Posts Tagged ‘tax whistleblower law firm’

IRS Tax Whistleblower Service at no Cost

Form 211

In an effort to promote the IRS Whistleblower program, the Tax Whistleblower Law Firm is willing review and suggest changes and modifications to IRS Whistleblower Claims at no charge to those individuals that desire to file their own IRS Whistleblower Claims.  We are willing to do this at no cost to the Whistleblower because we believe in the IRS Whistleblower program and want to see it successful in the years ahead.  We, as taxpayers, are all in this together, and certain taxpayers should not be circumventing the law simply because they can, or have been in the past.  The only condition is that we have the opportunity to provide our review prior to submission of the IRS Whistleblower Claim to the IRS.

This blog will provide information to those individuals that would like to file an IRS Whistleblower claim without the assistance of an IRS Whistleblower attorney/lawyer.

Although it does not appear to be a complex matter, the IRS simply requires that such an individual file a one page Form 211, Application for Award for Original Claim….nothing more.  There are 18 relatively easy questions, which include 9 questions (name address, etc.) just about the whistleblower.

As the IRS states in the instructions to the filing of the IRS whistleblower claim, as well in Notice 2008-04, the information provided should be “specific and credible.”  To the extent the IRS whistleblower has documentation, we certainly recommend that the IRS whistleblower claim contain not only specific and credible information, but be accompanied by supporting (i.e. relevant) documentation.  Remember, with specificity comes credibility.  All the information should be presented clearly and concisely.  Take into consideration all the positive factors the IRS will consider when determining the maximum IRS tax reward that you may be entitled and try to meet those positive factors.  See our prior blog on the IRS computation of a tax reward

Our office also recommends that the 211 claim, or 211 claim package, contain the same type of information that an IRS administrative file might contain, should the IRS have completed its examination and sent the case forward for trial.  As former IRS attorneys we strive to provide all the necessary information and documentation that the IRS needs in the processing of the claim and the completion of the examination, including a legal analysis of the substantive tax issue.  We will make specific suggestions as we review the files on a case by case basis for those whistleblowers filing their own claim.

The above is what is recommended for the submission of an IRS whistleblower claim.  An experienced and knowledgeable tax whistleblower attorney will only be able to assist if they are tax attorneys familiar with the substantive tax issue and experienced with the IRS whistleblower procedures.  Such an attorney will provide value assuring that the 211 Claim is clear and concise and will be accepted into the program.  In addition, the IRS whistleblower attorney work to maximize the reward, shorten the examination time (hence the time for pay off or the reward), and protect the identity of the whistleblower, including providing a guarantee.

Other reasons to consider an experienced tax whistleblower attorney include the continuance guidance through what is likely a 5 to 7 year process.  The attorney will supplement the claim over time with new and material information should such information exist.  The attorney will accompany the whistleblower to any meetings for which the IRS desires to meet with the whistleblower and will prepare the whistleblower for such meeting. Lastly, the experienced tax whistleblower attorney will handle the administrative and judicial appeal at no additional cost.

The Tax Whistleblower Law Firm has submitted hundreds of tax whistleblower claims over the years for billions of dollars and, to date, has had every case accepted into the IRS Whistleblower Program.  Therefore, again, if you are filing an IRS whistleblower claim and would like, at no charge or commitment, comments and recommendation by the former IRS attorneys of the Tax Whistleblower Law Firm with respect to your IRS whistleblower claim, call 1-877-404-1040 or email tom@rewardtax.com .

 

What is Purpose of Appealing a Rejected IRS Whistleblower Tax Case?

With respect to IRS Whistleblower Cases the US Tax Court ruled in Cooper v. Commissioner, 136 T.C. 597(2011) that it had the jurisdiction to hear “rejected” IRS Whistleblower cases on appeal.  The Tax Court decided that the right to appeal was not limited only to those cases that the IRS had determined a reward percentage (i.e. 15% to 30%) , but also those cases in which the IRS determined that a whistleblower was not entitled to a reward.

