IRS Releases Tax Whistleblower Award Procedures

Jun 18, 2010, 17:25 ET from The Ferraro Law Firm

WASHINGTON, June 18 /PRNewswire/ -- The IRS officially released Internal Revenue Manual 25.2.2 today addressing award procedures for Tax Whistleblowers under section 7623.  The procedures have been eagerly awaited as they are the last hurdle to award payments finally starting to be paid.  The procedures create an initial award determination that a Tax Whistleblower will have the opportunity to comment on before the IRS makes a final determination.  The text of the I.R.M. can be found at   The IRS will inform a Tax Whistleblower of the amount of taxes collected, the percentage being applied, and the total amount of award for which the Tax Whistleblower is eligible.  "The IRS has created a process which should reduce the need for most cases to go to Tax Court," said Gregory Lynam, a Tax Partner of The Ferraro Law Firm.  "One thing that is clear from these procedures; if you don't have counsel now, you better get counsel.  A tax whistleblower's best chance of increasing their award is before the IRS decides to take action, but these procedures give a chance for a Tax Whistleblower to really show, in the administrative process, the value they added and increase the amount they get paid," said Scott Knott, also a Tax Partner of The Ferraro Law Firm.

The procedures generally describe how the IRS will reach its determination of where on the 15-30 percent statutory award-scale a Tax Whistleblower falls.  Among these is a listing of positive and negative factors taken into account.  "We love the Positive Factors in the procedures.  Every submission we make hits nearly all of them," said Lynam.  

At least one part of the I.R.M. is contrary to the law.  "The I.R.M. claims that criminal penalties are not subject to Tax Whistleblower awards.  This is clearly contrary to section 7623(b)(1).  To claim that 'criminal fines' are not the collected proceeds of the punishment of persons guilty of violating the internal revenue laws is just crazy.  The Tax Court will kill this on the first case," said Knott.    

The Ferraro Law Firm's has more than $45 billion in submissions to the IRS Whistleblower Office.  For more information on The Ferraro Law Firm's tax group and tax whistleblower submissions, call 1-800-275-3332 or visit

SOURCE The Ferraro Law Firm