26 C.F.R. §§ 301.7623-1–301.7623-4

4 sections in range

§301.7623-1. General rules, submitting information on underpayments of tax or violations of the internal revenue laws, and filing claims for award.

26 C.F.R. § 301.7623-1

(a)

In general. In cases in which awards are not otherwise provided for by law, the Whistleblower Office may pay an award under section 7623(a), in a suitable amount, for information necessary for detecting underpayments of tax or detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same. In cases that satisfy the requirements of section 7623(b)(5) and (b)(6) and in which the Internal Revenue Service (IRS) proceeds with an administrative or judicial action based on information provided by an individual, the Whistleblower Office must determine and pay an award under section 7623(b)(1), (2), or (3). The awards provided for by section 7623 and this paragraph must be paid from collected proceeds, as defined in § 301.7623-2(d).

(b)

Eligibility to file claim for award.

(1)

In general. Any individual, other than an individual described in paragraph (b)(2) of this section, is eligible to file a claim for award and to receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4.

(2)

Ineligible whistleblowers. The Whistleblower Office will reject any claim for award filed by an ineligible whistleblower and will provide written notice of the rejection to the whistleblower. The following individuals are not eligible to file a claim for award or receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4—

(i)

An individual who is an employee of the Department of Treasury or was an employee of the Department of Treasury when the individual obtained the information on which the claim is based;

(ii)

An individual who obtained the information through the individual's official duties as an employee of the Federal Government, or who is acting within the scope of those official duties as an employee of the Federal Government;

(iii)

An individual who is or was required by Federal law or regulation to disclose the information or who is or was precluded by Federal law or regulation from disclosing the information;

(iv)

An individual who obtained or had access to the information based on a contract with the Federal Government; or

(v)

An individual who filed a claim for award based on information obtained from an ineligible whistleblower for the purpose of avoiding the rejection of the claim that would have resulted if the claim was filed by the ineligible whistleblower.

(c)

Submission of information and claims for award.

(1)

Submitting information. To be eligible to receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4, a whistleblower must submit to the IRS specific and credible information that the whistleblower believes will lead to collected proceeds from one or more persons whom the whistleblower believes have failed to comply with the internal revenue laws. In general, a whistleblower's submission should identify the person(s) believed to have failed to comply with the internal revenue laws and should provide substantive information, including all available documentation, that supports the whistleblower's allegations. Information that identifies a pass-through entity will be considered to also identify all persons with a direct or indirect interest in the entity. Information that identifies a member of a firm who promoted another identified person's participation in a transaction described and documented in the information provided will be considered to also identify the firm and all other members of the firm. Submissions that provide speculative information or that do not provide specific and credible information regarding tax underpayments or violations of internal revenue laws do not provide a basis for an award. If documents or supporting evidence are known to the whistleblower but are not in the whistleblower's control, then the whistleblower should describe the documents or supporting evidence and identify their location to the best of the whistleblower's ability. If all available information known to the whistleblower is not provided to the IRS by the whistleblower, then the whistleblower bears the risk that this information might not be considered by the Whistleblower Office for purposes of an award.

(2)

Filing claim for award. To claim an award under section 7623 and §§ 301.7623-1 through 301.7623-4 for information provided to the IRS, a whistleblower must file a formal claim for award by completing and sending Form 211, “Application for Award for Original Information,” to the Internal Revenue Service, Whistleblower Office, at the address provided on the form, or by complying with other claim filing procedures as may be prescribed by the IRS in other published guidance. The Form 211 should be completed in its entirety and should include the following information—

(i)

The date of the claim;

(ii)

The whistleblower's name;

(iii)

The whistleblower's address and telephone number;

(iv)

The whistleblower's date of birth;

(v)

The whistleblower's taxpayer identification number; and

(vi)

An explanation of how the information on which the claim is based came to the attention and into the possession of the whistleblower, including, as available, the date(s) on which the whistleblower acquired the information and a complete description of the whistleblower's present or former relationship (if any) to person(s) identified on the Form 211.

(3)

Under penalty of perjury. No award may be made under section 7623(b) unless the information on which the award is based is submitted to the IRS under penalty of perjury. All claims for award under section 7623 and §§ 301.7623-1 through 301.7623-4 must be accompanied by an original signed declaration under penalty of perjury, as follows: “I declare under penalty of perjury that I have examined this application, my accompanying statement, and supporting documentation and aver that such application is true, correct, and complete, to the best of my knowledge.” This requirement precludes the filing of a claim for award by a person serving as a representative of, or in any way on behalf of, another individual. Claims filed by more than one whistleblower (joint claims) must be signed by each individual whistleblower under penalty of perjury.

(4)

Perfecting claim for award. If a whistleblower files a claim for award that does not include information described under paragraph (c)(2) of this section, does not contain specific and credible information as described in paragraph (c)(1) of this section, or is based on information that was not submitted under penalty of perjury as required by paragraph (c)(3) of this section, the Whistleblower Office may reject the claim or notify the whistleblower of the deficiencies and provide the whistleblower an opportunity to perfect the claim for award. If a whistleblower does not perfect the claim for award within the time period specified by the Whistleblower Office, then the Whistleblower Office may reject the claim. If the Whistleblower Office rejects a claim, then the Whistleblower Office will provide notice of the rejection to the whistleblower pursuant to the rules of § 301.7623-3(b)(3) or (c)(7). If the Whistleblower Office rejects a claim for the reasons described in this paragraph, then the whistleblower may perfect and resubmit the claim.

(d)

Request for assistance.

(1)

In general. The Whistleblower Office, the IRS, or IRS Office of Chief Counsel may request the assistance of a whistleblower or the whistleblower's legal representative. Any assistance shall be at the direction and control of the Whistleblower Office, the IRS, or the IRS Office of Chief Counsel assigned to the matter. See § 301.6103(n)-2 for rules regarding written contracts among the IRS, whistleblowers, and legal representatives of whistleblowers.

(2)

No agency relationship. Submitting information, filing a claim for award, or responding to a request for assistance does not create an agency relationship between a whistleblower and the Federal Government, nor does a whistleblower or the whistleblower's legal representative act in any way on behalf of the Federal Government.

(e)

Confidentiality of whistleblowers. Under the informant's privilege, the IRS will use its best efforts to protect the identity of whistleblowers. In some circumstances, the IRS may need to reveal a whistleblower's identity, for example, when it is determined that it is in the best interests of the Government to use a whistleblower as a witness in a judicial proceeding. In those circumstances, the IRS will make every effort to notify the whistleblower before revealing the whistleblower's identity.

(f)

Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.

