The Tax Court released Whistleblower 21276-13W v. Commissioner of Internal Revenue, 144 T.C. No. 15 today.  While this decision is positive news for some whistleblowers, it is also a reminder of the importance of following best practices when filing a whistleblower case.

The facts of this case are interesting and a read of the full opinion is definitely worth the time, if you are so inclined.  This case arises from the rejection of Husband and Wife’s Forms 211.  Husband had provided information to Government agents, including IRS agents, that a foreign business, referred to as “Targeted Business,” was assisting United States taxpayers in evading Federal income taxes in order to reduce his punishment after Husband was arrested for taking part in a conspiracy to launder money.  Husband did not have the necessary documents, but he knew someone who did.  As the individual with the necessary documents was outside of the United States, Husband and Wife induced the individual to return to the United States.  Upon entering the United States, the individual was arrested.  While in custody, the individual agreed to assist in the Government proceeding against Target Business.  When the individual was released from custody and tried to back out of his agreement, Husband convinced him to follow through.  In part because of that individual’s assistance the Target Business was indicted, pleaded guilty, and ultimately paid the United States approximately $74 million.  However, the IRS Whistleblower Office rejected their Forms 211 because they were not received until after the payment was made by Target Business. 

The Court limited its opinion to whether petitioners are required, as a matter of law, to file Forms 211 with the Whistleblower Office before providing information to the IRS to qualify for an award under section 7623(b).  The Court held they do not.  The Court stated that the statutory text makes clear “that the Whistleblower Office is charged with being the central office for investigating the legitimacy of a whistleblower’s award claim, not necessarily the underlying tax issue.”  The Court looked to the Form 211 itself, which requests information about who the whistleblower first reported the violation to. 

While this case provides good news for whistleblowers who have provided or will provide information directly to the operating divisions of the IRS, we continue to believe that the best way to preserve your award eligibility and to ensure that the information provided to the IRS is given full and complete consideration while is to provide the IRS Whistleblower Office your information as early in the process as practicable, concurrently with an operating division if necessary, and to submit a Form 211 at that time.

  • Bubba Shawn

    This Court decision is indeed a big deal. My claim did just that. I contacted my IRS CI freind with the tip and mailed my F-211 to him. He dutifully passed that down the the Fresno Office and they forwarded that to Ogden WO. That was September 2007.

    That was just short of eight years ago.

    The 2013-XXXXX number in my claim file tells me the hated SOL will end sometime this summer or fall.

    What bothers me most about this costly experience is not knowing how much or when. The IRS has been very disciplined in not disclosing that information.

  • Simon Reynolds

    Hi Scott,

    Hypothetically, what happens to other whistleblower submissions that have similarly been rejected by the Whistleblower Office over the last 2-3 years because those whistleblowers either belatedly or simultaneously submitted a 211 having approached another IRS operating Division independent of the IRS Whistleblower Office?

    Will the Whistleblower Office automatically review and revisit it’s early decision in view of the Tax Court decision.

    Most, if not all the IRS Whistleblower’s in this position will not have the benefit of the 30 day appeal.


  • I don’t think the WBO “automatically” goes back and looks at old closed cases when these decisions come out, so if you believe you were wronged by this former policy you should raise it with them. Your appeal rights to Tax Court in such case would likely be limited though.

  • From the Otherside of the Pond

    Hi Scott,

    From our side of the pond IRS Whistleblowers are a perceived as a fairly marginalised group and foreign IRS Whistleblowers appear to be even more marginalised.

    It’s often held out as a big selling point of the IRS Whistleblower Program that the IRS Whistleblower’s confidentiality is guaranteed by regulation 6103, including, the confidentiality of overseas IRS Whistleblowers outside the jurisdiction of the US. i.e. Offshore banking centre’s in UK, Cayman Islands, Bahamas, British Virgin Islands, Hong Kong, Antigua, Gibraltar, Panama etc


    How is that right enforceable when foreign IRS Whistleblowers who interface with IRS representatives in US embassies are excluded from suing the IRS if the IRS negligently disclose the foreign whistleblowers identity outside the us.

