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.