||August 25, 1998
Rewards for Information Relating to
Violations of Internal Revenue Laws
DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Parts 301 and 602 [TD 8780] RIN
TITLE: Rewards for Information Relating to Violations of Internal
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
SUMMARY: This document contains final regulations relating to
rewards for information that relates to violations of the internal
revenue laws. The regulations reflect changes to the law made by the
Taxpayer Bill of Rights 2 and affect persons that are eligible to
receive an informant reward.
DATES: Effective date: These regulations are effective, August 21,
Applicability date: For dates of applicability, see §301.7623-1(g).
FOR FURTHER INFORMATION CONTACT: Judith A. Lintz (202) 622-4940 (not
a toll-free number).
Paperwork Reduction Act
The collections of information contained in these final regulations
have been reviewed and approved by the Office of Management and
Budget in accordance with the Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545-1534. Responses to these collections
of information are voluntary with respect to the provision of
information relating to violations of the internal revenue laws, but
are required to obtain a benefit with respect to filing a claim for
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
valid control number.
The estimated annual burden per respondent varies from 2 to 4 hours,
depending on individual circumstances, with an estimated average of
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer, OP:FS:FP,
Washington, DC 20224, and to the Office of Management and Budget,
Attn: Desk Officer for the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns
and tax return information are confidential, as required by 26
This document contains amendments to the Regulations on Procedure
and Administration (26 CFR Part 301) under section 7623 relating to
rewards for information that relates to violations of the internal
revenue laws. This section was amended by section 1209 of the
Taxpayer Bill of Rights 2 (TBOR 2) (Public Law 104- 168, 110 Stat.
On October 14, 1997, final and temporary regulations (TD 8737)
relating to informant rewards under section 7623 were published in
the Federal Register (62 FR 53230). A notice of proposed rulemaking
(REG-252936-96) cross-referencing the temporary regulations was
published in the Federal Register for the same day (62 FR 53274).
No written comments responding to the notice were received.
No public hearing was requested or held. The proposed regulations
under section 7623 are adopted as revised by this Treasury decision,
and the corresponding temporary regulations are removed. The
revisions are discussed below.
Explanation of Provisions
The amendments made by TBOR 2 to section 7623 provide that the
Secretary may pay rewards for information that leads to the
detection and bringing to trial and punishment persons guilty of
violating the internal revenue laws or conniving at the same, and
for information that leads to the detection of underpayments of tax.
In addition, the amendments to section 7623 provide that rewards
will be paid from the proceeds of amounts (other than interest)
collected by reason of the information provided.
Following the publication of the proposed regulations, it was
determined that the regulations should clarify that rewards may also
be paid in situations where information leads to the denial of a
claim for refund. Therefore, the final regulations provide that
proceeds of amounts (other than interest) collected by reason of the
information provided include both additional amounts collected
because of the information provided and amounts collected prior to
receipt of the information if the information leads to the denial of
a claim for refund that otherwise would have been paid.
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It has also been determined
that section 553(b) of the Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regulations.
It is hereby certified that the regulations in this document will
not have a significant economic impact on a substantial number of
small entities. This certification is based on a determination that
in the past approximately 10,000 persons have filed claims for
reward on an annual basis. Of these persons, almost all have been
individuals. Accordingly, a regulatory flexibility analysis under
the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Internal Revenue Code, the notice
of proposed rulemaking preceding these regulations was submitted to
the Small Business Administration for comment on its impact on small
The principal author of these regulations is Judith A.
Lintz, Office of Assistant Chief Counsel (Income Tax and
Accounting). However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects
26 CFR Part 301 Employment taxes, Estate taxes, Excise taxes, Gift
taxes, Income taxes, Penalties, Reporting and recordkeeping
26 CFR Part 602 Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations Accordingly, 26 CFR parts
301 and 602 are amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 continues to read
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.7623-1 is revised to read as follows:
§301.7623-1 Rewards for information relating to violations of
internal revenue laws.
(a) In general. In cases where rewards are not otherwise provided
for by law, a district or service center director may approve a
reward, in a suitable amount, for information that leads to the
detection of underpayments of tax, or the detection and bringing to
trial and punishment of persons guilty of violating the internal
revenue laws or conniving at the same.
