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IRS Lays Out Whistleblower Reward Rules

The IRS issued a final proposed rule for calculating whistleblowers' compensat

In a bulletin dated February 22, the Internal Revenue Service (IRS) proposed its final regulation outlining how whistleblowers would be compensated for providing information regarding underpayments, tax law violations or plans to do so.

 

In a bulletin dated February 22, the Internal Revenue Service (IRS) proposed its final regulation outlining how whistleblowers would be compensated for providing information regarding underpayments, tax law violations or plans to do so.

Accounting Today explains that the additional financial reporting guidance "clarifies the definition of proceeds of amounts collected and collected proceeds under Section 7623 of the Tax Code, and provides needed guidance to the general public as well as officers and employees of the IRS who review whistleblower claims."

The process began in January 2011, when the IRS published a notice in the Federal Register that sought to make it more clear what counted as proceeds when calculating the amount a whistleblower would be awarded, the source notes. While some may welcome the greater clarity, critics say the regulations would not help those who alert the authorities.

Additionally, the proposal includes the reduction of an overpayment credit balance in the "collected proceeds" and "proceeds of amounts collected," Accounting today notes. The discussions preceding the final proposal were not able to touch upon terminology, implementation of the statute and additional definitions, according to the source.

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