Posts Tagged ‘rewardtax.com’
In a continuing effort to help clarify the law and make the IRS Tax Whistleblower Program more efficient, and thereby ensuring its success, the Tax Whistleblower Law Firm has sent Senator Grassley a list of specific suggestions (See Letter 2 of 6) on how the IRS may shorten the time from the time a whistleblower submits a Claim for an Award to the IRS and the time for which the IRS can pay the award.
Many whistleblowers are concerned that it can take what is anticipated to be five (5) to seven (7) years before payment of an award is made. However, that length of time is simply an estimate and is the deemed to be the average amount of time for payment of the Award. The time could be as low as three years if the taxpayer settles with the IRS at the completion of the examination (Stage 2), signs a closing agreement waiving its right to claim a refund (i.e. 2 year rule), immediately pays the tax, and does not appeal the award. The high side could be twenty plus (20+) years if the taxpayer uses all avenues to fight the determination of tax as well as the payment of tax. In any case, for the program to be successful, both Congress and the IRS recognize that the program should be run efficiently from the inside out.
The specific suggestions are with respect to the various stages of a Tax Whistleblower Claim. The stages are:
Stage 1 – Processing of Claims.
Stage 2 – Examination Function.
Stage 3 – Appeal Function.
Stage 4 – Litigation Function.
Stage 5 – Collection Function.
Stage 6 – Payment of the Award.
Stage 7 – Appeal of the Award.
The Tax Whistleblower Law Firm provided a number of suggestions including IRS immediate contact with the Whistleblower, allowing the whistleblower to waive procedural requirements to protect his/her identity as well as waiving the prohibition of using the Whistleblower documents, establish deadlines and accountability with the IRS, expediting a whistleblower case internally, etc.
To the extent there are other specific suggestions not covered in Letter #2 from the Tax Whistleblower Law Firm, it is recommended that such suggestions be provided in the comments to this blog and that the commentator also send those suggestions to the Senator. Senator Grassley remains interested and concerned that the IRS Tax Whistleblower Program be successful.
The topics of the remaining letters to be sent to Senator Grassley are
Letter 3 of 6 – Better communications between Whistleblower and IRS
Letter 4 of 6 – Evaluation/calculation of the Award
Letter 5 of 6 – Appeal of the Awards
Letter 6 of 6 – Miscellaneous suggestions of the Program
Readers are encouraged to provide additional comments to be included in the subsequent letters that will be sent to Senator Grassley. Also, the reader should consider putting such comments on www.taxwhistleblowerforum.com. In the end the success of this program may require Commissioner Schulman to allocate more resources to the Program.
The Whistleblower participating in the IRS Tax Whistleblower Program has knowedge and power to receive a substantial tax reward/award under IRC 7623.
As was made clear by the recent article, U.S. Billionaires Avoid Reporting Cash to IRS by Jesse Drucker of Bloomberg News, there is no shortage as to the underpayment of tax in the United States and therefore the potential for a tax reward. Some say that the tax gap (the difference of what should be reported and paid versus that which is reported and paid) in the United States is now in excess of $400,000,000,000 per year. Todaymany attorneys/lawyers, including the Tax Whistleblower Law Firm (former IRS attorneys) assist Whistleblowers in filing and supplementing tax whistleblower claims with the IRS for purposes of claiming a reward, as well as representing the whistlblower before the IRS, attending conferences, and appealing the claim before the U.S. Tax Court. However, many attorneys/lawyers will not guarantee the confidentiaility of the Whistleblower’s identity as the former IRS attorneys of the Tax Whislblower Law Firm will do.
In the case of Billy Joe “Red” McCombs one must question how many accountants, attorneys/lawyers secretaries and others knew about McComb underreporting of his tax liability and could have filed a 211 Claim for a reward. Perhaps without the assistance of a tax whistleblower attorney/lawyer these individuals were likely aware of the facts but simply unaware that the tax issue (i.e. a de facto sale of stock) existed or that there existed a Whistleblower Program for which they could have reported the facts and ultimately receive a reward of $3.3 million to $6.6 million (15% to 30% of the amount ultimately collected by the IRS). Again, with Knowledge comes…a Tax Whistleblower Reward.