The Tax Court has issued good rulings with respect to the IRS Tax Whistleblower Program, However, the tax court has also ruled it did not have the jurisdiction to order the IRS to conduct a tax examination in an IRS Whistleblower matter.  Therefore, if the IRS rejects a IRS Whistleblower case, it cannot be ordered by the U.S. Tax court to conduct the examination, nor can it determine the tax deficiency of a taxpayer that is not before it based upon the IRS Whistleblower tax information.

So what is the point of giving the tax court the jurisdiction to hear a rejected cases if it has no power? The practical answer is that the case might have been improperly rejected by the IRS in that the IRS did conduct an examination, collected tax, and simply and improperly rejected the claim for purposes of paying the tax reward.

However, the IRS has quickly formed a successful strategy of dealing with the blow dealt it in the Cooper case in dealing with the appeal of rejected IRS Whistleblower cases.  The IRS has successfully, to date, filed motions for summary judgment (i.e. a motion that the court can rule on as there are no material facts in dispute) in an effort to dispose of these cases.

Suggested Strategy of the Whistleblower in the Appeal:

A Whistleblower of a rejected Whistleblower case should have a good basis for petitioning the US Tax Court for review of its whistleblower case.  Sometimes, this might be, as stated above, because the Whistleblower believes, in good faith, that the IRS collected money due to the Whistleblower’s information.

Therefore, the IRS Tax Whistleblower should be familiar with the Tax Court Rules and

  1. Timely petition the U.S. tax Court (within 30 days of the letter of determination)
  2. Timely file discovery (typically should be done on the 30th day after the IRS files an Answer).
  3. Timely respond to the motion for Summary Judgment, as ordered by the Court, pointing out to the Court material facts that are at issue.

To date the IRS has been successful by providing an Affidavit that

  1. it took “no administrative action”, and
  2. that there were no “collected proceeds” of tax penalty and interest based upon the information provided by the Whistleblower.

A good IRS Whistleblower Tax Attorney/Lawyer knows that the terms sworn to in the affidavit by IRS counsel have no defined meaning, and therefore, could be viewed as material facts in dispute.  For instance does an “administrative action” include opening a IRS Whistleblower file, making a phone call, referring the case criminally, referring the case for civil examination, holding a taint conference, or does it simply mean something else like opening and completing a tax examination or the ultimate assessment of tax.  Surely the IRS, as a governmental administrative agency, has taken an administrative action in most of these rejected IRS Whistleblower tax cases.  Again, unless the case is rejected upon submission, the IRS has reviewed the claim, opened a Whistleblower file, scanned the Claim, made phone calls, sent out emails, and at a minimum held meetings.  (All the IRS administrative actions should be confirmed in responses to the Whistleblower’s timely discovery requests).

As to the second part, in most cases, the IRS Whistleblower does not know whether or not tax, penalty and interest were collected due to information provided in the IRS Whistleblower Claim which is why the Whistleblower must engage in the discovery process.  The IRS will move for summary judgment without wanting to provide the Whistleblower copies of the taxpayer’s tax transcripts, the IRS history notes, emails, memos, etc.  However, that by itself leaves a material fact in dispute.  In addition, the IRS has issued proposed regulations and is now in the process of defining what is meant by “collected proceeds.”  It is difficult to believe that it can swear that it did not collect any tax penalty and interest when that term (i.e. collected proceeds) remains undefined.  For instance, if the IRS settles with a taxpayer and collects tax on future years but noting on the past years for which the Whistleblower provided information, should the tax collected in future years, due to the settlement, be considered collected proceeds subject to an award.  The IRS now says no.  Discovery is very important and should be part of the entire process.

At the very least, tax court discovery should inform the Whistleblower as to why his/her case was rejected by the IRS.  If the 211 Claim was improperly prepared (i.e. not clear and concise or failed to contain “specific and credible” information), then the Whistleblower should consider contacting an experienced Tax Whistleblower Attorney to assist in the resubmission of the Claim.

