IRS Form 211: For The Tax Snitches
Collecting 30% For Calling Out The Cheaters
Since the law was enacted in December, the IRS has received about 20 reward claims, some involving hundreds of millions of dollars, says Stephen Whitlock , head of the IRS’s new whistleblower office. Under that law, informants generally may collect as much as 30% of whatever the IRS eventually collects, including penalties and interest. Some reward claims have come from “people who are knowledgeable insiders,” Mr. Whitlock says. “They’re coming in with big, fat piles of paper, and they have, at least on the surface…some credibility about the information they’re bringing to us.” Although the law is relatively new, it’s attracting attention. Many lawyers attended a panel discussion on the subject at a recent meeting of the American Bar Association tax section in Washington. Some lawyers predict many more reward claims will be filed in coming months as more people learn about the law’s details.
Know someone you’d like to turn in to receive IRS monetary prizes? Here is a primer on how the law works, what to watch out for if you’re considering turning someone in, and a few of the unanswered questions about the law and the informants program that IRS lawyers are struggling with. The law generally sets a reward floor of 15% — and a cap of 30% — of the collected proceeds, including penalties and interest. The law applies to someone with information involving a business or, in the case of an individual, someone whose gross income exceeds $200,000 for any year in question. Whatever the case, the taxes, penalties and interest in dispute must exceed $2 million. The information must be submitted as a statement “under penalties of perjury.” To file a claim under the law, use IRS Form 211, available on the IRS Web site at www.irs.gov Another big change: Under the old law, the IRS typically wouldn’t pay a reward to tipsters who “substantially” participated in the wrongdoing they reported, Mr. Matthews says. The new law allows the IRS to pay rewards to people who were involved but only under certain circumstances. Don’t rely on the IRS too heavily to pay you. Over the past few decades, only about 8% of all claims have resulted in rewards, according to IRS data. Moreover, be prepared for a long wait. The IRS isn’t allowed by law to pay a reward until it actually collects. That often takes many years.