The IRS Tax Whistleblower Program is now reaching its 5 year anniversary (i.e. December 20, 2011). IRS Director Stephen Whitlock, an attorney, has been charged with the duty to implement the law. An experienced and knowledgable IRS staff of some of the most senior agents has been gathered to evaluate and process the many 211 claims that have been submitted to the IRS. Currently the IRS Whistleblower Office has maintained its budget for 2011 and will not be losing any employees due to budget constraints or attrition (2 IRS Whistleblower Analysts retired on September 30, 2011), thereby reflecting IRS Commissioner Schulman’s view of the importance of this Tax Whistleblower Program. The many issues that have arisen under the program are being addressed fairly and methodically by Director Whitlock.
The Tax Whistleblower Law Firm’s experience in filing claims with the IRS Tax Whistleblower Office over the last four years reflects that our clients are above average intelligence as they are able to apply the facts to the law recognizing the existence of a potential tax issue as well as being aware of the tax whistleblower program. Despite popular thought, Whistleblowers are largely ethical and are motivated by doing the right thing as opposed to simply chasing the reward. The reward is simply the bonus.
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.
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.
|Litigation of Rejected Tax Whistleblower Reward Cases »|
Most lawyers and attorneys law claim that they are a “tax whistleblower law firm” and will simply file a claim (Form 211) and simply aovid the litigation associated with the tax whistleblower program. However, there is so much more to it than filing the simple one page form. Quite frankly, one does not need an attorney to fill out the Form 211. After the filing of the Claim (Form 211) the process goes on. The claim should be constantly supplemented with new facts or new law as long as it is relevant and material to the IRS and its examination. If the IRS wishes to hold a conference with our clients, we will be there in person advising our clients ahead of time of the anticipated questions and how to best handle the questions.
However that is only the beginning and the middle of the process when a whistleblower participates in the tax whistleblower program. In the end, comes the appeal. The appealing/litigation process of the IRS’ “final determination” is a new process that was enacted on December 20, 2006 as I.R.C. 7623(b)(4), as follows:
Appeal of award determination . Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).
The Tax Whistleblower Law Firm has probably now appealed more rejected Tax Whistleblower Cases than any other law firm. These are rejected cases that have been filed pro se (by the individual) or by other attorneys. In four years, after submitting billions of dollars worth of claims with respect to hundreds of taxpayers, we have yet to have a claim rejected.
However, we believe that any law firm that claims it is a tax whistleblower law firm should be a full service law firm and handle the Claim from the initial filing of the Claim to the Appeal of the Claim to the U.S. Tax Court. Despite our vast experience before the U.S. Tax Court we recognize this area of the law involves new procedures and the interpretation of new law. Much will be a matter of first impression for the Court. We are interested in learning all we can learn so that we can continue to best represent our clients now and in the future.
For instance, in anticipation of future decisions by the IRS, we want to know
1. Can we find out why a tax WB case was rejected by the IRS if we file suit and engage in discovery?
2. Can we protect our client’s identity if we file suit and request that the case be sealed? If not, what do we need to do to protect our client’s identity?
3. What records can we discover in litigation? Will the IRS claim privilege to many of the documents that are valuable to our case?
4. The IRS moves for Summary Judgment in these whistleblower matters. What do we need to do to best represent our clients in such situations?
The Tax Whistleblower Law is new and ambiguous. It is important that we define and clarify as much of the law early into the program in an effort make the program successful. This can be done through regulations or litigation.
We would be interested in hearing views from anyone else that has litigated these cases or that has received a rejection of their claim from the IRS. Please post any comments or questions to this blog or to www.taxwhistleblowerforum.com.
On September 13, 2011 Senator Grassley responded to the GAO Report that was issued pursuant to his request to audit the IRS Tax Whistleblower Program. Senator Grassley’s letter praised the IRS for its progress and yet pointed out the downfall of the program and what he hoped that the IRS would do better in the future.
“While the IRS has made great progress, there is still room for improvements.”
Senator Grassley (September 13, 2011)
It is clear the IRS has a ways to go in properly implementing the IRS Tax Whistleblower Program as it was intended by the Congress. The Federal False Claims Act has been around for over 150 years.
