The Internal Revenue Service says that the changes it made to its whistleblower provisions last year are already beginning to pay off.According to a published report, since the law was enacted in December, offering much higher rewards in cases involving major tax cheating, the IRS has received about 20 reward claims -- some involving hundreds of million of dollars in alleged fraud.

In most cases, the minimum reward is now 15 percent of the collected proceeds in a case, including penalties and interest -- though the reward ceiling can go as high as 30 percent. If a reward is based on public information, such as that outlined in a court case or the media, smaller rewards may be handed out. Informants reporting on smaller amounts will still be covered under the old law, in which reward amounts typically aren’t more than 15 percent of the amount recovered.

Other changes as part of the law are:

  • That the program is limited to tips involving large amounts of money -- whatever the case, the taxes, penalties and interest in dispute must exceed $2 million;
  • Any information submitted to the program must be offered as a statement "under penalties of perjury;” and,
  • While under the old law, the IRS typically wouldn't pay out to tipsters who "substantially" participated in the wrongdoing, the new law allows the IRS to pay rewards to people who were involved under certain circumstances.

Claims can be made by filing Form 211, “Application For Reward for Original Information.”Other questions, such as how much the IRS will work with whistleblowers to develop cases, while stopping short of violating taxpayer-privacy laws will be addressed in IRS guidance later this year.

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