Notes, amendments, and revision history

Amendments

[T.D. 9687, 79 FR 47264, Aug. 12, 2014]

Authority

Authority: 26 U.S.C. 7805. Section 301.1474-1 also issued under 26 U.S.C. 1474(f). Section 301.6011-2 also issued under 26 U.S.C. 6011(e). Section 301.6011-3 also issued under 26 U.S.C. 6011. Section 301.6011-5 also issued under 26 U.S.C. 6011. Section 301.6011-6 also issued under 26 U.S.C. 6011(a). Section 301.6011-7 also issued under 26 U.S.C. 6011(e). Section 301.6011-10 also issued under 26 U.S.C. 6011. Section 301.6011-11 also issued under 26 U.S.C. 6011. Section 301.6011-12 also issued under 26 U.S.C. 6011. Section 301.6011-13 also issued under 26 U.S.C. 6011. Section 301.6011-14 also issued under 26 U.S.C. 6011. Section 301.6011-15 also issued under 26 U.S.C. 6011. Section 301.6012-2 also issued under 26 U.S.C. 6012. Section 301.6033-4 also issued under 26 U.S.C. 6033. Section 301.6036-1 also issued under 26 U.S.C. 6036. Section 301.6037-2 also issued under 26 U.S.C. 6037. Section 301.6039E-1 also issued under 26 U.S.C. 6039E. Section 301.6050M-1 also issued under 26 U.S.C. 6050M. Section 301.6057-3 also issued under 26 U.S.C. 6011 and 6057. Section 301.6058-2 also issued under 26 U.S.C. 6011 and 6058. Section 301.6059-2 also issued under 26 U.S.C. 6011 and 6059. Section 301.6061-1 also issued under 26 U.S.C. 6061. Section 301.6081-2 also issued under 26 U.S.C. 6081(a). Section 301.6103(c)-1 also issued under 26 U.S.C. 6103(c). Section 301.6103(h)(4)-1 also issued under 26 U.S.C. 6103(h)(4) and 26 U.S.C. 6103(q). Section 301.6103(j)(1)-1 also issued under 26 U.S.C. 6103(j)(1) and 6103(q). Section 301.6103(j)(5)-1 also issued under 26 U.S.C. 6103(j)(5). Section 301.6103(k)(6)-1 also issued under 26 U.S.C. 6103(k)(6); Section 301.6103(k)(6)-1T also issued under 26 U.S.C. 6103(k)(6); Section 301.6103(k)(9)-1 also issued under 26 U.S.C. 6103(k)(9) and 26 U.S.C. 6103(q). Section 301.6103(l)-1 also issued under 26 U.S.C. 6103(q). Section 301.6103(l)(14)-1 also issued under 26 U.S.C. 6103(l)(14). Section 301.6103(l)(21)-(1) also issued under 26 U.S.C. 6103(l)(21) and 6103(q). Section 301.6103(m)-1 also issued under 26 U.S.C. 6103(q). Section 301.6103(n)-1 also issued under 26 U.S.C. 6103(n). Section 301.6103(n)-2 also issued under 26 U.S.C. 6103(n). Section 301.6103(n)-2 also issued under 26 U.S.C. 6103(q). Section 301.6103(p)(2)(B)-1 also issued under 26 U.S.C. 6103(p)(2). Section 301.6103(p)(2)(B)-1T also issued under 26 U.S.C. 6103(p)(2). Sections 301.6103(p)(4)-1 and 301.6103(p)(7)-1T also issued under 26 U.S.C. 6103(p)(4) and (7) and (q), Section 301.6104(a)-6(d) is also issued under 5 U.S.C. 552. Section 301.6104(b)-1(d)(4) is also issued under 5 U.S.C. 552. Section 301.6104(c)-1 also issued under 26 U.S.C. 6104(c). Section 301.6104(d)-1(d)(3)(i) is also issued under 5 U.S.C. 552. Section 301.6104(d)-2 also issued under 26 U.S.C. 6104(d)(3). Section 301.6104(d)-3 also issued under 26 U.S.C. 6104(d)(3). Section 301.6104(d)-4 also issued under 26 U.S.C. 6104(e)(3). Section 301.6104(d)-5 also issued under 26 U.S.C. 6104(e)(3). Section 301.6109-1 also issued under 26 U.S.C. 6109 (a), (c), and (d). Section 301.6109-3 also issued under 26 U.S.C. 6109. Section 301.6111-1T also issued under 26 U.S.C. 6111. Section 301.6111-2T also issued under 26 U.S.C. 6111(f)(4). Section 301.6111-3 also issued under 26 U.S.C. 6111. Section 301.6111-3T also issued under 26 U.S.C. 6111. Section 301.6112-1T also issued under 26 U.S.C. 6112. Section 301.6114-1 also issued under 26 U.S.C. 6114. Section 301.6213-2 also issued under 26 U.S.C. 6213. Section 301.6221(a)-1 also issued under 26 U.S.C. 6221. Section 301.6221(b)-1 also issued under sections 6221 and 6241. Section 301.6222-1 also issued under 26 U.S.C. 6222 and 6223. Section 301.6222(a)-1T also issued under 26 U.S.C. 6230(k). Section 301.6222(a)-2T also issued under 26 U.S.C. 6230(k). Section 301.6222(b)-1T also issued under 26 U.S.C. 6230(k). Section 301.6222(b)-2T also issued under 26 U.S.C. 6230(k). Section 301.6222(b)-3T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6223(a)-1T also issued under 26 U.S.C. 6230(k). Section 301.6223(a)-2T also issued under 26 U.S.C. 6230(k). Section 301.6223(b)-1T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6223(b)-2T also issued under 26 U.S.C. 6230(k). Section 301.6223(c)-1T also issued under 26 U.S.C. 6223(c) and 6230 (i) and (k). Section 301.6223(e)-1T also issued under 26 U.S.C. 6230(k). Section 301.6223(e)-2T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6223(f)-1T also issued under 26 U.S.C. 6230(k). Section 301.6223(g)-1T also issued under 26 U.S.C. 6223(g) and 6230 (i) and (k). Section 301.6223(h)-1T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6224(a)-1T also issued under 26 U.S.C. 6230(k). Section 301.6224(b)-1T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6224(c)-1T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6224(c)-2T also issued under 26 U.S.C. 6230(k). Section 301.6224(c)-3T also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6225-1 also issued under 26 U.S.C. 6225. Section 301.6225-2 also issued under 26 U.S.C. 6223 and 6225. Section 301.6225-3 also issued under 26 U.S.C. 6225. Section 301.6226-1 also issued under 26 U.S.C. 6223 and 6226. Section 301.6226-2 also issued under 26 U.S.C. 6226. Section 301.6226-3 also issued under 26 U.S.C. 6226. Section 301.6226(a)-1T also issued under 26 U.S.C. 6230(k). Section 301.6226(b)-1T also issued under 26 U.S.C. 6230(k). Section 301.6226(e)-1T also issued under 26 U.S.C. 6230(k). Section 301.6226(f)-1T also issued under 26 U.S.C. C. 6230(k). Section 301.6227-1 also issued under 26 U.S.C. 6223 and 6227. Section 301.6227-2 also issued under 26 U.S.C. 6227. Section 301.6227-3 also issued under 26 U.S.C. 6227. Section 301.6229(c)(2)-1 is also issued under 26 U.S.C. 6230(k). Section 301.6229(c)(2)-1T also issued under 26 U.S.C. § 6230(k). Section 301.6231-1 also issued under 26 U.S.C. 6231. Section 301.6231(a)(6)-1T also issued under 26 U.S.C. 6230(k). Section 301.6231(a)(7)-1 also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6231(a)(7)-2 