Tax Whistleblowers Receive $74m Of $263m Recovery; IRS Plans 170% Increase In Whistleblower Office Staff

Washington Post, They Exposed a Tax Cheater. They’ll Share a $74 Million Reward.:

The IRS recovered $263 million from a single individual, ending more than a decade of tax evasion and one of its biggest whistleblower cases ever, according to lawyers from three firms involved in the case.

The three informants will split $74 million, nearly a third of the government’s proceeds and the largest award allowed by law, the lawyers said.

It’s a major win for the IRS whistleblower program, which rewards people who expose high-dollar tax cheats but has come under criticism for its opaque and lumbering process. Collections have tumbled in recent years, from $1.4 billion in 2018 to $337 million last year. ...

The whistleblower office was created in 2006 to close the tax gap — hundreds of billions of dollars go unpaid every year — by encouraging people with direct knowledge to step forward. The office only pursues tax debts of $2 million or more, which translates into six- or seven-digit payouts for the informants.

Bloomberg, Tax Tipsters Getting $74 Million Shows IRS Progress, Lawyers Say:

Whistleblower lawyers who have long complained that the Internal Revenue Service takes far too long to process tips about tax evasion are billboarding a $74 million payout as a sign of improvement.

Three people shared the award after disclosing an offshore tax-evasion scheme that spanned 15 years, enabling the IRS to collect $263 million from an unidentified individual, according to attorneys for Getnick Law, which helped represent the lead whistleblower. Although it took years to resolve the case, recent policy changes significantly shortened the time it took to pay the whistleblowers, the lawyers said.

“We think that this victory that we have achieved together with the IRS Whistleblower Office is a harbinger for the future,” said Neil Getnick, managing partner at Getnick Law, in an interview. ...

[A] process that typically takes a decade or longer has been criticized by whistleblower advocates, who say the IRS has been far less responsive on paying tipsters than the Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission. In its first five years of existence, the IRS program made no payment, after more than 1,300 tipsters came forward. Since then, the program has lurched forward.

“I realized we needed to work on improving the system,” said John Hinman, who became director of the IRS Whistleblower Office in 2022 after 39 years in various roles at the agency.

In an interview, Hinman said he has expanded the office to 84 employees from 48, with a goal of reaching 130. They’re improving evaluation of tips and working more closely with lawyers who represent whistleblowers, he said.

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