from OMB for an additional apportionment.

  6. When the Ogden ICE Unit receives the approval email, they will send an Account Adjustment Voucher (Form 2424) and a Manual Refund Voucher (Form 3753) to the Ogden accounting unit.

  7. The Ogden accounting unit will process the Account Adjustment Voucher (Form 2424) and the Manual Refund Voucher (Form 3753).

  8. The Ogden IRACS team will journalize the Informant Award account (Journal 495) and the Manual Refund (Journal 515).

25.2.2.12  (12-30-2008)
Grounds for Determining Allowability of Claims for Award

  1. In general, claims for awards will not be processed for the following reasons:

    1. Claims submitted by an individual who is an employee of the Department of Treasury, or who is acting within the scope of his/her duties as an employee of any Federal, State, or local Government.

    2. Claims submitted by an individual who is required by Federal law or regulation to disclose the information or by an individual who is precluded by Federal law or regulation from making the disclosure.

    3. Claims submitted by an individual who obtained or was furnished the information while acting in an official capacity as a member of a State body or commission having access to such materials as Federal returns, copies or abstracts.

    4. Claims submitted by an individual who had access to taxpayer information arising out of a contract with the Federal government that forms the basis of the claim.

    5. Claims that upon initial review have no merit or that lack sufficient specific and credible information.

    6. Claims submitted anonymously or under an alias.

    7. Claims filed by a person other than a natural person (such as a corporation or a partnership).

    8. For claims filed under section 7623(b), the alleged noncompliant person is an individual whose gross income is below $200,000 for all taxable years at issue in a claim.

  2. In general, claims for awards will be denied if:

    1. The information provided did not identify a federal tax issue upon which the IRS took action.

    2. The information did not result in the detection of underpayment of taxes.

    3. The information did not result in the collection of proceeds.

25.2.2.13  (12-30-2008)
Appeal Rights under section 7623(b)

  1. Once the Whistleblower Office has made a final determination regarding a claim, the Whistleblower Office will communicate the determination, in writing, to the claimant. Final Whistleblower Office determinations regarding awards under section 7623(b) may, within 30 days of such determination, be appealed to the United States Tax Court. In accordance with section 7623(b) (4), decisions under section 7623(a) may not be appealed to the Tax Court.

25.2.2.14  (12-30-2008)
Annual Report to Congress

  1. Section 7623, as amended on December 20, 2006, requires the Secretary of the Treasury to annually conduct a study and report to Congress on the use of section 7623 of the Internal Revenue code of 1986, including - An analysis of the use of such section during the preceding year and the results of such use.


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