Posts Tagged ‘blow the whistle’

Tax Reward (IRS Whistleblower Form) versus No Tax Reward

Claim a Reward

Tax Whistleblowers under the IRS Tax Whistleblower Reward Program can report tax fraud or any under payment of tax to the IRS on the proper IRS Whistleblower Form (i.e. Form 211, Application for Award for Original Information).  The Claimant/Whistleblower should follow the procedures in Notice 2008-4 when completing the IRS Whistleblower Form.  In order to prepare the claim for the highest potential reward, the Claimant should try to meet the positive factors stated in IRM 25.2.2.  The 211 Claim is submitted to the IRS Whistleblower Office under 26 U.S.C. Section 7623.  The IRS has created a Whistleblower Office that ultimately reports to the IRS Commissioner.  See Whistleblower/Informant Award.  Many Tax Whistleblower Law Firms can assist the whistleblower in completing the IRS Whistleblower Form, Form 211.  However, make sure the tax whistleblower attorney/lawyer is experienced in the substantive tax law as well.  An experienced tax whistleblower attorney/lawyer will not only assist in the preparation and filing of the IRS Whistleblower Claim Form (Form 211), but will be there for you to supplement the Claim with new information, attend meetings with you and the IRS and appeal your claim administratively as well as judicially to the U.S. Tax Court, if necessary.  The Tax Whistleblower Law Firm will guarantee the confidentiality of the tax whistleblower’s identity.

Tax Reward

Tax Reward v. Risk

Since inception of the program, a cottage industryof tax whistleblower attorneys/lawyers has sprung up to assist tax whistleblowers in these matters.  There are few “tax” attorneys/lawyers that have gotten aboard with this program.  Tax Attorneys/Lawyers know the substantive tax law as well as IRS and Tax Court procedures.  Therefore, most tax attorneys/lawyers recognize that this is a long process that may take years to reach completion, and taking such cases on a contingency basis means it will be years before they get paid, if at all.  The attorneys/lawyers that have gravitated in this new cottage industry are largely non-tax attorneys….personal injury law firms and qui tam law firms, as they are aware that contingency type cases could involve a long wait for payment. 

However, now that the first tax whistleblower award has been paid, there is a renewed interest in this area of the law.  

 Do Not Claim a Reward

Q. Why give up the reward?

A. To remain anonymous your cannot complete an IRS whistleblower form (Form 211).  By claiming the reward the IRS needs to know your identity.  In either situation, the same type of infomration must be provided to the IRS….”specific and credible information.”

  • Form 14242, “Report Suspected Abusive Tax Promotions or Preparers….do not complete IRS whistleblower form (Form 211). 

The IRS has recently posted new Form 14242, “Report Suspected Abusive Tax Promotions or Preparers,” on its website.  The IRS is also concerned about tax preparers and promoters of tax scams.  This new form is to be used to report tax avoidance schemes or tax return preparers who promote them.  Bottom line, Form 14242 is simply another form the IRS has to combat abusive tax practices and tax shelters. 

  • Abusive CPAs, Attorneys or Enrolled Agents:

Submit suspicious actions by tax professionals or inappropriate professionals to the email address of the IRS Office of Professional Responsibility.   All professionals representing taxpayers before the IRS should comply with Circular 230.  Do not complete IRS whistleblower form (Form 211) if you wish to remain anonymous.

  •  Form 3949-A, Information Referral.  Do not complete IRS whistleblower form (Form 211) if you wish to remain anonymous. 

The purpose of this form is simply to report the underpayment/underreporting of tax by a taxpayer.  Again the same type of information is required as if claiming a reward.  However, according to the instructions, you need not give your name and contact information.

For purposes of reporting Fraudulent IRS e-Mails and Websites contact the IRS at if you receive an e-mail claiming to be from the IRS. 

Not only are we all potentially a victim of identity theft, but this is one of the newest hotspots for tax crimes.  Yes, all of the criminals that steal a person’s identity for financial gain fail to report such illegal income.  Be alert for your protection as well as a potential source for claiming a reward.

The Tax Whistleblower Law Firm (former IRS attorney) has been assisting tax whistleblowers in excess of 4 years in the filing of IRS tax whistleblower claim forms (Form 211), attending conferences with the IRS, and appealing Whistleblower Claims to the US Tax Court, etc.


Tax Whistleblower Law Firm Letter #1 to Senator Grassley

Like Senator Grassley, the IRS, and whistleblowers in general, the Tax Whistleblower Law Firm is very interested in the success of the IRS Tax Whistleblower Program. 