The Tax Whistleblower Law Firm, consisting of former IRS attorneys, has been very successful in working with the IRS and the tax whistleblower program.  The Tax Whistleblower Law Firm has submitted claims as to hundreds of taxpayers for billions of dollars and to date, has had every case accepted into the IRS Whistleblower Tax Program.  Should you have any questions or comments as to the IRS Whistleblower program please visit www.taxwhistleblowerforum.com, or call 1-877-404-1040.

The Success of the IRS Tax Whistleblower Program (i.e. Payment of Tax Reward) is in the Hands of the IRS.

A recent comment by the Director of the IRS Whistleblower Office indicates that the IRS is serious about ensuring the success of the Tax Whistleblower Program.

Where There Is A Choice, The [Tax] Whistleblower Should Win.

This comment says it all.  There are many tough decisions to be made by the IRS, but if the above quote is the true reflection of the attitude of the IRS, then the IRS Tax Whistleblower Program is on its way to being highly successful.   However, as background to the above quote, it was said in the context of considering the “fair” and “right” thing to do in tax whistleblower situation.

IRS Whistleblower Office

Some of the tough issues facing the IRS are ….

Is the term “collected proceeds,” as used in I.R.C. § 7623, going to be narrowly defined in the final regulations that are yet to be issued?

We will see.  The IRS could go with the true meaning of Congress and reward the tax whistleblower for his/her contribution….or it may narrowly define the term “collected proceeds” as it did in the proposed regulation.  For instance, will the term “collected proceeds” include future amounts collected (under certain circumstances) rather than simply past amounts?  Will collected proceeds take into considerations net operating losses (NOLs) or tax credits carried back or forward to the years for which the tax whistleblower provided information?  Will collected proceeds take into consideration offsets as to refunds owed the taxpayer on other years?

Will the IRS recognize that it must make partial payments to a Tax Whistleblower if there are no prohibitions as to making a partial payment….or will the IRS wait as long as possible in making the tax reward payment to the Whistleblower? 

The IRS can always wait until the last penny of tax is collected with respect to a tax liability or until the ten year statute of limitations expires before it feels obligated to paying the tax award/reward to the whistleblower.  In fact there are no statutory (or self imposed) deadlines in which to pay a tax reward/award to a whistleblower.  However, the IRS may realize that if there are no prohibitions (i.e. the assessment of tax is final (i.e. no further avenue of appeal) and/or the collection of tax is not subject to a claim for refund (two year rule)) as to making a partial payment, it will immediately make the partial payment of the tax award/reward to the Tax Whistleblower. 

Currently this office has submitted a request for partial payment of a tax reward/award for which the Form 211 Claim was filed in 1999 and the tax was paid in 2005.   Hopefully the IRS will side with the Whistleblower in this matter and make a partial payment of the tax reward/award in an effort to promote the Tax Whistleblower Program.

Is an “administrative action” as used in I.R.C. § 7623 a “detection of tax” the result of a tax examination, tax assessment, court decision, or is it simply an action by an “administrative agency”, that might include opening a whistleblower file, making a telephone call to the taxpayer, sending a letter to the taxpayer, establishing an “amnesty program” due to the Whistleblower’s Claim, issuing a new Tax Regulation/Notice as a result of the Tax Whistleblower Claim.

Does a “related action” as used I.R.C. § 7623 include subsequent tax years with respect to the same ongoing issues raised in the tax whistleblower claim?  Does it include other tax issues discovered by the IRS in the tax examination for which the whistleblower provided information?  Does it include other taxpayers for which the IRS discovered as a result of the tax whistleblower claim?

How does the IRS allocate the tax reward between two whistleblowers who both substantially contributed to the determination of tax?

As the bottom line to this blog, there are dozens, if not hundreds, of unresolved issues that will be resolved over time.  Let’s hope the IRS lives by the motto…Where There Is A Choice, The [Tax] Whistleblower Should Win.

