Taxpayers who give the IRS Whistleblower Office (WBO) information about unpaid federal taxes may qualify for cash awards. To be eligible, tips must be credible and specific, relate to tax underpayments or violations of tax laws, and be used to collect proceeds. In one case, the manager-shareholder of a family business provided the WBO details about unreported payroll and underreported income. The tips led to collection of proceeds and a 15% WBO award for the tipster. He contested the amount. But the U.S. Tax Court ruled the award was limited because he failed to timely notify the IRS of the issues and, as a company employee, he may have contributed to the underpaid taxes. (TC Memo 2022-126)
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