The IRS issued proposed regulations on Decmeber 14, 2012 for whistleblower awards under Secs. 7623(a) and (b), as well as rules governing the disclosure of return information under Sec. 6103(h) to pursue these claims (REG-141066-09). The proposed regulations provide general rules for submitting information to the IRS, definitions of key terms, rules for administrative proceedings, and criteria for determining the size of an award.Sec. 7623(a) permits the IRS to pay awards to whistleblowers at its discretion. Any amount payable under Sec. 7623(a) is paid from the proceeds of amounts collected by reason of the information provided, and any amount collected is available for these discretionary payments.
Sec. 7623(b) provides that qualifying individuals will receive an award of at least 15%, but not more than 30%, of the collected proceeds resulting from the action that the IRS proceeded on based on the information the whistleblower provided to the IRS.
Prop. Regs. Sec. 301.7623-1 provides the general rules for submitting information on underpayments of tax or violations of tax laws and filing claims for awards. This section lists the information required to be submitted to file the claim and the people who are ineligible to claim an award. The list of ineligible claimants includes Treasury Department employees, government officials, and individuals who are required by law to disclose the information.
Prop. Regs. Sec. 301.7623-2 defines key terms of the whistle blower program.
Prop. Regs. Sec. 301.7623-4 contains the criteria the IRS will apply in determining the size of the award under Sec. 7623, which is based in part on how substantial the claimant’s contribution was in obtaining the collected proceeds and whether the claimant was involved in the act that gave rise to the proceeds.
Prop Regs. Sec. 301.6103(h)(4)-1 authorizes Whistleblower Office employees to disclose return information to the extent necessary to conduct whistleblower administrative proceedings. The regulations provide that the Whistleblower Office should use confidentiality agreements to protect from unauthorized disclosures of information disclosed to claimants.
The regulations are proposed to apply to information submitted on or after the date the final regulations are published or to claims that are open on that date. However, Prop. Regs. Sec. 301.7623-4 is not proposed to apply to claims under Sec. 7623(a) that are open on the date the final regulations are published, so that the IRS can continue to apply consistent rules to open claims under Sec. 7623(a). The IRS also requested comments on these proposed effective dates.
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Read more at: Tax Times blog