The rewards provided for by section 7623 and this section will be
paid from the proceeds of amounts (other than interest) collected by
reason of the information provided. For purposes of section 7623 and
this section, proceeds of amounts (other than interest) collected by
reason of the information provided include both additional amounts
collected because of the information provided and amounts collected
prior to receipt of the information if the information leads to the
denial of a claim for refund that otherwise would have been paid.
(b) Eligibility to file claim for reward--(1) In general.
Any person, other than certain present or former federal employees
described in paragraph (b)(2) of this section, that submits, in the
manner described in paragraph (d) of this section, information
relating to the violation of an internal revenue law is eligible to
file a claim for reward under section 7623 and this section.
(2) Federal employees. No person who was an officer or employee of
the Department of the Treasury at the time the individual came into
possession of information relating to violations of the internal
revenue laws, or at the time the individual divulged such
information, is eligible for a reward under section 7623 and this
section. Any other current or former federal employee is eligible to
file a claim for reward if the information provided came to the
individual's knowledge other than in the course of the individual's
(3) Deceased informants. A claim for reward may be filed by an
executor, administrator, or other legal representative on behalf of
a deceased informant if, prior to the informant's death, the
informant was eligible to file a claim for such reward under section
7623 and this section. Certified copies of the letters testamentary,
letters of administration, or other similar evidence must be
attached to the claim for reward on behalf of a deceased informant
in order to show the authority of the legal representative to file
(c) Amount and payment of reward. All relevant factors, including
the value of the information furnished in relation to the facts
developed by the investigation of the violation, will be taken into
account by a district or service center director in determining
whether a reward will be paid, and, if so, the amount of the reward.
The amount of a reward will represent what the district or service
center director deems to be adequate compensation in the particular
case, generally not to exceed fifteen percent of the amounts (other
than interest) collected by reason of the information. Payment of a
reward will be made as promptly as the circumstances of the case
permit, but not until the taxes, penalties, or fines involved have
However, if the informant waives any claim for reward with respect
to an uncollected portion of the taxes, penalties, or fines
involved, the claim may be immediately processed. Partial reward
payments, without waiver of the uncollected portion of the taxes,
penalties, or fines involved, may be made when a criminal fine has
been collected prior to completion of the civil aspects of a case,
and also when there are multiple tax years involved and the
deficiency for one or more of the years has been paid in full. No
person is authorized under this section to make any offer, or
promise, or otherwise to bind a district or service center director
with respect to the payment of any reward or the amount of the
(d) Submission of information. A person that desires to claim a
reward under section 7623 and this section may submit information
relating to violations of the internal revenue laws, in person, to
the office of a district director, preferably to a representative of
the Criminal Investigation Division. Such information may also be
submitted in writing to the Commissioner of Internal Revenue,
Attention: Assistant Commissioner (Criminal Investigation), 1111
Constitution Avenue, NW., Washington, DC 20224, to any district
director, Attention: Chief, Criminal Investigation Division, or to
any service center director. If the information is submitted in
person, either orally or in writing, the name and official title of
the person to whom it is submitted and the date on which it is
submitted must be included in the formal claim for reward.
(e) Identification of informant. No unauthorized person will be
advised of the identity of an informant.
(f) Filing claim for reward. An informant that intends to claim a
reward under section 7623 and this section should notify the person
to whom the information is submitted of such intention, and must
file a formal claim on Form 211, Application for Reward for Original
Information, signed by the informant in the informant's true name,
as soon as practicable after the submission of the information. If
other than the informant's true name was used in furnishing the
information, satisfactory proof of identity as that of the informant
must be included with the claim for reward.
(g) Effective date. This section is applicable with respect to
rewards paid after January 29, 1997.
§301.7623-1T [Removed] Par. 3. Section 301.7623-1T is removed.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT Par.
4. The authority citation for part 602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 5. In §602.101, paragraph (c) is amended by removing the entry
for 301.7623-1T from the table and by revising the.entry for
301.7623-1 to read as follows:
§602.101 OMB Control numbers.
* * * * *
(c) * * *
CFR part or section where Current OMB identified and described
* * * * *
* * * * *
Michael P. Dolan
Deputy Commissioner of Internal Revenue
Approved: 20 July 1998
Donald C. Lubick
Assistant Secretary of the Treasury
You can search the entire Tax Professionals section, or all of Uncle Fed's Tax*Board. For a more focused search, put your search word(s) in quotes.
1998 Regulations Main | IRS Regulations Main | Home