Section 7623 of the Internal Revenue Code (the “Code”), added in 1954, authorizes the Treasury Secretary to pay an award as he deems necessary for “(1) detecting underpayments of tax, or (2) detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same.”  The program was significantly enhanced in 2006 as part of the Tax Relief and Health Care Act with the addition of Code section 7623(b), which provides that if the Treasury Secretary proceeds with any  action based on information brought to the Secretary’s attention by an individual, such individual will receive as an award at least 15% but not more than 30% of the collected proceeds (including penalties, interest, additions to tax, and additional amounts) resulting from the action (including any related actions) or from any settlement in response to such action.  The determination of the amount of such award by the IRS Whistleblower Office, which was created by the 2006 legislation, depends upon the extent to which the individual substantially contributed to such action.

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