IRS Issues Whistleblower Alert on Fraud By Tax-Exempt Entities, Continuing Trend of Increased Agency Reliance on Whistleblowers

Posted April 29, 2026

By the Constantine Cannon Whistleblower Team

On April 17, the Internal Revenue Service (IRS) issued a Whistleblower Alert calling on whistleblowers to come forward with any information on the fraudulent misuse or diversion of federal funds and grants by tax-exempt organizations and businesses.[1] The agency used the Whistleblower Alert to further promote the IRS Whistleblower Program under which whistleblowers can receive up to 30% of the proceeds the government collects based on tax fraud information the whistleblower provides.

What Type of Tax Fraud Does the IRS Whistleblower Alert Target?

The Whistleblower Alert specifically identifies the following areas of tax-exempt misconduct the IRS is most interested in:[2]

- False statements in grant applications

- Misuse/diversion of federal funds and grants, especially for personal use.

- Self-dealing or undisclosed conflicts of interest.

- Improper payments to insiders, officers, or related parties.

- Failure to perform required services or deliver promised outcomes.

- Falsified reporting to federal agencies.

- Misclassification of activities to maintain tax-exempt status.

- Any other tax-exempt organization misconduct such as tax fraud, money laundering, operating for non-exempt purposes, or any other criminal or suspicious behavior.

In other words, if you have any inside information of federally funded tax-exempt entities engaging in illegal activity, misusing the federal dollars the Government has provided, or fraudulently securing those dollars, the IRS wants to hear from you.

What Role Do Whistleblowers Play in Helping the IRS Go After Tax Fraud?

According to IRS Chief Executive Officer Frank Bisignano, “Whistleblower Alerts are a new way for the IRS to spotlight high-risk areas and reach people who may have direct knowledge of noncompliance.” Recognizing the critical role whistleblowers play in helping the IRS identify fraud, Bisignano said the Alerts “will help connect us with individuals who can provide credible, timely information,” and that the agency “intends to issue additional Whistleblower Alerts in the future as other high-risk areas emerge.”

The introduction of these Whistleblower Alerts is just the latest step the IRS has taken to reinforce its commitment to the IRS Whistleblower Program. It comes roughly a year after the IRS Whistleblower Office announced its first ever multi-year Operating Plan aimed at expanding the reach, visibility, and impact of its Whistleblower Program.

Created by Congress in 2006, the IRS Whistleblower Program has delivered roughly $8 billion in collected proceeds and awarded roughly $1.5 billion to whistleblowers who helped expose significant tax fraud and evasion. Notably, the IRS award to the Credit Suisse whistleblowers who helped the agency secure a $510 million settlement from the company in May 2025 took the top spot in our Top 10 list of whistleblower awards for 2025.

The program has long been praised by policymakers and tax enforcement advocates, but it has also faced criticism for delays, lack of transparency, and inconsistent application of whistleblower protections. The IRS Whistleblower Office is hoping to turn that around with its new Operating Plan, its newly-launched Whistleblower Alerts, and other steps the agency is taking to invite whistleblowers into the enforcement fold.

Can We Expect to See More IRS Whistleblower Awards?

The IRS Whistleblower Office website further confirms how much the agency values its whistleblowers:

We need help from whistleblowers—people with firsthand knowledge of non-compliance who are willing to share what they know with us so we can investigate it when warranted. Whistleblower information that the IRS can act on bolsters the fair, efficient and effective enforcement of our nation’s tax laws, the success of our voluntary tax system and our efforts to reduce the tax gap.[3]

Constantine Cannon whistleblower attorney Dan Noel sees Whistleblower Alerts as another indication of the agency’s increasing reliance on whistleblowers. According to Noel, “The agency seems to be going out of its way to promote the highly valuable role whistleblowers play in helping to identify fraud that might otherwise escape the agency’s grasp.”

Noel says, “The IRS also seems to be taking pains to re-market itself as more whistleblower-friendly, willing to engage more cooperatively with whistleblowers and their counsel and remove many of the bureaucratic constraints and obstacles that had dogged the whistleblower program for years.” If the agency stays on its current course, Noel projects, “We are likely to see more whistleblower-prompted enforcement actions and more significant whistleblower awards in the near future.”

Constantine Cannon Has Substantial Experience Representing IRS Whistleblowers

Constantine Cannon has substantial experience representing IRS whistleblowers. If you would like to learn more about our many whistleblower successes, what type of tax fraud the IRS Whistleblower Programs cover, or what it means to be a whistleblower more broadly, please do not hesitate to contact us. We will connect you with an experienced member of the Constantine Cannon Whistleblower Team for a free and confidential consultation.