also issued under 26 U.S.C. 6230 (i) and (k). Section 301.6231(a)(12)-1T also issued under 26 U.S.C. 6230(k) and 6231(a)(12). Section 301.6231(c)-1 also issued under 26 U.S.C. 6231(c)(1) and (3). Section 301.6231(c)-2 also issued under 26 U.S.C. 6231(c)(1) and (3). Section 301.6231(c)-3T also issued under 26 U.S.C. 6230(k) and 6231(c). Section 301.6231(c)-4T also issued under 26 U.S.C. 6230(k) and 6231(c). Section 301.6231(c)-5T also issued under 26 U.S.C. 6230(k) and 6231(c). Section 301.6231(c)-6T also issued under 26 U.S.C. 6230(k) and 6231(c). Section 301.6231(c)-7T also issued under 26 U.S.C. 6230(k) and 6231(c). Section 301.6231(c)-8T also issued under 26 U.S.C. 6230(k) and 6231(c). Section 301.6231(d)-1T also issued under 26 U.S.C. 6230(k). Section 301.6231(e)-1T also issued under 26 U.S.C. 6230(k). Section 301.6231(e)-2T also issued under 26 U.S.C. 6230(k). Section 301.6231(f)-1T also issued under 26 U.S.C. 6230 (i) and (k) and 6231(f). Section 301.6232-1 also issued under 26 U.S.C. 6232. Section 301.6233-1T also issued under 26 U.S.C. 6230(k) and 6233. Section 301.6233(a)-1 also issued under 26 U.S.C. 6233. Section 301.6233(b)-1 also issued under 26 U.S.C. 6233. Section 301.6234-1 also issued under 26 U.S.C. 6234. Section 301.6235-1 also issued under 26 U.S.C. 6235. Section 301.6241-1 also issued under sections 48D(d), 6241, and 6417. Section 301.6241-2 also issued under 26 U.S.C. 6241. Section 301.6241-3 also issued under 26 U.S.C. 6241. Section 301.6241-4 also issued under 26 U.S.C. 6241. Section 301.6241-5 also issued under 26 U.S.C. 6241. Section 301.6241-6 also issued under 26 U.S.C. 6241. Section 301.6241-7 also issued under sections 48D(d), 6241, and 6417. Section 301.6311-2 also issued under 26 U.S.C. 6311. Section 301.6323(f)-(1)(c) also issued under 26 U.S.C. 6323(f)(3). Section 301.6325-1T also issued under 26 U.S.C. 6326. Section 301.6335-1 also issued under 26 U.S.C. 6335(e)(2). Section 301.6343-1 also issued under 26 U.S.C. 6343. Section 301.6343-2 also issued under 26 U.S.C. 6343. Section 301.6402-2(g) also issued under 26 U.S.C. 6402(n). Section 301.6402-3 also issued under 95 Stat. 357 amending 88 Stat. 2351. Section 301.6402-7 also issued under 26 U.S.C. 6402(i) and 6411(c). Section 301.6404-2 also issued under 26 U.S.C. 6404. Section 301.6404-3 also issued under 26 U.S.C. 6404(f)(3). Section 301.6621-1 also issued under 26 U.S.C. 6230(k). Section 301.6689-1 also issued under 26 U.S.C. 6689(a), 26 U.S.C. 6227(d), and 26 U.S.C. 6241(11). Section 301.6689-1T also issued under 26 U.S.C. 6689(a). Section 301.6708-1 also issued under 26 U.S.C. 6708 Section 301.6721-1 also issued under 26 U.S.C. 6011 and 6721. Section 301.6751(b)-1(a)(4) also issued under 26 U.S.C. 6751(b)(1). Section 301.7216-2, paragraphs (o) and (p) also issued under 26 U.S.C. 7216(b)(3). Section 301.7502-1 also issued under 26 U.S.C. 7502. Section 301.7502-2 also issued under 26 U.S.C. 7502. Section 301.7507-1 also issued under 26 U.S.C. 597. Section 301.7507-9 also issued under 26 U.S.C. 597. Section 301.7508-1 also issued under 26 U.S.C. 7508(a)(1)(K). Section 301.7508A-1 also issued under 26 U.S.C. 7508(a)(1)(K) and 7508A(a). Section 301.7605-1 also issued under section 6228(b) of the Technical and Miscellaneous Revenue Act of 1988. Sections 301.7623-1 through 301.7623-4 also issued under 26 U.S.C. 7623. Section 301.7624-1 also issued under 26 U.S.C. 7624. Section 301.7701-1(a)(4) also issued under 26 U.S.C. 7701(a)(40). Section 301.7701-2 also issued under 26 U.S.C. 7701. Sections 301.7701(b)-1 through 301.7701(b)-9 also issued under 26 U.S.C. 7701(b)(11). Section 301.7701(i)-1(g)(1) also issued under 26 U.S.C. 7701(i)(2)(D). Section 301.7701(i)-4(b) also issued under 26 U.S.C. 7701(i)(3). Section 301.7705-1 also issued under 26 U.S.C. 7705(h). Section 301.7705-2 also issued under 26 U.S.C. 7705(h). Section 301.7803-2 is also issued under 26 U.S.C. 7803(e). Section 301.7803-3 is also issued under 26 U.S.C. 7803(e). Section 301.9000-1 also issued under 5 U.S.C. 301 and 26 U.S.C. 6103(q) and 7804; Section 301.9000-2 also issued under 5 U.S.C. 301 and 26 U.S.C. 6103(q) and 7804; Section 301.9000-3 also issued under 5 U.S.C. 301 and 26 U.S.C. 6103(q) and 7804; Section 301.9000-4 also issued under 5 U.S.C. 301 and 26 U.S.C. 6103(q) and 7804; Section 301.9000-5 also issued under 5 U.S.C. 301 and 26 U.S.C. 6103(q) and 7804; Section 301.9000-6 also issued under 5 U.S.C. 301 and 26 U.S.C. 6103(q) and 7804; Section 301.9100-1T also issued under 26 U.S.C. 6081. Section 301.9100-2T also issued under 26 U.S.C. 6081. Section 301.9100-3T also issued under 26 U.S.C. 6081. Section 301.9100-4T also issued under 26 U.S.C. 168(f)(8)(G). Section 301.9100-7T also issued under 26 U.S.C. 42, 48, 56, 83, 141, 142, 143, 145, 147, 165, 168, 216, 263, 263A, 448, 453C, 468B, 469, 474, 585, 616, 617, 1059, 2632, 2652, 3121, 4982, 7701; and under the Tax Reform Act of 1986, 100 Stat. 2746, sections 203, 204, 243, 311, 646, 801, 806, 905, 1704, 1801, 1802, and 1804. Section 301.9100-8 also issued under 26 U.S.C. 1(i)(7), 41(h), 42(b)(2)(A)(ii), 42(d)(3), 42(f)(1), 42(g)(3), 42(i)(2)(B), 42(j)(5)(B), 121(d)(9), 142(i)(2), 165(l), 168(b)(2), 219(g)(4), 245(a)(10), 263A(d)(1), 263A(d)(3)(B), 263A(h), 460(b)(3), 643(g)(2), 831(b)(2)(A), 835(a), 865(f), 865(g)(3), 865(h)(2), 904(g)(10), 2056(b)(7)(c)(ii), 2056A(d), 2523(f)(6)(B), 3127, and 7520(a); the Technical and Miscellaneous Revenue Act of 1988, 102 Stat. 3324, sections 1002(a)(23)(B), 1005(c)(11), 1006(d)(15), 1006(j)(1)(C), 1006(t)(18)(B), 1012(n)(3), 1014(c)(1), 1014(c)(2), 2004(j)(1), 2004(m)(5), 5012(e)(4), 6181(c)(2), and 6277; and under the Tax Reform Act of 1986, 100 Stat. 2746, section 905(a). Sections 301.9100-9T, 301.9100-10T and 301.9100-11T also issued under 26 U.S.C. 1103 (g) and (h) and 6158(a). Sections 301.9100-13T, 301.9100-14T and 301.9100-15T also issued under 26 U.S.C. 108(d)(8) and 1017(b)(3)(E). Section 301.9100-16T also issued under 26 U.S.C. 463(d). Section 301.9100-22T is also issued under section 1101(g)(4) of Public Law 114-74.

