October 20, 2021

Maryland’s New Tax Whistleblower Reward Program

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Recently, Maryland took aggressive action to mitigate revenue losses due to the “tax gap”— the difference between what taxpayers owe and what they actually pay to the taxing authority. On June 2, 2021, Maryland became the first state, after the District of Columbia, to enact a tax whistleblower reward and protection program similar to its IRS counterpart when the Maryland General Assembly passed House Bill 804, captioned “Taxes – Whistleblower Reward Program and Statute of Limitations for Tax Collections” (Whistleblower Reward Program).  Enacted without Governor Hogan’s signature, the Whistleblower Reward Program went into effect on October 1, 2021. 

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Maryland’s new Whistleblower Reward Program strongly incentivizes whistleblowers to report tax fraud and avoidance. As discussed more fully herein, generally, a whistleblower may receive 15% to 30% of the amount recovered by the state via enforcement action. On September 30, 2021, the Comptroller of Maryland released a Tax Alert addressing the new Whistleblower Reward Program and offering guidance to taxpayers and their representatives on “eligibility for the program, the method for filing claims, and the criteria used to evaluate the amount of the award issued to a qualifying whistleblower.”¹

We encourage you to read our brief summary below of the newly released informational Tax Alert. And if you have “original information”—evidence—that a person or business is committing tax fraud or avoidance, we urge you to consult with an experienced whistleblower attorney who can help you file your complaint (anonymously if you choose) and maximize your recovery share.

Tax Alert: Whistleblower Reward Program (9/30/2021)

The most recent guidance on the Whistleblower Reward Program appears in the Tax Alert released by the Comptroller at the end of September. The Tax Alert clarifies many aspects of the program for taxpayers and their representatives—however, it is important to repeat the Comptroller’s note that “[t]he guidance provided in this Tax Alert should be considered secondary to both statute and any tax forms, filing instructions, or regulations promulgated by the Comptroller of Maryland.”²

A. Eligibility and Key Terms

“Eligibility” for the Whistleblower Reward Program is the first topic addressed in the Tax Alert. The Comptroller states that “[w]histleblowers may be entitled to an award if they provide original information leading to a recovery by the Comptroller under a covered enforcement action.”³ The Tax Alert provides the following definitions of the three underlined “key terms” therein as follows:

  1. A whistleblower is an individual or entity who provides information—in a sworn affidavit—relating to a violation of State tax law, rule, or regulation. The violation may have already occurred, be occurring, or is about to occur. A whistleblower may provide the information to a law enforcement agency before providing it to the Comptroller.
  2. Original information is information which is:
  • Derived from the whistleblower’s independent knowledge or analysis;
  • Not known to the Comptroller from any source other than the whistleblower;
  • Not exclusively derived from an allegation made in the media or a government hearing, report, audit, or investigation, unless the whistleblower was the original source; AND
  • Provided to the Comptroller in a sworn affidavit for the first time on or after October 1, 2021.

     3. A covered enforcement action is one brought by the Comptroller with taxes in dispute exceeding $250,000 and which concerns:

  • The State and county income tax liability of an individual or a married couple filing jointly whose federal adjusted gross income is at least $250,000; OR
  • The State and county tax liability of a business—including anyone liable for the business’ State taxes—whose annual gross receipts or sales are at least $2,000,000.⁴

B. Proper Method of Filing

As the Comptroller explains, the whistleblower must provide their original information in a sworn affidavit. Failure to provide information in a sworn affidavit “may make a whistleblower ineligible to participate in the Program.”⁵ The Comptroller defines “sworn affidavit” in the FAQ section of the Tax Alert as “a written statement the contents of which are affirmed under the penalties of perjury to be true to the best of the whistleblower’s knowledge, information, and belief.”⁶  Additionally, whistleblowers may submit their affidavits via either regular mail or email (both mailing addresses are provided in the Tax Alert).

Thereafter, the Comptroller will provide the whistleblower (or whistleblower’s representative) with “written notice within fifteen (15) days confirming receipt of the information and identifying an agency employee as a point of contact.”⁷

Whistleblowers and/or representatives are further advised to submit any questions about the program to the same addresses used for the affidavits or by phone at (410) 767-1557. However, “[p]otential whistleblowers may not enter into the Program via phone, and disclosing original information via phone may disqualify a whistleblower from eligibility for an award under the Program.”⁸

C. Award Criteria

Again, if a whistleblower properly provides original information which ultimately leads to a final assessment or other successful recovery, they should be eligible for a monetary award. The amount of the award is between 15% and 30% of the taxes, penalties, and interest recovered. As outlined in the Tax Alert, the Comptroller will consider the following factors to determine the award amount within that range:

  • The significance of the information provided;
  • The degree of assistance provided by the whistleblower or their representative;
  • The amount of unpaid taxes owed to the State that may be recovered;
  • The interest of the State in deterring violations of the law and encouraging whistleblowers; AND
  • Any additional factors which may be established by regulation.⁹

Note that, if more than one whistleblower is eligible for an award arising from the same action, then the Comptroller will determine the award allocation among all whistleblowers. Moreover, “[s]ubsequent whistleblowers reporting the same underlying violation of law will only be entitled to a reward if their information adds significantly to that previously received.”¹⁰

Furthermore, the Tax Alert indicates that a whistleblower may be excluded from an award if the Comptroller finds that the whistleblower:

  • Acquired the information through their position with law enforcement or regulatory agency;
  • Was convicted of a criminal violation related to the enforcement action or related action;
  • Could have been convicted of a criminal violation had the original information been provided prior to the expiration of any applicable statute of limitations; OR
  • Submitted information containing knowingly false, fictitious, or fraudulent statements, documents, or data.¹¹

Finally, in accordance with Maryland Tax-General Article §1-403(C), a whistleblower may challenge the award determination within 45 days of the determination’s date; however, in such action, the whistleblower may not challenge:

  • The decision to conduct or the method of conducting an investigation arising from the information received;
  • The amount of unpaid taxes, penalties, or interest due as a result of the investigation;
  • The result of a covered enforcement action or related action; OR
  • Any settlement between the State and a person having a tax liability arising from the information received.¹²


The Tax Alert includes an FAQ section, as well. Briefly, the answers provided indicate that:

  • Not every whistleblower submission will trigger enforcement action—only those the Comptroller deems warranted under the laws of Maryland.
  • Monetary awards are taxable income for both Federal and Maryland purposes.
  • Your whistleblower complaints may be submitted anonymously if you are represented by a Maryland-licensed attorney. Note that prior to receiving an award, though, the Comptroller may require you to disclose your name or other information.
  • Whistleblowers are not compensated for attorneys’ fees.


Generally, Maryland’s new Whistleblower Reward Program provides that whistleblowers who properly report tax fraud or tax avoidance to the Maryland Comptroller that leads to the recovery of money will be entitled to receive a monetary reward amount between 15% to 30% of what the total amount recovered. Significantly, Maryland’s program also attempts to shield whistleblowers from retaliation by allowing whistleblower complaints to be submitted anonymously if the whistleblower is represented by a Maryland-licensed attorney. If you have information that a person or business is committing tax fraud or avoidance, contact the Frost Law team at (410) 497-5947 or schedule a confidential consultation with our brief contact form.


  1. You may read the Tax Alert in full at Link to Tax Alert
  2. Id. at 2.
  3. Id.
  4. Id. at 2-3.
  5. Id. at 3.
  6. Citing Annotated Code of Maryland, Maryland Rules, Rule 1-202(b).
  7. Tax Alert at 3.
  8. Id.
  9. Id.
  10. Id.
  11. Id. at 4.
  12. Id.
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