Clearly the IRS does not need to reinvent the wheel on how to make partial payments or to define certain terms as the tax whistleblower program grows. Senator Grassley noted this and much much more. As Senator Grassley pointed out, Tax Whistleblowers are experts sometimes as to the facts and sometimes as to the law. The IRS must begin communication with the tax whistleblower as a cost saving measure if for no other reason.
Senator Grassley noted the great initial success of the tax whistleblower program by noting the multiple claims that have been submitted for millions of dollars. In fact the first claim paid under the program was for over $20,000,000 and goes a long way in justifying the cost of properly implementing the program.
We note that Senator Grassley brought to the IRS Commissioner’s attention a number of items for whichhe hope would be changes in the future to better implement the tax whistleblower program.
- Whistleblower Advocates v. Whistleblower Analyst – Congress intended that the whistleblower office would advocate for the whistleblower as opposed to simply processing paper.
- Whistleblower Office Independence – The office should be independent of the other branches of the IRS (SBSE, LB&I, CI, TEGE, Etc.) and should not simply follow their lead in denying a reward (claim did not substantially contribute to the determination of tax) or refusing to engage in an examination.
- Whistleblower Counsel - The IRS Whistleblower Office should have its own legal counsel separate and apart from the Office of Chief Counsel attorneys which advise the examination divisions of the IRS. Independent tax whistleblower attorneys could provide advice faster to the IRS Whistleblower Office if it was within house.
- Time period of Payment of the Award - The IRS should work on shortening the period of payment of the award.
- Better Communication between IRS and Whistleblower – The IRS should state with specificity the reason of rejection if it is rejecting a Claim thereby saving unnecessary litigation time and costs.
The Tax Whistleblower Law Firm will send a series of six (6) letters to Senator Grassley commenting on his recommendations and providing specific suggestions as to his recommended changes.
Answer: NO! …and therefore “Confidentiality is of the Utmost Importance” for the Tax Whistleblower Treasury Inspector General for Tax Administration (TIGTA), August 20, 2009.
The risk to a Tax Whistleblower may be tremendous. There may be the fear of bodily harm, loss of professional license, loss of employment, loss of career, loss of family, etc.
Despite the August 20, 2009 TIGTA Report that recommended that federal legislation be enacted to ensure that tax whistleblowers are protected against retaliation by their employers and be provided with other relief with respect to retaliation, IRS Management correctly stated that such recommendations are outside the jurisdiction of the IRS as to the tax whistleblower program.
However, the IRS has implemented necessary procedures as set out in IRM 25.2.2 to protect the identity of the Tax Whistleblower and does everything it can to ensure these procedures are followed. In fact, the reality is that this all the IRS can do without the much needed legislation. In fact, if the tax whistleblower attorney/lawyer and the IRS protects the identity of a Tax Whistleblower, then the Tax Whistleblower need only worry about disclosing his/her identity through his/her own carelessness, improper use of company email, telephone, etc. In a recent U.S. Tax Court decision on December 8, 2011, the U.S. Tax Court’s issued an opinion in Whistleblower 14106-10 v. Commissioner, 137 T.C No. 15 (2011) supporting the confidentiality of a tax Whistleblower under certain circumstances. See TaxWhistleblowerblog.com dated December 12, 2011.
Experienced and knowledgeable TaxWhistleblower Attorneys/Lawyers can act as buffers to further protect the identity of a tax whistleblower by communicating through the use of a drop box or by other means as may be necessary. Few if any tax whistleblower attorneys/lawyers are as confident as those with Tax Whistleblower Law Firm, LLC, comprised of former IRS attorneys, who are so confident in (i) their abilities as well as their internal procedures, (ii) the IRS, and (iii) the IRS Whistleblower Office that it guarantees the confidentiality of a tax whistleblower in that it is willing to forfeit its fees if the Tax Whistleblower’s identity is ever disclosed by the IRS or by the Tax Whistleblower Law Firm, LLC.
Although nearly all whistleblower’s who report fraud (i.e. violations of environmental rules, health and safety hazards and political corruptions, government fraud) have some sort of legal protection pursuant to statute, the tax whistleblower does not have such protection, and must, for the time being, rely on the IRS and his/her attorney to protect his/her identity.
