The Tax Court held that it has jurisdiction to review the IRS’s whistleblower claims award determinations where the informant has alleged that they provided significant information to the IRS before and after December 20, 2006, the effective date of section 7623(b).  Whistleblower 11332-13W v. Commissioner, 142 T.C. No. 21, is a continuation of one of the cases where the whistleblower that was allowed to proceed anonymously and have the record sealed in one of the three cases released on May 20, 2014. 

In this case, the whistleblower first provided generic information regarding the tax fraud scheme engaged in by the whistleblower’s employer and several related entities and subsidiary companies to IRS and the Department of Justice in June of 2006.  The whistleblower had several more meetings with the IRS and DOJ in 2006.  The whistleblower continued to provide additional information relating to the tax scheme and those involved to the IRS and Department of Justice until the fall of 2009.  The whistleblower alleges that the information provided after 2006 was not simply confirmatory details.  The Government entered into a Non-Prosecution Agreement with one of the targets that led to a recovery of more than $30 million in taxes, penalties, and interest.  The Whistleblower Office granted that whistleblower an award under section 7623(a) and denied the whistleblower’s request for an award under section 7623(b).

The Court held that the whistleblower had satisfied the “pleading burden by alleging facts that respondent proceeded with an action against the targets using information brought to respondent’s attention by the whistleblower both before and after December 20, 2006.”  The Court held that the allegations are sufficient to establish jurisdiction. 

The Tax Court also released a second opinion, Whistleblower 10949-13W v. Commissioner, T.C. Memo 2014-106.  The Tax Court held, on similar facts as Whistleblower 11332-13W, 142 T.C. No. 21, that the Tax Court also had jurisdiction to hear their appeal of the IRS Whistleblower Office’s denial of their award under section 7623(b).

It is good to see that the Tax Court continues to broadly interpret its jurisdiction when it comes to appeals of whistleblower award determinations.  These cases demonstrate the Tax Court’s continued fairness in providing whistleblower with a venue to appeal award determinations under section 7623.

  • Anon

    This case and the ones mentioned in your prior post say this WB was offered Witness Protection Program by the FBI. Yet, the IRS wont pay him as the law requires? What is going on with this program?

  • This whistleblower did receive an award under section 7623(a) for the information provided before December 20, 2006. However, the IRS was treating these kinds of cases as ineligible for an award under 7623(b) because the whistleblowers originally provided information prior to the effective date of 7623(b). The Court found it has jurisdiction to hear the appeal of the denial under section 7623(b) because the whistleblower continued to provide information after the effective date to the government that was more than merely confirmatory details and has sought awards under 7623(b) for the information that was provided after the effective date.

  • Linda Williams

    Looks like the long awaited ‘final whistleblower regs’ are ready on the launch pad. Allegedly, according to well placed insiders they’re worse than anyone could envisage. It explains the blank faces from the IRS panel at the IRS auditorium in Washington on the 10 April 2013 as they listened to the well intentioned speakers.

    Perhaps worst of all is the proposed Interpretation of “collected proceeds” which now excludes any award being paid to a whistleblowers where it ends up with a criminal prosecution. On top of the exclusion of FBAR’s this would effectively rule out most whistleblowers in the offshore banking industry and others filing a form 211.

    If a whistleblower was foolish enough to get involved with the IRS Whistleblower program you’d be advised to remove any documents that would push a case towards a criminal prosecution or FBARS’s.

    Read below Dean Zerbe’s excellent rear guard action in a letter dated 6 June 2014 to Jack Lew Treasury Secretary

    At best this means the IRS Whistleblower Program will be tied up in litigation for years.

    That’s if the attorneys get a chance to challenge the regulations in court which if few awards are being made and the IRS continues to cull 250-450 submissions a year for no good reason other than the statute of limitation has run out or they’re short on resources……..seems very unlikely.

    Everyday how I wished I’d never got involved in the IRS Whistleblower Program 6 years ago.

  • Myheadhurtz

    If what Linda is saying is true, sure wish the IRS would of implements these regulations 2 years ago when they paid out $104 million to Birkenfield. Do you think the new head of the IRS is the one who push for these new regulation even after giving everyone the impression he was on our side?

  • Myheadhurtz

    Is the whole point of the Whistleblower program is to turn in to the IRS, companies who have been hiding income so they wouldnt have to pay taxes? Is that breaking the law? Doesnt that make them all criminal? If the whistleblower has contributed to the criminal activity shouldnt get a reward. And if you do jail time for it, you definitely lose your right to a reward. The message that the IRS has been sending has been alot more negative then positive.

  • Linda Williams

    Its not Commissioner Koskinen pushing through the new regs he’s too busy fighting off the Louis Lerner thing ………..attempting to get Obama out of the brown stuff. It’s Mr Wilkins and his IRS Office of Chief Counsel who are pushing through the new regs that will limit and reduce the effectiveness of the IRS Whistleblower Program.

    Dean Zerb’s letter to jack Lew (above) with the discussion on the definition of “collected proceeds” probably explains why the US doctor in the New York Times article Feb 2014 (link below) has not been paid an award despite being wired up by the IRS Special Agents from the Criminal Division during meetings with Swiss bankers. A Swiss banker was prosecuted and sentenced some 2 years ago after pleading guilty in that case.

    We’ve all been sitting around for 7 years believing the IRS Whistleblower Program is somehow going to miraculously ‘turn the corner’…………………….it’s just not going to happen. Too many talented whistleblower attorneys have got misplaced faith in Stephen Whitlock and the Whistleblower office and have not taken the IRS on publically and privately for fear of poisoning their own large inventory of cases sitting in the Whistleblower Office.

    Once the final regs come out Stephen Whitlock will start sending out the rejection letters and cull the rather embarrassing number of long-term whistleblower submissions, starting with a couple of hundred cases being held in the suspense account.

    The ‘final regs’ have never been about setting up a viable whistleblower awards system and implementing the intent of Congress……..its always been about IRS Office of Chief Counsel setting up a system of rules to cripple the IRS Whistleblower Program.

    Only 9 awards in 7 years…………in 5 years time it won’t be much different. We’ve all risked our personal safety and careers for nothing.

  • Bubba Shawn

    Are those “well placed insiders” the same as the guys that declared the IRS Whistleblower program has “turned the corner”?

    I don’t believe there are any well placed insiders. Even with a “fan” sitting in the Commissioner chair, all IRS whistleblowers languish in the same information vacuum.

  • Bubba Shawn

    Well here it is July 9, 2014 and those “well placed insiders” are silent on their prediction that the final regulations will be published “any day”.

    Building false hope is what those guys are all about.

    The Senate Finance Committee asked the GAO for another report on the IRS Whistleblower Program. We should get some valid numbers that aren’t “speculative”.

    That final Regulations are not published yet. Perhaps Deputy Treasury Mazur will get the job done. But he hasn’t kept his promise to Senator Grassley during his nomination hearing yet. It is unlikely he is motivated by any pressure coming from “well placed insiders”.