    Even, if the breach of confidentiality negligence occurred in the United States foreign IRS Whistleblower are still excluded from suing the IRS for breach of confidentiality negligence. The U.S. Supreme Court in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), unanimously rejected the “headquarters doctrine,” whereby several courts of appeals had found the federal government liable for torts occurring in foreign countries if the wrongdoing was planned or directed by government employees within the United States. The Court found that this theory opened the door too far to the very sort of claims from which Congress intended to protect the federal government. Accordingly, the Court held that the foreign country exception applies to “all claims based on any injury suffered in a foreign country, regardless of where the tortious act or omission occurred.”See also the recent case of Hernandez V. United States. US Court of Appeals, 5th Circuit case no. 11-50792.

    Is the above analysis accurate with respect to foreign IRS Whistleblowers outside the US?


  • Myheadhurtz
  • We have plenty of overseas whistleblower clients and they are not treated any differently by the IRS as compared to US whistleblowers. With respect to suing the IRS in tort for improperly disclosing the identity of a whistleblower, we thankfully have never had to deal with that issue. Maybe consider who is the source of the information if you are worried about that?

    6103 is a Title 26 (Internal Revenue Code) Section of the US Code, not a Treasury Regulation, and violations of this statute can result in criminal sanctions under section 7213 of Title 26. That means that IRS personnel who violate section 6103 by disclosing information about a whistleblower can go to jail, so if this has happened you need to immediately talk to the DOJ.

  • Eric Rasmusen

    This is related to the question of what to do if the IRS instantly rejects the application, waits 30 days, and then uses the information anyway, so the whistleblower can’t appeal.

  • From the Otherside of the Pond

    Hi Scott,

    In view of the serious implications of the courts ruling for numerous rejected submissions, Is their a mechanism for third parties with a legitimate interest in the outcome of a Federal Tax Court case to request the court to issue an amended order or further order which requires the IRS Whistleblower office to identify, reinstate and review whistleblower claims that were rejected contrary to the law? i.e. would Ferraro make such an application?

    Clearly, once the 30 days has expired a whistleblower has no rights of appeal even though the IRS Whistlewblower Office has wrongly applied the law

    For what it’s worth I’ve today written to Timothy Camus TIGTA Office of Investigations, Senator Grassley, Kolan Davis senior Counsel Senate Committee Judiciary and Gladys Hernandez Senior Counsel TIGTA, asking them to intervene in the interests of equity and request Stephen Whitlock take action and comply with the law in all other relevant rejected whistleblower cases.

    Had it not been for this case nobody would have known that this criteria for rejecting a whistleblower submission existed. So its a big thank-you to the whistleblowers who brought this case and Scott and his colleagues at Ferraro law firm for posting it on their blog.


  • Anish

    Hi Scott,

    A question for you, assuming a Form 211 was filed more than 6 months and there has not been a debriefing (the Commissioner has just highlighted this timeframe in his written responses to Sen. Grassley), would it make sense to file another Form 211 with the operating divisions or who one knows to be the Subject Matter Expert? We now know that you do not need to go through the WB office and we have no idea if the delay or the decision not to pursue the matter is with the WB office or the operating divisions.


  • From the Otherside of the Pond

    Thanks Scott.

    In view of the Tax Courts decision above, do you think there is any opportunity for whistleblowers who were wrongly rejected for a reward because they contacted an IRS operating division first before filing 211 to seek recourse i.e.

    Court of Federal Claims, Administrative Procedure Act, Federal Torts Act .

    During March 2012 there was much excitement about the possibilities afforded by APA re the Sackett case but nothing seemed come of it. [Sackett v. Environmental Protection Agency, Supp. ct. dkt. No 10-1026(2012)]

    What do you think of Eric Rasmusen’s analysis above?

    It frankly beggars belief that a US Federal Government agency (IRS) has been shown to have misapplied the law and in doing so denied valuable property rights to individuals (whistleblowers) but yet not be required to make recompense and rectify its past unlawful conduct!

    How can anyone ever have any confidence in the IRS Whistleblower Program again if this injustice is not rectified?

    What other unlawful criteria have been applied by the IRS Whistleblower Offiice to deny legitimate whistleblower submissions that we don’t know off because they’ve not been disclosed.

    The above Tax court decision has emphasised how unaccountable the IRS Whistledblower Program has been during the last 8 years.

    The next annual report to Congress on the Progress of the Whistleblower Program Y2014 will be important not so much for the 12 awards that have been made during the last 8 years but more for the hundreds, maybe over a thousand submissions that have been rejected (culled) for no legitimate reason. I suspect this is one of the reasons for the delay. in its release.

  • Filing 211’s directly with the operating division could actually delay a case on the civil side for taint review reasons. However, when we know a special agent who is personally going to look at a criminal case we sometimes go directly to them first, with a concurrent WBO filing of the necessary forms.