 Should you have any questions or comments as to the IRS tax whistleblower program or obtaining a tax reward, please post comments to this blog, visit www.taxwhistlblowerforum.com, call the former IRS attorneys at the Tax Whistleblower Law Firm at 1-877-404-1040 or email tom@rewardtax.com .

 

How does the IRS Tax Whistleblower Office compute the tax reward/award on Tax Whistleblower Cases?

 The IRS Tax Whistleblower Office is at the beginning stage of paying tax rewards/awards on these tax whistleblower cases.  It is clear the tax whistleblower program is a process that is developing and being tweaked over time.  IRS Whistleblower Office Director Stephen A. Whitlock and his staff are busy anticipating and resolving issues and problems as they develop.

IRS will Calculate Tax Reward

In June 2010, the IRS published IRM 25.2.2 which provided certain factors that will be considered in determining a tax reward/award.  In fact, it is advisable that every tax whistleblower consult with an experienced and knowledgeable tax whistleblower attorney/lawyer in order to submit the 211 Claim (i.e. Tax Whistleblower Claim) in a manner to maximize the tax award/reward. 

In addition, the 211 claim package should be prepared and submitted so as to minimize the examination time and thereby minimize the time period in which to pay the reward/award.

As of this time, only several tax rewards/awards have been paid under the new IRS Tax Whistleblower Program pursuant to IRC 7623(b).

At this time, this is how the awards are determined by the IRS Tax Whistleblower Office:

  1. The IRS has established 5 tax reward brackets (15%, 18%, 22%, 26% and 30%) that will be applied to the amount of tax collected.
  2. In determining a reward, the IRS will begin at the 15% reward bracket.
  3. The IRS will then evaluate the positive factors and to the extent the tax whistleblower has met a number of these positive factors, the reward will be increased from 15% to 22%, and if the tax whistleblower has met significant number of the positive factors (i.e. perhaps assisted or showed their willingness to assist in the determination of tax (tax examination/tax crime prosecution) in an extraordinary manner such as testifying in court, wearing a wire, etc.), the tax reward bracket will be increased from 22% to 30% of the amount of tax collected.
  4. After considering the positive factors, the IRS will examine the negative factors as set out in IRM 25.2.2.  To the extent there are negative factors, the above reward determination will be reduced.  In the case of 30% tax reward as determined in 3, above, it will be reduced to 26%.  To the extent there are significant negative factors, the tax reward will be reduced to 18% from 26%, as established in the previous sentence, or if the starting point is 22% as stated in 3 above, it will be reduced to 18%, but no lower than 15% under any circumstances.

Note 1:  The positive and negative factors are not exclusive and are not weighted. In the particular circumstances of a case, one factor may out-weigh several others and result in a unique or exceptional award determination. Negative factors can offset positive factors, but cannot result in an award that is less than the statutory minimum (15%)

Note 2: A tax reward/award that is simply from third party sources or for which the tax whistleblower initiated and planned the transaction that led to the underpayment of tax, then pursuant to 7623(b), the reward cannot exceed 15%.

Note 3:  Under certain situations the IRS Tax Whistleblower Office will consider splitting a tax reward bracket in an effort to achieve the “right” answer.

The above analysis is the current procedure as to how a tax reward/award is to be computed and paid.  This procedure will likely to be adjusted over time by both the U.S. Tax Court and the IRS Tax Whistleblower Office.

To the extent that there are any questions please call the Tax Whistleblower Law Firm at 1-877-404-1040 or email tom@rewardtax.com as to how the IRS Whistleblower Office is likely to determine a tax reward/ award, or as to any other questions regarding the IRS Tax Whistleblower Program.

Tax Court Rules to Protect the Confidentiality of the Tax Whistleblower

US Tax Court issues major Whistleblower Opinion

The IRS has procedures to protect the identity of the Tax Whistleblower and maintain his/her confidentiality as part of its IRS Tax Whistleblower Program.  In addition, IRC § 7623(b) gives the Tax Whistleblower the right to appeal the determination/rejection of an award.  However, the irony of this entire Tax Whistleblower Program up until the recent Tax Court decision is that the Office of Chief Counsel (i.e. attorneys for the IRS) adamantly opposes tax whistleblower attorneys/lawyers efforts to protect the identity (remain anonymous) of their client in the U.S. Tax Court.