In the end, if the tax whistleblower’s identity is protected by the IRS and now by the tax court under certain circumstances. Therefore, there is no reason to fear any of the retaliation listed above from the taxpayer. Few Tax Whistleblower Law Firms will guarantee the confidentiality of a tax Whistelblower by contractually giving up their fees if they or the IRS discloses the identity of the Tax Whistleblower.
Senator Grassley Be Patient But Firm with IRS in the Implementation of the Tax Whistleblower Program
Senator Grassley you were quoted by Associated Press (AP) as making several comments that could be interpreted as being critical towards the IRS upon learning of the payment of the first reward under the newly (in the 5th year) created Tax Whistleblower Program.
As you know, the IRS Tax Whistleblower Program is a process that is being implemented over time. The problem is the statute (IRC § 7623) lacks definition, contains ambiguities and needs clarification. There are too many issues that still need to be addressed, and if not now, then by the Courts.
Clearly, the program cannot pay a reward to a whistleblower before the IRS does its job. Taxpayers have been given rights, including the right to receive administrative notice of an examination, the examination itself, the right to appeal, U.S. Tax Court, Collection rights, the right to file a claim for refund after a settlement, right to file suit in District Court, the right to appeal to the Circuit Court of Appeals, etc. Therefore, it should not be “surprising” to anyone that the process is a long process. In fact, the only surprise is that this first tax reward was paid in as little as four years as opposed to what is anticipated to be an average of five to seven years from the time the Claim is filed to payment of a reward. A great tax whistleblower attorney/lawyer can help reduce the examination time but so could changes in IRS procedures.
Having said that, the IRS has taken your prior critique seriously when it redefined the term “collected proceeds” as it is used in the statute. The IRS expanded its definition of “collected proceeds” in the proposed regulations published on January 18, 2011 so as to comply with Congressional intent. However, there are many unanswered questions more serious than your initial criticism. There are many questions that must be resolved now to ensure the success of the program and to avoid expensive and unnecessary litigation. Numerous comments have been submitted to the proposed regulations and a public hearing will be held on May 11, 2011. Many of these comments, if considered, will further clarify the program and will greatly shorten the pay off time to the Whistleblower. Your involvement is important. To the extent that you can encourage upper management in the IRS to seriously consider and implement these comments it would ensure the success of the program as Congress intended. The program should be and must be successful as it will go a long way towards achieving effective tax administration.
The second comment was simply that the IRS may have been slow in paying off because it might have been “embarrassed” that it missed the issue involving the unpaid/underreported $20,000,000 in tax that was reported by the whistleblower. However, as we know, the IRS is very successful in enforcing the Internal Revenue Code. In fact, it is the most successful tax agency in the world. It has nothing to be embarrassed about. The U.S. tax system is a “voluntary” system and the only way to ensure 100% compliance with the law is to fund the IRS to audit every transaction of every taxpayer. This is not something anyone wants. However, perhaps there is a lesson to be learned.
In this first whistleblower matter, we had a taxpayer that failed to correct an error that occurred on its original tax return which was ultimately brought to its attention by an accountant. However, there is no legal requirement that a taxpayer file an amended return to correct an error on the original filed return. As long as the tax return was accurately filed under penalties of perjury to the best of the taxpayer’s knowledge….then the taxpayer complied with the law. To the extent an error is later discovered and brought to the taxpayer’s attention, there is no legal requirement to file an amended tax return. We can learn a lesson from this matter and simply require taxpayers to file an amended tax return under certain circumstances. Consider the following proposed statute:
A taxpayer must file an amended tax return, or self report the error to the Commissioner, or its delegate, pursuant to regulations within 90 days of discovering that it has underreported/underpaid its tax based upon the following:
1. the tax year is open for three years from the date the due date of the tax return, including extension, for purposes of examination and assessment of tax, and
2. the underreported/unpaid tax exceeds $100,000.
Failure of the taxpayer to self report and/or amend its tax return based upon the above will result in the statute of limitations remaining open for 5 years from the date it would otherwise expire and subject the taxpayer to penalties up three times the underpayment of tax. The taxpayer shall not be subject to penalties under IRC 6662 upon the filing of an amended tax return under this section.