  • We haven’t looked at those judicial remedy alternatives because this technical foot fault has not happened to any of our clients. Again, we’d start with the administrative route with the WBO.

  • Eric Rasmusen

    Scott Knott said “While the Tax Court has the authority to determine the bounds of its jurisdiction, and has not ruled that such an action is outside of its jurisdiction, we do not believe that an order to have the IRS to identify, reinstate, and review whistleblower claims that were rejected would be considered to be within the jurisdictional grant…”

    That’s right. Moreover, if I remember rightly Tax Court has no equity powers unless specifically granted. “Equity” is things like issuing an injunction, as opposed to “Law”, which is assessing money amounts such as a different award than the IRS made. For equity remedies, one needs to go to District Court. But I wonder whether any court would tell the executive branch to go back and review old cases on its own, as opposed to waiting for those injured to ask for the review. The best bet is to ask the IRS for review, and if it refuses to then consider somehow asking a court to intervene in that specific instance. Even that’s tricky, which is why I suggested the carefully plotted procedure above.

    Don’t blame the courts for doing it this way. It’s not special to the whistleblower program. In our constitutional system, the executive branch is supposed to administer programs by itself and not with micromanagement by judges. If the executive branch does make a mistake, whoever is hurt is free to go to the judge and ask for justice, but he has to present his individual facts to the court.

  • Eric Rasmusen

    P.S. Maybe I’m wrong on equitable remedies and Tax Court. I just came across the article below on Tax Court ordering the IRS to reconsider offers-in-compromise that it rejected for improper reasons. It seems to say that Tax Court hadn’t clearly commanded the IRS to reconsider, but it hadn’t said it didn’t have the power either, so it is hazy as to what happens if Tax Court sends a case back to the IRS and the IRS just repeats its wrongful rejection.

    133 Tax Notes 859 September 27, 2011
    The Tax Court Keeps Growing Its Collection Due Process Powers
    Carlton M. Smith

  • From the Otherside of the Pond

    Thanks for sharing your research Eric Rasmusen.
    Will consider it’s contents with interest.

    Particularly as no one else seems to be concerned about what happens to the IRS Whistleblowers who have been wrongly rejected for awards solely because they contacted an IRS operating division before first filing 211.

    As things stand at the moment it would appear that the IRS Whistleblower Offfice is unaccountable for its unlawful actions.

    After 8 and half years we still haven’t seen the IRS properly challenged over the lack of interim payments, withholding tax on awards, no awards paid on FBARS and criminal fines, sequestration etc etc

  • Myheadhurtz

    I totally agree with you on your last paragraph From the Otherside of the Pond. Until someone makes the IRS be accountable for their action, the IRS will continue doing what they are doing. Anyone else in this country via individuals & corporations cant get away with all the crap the IRS is getting away with. Smh Who else can get away from not publishing an annual report and its almost the 3rd quarter into the next year. Who else can get away from not doing their jobs and continue to having a well paid job. In the corporate world, the company whould start removing people & replacing them. Maybe that is what it will take to start getting things done.

  • Bubba Shawn

    Over these last few years, I have been very critical trying to get Senator Grassley and Senator Murray aware of the WO and Chief Counsel Office policies that hurt whistleblower awards and the rules that are absolutely contrary to what thoughtful practitioners recommended in good faith.

    But “unlawful”? that is going way too far when describing the WO and Chief Counsel Office policies.

    We are dealing with professional bureaucrats. Dealing with whistleblowers is the WO staff’s job. Those folks don’t give us a second thought when their work day is done.

    The proof of what I am saying is in the claim numbers we are assigned and the legalized muzzle WO staff are bound to when they talk to us. Those claim numbers are assigned for the IRS WO benefit not to impart any information to us whistleblowers. Just the same, the final WO rules were chosen not to add any burden upon the management of the IRS Whistleblower Program.

    IRS Whistleblower Office staff only reads our claim files when a Congressional inquiry requires they to do so and when Director Whitlock makes an award determination. I doubt if they read through the 11369s when an award is rejected.

    As unfair it may seem to us, from IRS bureaucrats point of view they are following every word of the law as they interpret from Congress.

    College accounting professors should stop telling their students that the US Tax Court and the IRS strive to adhere to Congressional intent. Our experience as IRS whistleblowers has taught us just the opposite is true. The IRS only adheres to Congressional intent when forced to by the Court.