Source

Source: 32 FR 15241, Nov. 3, 1967, unless otherwise noted.

Amendments

[T.D. 9687, 79 FR 47264, Aug. 12, 2014]

§301.7623-2. Definitions.

26 C.F.R. § 301.7623-2

(a)

Action.

(1)

In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term action means an administrative or judicial action.

(2)

Administrative action. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term administrative action means all or a portion of an Internal Revenue Service (IRS) civil or criminal proceeding against any person that may result in collected proceeds, as defined in paragraph (d) of this section, including, for example, an examination, a collection proceeding, a status determination proceeding, or a criminal investigation.

(3)

Judicial action. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term judicial action means all or a portion of a proceeding against any person in any court that may result in collected proceeds, as defined in paragraph (d) of this section.

(b)

Proceeds based on.

(1)

In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the IRS proceeds based on information provided by a whistleblower when the information provided substantially contributes to an action against a person identified by the whistleblower. For example, the IRS proceeds based on the information provided when the IRS initiates a new action, expands the scope of an ongoing action, or continues to pursue an ongoing action, that the IRS would not have initiated, expanded the scope of, or continued to pursue, but for the information provided. The IRS does not proceed based on information when the IRS analyzes the information provided or investigates a matter raised by the information provided.

(2)

Examples. The provisions of paragraph (b)(1) of this section may be illustrated by the following examples:

(c)

Related action.

(1)

In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term related action means an action against a person other than the person(s) identified in the information provided and subject to the original action(s), when—

(i)

The facts relating to the underpayment of tax or violations of the internal revenue laws by the other person are substantially the same as the facts described and documented in the information provided (with respect to the person(s) subject to the original action);

(ii)

The IRS proceeds with the action against the other person based on the specific facts described and documented in the information provided; and

(iii)

The other, unidentified person is related to the person identified in the information provided. For purposes of this paragraph, an unidentified person is related to the person identified in the information provided if the IRS can identify the unidentified person using the information provided (without first having to use the information provided to identify any other person or having to independently obtain additional information).

(2)

Examples. The provisions of paragraph (c)(1) of this section may be illustrated by the following examples:

(d)

Collected proceeds.

(1)

In general. For purposes of section 7623 and §§ 301.7623-1 through 301.7623-4, the terms proceeds of amounts collected and collected proceeds (collectively, collected proceeds) include: Tax, penalties, interest, additions to tax, and additional amounts collected because of the information provided; amounts collected prior to receipt of the information if the information provided results in the denial of a claim for refund that otherwise would have been paid; and a reduction of an overpayment credit balance used to satisfy a tax liability incurred because of the information provided. Collected proceeds are limited to amounts collected under the provisions of title 26, United States Code.

(2)

Refund netting.

(i)

In general. If any portion of a claim for refund that is substantively unrelated to the information provided is—

(A)

Allowed, and

(B)

Used to satisfy a tax liability attributable to the information provided instead of refunded to the taxpayer, then the allowed but non-refunded amount constitutes collected proceeds.

(ii)

Example. The provisions of paragraph (d)(2)(i) of this section may be illustrated by the following example:

(3)

Amended returns. Amounts collected based on amended returns constitute collected proceeds if—

(i)

The IRS proceeds based on the information provided;

(ii)

As a result, the person subject to the action(s) with which the IRS proceeds files amended returns; and

(iii)

The amounts collected based on the amended returns relate to the activities or facts described in the information provided.

(4)

Criminal fines. Criminal fines deposited into the Crime Victims Fund are not collected proceeds and cannot be used for payment of awards.

(5)

Computation of collected proceeds.

(i)

In general. Pursuant to § 301.7623-4(d)(1), the IRS cannot make an award payment until there has been a final determination of tax. For purposes of determining the amount of an award under section 7623 and §§ 301.7623-1 through 301.7623-4, after there has been a final determination of tax as defined in § 301.7623-4(d)(2), the IRS will compute the amount of collected proceeds based on all information known with respect to the taxpayer's account, including with respect to all tax attributes, as of the date the computation is made.

(ii)

Post-determination proceeds. If, based on all information known with respect to the taxpayer's account as of the date of the computation described in paragraph (d)(5)(i) of this section, there is a possibility that the IRS may collect additional proceeds, then the Whistleblower Office will continue to monitor the case. If the Whistleblower Office identifies additional collected proceeds, then the IRS will compute and pay accordingly.

(iii)

Partial collection. If the IRS does not collect the full amount of taxes, penalties, interest, additions to tax, and additional amounts assessed against the taxpayer, then any amounts that the IRS does collect will constitute collected proceeds in the same proportion that the adjustments attributable to the information provided bear to the total adjustments.

(e)

Amount in dispute and gross income.

(1)

In general. Section 7623(b) applies with respect to any action against any taxpayer in which the tax, penalties, interest, additions to tax, and additional amounts in dispute exceed $2,000,000 but, if the taxpayer is an individual, then only if the taxpayer's gross income exceeds $200,000 in at least one taxable year subject to the action.

(2)

Amount in dispute.

(i)

In general. For purposes of section 7623(b)(5) and §§ 301.7623-1 through 301.7623-4, the term amount in dispute means the greater of the maximum total of tax, penalties, interest, additions to tax, and additional amounts that resulted from the action(s) with which the IRS proceeded based on the information provided, or the maximum total of such amounts that were stated in formal positions taken by the IRS in the action(s). The IRS will compute the amount in dispute, for purposes of award determinations described in § 301.7623-3(c)(6), when there has been a final determination of tax as defined in § 301.7623-4(d)(2).

(ii)

Examples. The provisions of paragraph (e)(2)(i) of this section may be illustrated by the following examples:

(3)

Gross income. For purposes of section 7623(b)(5) and §§ 301.7623-1 through 301.7623-4, the term gross income has the same meaning as provided under section 61(a). The IRS will compute the individual taxpayer's gross income, for purposes of award determinations described in § 301.7623-3(c)(6), when there has been a final determination of tax as defined in § 301.7623-4(d)(2).

(f)

Notes, amendments, and revision history

Amendments

[T.D. 9687, 79 FR 47266, Aug. 12, 2014; 79 FR 57785, Sept. 26, 2014]

Authority

Source

Source: 32 FR 15241, Nov. 3, 1967, unless otherwise noted.