Whistleblower Law Firm

Senator Grassley, the sponsor of the IRS Tax Whistleblower Program

This tax whistleblower program will reach its fifth anniversary on December 20, 2011.  However, there is still a long way to go.  The GAO just completed its audit of the program and published the results in an August 2011 Report at the request of Senator Grassley.  On September 14, 2011,  Senator Grassley immediately responded by sending a letter to IRS Commissioner Schulman  both praising the IRS for its dedication to the program but also commenting on the program and making suggestions on how the program can be better improved.

The Tax Whistleblower Law Firm, established by Former IRS Attorneys, is also interested in improvement in the program.  In the last four years we have submitted billions of dollars worth of claims to the IRS with respect to hundreds of taxpayers.  We attempt to improve on every claim we submit both in presentation and content.  To date, every case we have submitted has been accepted into the IRS Tax Whistleblower Program.  We are interested in maximizing the claim and shortening the time for payment of the reward.  In the past year, we have taken the following actions:

Litigation - we believe that much needs to be done to clarify the law and procedures.  We have likely filed/appealed more Whistleblower Cases in the U.S. Tax Court than any other law firm.  Our goal is to simply make the program more workable to the genera public.

Administrative - We have provided comments to the IRS proposed regulations and spoke at a public hearing held on May 11, 2011.  We have participated in bar associationseminars to educate other attorneys as to the IRS Tax Whistleblower Program.

Legislative - We are in the process of sending a series of six letters to Senator Grassley addressing his comments and concerns with the program.  We will be providing specific suggestions on the the program can work better.  The first letter in the Series was sent November 1, 2011. 

The remainder of the letters will be posted in the future as they are sent.

Offshore Accounts Remain Focus of the IRS as well as Tax Whistleblowers

Many tax whistleblower (those seeking tax rewards) cases involve aspects of offshore accounts.  In the past, embezzlements, as well as unreported income, in the millions of dollars were safely hidden in foreign bank accounts.  This alone increased the tax and fraud penalty in these situations unless the taxpayer properly disclosed this on their tax returns and complied with the FBAR requirements.

Credit Suisse-the next target of the IRS Tax Whistleblower Program

As of November 8, 2011, Credit Suisse AG, Switzerland’s second-largest bank, began notifying certain U.S. clients suspected of offshore tax evasion that it intends to turn over their names to the Internal Revenue Service, with the help of Swiss tax authorities.

 The move by Credit Suisse to disclose American client names and account information is the latest twist in a showdown between Switzerland and the United States over the battered tradition of Swiss bank secrecy.

U.S. authorities, who suspect tens of thousands of wealthy Americans of evading billions of dollars in taxes through Swiss private banks in recent years, are conducting a widening criminal investigation into scores of Swiss banks, including Credit Suisse.

“The I.R.S. is seeking information with regard to accounts of certain U.S. persons owned through a domiciliary company (as beneficial owners) that have been maintained with Credit Suisse AG.

“In connection with the IRS treaty request, the SFTA has issued an order directing Credit Suisse to submit responsive account information to the SFTA,” the letter said. “This order is immediately executable and Credit Suisse as an information holder has no right to appeal.”

It was unclear how many U.S. clients had been sent the letter.  Many Americans have voluntarily disclosed their foreign bank accounts for this reason as well as the recently enacted IRS Tax Whistleblower Program that was established for tax whistleblowers seeking a tax reward by providing specific and credible information to the IRS as to the underpayment of tax.

 The letter says that the IRS request covers accounts maintained at any time over the period from January 1, 2002, through December 31, 2010.

Credit Suisse in July received a target letter from the U.S. Justice Department notifying it that it was the subject of a federal criminal investigation into its offshore private banking services.

Switzerland is trying to craft a deal with the United States that would cover its entire banking industry of some 355 banks.

It is unclear how many American clients of Credit Suisse hold private banking accounts that have gone undeclared to U.S. tax authorities; however, with the IRS new Tax Whistleblower Program, there could be significant tax rewards payable to the individual with knowledge.

 The Tax Whistleblower Law Firm, established and run by former IRS Attorneys/Lawyers use their knowledge and experience to submit valid whistleblower claims to the IRS as well as represent their clients in conferences, and appeals before the U.S. Tax Court in an effort to obtain the highest tax reward based upon the facts and circumstances.

I’m interested in the IRS Tax Whistleblower Program…What should I do?