  • Fox in the Box


    Unless I’ve missed something along the way your line of argument is a bit lost on me.

    As I understand it the substance of this blog is that the Federal Tax Court in Whistleblower(s) v. Commissioner of Internal Revenue, 144 T.C. has just ruled that the IRS has not complied with and wrongly interpreted the law i.e. the meaning of 7623(b). Therefore the IRS Whistleblower Office and IRS Counsel has indeed been found to have acted “unlawfully”.

  • Myheadhurtz

    Fox in the Box,

    What us Whistleblowers have found is that even though the tax court & the IRS Counsel have been found acting unlawfully, there is no consequences in them acting this way. There is no accountability in their action. They may have lost in this case, it doesnt mean it will help them change their ways. IRS is being very rebellious. The laws & rules doesnt apply to them. Until Congress or the President start axing the way of the cancer in the IRS system, nothing is going to get done.

  • Bubba Shawn

    Fox in the Box,

    If you read Commissioner Koskinen’s responses to Senator Grassley, you gain insight into the bureaucrat’s world view. In the past, Scott has described the IRS Chief Counsel Office lawyers vs. whistleblowers in Tax Court as an adversarial relationship. Many of the motions the IRS has advocated in Tax Court were described by Scott as hostile.

    Commissioner Koskinen just described those same motions as the Chief Counsel lawyers just doing their jobs defending determinations. Commissioner Koskinen is also a lawyer so he knows about adversarial relationships in court. But he describes Chief Counsel Lawyers as a bureaucrat describes their colleagues.

    That is my point.

    I have spoken to WO staff over the years. They are real people who are doing their jobs.

    The Tax Court is not a criminal Court. So the IRS motion are not “unlawful”. They are hostile, unfair and ridiculous as described by other lawyers. Are Chief Counsel Lawyers successfully prevailing against whistleblowers? Yes they are.

    Irs whistleblowers lose in Tax Court just about all the time. That is why the case 21276-13W is a big deal.

    We are all very tired of fighting the IRS. I just want to get paid.

  • Linda Williams

    “Bad things happen because good men [women] do nothing”

    Maybe it’s time for IRS Whistleblowers to be proactive and do some lobbying to ensure the IRS is properly held to account for its unlawful conduct and retroactively correct the Whistleblower Office’s previous incorrect application of the law.

    Contact Senator Grassley and ask him to write to IRS Commissioner Koskinen, citing the above Federal Tax Court case, requesting that the Commissioner instruct Stephen Whitlock to comply with the law and “identify, review and reinstate” all those whistleblowers whose 7623 submissions have been wrongly rejected during the last 8 years because they contacted an IRS operating division before filing a 211.

    You should send your emails, ‘care of’’, to the two Grassley staffer’s who advise and assist the Senator on drafting letters on IRS Whistleblower matters and copy your Email to the next 5 on the list (who are pivotal in this matter), with your request to the Senator;

    Keep the emails crisp, specific and to the point ……..NO waffle.

    Even if you’re not a whistleblower who has previously had your submission for an award rejected, you should lobby because your submission could well be next for rejection (even after 3-5 years in the system) for god knows what absurd criteria if IRS Counsel continues to take such aggressive positions in Federal Tax Court against IRS Whistleblower cases. It was only last year that the IRS contested IRS whistleblower’s right to anonymity in Federal Tax court.


  • Bubba Shawn

    Thanks Linda,

    At the risk of throwing a damp towel upon your great idea, I’ve emailed Senator Grassley’s office many times both at Judiciary and Finance Committees and never got a response. I know that his staff used to read them because Senator Grassley had voice mine , and I’m sure many others, concerns in Finance Committee hearings. maybe your right and numbers may make a difference.

    Debra Bowe did not return my phone call. Perhaps because I am not a lawyer. So I doubt contacting her will do any good for anybody.

    Mark Mazur was punished by Senator Grassley over the Berkenfield award payment. Plus it was Mark Mazur wrote the finalized WO final regulations completely disregarding all the excellent recommendations from practitioners that would of benefited us IRS whistleblowers. Mark Mazur proved at that time he will never pay any attention to IRS whistleblower concerns.

    Catherine Barre will only respond to inquiries from House or Senate members.

    All the King’s Horses and all the King’s men couldn’t put Humpty Dumpty back together again. So the same is true with any efforts getting the WO to pay any sooner or more.

    That just ain’t going to happen.