Amendments

[T.D. 9687, 79 FR 47266, Aug. 12, 2014; 79 FR 57785, Sept. 26, 2014]

§301.7623-3. Whistleblower administrative proceedings and appeals of award determinations.

26 C.F.R. § 301.7623-3

(a)

In general. The Whistleblower Office will pay awards under section 7623(a) and determine and pay awards under section 7623(b) in whistleblower administrative proceedings pursuant to the rules of this section. The whistleblower administrative proceedings described in this section are administrative proceedings pertaining to tax administration for purposes of section 6103(h)(4). See § 301.6103(h)(4)-1 for additional rules regarding disclosures of return information in whistleblower administrative proceedings. The Whistleblower Office may determine awards for claims involving multiple actions in a single whistleblower administrative proceeding. For purposes of the whistleblower administrative proceedings for rejections and denials, described in paragraphs (b)(3), (c)(7), and (c)(8) of this section, the Internal Revenue Service (IRS) may rely on the whistleblower's description of the amount owed by the taxpayer(s). The IRS may, however, rely on other information as necessary (for example, when the alleged amount in dispute is below the $2 million threshold of section 7623(b)(5)(B), but the actual amount in dispute is above the threshold).

(b)

Awards under section 7623(a).

(1)

Preliminary award recommendation. In cases in which the Whistleblower Office recommends payment of an award under section 7623(a), the Whistleblower Office will communicate a preliminary award recommendation under section 7623(a) and §§ 301.7623-1 through 301.7623-4 to the whistleblower by sending a preliminary award recommendation letter that states the Whistleblower Office's preliminary computation of the amount of collected proceeds, recommended award percentage, recommended award amount (even in cases when the application of § 301.7623-4 results in a reduction of the recommended award amount to zero), and a list of the factors that contributed to the recommended award percentage. The whistleblower administrative proceeding described in paragraphs (b)(1) and (2) of this section begins on the date the Whistleblower Office sends the preliminary award recommendation letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary award recommendation to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and pay an award, pursuant to paragraph (b)(2) of this section.

(2)

Decision letter. At the conclusion of the process described in paragraph (b)(1) of this section, and when there is a final determination of tax, as defined in § 301.7623-4(d)(2), the Whistleblower Office will pay an award under section 7623(a) and §§ 301.7623-1 through 301.7623-4. The Whistleblower Office will communicate the amount of the award to the whistleblower in a decision letter.

(3)

Rejections and denials. If the Whistleblower Office rejects a claim for award under section 7623(a), pursuant to § 301.7623-1(b) or (c), or if the IRS either did not proceed based on information provided by the whistleblower, as defined in § 301.7623-2(b), or did not collect proceeds, as defined in § 301.7623-2(d), then the Whistleblower Office will not apply the rules of paragraphs (b)(1) or (2) of this section. The Whistleblower Office will provide written notice to the whistleblower of the rejection or denial of any award and, in the case of a rejection, the written notice will state the basis for the rejection.

(c)

Awards under section 7623(b).

(1)

Preliminary award recommendation. For claims under section 7623(b) other than those described in paragraphs (c)(7) and (c)(8) of this section (rejections and denials), the Whistleblower Office will prepare a preliminary award recommendation based on the Whistleblower Office's review of the administrative claim file and the application of the rules of section 7623 and §§ 301.7623-1 through 301.7623-4 to the facts of the case. See paragraph (e)(2) of this section for a description of the administrative claim file. The whistleblower administrative proceeding described in paragraphs (c)(1) through (6) of this section begins on the date the Whistleblower Office sends the preliminary award recommendation letter. The preliminary award recommendation is not a determination letter within the meaning of paragraph (c)(6) of this section and cannot be appealed to Tax Court under section 7623(b)(4) and paragraph (d) of this section. The preliminary award recommendation will notify the whistleblower that the IRS cannot determine or pay any award until there is a final determination of tax, as defined in § 301.7623-4(d)(2).

(2)

Contents of preliminary award recommendation. The Whistleblower Office will communicate the preliminary award recommendation under section 7623(b) to the whistleblower by sending—

(i)

A preliminary award recommendation letter that describes the whistleblower's options for responding to the preliminary award recommendation;

(ii)

A summary report that states a preliminary computation of the amount of collected proceeds, the recommended award percentage, the recommended award amount (even in cases when the application of section 7623(b)(2) or section 7623(b)(3) results in a reduction of the recommended award amount to zero), and a list of the factors that contributed to the recommended award percentage;

(iii)

An award consent form; and

(iv)

A confidentiality agreement.

(3)

Opportunity to respond to preliminary award recommendation. The whistleblower will have 30 days (this period may be extended at the sole discretion of the Whistleblower Office) from the date the Whistleblower Office sends the preliminary award recommendation letter to respond to the preliminary award recommendation in one of the following ways—

(i)

If the whistleblower takes no action, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section;

(ii)

If the whistleblower signs, dates, and returns the award consent form agreeing to the preliminary award recommendation and waiving any and all administrative and judicial appeal rights, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section;

(iii)

If the whistleblower signs, dates, and returns the confidentiality agreement, then the Whistleblower Office will provide the whistleblower with a detailed award report, and an opportunity to review documents supporting the report pursuant to paragraphs (c)(4) and (5) of this section, and any comments submitted by the whistleblower will be added to the administrative claim file; or

(iv)

If the whistleblower submits comments on the preliminary award recommendation to the Whistleblower Office, but does not sign, date, and return the confidentiality agreement, then the comments will be added to the administrative claim file and reviewed by the Whistleblower Office in making an award determination, pursuant to paragraph (c)(6) of this section.

(4)

Detailed report.

(i)

Contents of detailed report. If the whistleblower signs, dates, and returns the confidentiality agreement accompanying the preliminary award recommendation under section 7623(b), pursuant to paragraph (c)(3) of this section, then the Whistleblower Office will send the whistleblower—

(A)

A detailed report that states a preliminary computation of the amount of collected proceeds, the recommended award percentage, and the recommended award amount, and provides a full explanation of the factors that contributed to the recommended award percentage;

(B)

Instructions for scheduling an appointment for the whistleblower (and the whistleblower's legal representative, if any) to review information in the administrative claim file that is not protected by one or more common law or statutory privileges; and

(C)

An award consent form.

(ii)

Opportunity to respond to detailed report. The whistleblower will have 30 days (this period may be extended at the sole discretion of the Whistleblower Office) from the date the Whistleblower Office sends the detailed report to respond in one of the following ways—

(A)

If the whistleblower takes no action, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section;

(B)

If the whistleblower requests an appointment to review information from the administrative claim file that is not protected from disclosure by one or more common law or statutory privileges, then a meeting will be arranged pursuant to paragraph (c)(5) of this section;

(C)

If the whistleblower does not request an appointment but does submit comments on the detailed report to the Whistleblower Office, then the comments will be added to the administrative claim file and reviewed by the Whistleblower Office in making an award determination pursuant to paragraph (c)(6) of this section; or

(D)

(iii)

Additional rules. The detailed report is not a determination letter within the meaning of paragraph (c)(6) of this section and cannot be appealed to Tax Court under section 7623(b)(4) and paragraph (d) of this section. The detailed report will notify the whistleblower that the IRS cannot determine or pay any award until there is a final determination of tax, as defined in § 301.7623-4(d)(2).

