IRS whistleblower nets $15M award amid calls for reform

An anonymous whistleblower who helped the IRS uncover a complex tax evasion scheme used by more than 100 wealthy people got an award of more than $15 million, lawyers said last week.

Without revealing the identity of the tipster or the nature of an avoidance scheme that led to an agency enforcement action netting $71 million in payments to the U.S. Treasury from 109 high net worth individuals, whistleblower attorneys Stephen Kohn of Kohn, Kohn and Colapinto and Dean Zerbe of Zerbe, Miller, Fingeret, Frank & Jadav announced the IRS reward of $15.1 million to their client on Nov. 29. The agency is cracking down on wealthy tax dodgers through an enforcement push backed by its bulked-up funding through the Inflation Reduction Act.

"Today's award serves to reinforce that the IRS Whistleblower Program is critical in going after wealthy individuals who are evading tax," Zerbe said in a statement. "The IRS would have struggled significantly in bringing an enforcement action against these tax cheats but for the good work of the whistleblower."

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Kohn and Zerbe once represented a former UBS banker who pleaded guilty of conspiring to defraud the U.S. in 2009 but received a whistleblower award of $104 million three years later after aiding authorities' detection of illegal tax scams. They're also backing a bill introduced in Congress with bipartisan cosponsors that would overhaul the agency's whistleblower process.

"This award underscores how vital it is for the government to reward tax whistleblowers if the IRS is going to have success in going after wealthy tax cheats," Kohn said in a statement. "As I've seen in my work representing whistleblowers — you have to reward whistleblowers if you want good, knowledgeable information about violations of the law, and especially in the case of tax. Those engaged in tax evasion are purposefully seeking to hide their activities. The best way to expose and uncover tax evasion is by encouraging whistleblowers to come forward."

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In the last fiscal year, the IRS paid out 132 whistleblower awards for a combined $37.8 million, according to an annual report to Congress. Since 2007, whistleblowers have received $1.1 billion in connection with $6.6 billion in collections for the Treasury Department.