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When I read the claim that someone could collect up to 30% of monetary sanctions for exposing fraud, the percentage caught my attention. But my next question was probably the same one you might ask, “What exactly would I have to do”?
We work hard for our money. Watching tax dollars disappear into fraudulent schemes is frustrating. A social media post can make a complicated government program sound as easy as submitting a tip and waiting for a check.
I don’t want this article to come off as we EA's, CPA’s or Tax Attorney should be looking for fraud because we might receive a big payday.
No, Circular 230, §10.21 requires a practitioner who knows of a client’s tax noncompliance, error, or omission to:
Promptly inform the client.
Advise the client of the consequences under the tax laws and regulations.
That section directs you to notify the client. It does not impose a general requirement to notify the IRS. It also applies to errors and omissions, so you do not need to establish intentional fraud before addressing the problem.
But keep in mind, You cannot help the client continue the misconduct.
Under §10.34, you cannot knowingly sign or advise a return position involving a willful attempt to understate tax or intentional disregard of the rules. You must make reasonable inquiries when client information appears incorrect, inconsistent, or incomplete.
So this week, let’s walk through what the Treasury actually announced. How whistleblower rewards work, and what you can do if you have information that deserves a closer look.
Report Fraud, Protect Taxpayer Dollars, and Learn When You Could Qualify for a Whistleblower Reward
“Publicity is justly commended as a remedy for social and industrial diseases.”
— Louis D. Brandeis, Other People’s Money and How the Bankers Use It (1914).
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What Scott Bessent’s announcement actually means
On February 13, 2026, the Treasury announced that its Financial Crimes Enforcement Network, known as FinCEN, had launched a dedicated webpage for whistleblower tips. The announcement followed Secretary Scott Bessent’s visit to Minnesota and addressed fraud, money laundering, and sanctions violations. The Treasury encouraged people to provide specific information and supporting documentation if they suspect fraudulent schemes are happening.
However, FinCEN’s program covers particular financial laws, including the Bank Secrecy Act and specified sanctions laws. Take note, a complaint about wasteful spending does not automatically become an eligible award claim. The distinction is important for a business owner or employee who notices something suspicious. Reporting a concern and qualifying for compensation are separate questions.
How the 10%–30% reward works
Under FinCEN’s framework, eligible whistleblowers can receive 10%–30% of qualifying collected monetary sanctions. The information must meet the program’s requirements and lead to successful enforcement. FinCEN identifies a threshold of monetary penalties exceeding $1 million.
That threshold concerns the enforcement action’s penalties. It does not mean every tip describing $1 million in suspected fraud qualifies.
For a simplified illustration, if qualifying collected sanctions were $2 million, a 10% award would be $200,000 and a 30% award would be $600,000. Those figures explain the math. They do not predict an award in any particular case.
There is also a timing detail worth mentioning. As of October 19, 2026, FinCEN’s program page says it will begin processing and paying awards once its implementing regulation is finalized. It identifies the rule published April 1, 2026, as proposed. Accepting tips does not mean immediate payments are available.
Tax fraud uses a different reward program
Because I am an Enrolled Agent, I want to point out a distinction that can easily get lost. The IRS has its own whistleblower program.
The IRS generally offers eligible whistleblowers 15%–30% of proceeds collected because of the information provided. To request an award, use Form 211, Application for Award for Original Information.
The mandatory award generally requires the amount in dispute to exceed $2 million. When the subject is an individual, that person’s gross income must exceed $200,000 in at least one relevant tax year. Claims outside those thresholds may be considered for discretionary awards.
This means the IRS program’s percentages and thresholds differ from FinCEN’s. Always check the rules for the program that matches the conduct you are reporting.
What about Medicare, Medicaid, and Minnesota?
Suspected Medicare or Medicaid fraud can be reported to the Department of Health and Human Services Office of the Inspector General. Its hotline accepts concerns about fraud, waste, abuse, and mismanagement in HHS programs.
Separately, certain false claims against the government may support a False Claims Act lawsuit brought by a whistleblower, called a qui tam action. Successful cases can result in a share of the recovery, typically 15%–30%. Filing a hotline complaint alone does not create that lawsuit or guarantee a share. An attorney experienced in these cases can explain the filing requirements.
Minnesota’s cases deserve attention, but different programs and court outcomes should be kept separate. For example, the DOJ has documented guilty pleas in the Feeding Our Future child-nutrition fraud scheme is an established fact. That is different from treating every “allegation” about a daycare or autism services as an established fact. Of course, responsibility belongs to the people and organizations supported by the evidence.
How large is the fraud problem?
The Government Accountability Office (GAO) estimated annual federal fraud losses of $233 billion to $521 billion using the fiscal 2018–2022 data. This is a government-wide estimate with limitations, rather than a verified tally for 2026 or a figure that can be assigned to one state.
GAO also explains that fraud estimates and improper-payment estimates are different measurements. A payment error can involve missing documentation or another mistake without establishing intentional deception. As you can see these numbers are big, really big and deserve the attention they’re getting.
Two practical steps you can take
First, write down what you actually know. Record dates, amounts, names, and how you learned the information. Separate firsthand observations from assumptions, or third party hearsay. For example, identifying specific invoices for services you know were never delivered is more useful than saying an organization seems suspicious. Preserve records you lawfully possess without altering them or accessing files you are not authorized to view.
Second, choose the reporting channel before submitting. Use the official links above to match your concern to the appropriate agency. If you want to pursue an award, or the information involves confidential workplace records, get legal guidance about eligibility, confidentiality, and filing requirements. Keep a copy of your submission and any acknowledgment.
You can make a useful difference
You do not have to solve an entire fraud scheme yourself. Clear, truthful information can give investigators a starting point. Understanding the process helps you act responsibly while keeping your expectations about a possible reward realistic.
A little help keeping your own records clear
If this topic has you thinking about the quality of your own business records, The Smith Advisory can help you identify bookkeeping gaps and better understand your tax obligations. Feel free to contact us at [email protected]. Getting organized now can make questions easier to answer and reduce surprises at tax time.
Disclaimer
This article provides general educational information and is not legal advice or individualized tax advice. Whistleblower eligibility, confidentiality protections, procedures, and award amounts depend on the applicable law and facts. No payment is guaranteed. Information was reviewed as of October 19, 2026. Consult a qualified attorney about whistleblower claims and a tax professional about your circumstances.
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