(5)

Opportunity to review documents supporting award report recommendations. Appointments for the whistleblower (and the whistleblower's legal representative, if any) to review information from the administrative claim file that is not protected from disclosure by one or more common law or statutory privileges will be held at the Whistleblower Office in Washington, DC, unless the Whistleblower Office, in its sole discretion, decides to hold the meeting at another location. At the appointment, the Whistleblower Office will provide for viewing the information from the administrative claim file. The Whistleblower Office will supervise the whistleblower's review of the information and the whistleblower will not be permitted to make copies of any documents or other information. The whistleblower will have 30 days (this period may be extended at the sole discretion of the Whistleblower Office) from the date of the appointment to submit comments on the detailed report and the documents reviewed at the appointment to the Whistleblower Office. All comments will be added to the administrative claim file and reviewed by the Whistleblower Office in making an award determination, pursuant to paragraph (c)(6) of this section.

(6)

Determination letter. After the whistleblower's participation in the whistleblower administrative proceeding, pursuant to paragraph (c) of this section, has concluded, and there is a final determination of tax, as defined in § 301.7623-4(d)(2), a Whistleblower Office official will determine the amount of the award under section 7623(b)(1), (2), or (3), and §§ 301.7623-1 through 301.7623-4, based on the official's review of the administrative claim file. The Whistleblower Office will communicate the award to the whistleblower in a determination letter, stating the amount of the award. If, however, the whistleblower has executed an award consent form agreeing to the amount of the award and waiving the whistleblower's right to appeal the award determination, pursuant to section 7623(b)(4) and paragraph (d) of this section, then the Whistleblower Office will not send the whistleblower a determination letter and will make payment of the award as promptly as circumstances permit.

(7)

Rejections. A rejection is a determination that relates solely to the whistleblower and the information on the face of the claim that pertains to the whistleblower. If the Whistleblower Office rejects a claim for award under section 7623(b), pursuant to § 301.7623-1(b) or (c), then the Whistleblower Office will not apply the rules of paragraphs (c)(1) through (6) of this section. The Whistleblower Office will send to the whistleblower a preliminary rejection letter that states the basis for the rejection of the claim. The whistleblower administrative proceeding described in this paragraph begins on the date the Whistleblower Office sends the preliminary rejection letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary rejection letter to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and, following that review, the Whistleblower Office will either provide written notice to the whistleblower of the rejection of the claim, including the basis for the rejection, or apply the rules of paragraphs (c)(1) through (c)(6) of this section.

(8)

Denials. A denial is a determination that relates to or implicates taxpayer information. If, with respect to a claim for award under section 7623(b), the IRS either did not proceed based on the information provided by the whistleblower, as defined in § 301.7623-2(b), or did not collect proceeds, as defined in § 301.7623-2(d), then the Whistleblower Office will not apply the rules of paragraphs (c)(1) through (6) of this section. The Whistleblower Office will send to the whistleblower a preliminary denial letter that states the basis for the denial of the claim. The whistleblower administrative proceeding described in this paragraph begins on the date the Whistleblower Office sends the preliminary denial letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary denial letter to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and, following that review, the Whistleblower Office will either provide written notice to the whistleblower of the denial of any award, including the basis for the denial, or apply the rules of paragraphs (c)(1) through (c)(6) of this section.

(d)

Appeal of award determination. Any determination regarding an award under section 7623(b)(1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court.

(e)

Administrative record.

(1)

In general. The administrative record comprises all information contained in the administrative claim file that is relevant to the award determination and not protected by one or more common law or statutory privileges.

(2)

Administrative claim file. The administrative claim file will include the following materials relating to the action(s) to which the determination relates—

(i)

The Form 211, “Application for Award for Original Information,” filed by the whistleblower and all information provided by the whistleblower (whether provided with the whistleblower's original submission or through a subsequent contact with the IRS).

(ii)

Copies of all debriefing notes and recorded interviews held with the whistleblower (and the whistleblower's legal representative, if any).

(iii)

Form(s) 11369, “Confidential Evaluation Report on Claim for Award,” including narratives prepared by the relevant IRS office(s), explaining the whistleblower's contributions to the actions and documenting the actions taken by the IRS in the case(s). The Form 11369 will refer to and incorporate additional documents relating to the issues raised by the claim, as appropriate, including, for example, relevant portions of revenue agent reports, copies of agreements entered into with the taxpayer(s), tax returns, and activity records.

(iv)

Copies of all contracts entered into among the IRS, the whistleblower, and the whistleblower's legal representative (if any), and an explanation of the cooperation provided by the whistleblower (or the whistleblower's legal representative, if any) under the contract.

(v)

Any information that reflects actions by the whistleblower that may have had a negative impact on the IRS's ability to examine the taxpayer(s).

(vi)

All correspondence and documents sent by the Whistleblower Office to the whistleblower.

(vii)

All notes, memoranda, and other documents made by officers and employees of the Whistleblower Office and considered by the official making the award determination.

(viii)

All correspondence and documents received by the Whistleblower Office from the whistleblower (and the whistleblower's legal representative, if any) in the course of the whistleblower administrative proceeding.

(ix)

All other information considered by the official making the award determination.

(f)

Notes, amendments, and revision history

Amendments

[T.D. 9687, 79 FR 47268, Aug. 12, 2014]

Authority

Source

Source: 32 FR 15241, Nov. 3, 1967, unless otherwise noted.

Amendments

[T.D. 9687, 79 FR 47268, Aug. 12, 2014]

§301.7623-4. Amount and payment of award.

26 C.F.R. § 301.7623-4

(a)

In general. The Whistleblower Office will pay all awards under section 7623(a) and determine and pay all awards under section 7623(b). For all awards under section 7623 and §§ 301.7623-1 through 301.7623-4, the Whistleblower Office will—

(1)

Analyze the claim by applying the rules provided in paragraph (c) of this section to the information contained in the administrative claim file to determine an award percentage; and

(2)

Multiply the award percentage by the amount of collected proceeds. If the award determination arises out of a single whistleblower administrative proceeding involving multiple actions, the Whistleblower Office may determine separate award percentages on an action-by-action basis and apply the separate award percentages to the collected proceeds attributable to the corresponding actions. The Internal Revenue Service (IRS) will pay all awards in accordance with the rules provided in paragraph (d) of this section. All relevant factors will be taken into account by the Whistleblower Office in determining whether an award will be paid and, if so, the amount of the award. No person is authorized under this section to make any offer or promise or otherwise bind the Whistleblower Office with respect to the amount or payment of an award.

(b)

Factors used to determine award percentage.

(1)

Positive factors. The application of the following non-exclusive factors may support increasing an award percentage under paragraphs (c)(1) or (2) of this section—

(i)

The whistleblower acted promptly to inform the IRS or the taxpayer of the tax noncompliance.

(ii)

The information provided identified an issue or transaction of a type previously unknown to the IRS.

(iii)

The information provided identified taxpayer behavior that the IRS was unlikely to identify or that was particularly difficult to detect through the IRS's exercise of reasonable diligence.

(iv)

The information provided thoroughly presented the factual details of tax noncompliance in a clear and organized manner, particularly if the manner of the presentation saved the IRS work and resources.

