What monetary awards are available to IRS whistleblowers?

Federal law requires the IRS to pay some whistleblower awards and gives it discretion to pay others.

If a whistleblower’s information leads to a recovery of $2 million or more, the IRS must issue an award of at least 15% and up to 30% of the amount recovered. If the information concerns an individual (as opposed to a corporate entity) then the individual’s annual gross income must exceed a certain threshold, but that threshold is usually met when the government has recovered $2 million.

The IRS also has discretion to issue awards of up to 10% of its recovery to whistleblowers who provide information that is not “original,” but nonetheless significantly contributes to successful pursuit of an action. When the IRS’s recovery exceeds $2 million, its denial of an award can be appealed to the Tax Court.

If a whistleblower’s information leads to a recovery of less than $2 million, then the IRS has discretion to issue an award. These discretionary decisions are final and unappealable.

The IRS considers several different factors to determine the amount it awards to a whistleblower. Some “positive” factors favor higher awards, such as acting promptly, providing detailed information, identifying facts previously unknown to the IRS, disclosing illegality that is hard for the IRS to detect, and identifying assets for collection.

Other “negative” factors can lead to lower awards, such as the whistleblower’s involvement in the noncompliance or failure to assist the IRS’s investigation.

No award is paid until the IRS collects all taxes, penalties, and interest owed and until the time for a taxpayer to file a claim for a refund has expired.

To learn more about the IRS’s whistleblower program and other programs, go to www.mololamken.com and follow us on LinkedIn. “Brilliant lawyers with courtroom savvy” — Benchmark Litigation. Copyright MoloLamken LLP 2025.