An an experienced and knowledgeable tax whistleblower attorney/lawyer can help you with this complicated problem.  Remember, the right tax whistleblower attorney should have experience with the substantive tax law as well as the tax whistleblower law.

tax whistleblower attorney
What to do to Maximize the Reward

 ·         Call a tax attorney/lawyer that concentrates on a full time basis in the IRS Tax Whistleblower Program.   Call 1-877-404-1040.  Do not call attorneys that practice in other areas of the law.  Remember you get what you pay for.  You want an attorney not a law firm.  The law firm does not practice before the IRS or before the court.

 ·         Legally gather documents that would help support your case.


·         Identify what are the important documents and where the important information can be found to support your case.  Where are the computer records stored?  Has anything been destroyed?  What bank is the taxpayer affiliated.  What is the taxpayers Employer Identification Number (EIN) or Social Security Number (SSN)


·         Identify the tax issue and tax years.  Remember under the IRS Tax Whistleblower Program it does not have to be tax fraud.  Any under payment of tax over $2,000,000 qualifies for the program and could entitle you to a tax reward.


·         Identify all potential witnesses to the case and to the extent that you are able obtain contact information (phone number and addresses).  It is important to the extent you are able, that you identify both favorable and unfavorable witnesses.


·         Be ready to discuss with your tax whistleblower attorney/lawyer all matters concerning whether the information you have is privileged, stolen or that somehow you could have participated in the taxpayer’s underpayment of tax.


·         The Tax Whistleblower Attorney will identify what laws were violated and provide a legal analysis to the IRS.  Your job is to identify (i) the taxpayer, (ii) tax years, and (iii) the facts for which your attorney can apply to the law.

*  Protect your confidentiality, do not brag or share with others what you are thinking.  An attorney is prevented by Rules of Ethics from sharing your information, a friend isn’t.

*  Search the internet for the right tax attorney, someone that is ethical and knowledgeable about tax law as well as cares more about his client rather than simply filing the claim form believing that he is done with his job and earned a fee.

It is not a matter of what you think or what you know or what you believe it is a matter of having specific and credible facts that are presented clearly to the Internal Revenue Service.  Remember your goal is to get the maximum reward in the minimum amount of time with the minimum risk.  Finding the right tax whistleblower attorney/lawyer that understands the substantive tax law as well as procedures in important.

How Do Tax Whistleblowers Reconcile the Diebold Case?

In 2003 , Stephen Heller blew the whistle on an illegal scheme by Diebold to use uncertified software on their voting machines in the state of California, which would have compromised the voting process and voter confidence.  Heller blew the whistle on the company’s plan to defraud California voters when he exposed documents he saw while working as a temp worker at Diebold’s California law firm, Jones Day.  Diebold had been advised by Jones Day that what it had been doing with its uncertified software was illegal.  The courageous act, from which Heller stood to gain nothing (he, in fact, was fired for it) led to the decertification of Diebold in the state by former Sec. of State Kevin Shelley, and then to the eventual settlement between the company and the state of California for $2.6 million in 2004. 

In 2007, Heller was indicted by the Los Angeles District Attorney’s Office on criminal charges.  Do tax whistleblowers need to fret over the apparent injustice of Heller’s indictment?

Whistleblowing is not an act that absolves a Whistleblower of previous crimes he has committed.  A Tax Whistleblower should be very concerned about whether they have any culpability for crimes that could be exposed during the Whistleblower process.  A discussion of potential culpability must occur with a Whistleblower’s attorney before the decision is made to engage in the Whistleblower process.  Many Whistleblowers have the false sense of security that, because they are doing a noble act of informing the government of detrimental acts, the government will forgive any past acts of impropriety.

Heller stold documents from the Jones Day law firm.  Jones Day had not committed a crime, its client had.  In addition, those documents were protected by the Fifth Amendment.  The Constitution cannot be violated for the sake of preventing another violation of law. 

In the end, the LA District Attorney’s Office only slapped Heller on the wrist.  He pled guilty and received 6 months probation.  No fine.  No jail time.  In the end, the LA District Attorney’s Office did give Heller a break because he provided such valuable information as a Whistleblower.  However, the LA District Attorney’s Office made it clear that a Whistleblower, without clean hands, can be subject to some form of punishment.

The Expanding World of the Whistle Blower

The new (December 2006) IRS Tax Whistleblower Prgram appears to be successful beyond expectation.  The IRS is nearing 500 open cases (in excess of $2,000,000)since the program began 23 months ago.  In 2005 the IRS had only two cases that exceeded $2,000,000 under the informant reward program.  It appears that the public is lining up to make the world a better place. 


