Many of you know that we provide accounting services, as part of our offerings. That also includes tax planning and preparation. Yes, we believe that everyone has the right to pay the lowest amount of taxes required by law. (No, we don’t believe that gains that private equity firms obtain are “carried interest”, but we don’t make the law, either. Lobbyists do. [Don’t believe for one minute that the American Legislative Exchange Council (ALEC) doesn’t write the bulk of the laws of the states and our Federal government enact. If that were true, those state laws enacted recently would not have such identical verbiage.]) We also work with a few law firms, serving as business advisors and financial managers. One of which is a family law firm. It’s not very unusual for family law clients to want to turn their soon-to-be ex-spouses into the IRS. Another such client specializes in business and employee law, who also have folks who want to turn in various companies for tax fraud. All of this is becoming even more pronounced as folks have found that Bradley Birkenfeld was provided a $ 104 million windfall for turning in his employer, UBS. And, Mr. B is a convicted felon for refusing to divulge information demanded by the IRS about that same fraud! Most folks had no idea that in 2006 the award structure was changed to afford “tattletales” or “whistleblowers” up to 30% of the collected taxes as an award. (It did take the US Tax Court to impose upon the IRS to follow this law. But, that’s another story.) 
What does it take? Form 211. And, you need the 411 to fill it out. Because if there is not a lucid narrative, legal evidence, and a memorandum of law accompanying the filing, the odds are you will get nothing and your claim will go nowhere. (The IRS is NOT going to do any hard work for you. It’s your potential award.) And, don’t try to include stolen information or attorney-client (or legal tax representative-client) communciations- they are inadmissible. As you can surmise from Mr. B’s award, the claimant does not have to be ‘Mr. Goody Two Shoes’. But, you can’t be among those who plannned or initiated the fraud, either! It’s also not a get rich quick scheme. The average time for prosecution and collection of a whistleblower claim can be four years; seven years is not out of the question. Oh… one more very important fact. The award you receive is taxable, subject to withholding by the IRS. However, the fees you pay to a firm like ours to help your prepare the submission are fully deductible- above the line, so your tax is on the net award, not the total award. Happy hunting!
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