Thursday, October 4, 2012

No IRS Whistleblower Awards for Non Title 26 Tax Violations

Violations of non-tax laws—including those enforced by the Internal Revenue Service—cannot form the basis of a whistleblower award under tax code Section 7623, the IRS Office of Chief Counsel said in a program manager technical advice memorandum.  

This memorandum (PMTA 2012-10 ) addresses whether I.R.C. § 7623 authorizes payment of whistleblower awards based on information related to violations of laws outside Title 26. For the reasons discussed below, violations of non-tax laws, such as the provisions of Titles 18 and 31 for which the IRS has delegated authority, cannot form the basis of an award under section 7623.  

Although IRS has delegated authority for enforcing certain Bank Secrecy Act and money laundering provisions under Titles 18 and 31, amounts recovered for violations of those titles may not be considered for purposes of computing a Section 7623 award, the office said in PMTA 2012-10.



Based on each of the reasons discussed above, amounts recovered for violations of non-tax laws may not be considered for purposes of computing an award under section 7623.

Information that pertains to Title 18 or Title 31 violations but nonetheless leads to recovered amounts for a Title 26 violation, however, may provide the basis of an award under section 7623.

Nothing in section 7623 precludes the IRS from paying an award in situations where the information provided relates to either a Title 18 or Title 31 violation, but the IRS’s investigation based on that information leads to detection of violations of tax laws. In such circumstances, the IRS may pay an award so long as, based on the information provided, the IRS recovers proceeds directly associated with a violation of tax laws.

If, on the other hand, the IRS receives information pertaining to a Title 26 violation that leads not to a recovery under Title 26, but to a recovery for violations of Titles 18 or 31, then the IRS may not pay an award under section 7623.

The IRS may pay awards under section 7623, based on a whistleblower’s information, only if it recovers amounts related to violations of tax laws.

If you have a Tax Problem, contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at or or Toll Free at 888-8TaxAid (888 882-9243).


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