(v)

The whistleblower (or the whistleblower's legal representative, if any) provided exceptional cooperation and assistance during the pendency of the action(s).

(vi)

The information provided identified assets of the taxpayer that could be used to pay liabilities, particularly if the assets were not otherwise known to the IRS.

(vii)

The information provided identified connections between transactions, or parties to transactions, that enabled the IRS to understand tax implications that might not otherwise have been understood by the IRS.

(viii)

The information provided had an impact on the behavior of the taxpayer, for example by causing the taxpayer to promptly correct a previously-reported improper position.

(2)

Negative factors. The application of the following non-exclusive factors may support decreasing an award percentage under paragraphs (c)(1) or (2) of this section—

(i)

The whistleblower delayed informing the IRS after learning the relevant facts, particularly if the delay adversely affected the IRS's ability to pursue an action or issue.

(ii)

The whistleblower contributed to the underpayment of tax or tax noncompliance identified.

(iii)

The whistleblower directly or indirectly profited from the underpayment of tax or tax noncompliance identified, but did not plan and initiate the actions that led to the underpayment of tax or actions described in section 7623(a)(2) .

(iv)

The whistleblower (or the whistleblower's legal representative, if any) negatively affected the IRS's ability to pursue the action(s), for example by disclosing the existence or scope of an enforcement activity.

(v)

The whistleblower (or the whistleblower's legal representative, if any) violated instructions provided by the IRS, particularly if the violation caused the IRS to expend additional resources.

(vi)

The whistleblower (or the whistleblower's legal representative, if any) violated the terms of the confidentiality agreement described in § 301.7623-3(c)(2)(iv).

(vii)

The whistleblower (or the whistleblower's legal representative, if any) violated the terms of a contract entered into with the IRS pursuant to § 301.6103(n)-2.

(viii)

The whistleblower provided false or misleading information or otherwise violated the requirements of section 7623(b)(6)(C) or § 301.7623-1(c)(3).

(c)

Amount of award percentage.

(1)

Award for substantial contribution.

(i)

In general. If the IRS proceeds with any administrative or judicial action based on information brought to the IRS's attention by a whistleblower, such whistleblower shall, subject to paragraphs (c)(2) and (3) of this section, receive as an award at least 15 percent but not more than 30 percent of the collected proceeds resulting from the action (including any related actions) or from any settlement in response to such action. The amount of any award under this paragraph depends on the extent of the whistleblower's substantial contribution to the action(s). See paragraph (c)(4) of this section for rules regarding multiple whistleblowers.

(ii)

Computational framework. Starting the analysis at 15 percent, the Whistleblower Office will analyze the administrative claim file using the factors listed in paragraph (b)(1) of this section to determine whether the whistleblower merits an increased award percentage of 22 percent or 30 percent. The Whistleblower Office may increase the award percentage based on the presence and significance of positive factors. The Whistleblower Office will then analyze the contents of the administrative claim file using the factors listed in paragraph (b)(2) of this section to determine whether the whistleblower merits a decreased award percentage of 15 percent, 18 percent, 22 percent, or 26 percent. The Whistleblower Office may decrease the award percentage based on the presence and significance of negative factors. Although the factors listed in paragraphs (b)(1) and (2) of this section are described as positive and negative factors, the Whistleblower Office's analysis cannot be reduced to a mathematical equation. The factors are not exclusive and are not weighted and, in a particular case, one factor may override several others. The presence and significance of positive factors may offset the presence and significance of negative factors. But the absence of negative factors does not constitute a positive factor.

(iii)

Examples. The operation of the provisions of paragraph (c)(1)(ii) of this section may be illustrated by the following examples. The examples are intended to illustrate the operation of the computational framework. The examples provide simplified descriptions of the facts relating to the claims for award, the information provided, and the facts relating to the underlying tax cases. The application of section 7623(b)(1) and paragraph (c)(1)(ii) of this section will depend on the specific facts of each case.

(2)

Award for less substantial contribution.

(i)

In general. If the Whistleblower Office determines that the action described in paragraph (c)(1) of this section is based principally on disclosures of specific allegations resulting from a judicial or administrative hearing; a government report, hearing, audit, or investigation; or the news media, then the Whistleblower Office will determine an award of no more than 10 percent of the collected proceeds resulting from the action (including any related actions) or from any settlement in response to such action. If the whistleblower is the original source of the information from which the disclosures of specific allegations resulted, however, then the award percentage will be determined under paragraph (c)(1) of this section.

(ii)

Computational framework. The Whistleblower Office will analyze the administrative claim file to determine—

(A)

Whether the claim involves specific allegations regarding a tax underpayment or a violation of the internal revenue laws that reasonably may be inferred to have resulted from a judicial or administrative hearing; a government report, hearing, audit, or investigation; or the news media;

(B)

Whether the action described in paragraph (c)(1) of this section was based principally on the disclosure of the specific allegations; and

(C)

Whether the whistleblower was the original source of the information that gave rise to the specific allegations. If the Whistleblower Office determines that the action was based principally on disclosures of specific allegations, as stated in paragraph (c)(2)(ii)(B) of this section, and that the whistleblower was not the original source of the information, then, starting at 1 percent, the Whistleblower Office will analyze the administrative claim file using the factors listed in paragraph (b)(1) of this section to determine whether the whistleblower merits an increased award percentage of 4 percent, 7 percent, or 10 percent. The Whistleblower Office will then determine whether the whistleblower merits a decreased award percentage of zero, 1 percent, 4 percent, or 7 percent using the factors listed in paragraph (b)(2) of this section. The Whistleblower Office may increase the award percentage based on the presence and significance of positive factors and may decrease (to zero) the award percentage based on the presence and significance of negative factors. Like the analysis described in paragraph (c)(1)(ii) of this section, the Whistleblower Office's analysis cannot be reduced to a mathematical equation. The factors are not exclusive and are not weighted and, in a particular case, one factor may override several others. The presence and significance of positive factors may offset the presence and significance of negative factors. But the absence of negative factors does not constitute a positive factor.

(iii)

Example. The operation of the provisions of paragraph (c)(2)(ii) of this section may be illustrated by the following example. The example is intended to illustrate the operation of the computational framework. The example provides a simplified description of the facts relating to the claim for award, the information provided, and the facts relating to the underlying tax case(s). The application of section 7623(b)(2) and paragraph (c)(2)(ii) of this section will depend on the specific facts of each case.

(3)

Reduction in award and denial of award.

(i)

In general. If the Whistleblower Office determines that a claim for award is brought by a whistleblower who planned and initiated the actions, transaction, or events (underlying acts) that led to the underpayment of tax or actions described in section 7623(a)(2), then the Whistleblower Office may appropriately reduce the amount of the award percentage that would otherwise result under section 7623(b)(1) and paragraph (c)(1) of this section or section 7623(b)(2) and paragraph (c)(2) of this section, as applicable. The Whistleblower Office will deny an award if the whistleblower is convicted of criminal conduct arising from his or her role in planning and initiating the underlying acts.

(ii)

Threshold determination. A whistleblower planned and initiated the underlying acts if the whistleblower—

(A)

Designed, structured, drafted, arranged, formed the plan leading to, or otherwise planned, an underlying act,

(B)

Took steps to start, introduce, originate, set into motion, promote or otherwise initiate an underlying act, and

(C)

Knew or had reason to know that an underpayment of tax or actions described in section 7623(a)(2) could result from planning and initiating the underlying act.

