The IRS Whistleblower Office’s 2023 Annual Report was released on June 24, 2024, highlighting the results over the program over the last federal fiscal year. The report covers from October 1, 2022, to September 30, 2023, and includes an analysis of claims received, processed, and the awards paid to whistleblowers.  

In fiscal year 2023, the IRS paid $88.8 million to whistleblowers on a collection of $338 million from their tips and reports. The percentage of recoveries awarded to whistleblower was 26.3%, a large increase from the 21.9 and 14.7 percent awarded in 2022 and 2021 respectively. 

The $88.8 million was more than double the awards paid in 2022, when 132 whistleblower were awarded $37.8 million.  The IRS received a total of nearly 6,500 submissions, an increase from the near 5,100 submissions received in 2022. 

IRS Whistleblower 2023 Results and Statistics 

Awards Paid and Proceeds Collected: 

• In FY 2023, the IRS paid 121 awards totaling $88.8 million. 
• These awards were based on information that led to the collection of $338 million in proceeds. 
• The total dollar amount of awards increased significantly from $37.8 million in FY 2022. 
• The number of claims related to awards increased to 1,234 in FY 2023, the highest since the program’s inception in 2007. 
• The Whistleblower Office received 6,455 submissions and established 16,932 claim numbers in FY 2023, a significant increase from the previous year.

Whistleblower Program Improvement Plans 

The IRS Whistleblower Office stated it has engaged in a series of improvements to the program, following the Inflation Reduction Act Strategic Operating Plan. The changes are intended to allow for additional investigation of submissions, and speed up the results. 

The IRS highlighting increased staffing and a new claim management system among the major changes. The report highlights several recommendations to improve the program: 

1. Stronger Protection for Taxpayers: Addressing challenges in the disclosure of taxpayer information to whistleblowers and ensuring legal restrictions on redisclosure. 
2. Information Sharing: Enhancing the ability to share information within the government to improve the determination of awards. 
3. Clarifying Claim Submission Requirements: Ensuring that whistleblowers file claims with the Whistleblower Office before the IRS takes action based on their information. 

Types of Claims and Awards: 

Most Common Allegations: 

• Unreported/Underreported Income 
• Overstated or False Deductions 
• Failure to File Tax or Information Returns 
• General Allegations of Fraud 

Number of Claims and Awards: 

• Total claims related to awards: 1,234 
• Total number of awards: 121 
• IRC Section 7623(b) awards: 21 
• IRC Section 7623(a) awards: 100 

Geographic Distribution: 

Most award recipients were United States residents, but some awards were also given to reports coming from outside the United States. You do not have to be a citizen of the United States or reside in the United States to report to the IRS. 

• Western Region: 1,401 whistleblowers 
• Central Region: 1,722 whistleblowers 
• Eastern Region: 1,856 whistleblowers 
• Foreign: 112 whistleblowers 

IRS Whistleblower Program – Up to 30% of Recovery as an Award 

The IRS establishes both a category for mandatory awards and discretionary awards that can be received even if one does not meet the mandatory category requirements. 

Mandatory Awards (26 USC § 7623(b)): 

The law requires the IRS to give an award of 15 to 30% of the fraud recovery or tax underpayment under section 26 USC § 7623(b), if: 

• The IRS collects tax underpayments resulting from the action or related actions; 
• The amount disputed exceeds $2 million (and if an individual and not an entity, the defendant earned at least $200,000 one year in income); and 
• The IRS acts upon the tip from a whistleblower. 

The Tax Relief and Health Care Act differs from the False Claims Act in that qui tam lawsuits are not allowed under the former. A qui tam lawsuit allows an individual to proceed on behalf of the government, potentially winning a case even if the government does not join the lawsuit. For IRS tax fraud and tax underpayment, the IRS prosecutes the case for tax fraud.  

In 2023 the IRS awarded $86.6 million through 7623(b) mandatory awards. 

Discretionary Awards (26 USC § 7623(a)): 

Even if a case does not meet the criteria for a mandatory award, it is still possible for a whistleblower to receive an award. Discretionary awards are possible for cases that result in “detecting underpayments of tax or bringing to trial and punishment persons guilty of violating the internal revenue laws”. The maximum award for discretionary awards is 15 percent of the tax recovery. 

In 2023 the IRS awarded $2.2 million through 7623(a). 

IRS Whistleblower Law Firm 

Schneider Wallace represents whistleblowers. Schedule a consult with our whistleblower law firm for a free and private legal consultation. To speak with a lawyer regarding IRS tax fraud, contact us at 1-800-689-0024.