Tax fraud and illegal tax avoidance cost the federal and state governments billions of dollars each year. In 2024 alone, the IRS’s criminal enforcement arm identified over $2 billion in federal tax fraud. A failure to pay taxes owed undermines the fair and equitable enforcement of our tax laws and deprives the government of resources needed to fund important public programs. 

There are countless ways in which a business or individual can improperly avoid tax obligations.  Some of the most common are:

• Failure to report all sources of taxable income
• Engaging in illegal tax shelters
• Claiming improper deductions or credits
• Failure to pay appropriate taxes on investment activity or cryptocurrency transactions
• Failure to properly account for intercompany transfers
• Failure to identify income that is attributable to U.S. business activity
• Failure to forward withheld employee taxes to the IRS

The primary way that whistleblowers can report tax fraud is through the IRS Whistleblower Program, which covers underpayments of federal taxes and related penalties and proceeds.  Certain states allow for whistleblowers to pursue state tax-related claims through their false claims act statutes or through other statutory or administrative mechanisms. 

The IRS Whistleblower Program 

The IRS Whistleblower Program’s fraud reporting system encourages individuals to come forward with information regarding the underpayment of federal taxes by offering financial awards when that information leads to a successful government recovery.  Since its creation, the IRS Whistleblower Program has led to the collection of nearly $7 billion in underpaid taxes and has made $1.2 billion in awards to whistleblowers.

Individuals who follow the procedures of the IRS Whistleblower Program and whose information leads to the recovery of over $2 million in proceeds may be eligible for financial awards equal to 15-30% of the proceeds collected. To qualify for a whistleblower award, an individual must present information regarding the underpayment of taxes to the IRS Whistleblower Office according to specific procedures. The IRS takes all appropriate measures to protect the whistleblowers’ anonymity and does not personally identify whistleblowers even when making and announcing whistleblower awards. 

We have extensive experience representing individuals who submit claims under the IRS Whistleblower Program and working collaboratively with the IRS to pursue and facilitate its recovery of underpaid taxes and to obtain awards for our clients. We handle a range of matters involving sophisticated tax issues, such as the U.S. tax liability of international corporate transactions, Ponzi-like tax fraud schemes, and the taxation of complex financial instruments. We will not hesitate to engage tax consultants when expertise regarding a particular aspect of the U.S. Tax Code is necessary.

We represent clients on a contingency fee basis, and we do not charge a fee for an initial, no-obligation case evaluation that is fully confidential. We carefully evaluate each claim whistleblowers bring forward, heavily investing our time and resources to demonstrate our belief in a case’s value. We receive a fee only when we succeed on your behalf.

Please contact us directly, at whistleblower@cohenmilstein.com, if you believe you’ve witnessed or have significant information concerning a tax fraud.