Congress Strengthens IRS Whistleblower Statute

The Tax Relief and Health Care Act of 2006, signed into law on December 20, 2006, amended the Internal Revenue Code to provide more incentives for private citizens to blow the whistle on tax evaders. Generally, the new legislation requires the IRS to award to the whistleblower at least 15%, but not more than 30%, of the collected proceeds resulting from the information provided by the whistleblower. However, these new awards are only available for tax-cheats with more than $200,000 in gross income with a tax liability (including penalties and interest) in excess of $2,000,000.

Prior to the amendment, Internal Revenue Code § 7623 and the accompanying regulations specified that "the amount of a reward will represent what the district or service center director deems to be adequate compensation in the particular case, generally not to exceed fifteen percent of the amounts collected by reason of the information."¹ Typically, the awards determined by the IRS were minimal and difficult to