(D)

The whistleblower need not have been the sole person involved in planning and initiating the underlying acts. A whistleblower who merely furnishes typing, reproducing, or other mechanical assistance in implementing one or more underlying acts will not be treated as initiating any underlying act. A whistleblower who is a junior employee acting at the direction, and under the control, of a senior employee will not be treated as initiating any underlying act.

(E)

If the Whistleblower Office determines that a whistleblower has satisfied this initial threshold of planning and initiating, the Whistleblower Office will then reduce the award amount based on the extent of the whistleblower's planning and initiating, pursuant to paragraph (c)(3)(iii) of this section.

(iii)

Computational framework. After determining the award percentage that would otherwise result from the application of section 7623(b)(1) and paragraph (c)(1) of this section or section 7623(b)(2) and paragraph (c)(2) of this section, as applicable, the Whistleblower Office will analyze the administrative claim file to make the threshold determination described in paragraph (c)(3)(ii) of this section. If the whistleblower is determined to have planned and initiated the underlying acts, then the Whistleblower Office will reduce the award based on the extent of the whistleblower's planning and initiating. The Whistleblower Office's analysis and the amount of the appropriate reduction determined in a particular case cannot be reduced to a mathematical equation. To determine the appropriate award reduction, the Whistleblower Office will—

(A)

Categorize the whistleblower's role as a planner and initiator as primary, significant, or moderate; and

(B)

Appropriately reduce the award percentage that would otherwise result from the application of section 7623(b)(1) and paragraph (c)(1) of this section or section 7623(b)(2) and paragraph (c)(2) of this section, as applicable, by 67 percent to 100 percent in the case of a primary planner and initiator, by 34 percent to 66 percent in the case of a significant planner and initiator, or by 0 percent to 33 percent in the case of a moderate planner and initiator. If the whistleblower is convicted of criminal conduct arising from his or her role in planning and initiating the underlying acts, then the Whistleblower Office will deny an award without regard to whether the Whistleblower Office categorized the whistleblower's role as a planner and initiator as primary, significant, or moderate.

(iv)

Factors demonstrating the extent of a whistleblower's planning and initiating. The application of the following non-exclusive factors may support a determination of the extent of a whistleblower's planning and initiating of the underlying acts—

(A)

The whistleblower's role as a planner and initiator. Was the whistleblower the sole decision-maker or one of several contributing planners and initiators? To what extent was the whistleblower acting under the direction and control of a supervisor?

(B)

The nature of the whistleblower's planning and initiating activities. Was the whistleblower involved in legitimate tax planning activities? Did the whistleblower take steps to hide the actions at the planning stage? Did the whistleblower commit any identifiable misconduct (legal, ethical, etc.)?

(C)

The extent to which the whistleblower knew or should have known that tax noncompliance could result from the course of conduct.

(D)

The extent to which the whistleblower acted in furtherance of the noncompliance, including, for example, efforts to conceal or disguise the transaction.

(E)

The whistleblower's role in identifying and soliciting others to participate in the actions reported, whether as parties to a common transaction or as parties to separate transactions.

(v)

Examples. The operation of the provisions of paragraphs (c)(3)(ii) and (iii) of this section may be illustrated by the following examples. These examples are intended to illustrate the operation of the computational framework. The examples provide simplified descriptions of the facts relating to the claim for award, the information provided, and the facts relating to the underlying tax case. The application of section 7623(b)(3) and paragraph (c)(3) of this section will depend on the specific facts of each case.

(4)

Multiple whistleblowers. If two or more independent claims relate to the same collected proceeds, then the Whistleblower Office may evaluate the contribution of each whistleblower to the action(s) that resulted in collected proceeds. The Whistleblower Office will determine whether the information submitted by each whistleblower would have been obtained by the IRS as a result of the information previously submitted by any other whistleblower. If the Whistleblower Office determines that multiple whistleblowers submitted information that would not have been obtained based on a prior submission, then the Whistleblower Office will determine the amount of each whistleblower's award based on the extent to which each whistleblower contributed to the action(s). The aggregate award amount in cases involving two or more independent claims that relate to the same collected proceeds will not exceed the maximum award amount that could have resulted under section 7623(b)(1) or section 7623(b)(2), as applicable, subject to the award reduction provisions of section 7623(b)(3), if a single claim had been submitted.

(d)

Payment of Award.

(1)

In general. The IRS will pay any award determined under section 7623 and §§ 301.7623-1 through 301.7623-4 to the whistleblower(s) that filed the corresponding claim for award. Payment of an award will be made as promptly as the circumstances permit, but not until there has been a final determination of tax with respect to the action(s), as defined in paragraph (d)(2) of this section, the Whistleblower Office has determined the award, and all appeals of the Whistleblower Office's determination are final or the whistleblower has executed an award consent form agreeing to the amount of the award and waiving the whistleblower's right to appeal the determination.

(2)

Final determination of tax.

(i)

In general. For purposes of §§ 301.7623-1 through 301.7623-4, a final determination of tax means that the proceeds resulting from the action(s) subject to the award determination have been collected and either the statutory period for filing a claim for refund has expired or the taxpayer(s) subject to the action(s) and the IRS have agreed with finality to the tax or other liabilities for the period(s) at issue and the taxpayer(s) have waived the right to file a claim for refund. A final determination of tax does not preclude a subsequent final determination of tax if the IRS proceeds based on the information provided following the payment, denial, or rejection of an award.

(ii)

Example. The provisions of paragraph (d)(2)(i) of this section, regarding subsequent final determination of tax, may be illustrated by the following example:

(3)

Joint Whistleblowers. If multiple whistleblowers jointly submit a claim for award, the IRS will pay any award in equal shares to the joint whistleblowers unless the joint whistleblowers specify a different allocation in a written agreement, signed by all the joint whistleblowers and notarized, and submitted with the claim for award. The aggregate award payment in cases involving joint whistleblowers will be within the award percentage range of section 7623(b)(1) or section 7623(b)(2), as applicable, and subject to the award reduction provisions of section 7623(b)(3).

(4)

Deceased Whistleblower. If a whistleblower dies before or during the whistleblower administrative proceeding, the Whistleblower Office may substitute an executor, administrator, or other legal representative on behalf of the deceased whistleblower for purposes of conducting the whistleblower administrative proceeding.

(5)

Tax treatment of award. All awards are includible in gross income and subject to current Federal tax reporting and withholding requirements.

(e)

Notes, amendments, and revision history

Amendments

[T.D. 9687, 79 FR 47270, Aug. 12, 2014]

Authority

Source

Source: 32 FR 15241, Nov. 3, 1967, unless otherwise noted.

Amendments

[T.D. 9687, 79 FR 47270, Aug. 12, 2014]

26 C.F.R. §§ 301.7623-1–301.7623-4

§301.7623-1. General rules, submitting information on underpayments of tax or violations of the internal revenue laws, and filing claims for award.

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§301.7623-2. Definitions.

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§301.7623-3. Whistleblower administrative proceedings and appeals of award determinations.

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Source

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§301.7623-4. Amount and payment of award.

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Cite this provision

Incoming references