However, with respect to protection of the whistleblower with respect to a tax matter, it is important for the Whistleblower to recognize a number of points

1.  Is the Whistleblower somehow involved in the underreporting/underpayment of tax such that there could be criminal implications to the whistleblower?

2.  Is the Whistleblower somehow involved that they could be excluded from receiving the reward pursuant to IRC 7623?

3.  Is the Whistleblower somehow involved that they might be held liable for the underpayment of tax as a transferee/nominee/alter ego of the taxpayer? 


Certainly a good analysis by the Tax Whistleblower’s attorney is important before any case is submitted to the IRS. 


However, there are other concerns such as retaliation by the Employer, suit for breach of a confidentiality agreement or breach of the fiduciary duty of loyalty, perhaps the loss of a professional license, etc.


Recently The Consumer Product Safety Improvement Act of 2008 (“CPSIA”) was signed into law by President Bush in August 2008, and is merely the most recent of more that 100 federal statutes and regulations that contain whistleblower provisions protecting employees who “blow the whistle” on their employer. The most prominent of these in terms of publicity is the Corporate and Criminal Fraud Accountability Act of 2002, more commonly known as the Sarbanes-Oxley Act, or “SOX.” The more recent CPSIA’s prohibitions (which are typical of other whistleblower statutes) cover discharge or discrimination when an employee:


*     provided, caused to be provided or is about to provide or cause to be provided to the employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of this Act or any other Act enforced by the [Consumer Product Safety] Commission, or any order, rule, regulation, standard or ban under any such Acts;


*     testified or is about to testify in a proceeding concerning such violation;


*     assisted or participated or is about to assist or participate in such a proceeding; or


*     objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of this Act or other Act enforced by the Commission, or any order, rule, regulation, standard, or ban under any such Act.


Many states have similar statutes or common law protection. For example, Michigan and Illinois have specific whistleblower statutes. Missouri and Texas have judicially created exceptions to the employment at will doctrine that provide remedies to employees who report violations of law or public policy to superiors or public authorities.


If a violation is proven, the employee is entitled to reinstatement with back pay and restoration of all the rights of that employment, compensatory damages, including all costs and expenses incurred in protecting his or her rights, including attorney and expert witness fees. If, on the other hand, the claim is found to be frivolous or in bad faith, the employer may be awarded its reasonable attorneys fees up to $1,000, or roughly the cost of the initial consultations with its counsel.


Claims brought under these whistleblower statutes are very much like retaliation claims brought under the federal and state discrimination laws. To prevail, the employee must prove (1) involvement in some activity protected by the statute or regulation such as reporting illegal activities, participating the proceedings concerning violations of the statutes or regulations, or opposing; (2) that the employer had knowledge of the protected activity by the employee; (3) adverse employment action by the employer; and (4) a causal connection between the protected activity and the adverse employment action.


Most of these statutes and regulations require that the employee had a reasonable belief that the activity at issue was illegal or in violation of the statute or regulation. Whether the belief is reasonable is both a subjective and objective determination: the employee has to demonstrate that he/she genuinely believed that the activity reported violated the statute under which the employee claims protection, and a reasonable person in his/her situation would have believed the activity violated the statute.

Accountants as Whistleblowers vs. Ethics

As a principal of, I am frequently asked by Whistleblower clients, who happen to be accountants, whether they are at risk for turning in a client for tax malfeasance.  I read a very interesting article this week authored by Cara Patterson that was published by The Trusted Professional, the newspaper of the New York State Society of CPAs (  In the article, the author draws an honest conclusion that an accountant does not have the same handcuffs on reporting their clients’ tax malfeasance as, say, an attorney.  The author also points out that it is nearly inconceivable that an accountant could be reprimanded or sued for malpractice for reporting the tax malfeasance of a client.  The Office of the IRS Tax Whistleblower Reward Program has stated to me on numerous occassions that their biggest source of cases thus far is former tax directors or CFOs who separate from their former employer.  In addition, the IRS has made it clear through various notices that they will accept all information from whatever source, and they will let the Courts decide whether certain information gained from privileged sources should be excluded as tainted evidence.  I am very glad that the New York State Society of CPAs chose to publish this piece.  It is high time that the accountant societies begin to question and discuss the issue of accountants who blow the whistle on their clients who commit tax malfeasance.  Fear of reprimand may be keeping the majority of accountants from coming forward, yet, their silence is allowing unscrupulous taxpayers to continue to fill their pockets and further erode the tax base & taxpayer confidence.

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