Until the December 8, 2011, in the U.S. Tax Court’s opinion in Whistleblower 14106-10 v. Commissioner, 137 T.C No. 15 (2011), it was unknown as to what facts and circumstances were necessary for the Tax Whistleblower to remain anonymous in the judicial appeal before the court.  As always, the court must balance the long tradition of open trials and public access to court records with the need to protect the identity of a Tax Whistleblower.

The Tax Court, in a full court opinion, did an admirable job in assembling the law regarding confidentiality of a Tax Whistleblower for which the tax whistleblower is not otherwise protected under the law.  Although there is no guarantee that the Tax Whistleblower’s identity will be protected in an appeal, the Tax Whistleblower attorney/lawyer that files a petition for judicial review of the IRS determination (including a rejection) of a tax whistleblower claim, now has a roadmap as to what facts are necessary for his/her client to remain anonymous.

In its opinion, the U.S. Tax Court stated,

Respondent’s [IRS] take-it-or-leave-it approach to confidentiality improperly minimizes the practical value of judicial review, which is an integral part of the scheme under section 7623(b).  Respondent’s approach, which we cannot say is disinterested, would confront claimants with a dilemma of either forfeiting confidentiality to seek judicial review or forfeiting judicial review. The likely upshot would be a chilling effect on some claimants who have a compelling need to proceed anonymously. This result would be at odds with the ostensible legislative purpose of encouraging tax whistleblower claims and promoting public confidence, through judicial oversight, in the administration of the tax whistleblower award program.

It is clear, the Tax Court, after careful thought, reached the right answer as to this issue resulting in a tremendous boost to the IRS Tax Whistleblower Program.  Every Tax Whistleblower that considers appealing the IRS determination should make sure that they engage an experienced and knowledgeable tax whistleblower law firm to assist them with the appeal.

The right (experienced and knowledgeable) tax whistleblower attorney/lawyer (experienced in both tax law and whistleblower law) can assist in all the following:

  • Properly preparing the 211 Claim to get the Claim into the IRS tax whistleblower program.
  • Regularly Supplementing the 211 Claim with new and material facts.
  • Decreasing the IRS examination time and therefore the ultimate payment of the Reward.
  • Attending all conferences with the IRS and properly advising the client prior to the conference.
  • Properly monitoring the Claim throughout the tax whistleblower process.
  • Assisting in the administrative appeal of the tax reward.
  • Assisting in the judicial appeal of the tax reward before the U.S. Tax Court.
  • Help ensure and maintain confidentiality of the tax whistleblower throughout the tax whistleblower process including the willingness to forfeit his fees if he or the IRS discloses the  tax whistleblower’s identity.

The IRS Must Withhold on Tax Whistleblower Award Payments

Although many Tax Whistleblower Attorneys complain about the IRS’ recent decision to withhold tax on an award/reward paid under IRC 7623, it is perhaps that they do not understand withholding tax prevents the viability of the program from being at stake.  The IRS, as well as the Director of the Whistleblower Office, has many very difficult decisions to make with respect to the implementation of the IRS Tax Whistleblower program in order to ensure its success…including whether or not to withhhold tax on potentially hundreds of millions of dollars of reward. 

IRS to Withhold Tax

A tough decision that was made recently was whether or not to withhold federal income tax on a tax Whistleblower award/reward.  There is no dispute that under I.R.C. section 61, the Award/Reward is taxable.  As all tax whistleblower attorneys/lawyers are aware, the costs associated with a tax whistleblower receiving an Award/reward (i.e. attorney fees, etc.) is deductible…above the line for awards/rewards paid pursuant to IRC section 7623(b).  Congress made sure of that back in 2006 when the new Tax Whistleblower law was enacted.  See I.R.C. 62(a)(21).  So what is the big deal?