Senator, your support for the Tax Whistleblower Program is commendable. Let’s not increase taxes but assist the IRS by (i) encouraging its support of the proposed whistleblower regulations set out in the Comments and (ii) enact the above proposed statute to require a legal obligation by a taxpayer to correct a tax return where it becomes evident to the taxpayer it erroneously underreported/underpaid taxes in excess of $100,000.
The IRS does its job and need not be embarrassed for not obtaining 100% compliance.
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.
· 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.
The IRS, and its watchdog, Senator Grassley, have come a long way towards improving the IRS Tax Whistleblower Program with the recently (1/14/11) proposed regulations (Treas. Reg. § 301.7623-1)….but they have not gone far enough. Attorney Thomas Pliske of Tax Whistleblower Law Firm, LLC believes that Phase One of the IRS Tax Whistleblower Program is the solicitation (by the IRS) of information under the program and ultimate submission of valuable tax whistleblower cases (by the WB) while Phase Two is the litigation of the cases by the IRS and the Whistleblower in order to clarify the drafting of the legislation and the one sided interpretation of the law by the IRS, as reflected in the recently published IRM.
In fact, this is so likely that the Tax Whistleblower Law Firm, LLC is willing to appeal tax whistleblower cases at no additional costs to its clients. “Litigation may simply be a necessary step towards proper representation of a client in these matters,” stated Thomas Pliske, who is convinced that any new law is subject to interpretation through litigation. However, litigation should be unnecessary if both the IRS and the whistleblower are on the same side….working with each other to have others pay the tax that should have been reported and paid. They simply need to have clear rules in which to play the game.
The Internal Revenue Code is complicated while the tax whistleblower law (IRC § 7623) is simple thereby making it full of ambiguities and uncertainties. Senator Grassley was upset with the IRS interpretation of the plain language of the statute, as reflected in the recently published IRM. He put pressure on the IRS to clarify the term “collected proceeds,” key words of legal significance for which the reward is based and for which drafter of the legislation failed to provide a definition when the statute was enacted. As a result, the IRS has now issued proposed regulations defining the term.
The proposed regulation simply takes a small step towards supporting Senator Grassley’s intent of the statute from the most offensive interpretation of IRC § 7623 by the IRS. The IRS had simply interpreted “collected proceeds” as it was written, the amounts that are collected from the taxpayer due to the WB information. However, after the issuance of the proposed regulations, Senator Grassley now states
“These regulations are good news for whistleblowers. The Commissioner made the common-sense decision of ensuring that individuals who blow the whistle on improper refund claims will be rewarded, as I intended when I wrote the law. These new regulations will help the IRS target tax fraud. This is an issue of fairness for honest taxpayers. I hope these new regulations mean the IRS has turned the corner on encouraging whistleblowers and that this program will be a success. Next, the IRS needs to finalize these regulations quickly so they will apply to all the whistleblowers that filed claims after the 2006 law and have been waiting for their awards.”
There is no doubt about it … the IRS and Senator Grassley supports the IRS Tax Whistleblower Program. The program, now in its 5th year (enacted December 20, 2006), has yet to pay a reward pursuant to the tax whistleblower’s claim. That is likely the normal process of instituting a new program and allowing the taxpayer all the rights and appeals that taxpayers have come to deserve over the years.
However, there is so much more that can be done to improve the Tax Whistleblower program. Don’t stop now Senator Grassley. Please continue to encourage tax whistleblowers to come forward and provide information on tax fraud or any underpayment of tax that leads to the determination and collection of taxes by the IRS. IRS, if you are proposing regulations please clarify your positions on a number of unanswered questions. Please commit to positions and timelines to make the whistleblower program more effective. Please discourage future lawsuits by addressing issues early on and not 5 or 10 years from now through litigation.
The IRS is presently gearing up for litigation against whistleblowers having designated GLS Division responsible for such litigation. The Whistleblower Office has identified many of these issues and they currently remain unanswered. Please do more with the proposed regulations than addressing the one simple issue stated within the proposed regulation and take the “giant step” towards promoting the tax whistleblower program by providing meaningful regulations.
Currently Tax Whistleblower Law Firm, LLC is soliciting suggestions from others as to how to better improve the IRS Tax Whistleblower Program.