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If the confidential informant is disclosed and proceeds to testify at trial, the way to beat them would be to make them appear unreliable. You impeach them on the stand, which discredits the evidence, information, and testimony they give. Criminal defense attorneys have a host of tools to do this.
If the State Department adheres strictly to the letter of the law, the answer is yes. Since 1913, reward money has been subject to taxation, barring an act of Congress to exempt a specific reward.
Once You Become a Confidential Informant, the Police Own You. When you become a confidential informant, you say goodbye to your identity. Many of your freedoms and most of your constitutional rights have now been compromised. You are issued a CI number to hide your identity.
Ing to the Confidential Informant Guidelines, a confidential informant or "CI" is "any individual who provides useful and credible information to a Justice Law Enforcement Agency (JLEA) regarding felonious criminal activities and from whom the JLEA expects or intends to obtain additional useful and credible ...
Informants are individuals who supply information to the FBI on a confidential basis. They are not hired or trained employees of the FBI, although they may receive compensation in some instances for their information and expenses.