What Is Form 211: Application for Award for Original Information?
Internal Revenue Service (IRS) Form 211 is an application that must be submitted to the IRS by a “whistleblower” who seeks to claim a reward for providing information about tax evasion to the U.S. government. If the IRS can recover funds based on a whistleblower's or informant's claim, the whistleblower or informant will receive a percentage of funds recovered.
The title of Form 211 is Application for Award for Original Information.
- Form 211 is submitted to the IRS by a “whistleblower” who seeks to claim a reward for providing information about tax evasion to the U.S. government.
- Form 211 rewards can be substantial, up to 30% of the additional tax, penalties, and other amounts the IRS Whistleblower Office collects.
- Federal government employees do not qualify for an award.
- Information provided under the program must be specific, credible, and supported; not guesses.
Understanding Form 211: Application for Award for Original Information
A whistleblower can submit IRS Form 211 to claim a reward unless the U.S. Department of the Treasury employed them at the time of receiving or providing the information on the tax evasion, or the person is a present or former federal government employee who received the information in the course of official duties.
Also, the IRS requires that the information is specific, supported, and credible; not a guess.
Form 211 rewards can be substantial, up to 30% of the additional tax, penalties, or other amounts the IRS collects as a result of the information.
The IRS runs two whistleblower reward programs. Under the first program, if the IRS collects taxes, interest, and penalties on an amount exceeding $2 million, the whistleblower may be rewarded 15 to 30 percent of the amount the IRS collects.
If the whistleblower is reporting an individual taxpayer, that person must have an annual income in an amount greater than $200,000 for the whistleblower to be eligible to collect 15% to 30% of the funds recovered. Under the first program, if the whistleblower isn’t happy with the outcome of the investigation, he or she can bring it before the Tax Court in an appeal. Rules for this program are available in the Internal Revenue Code (IRC) Section 7623(b).
Under the second whistleblower reward program, whistleblowers can file Form 211 to inform the IRS of tax evasion in amounts less than $2 million, or by individuals earning less than $200,000. Whistleblowers using this second program may collect a maximum of 15% of the total funds recovered, up to $10 million. They may not appeal the case to the Tax Court. The rules for informant claims under this program can be found at IRC 7623(a).
Any whistleblower award received under the program is subject to taxation.
This is not the same form as the Form 211 submitted with the FINRA OTC Compliance Unit.
How to File Form 211: Application for Award for Original Information
The whistleblower submits Form 211, under penalty of perjury, to the IRS at the following address:
Internal Revenue Service Whistleblower Office - ICE
1973 N. Rulon White Blvd.
Ogden, UT 84404
The Application for Award for Original Information can be downloaded off the IRS website.
The Form is not meant to be used to settle personal disputes between people or business partners. The program looks for a "significant Federal tax issue," not small tax mistakes.
Whistleblower Financial Results
Typically, more than half of the claims end up receiving an award. In 2016, 761 claims were submitted, resulting in 418 awards for a total of $61 million on an additional $369 million collected in taxes.
In 2017, there were 367 claims and 242 awards for a total of $34 million paid out on $190 million in additional collections.
In 2018, there were 423 claims and 217 awards. The award payouts totaled $312 million on $1.4 billion collected in additional taxes.
Awards are typically not paid out for at least eight years after a claim has been submitted, as the evidence gathering and subsequent collection of the tax funds takes a significant amount of time. The whistleblower is not paid out until there is a final determination on the amount actually collected.
Example of Using Form 211 to Report Tax Evasion
Assume a person, such as an employee, is aware that their company is evading taxes to a significant degree. Without breaking other laws, the person could collect information on the extent of the tax evasion, as well as those involved, and other pertinent information.
Once the person has compiled this information, they download Form 211, fill it out, and send it to the IRS along with their detailed information on the alleged tax offense. False information is punishable under penalty of perjury.
The Form is received by the IRS. They will determine if the case is worth pursuing. If they proceed they will audit or investigate the alleged offending company.
If the information qualifies for an award, the award amount (percentage of total) is discretionary, and it typically takes more than seven years for the whistleblower to receive payment for the information. This is because the information gathering and tax collection can take years. The whistleblower is only paid out once the final tally for monies collected on the evaded taxes has been determined.
If the IRS is able to collect $10 million in evaded taxes as a result of the whistleblower's information, they may qualify for an award between 15% and 30% of the total.
If the funds take nine years to collect (including the investigation or audit), and the IRS determines a payout of 20%, the whistleblower would receive a check for $2 million, less withholding tax, nine years after they file the Form.
The whistleblower is responsible for reporting the award amount on their taxes and paying the appropriate taxes on it.