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Whistleblowers can get paid by the IRS under section 7623(a) and section 7623(b). Section 7623(a) authorizes the Secretary to pay awards to whistleblowers for information in detecting underpayments of tax or detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws. Importantly, the payment of an award under section 7623(a) is entirely up to the discretion of the Secretary and is not mandatory. The amounts payable under section 7623(a) are paid from the proceeds of amounts collected by the IRS by reason of the information provided by the whistleblower.

Once a whistleblower files a properly completed Form 211, the IRS Whistleblower Office will assign a claim number (or numbers if there are multiple taxpayers). From that point forward, the claim number is used in all communications between the IRS and the whistleblower. While the IRS will confirm that a claim number is still open, payable, or denied, the IRS takes the position that it is not authorized under the law to tell the whistleblower the action, if any, that the IRS intends to take on the claim or whether the IRS has already taken action against the taxpayer being reported until there is an award determination from the IRS Whistleblower Office or the claim is litigated in the U.S. Tax Court.

Whistleblower claims are denied by the IRS for a variety of reasons including: there was no tax issue involved, the information was not credible or speculative, the information provided by the whistleblower was already provided to the IRS by another source, there is no collection of proceeds because the taxpayer does not have assets that the IRS can collect against, the taxpayer makes a successful appeal, the statute of limitations has expired, or the IRS audit or investigation results in no finding of taxpayer liability.