The big deal is simply that the IRS, not knowing the amount of the attorney fees to be paid will withhold tax based upon a fixed percentage of the entire award.  Since the normal “contingent” attorney fee is one third of the award, the IRS will withhold on that too.  Therefore, if the tax rate is 33.33%  the IRS will keep (i.e. withhold) a third, while the Whistleblower gets a third and the attorney working on a contingent basis gets a third.  The reality is that in less than 12 months the Whistleblower will file a tax return and receive a refund with respect to any over withholdings by the IRS of the tax withheld due to the costs/attorney fees paid and deducted by the Whistleblower when filing the return.  It is a small matter of timing …nothing more.  Therefore, no harm no foul.

Many attorneys/lawyers representing Whistleblowers are up in arms that the IRS in the Chief Counsel memorandum from the Procedural & Administration Branch recommended withholding tax on the Award.  Perhaps it is because the attorney may not have properly explained to their client that the award is taxable or they continue to talk of the gross reward, when in reality the reward, like any other income, should be viewed as after expenses and taxes. 

Can you imagine if the IRS paid out millions (perhaps hundreds of millions) of dollars to a Whistleblower that gambles the award away or simply puts the money out of reach of the IRS.  The American taxpayers, as well as Congress, would be furious.  The IRS Tax Whistleblower Program would unlikely survive such an ordeal.  Again, there are many tough decisions that have to be made.  The Tax Whistleblower Program should be viewed as a “public-private partnership” and everyone involved in this program should want to reach the right result for the taxpayer as well as the right result for the Whistleblower.

Tax Whistleblower Attorneys should choose their battles with the IRS and this is not a battle worth fighting.  Any litigation of this issue would be moot by the time the court would hear the case as the Whistleblower would have filed the return and received the refund.

However, in an effort to minimize concerns, Director Stephen Whitlock recently mentioned that the Whistleblower Office is considering offering the Whistleblower a “Withholding Agreement” whereby the parties acknowledge what the costs (including attorney fees) are to the Whistleblower and simply withhold on the net amount after the expenses.  The IRS is also considering withholding at a 28% rate rather than the maximum individual tax rate.

The Tax Whistleblower Law Firm, established by former IRS Attorneys, are experienced tax attorneys and experienced whistleblower attorneys.  The firm has submitted hundreds of cases since the program was begun and to date has had every claim submitted accepted into the progrram.  The Tax Whistleblower Program can assist in the litigation/appeal of an Award/Reward as well as in the negotiations of a Withholdings Agreement.

This is clearly the right answer all around.  Always feel free to contact a tax whistleblower attorney at the Tax Whistleblower Law Firm at 1-877-404-1040 or email at tom@rewardtax.com.

 

 

With Tax Knowledge Comes Power for the Tax Whistleblower

The Whistleblower participating in the IRS Tax Whistleblower Program has knowedge and power to receive a substantial tax reward/award under IRC 7623

Confidentiality of Tax Whistleblower

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.

Litigation of IRS Tax Whistleblower Cases

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 US Tax Court Litigationbe 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.

 

Senator Grassley Letter to Commissioner Schulman regarding Tax Whistleblower Program

On September 13, 2011 Senator Grassley responded to the GAO Report that was issued pursuant to his request to audit the IRS Tax Whistleblower ProgramSenator 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)

Senator Grassley

Senator Grassley continues to monitor IRS Tax Whistleblower Program

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.

Is the Tax Whistleblower’s Identity protected under the IRS Tax Whistleblower Program?

Answer:  NO! …and therefore Confidentiality is of the Utmost Importance”  for the Tax Whistleblower  Treasury Inspector General for Tax Administration (TIGTA), August 20, 2009.

Tax WhistleblowerWhether it is simply the times, the economy, or the culture, being a tax whistleblower and taking advantage of the IRS Tax Whistleblower Program could be viewed simply as “doing the right thing.”

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.

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