25.2.1  Receiving Information  (12-23-2008)
Overview: Authority and Policy

  1. The Information and Whistleblower Awards IRM provides procedures and guidance for all service personnel and must be strictly adhered to. Any deviation from this IRM must be approved by the Headquarters Office. This section explains the procedures used by the Service when information concerning an alleged violation of federal tax laws is received. The Service always welcomes the receipt of information that indicates a taxpayer has or is violating the Federal tax laws.

  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.

  4. 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. 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.


    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 results 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. The authority of the Director of the IRS Whistleblower Office to make determinations under section 7623 does not affect the delegation of authority for determinations regarding the payment of whistleblower expenses from confidential funds available to the Chief, Criminal Investigations.  (12-23-2008)
Disclosure/Security Procedures

  1. DO NOT DISCLOSE any tax return or account information to the whistleblower about the alleged tax violator (e.g., whether or not the alleged tax violator filed a tax return). Taxpayers look to the Service to maintain their returns and associated account information in a secure and confidential manner. Moreover, the Service is required by statute to do so. Any sharing of this information with anyone beyond the taxpayer is considered an unauthorized disclosure unless authorized by IRC 6103.

  2. The identity of the whistleblower must not be disclosed to any other Service officials or employees except on a "need to know" basis in the performance of their official duties in accordance with section 6103.

  3. To maintain maximum security, protect documents and screen displays which identify whistleblower information or the whistleblower. Keep all documents, screen displays, and forms secured. This information must be kept concealed from all employees in a locked file cabinet until it is forwarded to the responsible party.

  4. Transmit the information in a double sealed envelope. (Use pink or gray envelopes).

  5. Personnel are required to treat the identity of the whistleblower and the whistleblower’s information as highly confidential and to exercise the security precautions stated above.

  6. See the Physical and Document Security for guidelines on securing whistleblower material.  (12-23-2008)
Handling the Information

  1. A whistleblower who wishes to report possible instances of tax fraud by another individual, and does not want an award, must complete public use Form 3949 A, Information Referral, or provide the information via a letter.

  2. Customer Service Call Sites and Taxpayer Assistance Centers (TAC) will follow procedures outlined in IRM, Informant Contacts.

  3. Employees of other organizations/functions will follow procedures outlined below in IRM through IRM  (12-23-2008)
Request for Reward for Information Provided

  1. If the whistleblower indicates he or she wants an award, take the following action:

    1. For telephone inquiries advise the whistleblower he or she can get Form 211, Application for Award for Original Information , and Notice 2008-4, which provides instructions on how to complete Form 211 and where to send it, at http://www.irs.gov.

    2. For correspondence inquiries, provide Form 211 to the whistleblower. Advise the whistleblower to return the completed Form 211 and include any additional information to:
      Internal Revenue Service, Whistleblower Office, SE: WO
      1111 Constitution Ave., NW, Washington, DC 20224

    3. Advise the whistleblower that all claims must be submitted under penalty of perjury.  (12-23-2008)
Documenting the Information

  1. Use Form 3949 (Information Report Referral) to record information from whistleblowers.

  2. Attempt to obtain all of the information necessary to complete Form 3949. Fill in all blocks/spaces to the extent possible using the information provided by the whistleblower.

  3. It is important that Form 3949 include the alleged tax violator’s name and address, (the SSN, if known), the tax periods, and the specific nature of the violation. The dollar amounts of unreported income or erroneous deductions are also important. Therefore, if the whistleblower does not have enough information to properly complete Form 3949, ask him/her to call back when he/she has, at least, the alleged tax violator’s name and the alleged tax violation.

  4. Invite the whistleblower to give his/her name and telephone number in case a Service employee wishes to contact him/her at a later date to obtain additional information.

  5. 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 submit claims for award directly to Service field personnel, despite instructions to send all Forms 211 to the Whistleblower Office, in some cases claimants may mistakenly submit claims directly to Service field personnel. 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.

  6. Areas other than Customer Service call site will follow the instructions below for the Form 3949.  (12-23-2008)
Disposition of the Information After the Pre-Screening Process

  1. Use the following table to determine where to route the whistleblower referral on Form 3949. Refer to the text for instructions having greater detail than the following table.

    If And Then
    The unreported income is $50,000 or more per year For all cases. Route to Area Office Criminal Investigation in the area where the alleged tax violator resides.
    The unreported income is $50,000 or more per year and A.O. Criminal Investigation has evaluated the information. 1. There is no CI potential. Route to A.O. Collection if open collection activity; otherwise route to A.O. Examination.
    2. There is no Examination or Collection potential. Retain the file in accordance with 1.6(1) h.2 above.
    The unreported income is less than $50,000 per year.   Route to Campus Examination-Classification where the alleged tax violator’s return is filed.

    Route to office working the case.

  2. If no tax potential exists, for example, no specific tax violation is provided, the tax periods are not given, or there is insufficient information to perform IDRS research; do not forward the information; retain Form 3949 in accordance with the Records Control Schedule (RCS) for your function (see RCS 202 for Examination, RCS 204 for Collection, RCS 206 for Customer Service, and RCS 207 for Criminal Investigation). See IRM for final screening procedures by CI, Field Territory Managers, and Campus Examination (Classification).  (12-23-2008)
Final Screening of Information by Function(s) (Form 3949)

  1. Procedures for referring screening to Criminal Investigation:

    1. Allegations involving $50,000 or more per year of unreported income are evaluated by the Area Office Criminal Investigation for criminal potential. Such information may be received directly by the Criminal Investigation.

    2. If it is determined that criminal potential exists, retain the original information in the Area Criminal Investigation for normal processing.

    3. If Form 211 is received with the information, send the original Form 211 and a copy of the Form 3949 to the Whistleblower Office, Washington, D.C.

    4. If there is insufficient revenue potential and no claim for reward has been filed, retain the file in accordance with the Records Control Schedule (RCS) 207 (Criminal Investigation).

    5. Screen the Form 3949 and any attached information, which may include research (IDRS) transcripts, for examination/collection potential. Refer to the criteria for accepting referrals as provided by the Chief, Classification Section, in the Campus having jurisdiction over the tax violator’s tax return.

    6. If there is insufficient revenue potential to warrant further review for potential examination/collection activity, and no claim for reward has been filed and there is no indication that a claim may be filed, retain the file in accordance with the Records Control Schedule (RCS) for your area. RCS 202—Examination, RCS 204—Collection, RCS 206—Customer Service.  (12-23-2008)
Storage of Informant’s Information

  1. All written correspondence, received from an informant, must be retained in a secured/locked cabinet—see IRM, Protection of Informant Information, for guidelines. Cabinet access must be limited to the person or persons responsible for the security and review of the informant documents.

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