Posts Tagged ‘Tom Pliske’

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.

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.

Whistleblower ProgramOne such comment Senator Grassley, was that you were “surprised” by the payment of the reward.  We were all  nicely surprised.

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:

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.

Ten Top Reasons not to Hire “just any” Attorney for Tax Whistleblower Program

1. There are too few good "Tax" Whistleblower Attorneys. The field is getting crowded with attorneys advertising they do Tax Whistleblower cases, thinking they can fill out a Form 211 with its 1 6 questions and take one third of your reward. Potential clients don’t realize that the internet and websites make all tax whistleblower attorneys appear equal. In fact a quick reading on nearly all the attorneys’ backgrounds will indicate that they are qui tam attorneys or personal injury attorneys. It is unlikely they have ever handled a tax matter, much less one as important, potentially worth millions of dollars. Perhaps, they will do a tax whistleblower case on the side. Advice: Find a good tax attorney…preferably former IRS attorney that is experience in Tax Whistleblower cases. 2. File your own 211 Claim and save money. You as well as any attorney can file a Form 211 with a few pages of attachment. Perhaps you don’t think the potential payoff (15% to 30% of amount collected) is worth sharing with an attorney. Advice: You may file your 211 Claim yourself or hire an experienced tax attorney that will be with you through the beginning (filing the 211 Claim), middle (regularly supplementing the claim) and end (negotiating the highest reward and/or appealing the reward to the U.S. Tax Court) of the Whistleblower process. A good Tax Whistleblower Attorney is familiar with IRS procedures and its administrative files and will prepare your case for acceptance into the program. Many of the tax whistleblower attorneys are not even licensed before the U.S. Tax Court. Read the rest of this entry »

Senator Grassley, Please take the “Giant Step” to Support the Tax Whistleblower Program

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.

The Tax Whistleblower Reward Program Turns Two

In a recent speach before the American Bar Association, the IRS announced that the Tax Whistleblower Reward Program is more successful than anticipated.  A large spike in submitted claims in 2008 shows that the new whistleblower law is “working as it was intended” since it was revised two years ago, said IRS Whistleblower Office Director Stephen Whitlock.  Part of the law’s initial success can be seen in the public’s awareness of it, Whitlock told the American Bar Association Section of Taxation at the fall meeting in San Francisco on September 12.

In December 2006, Congress turned to the American people to expose taxpayers (i.e., individuals, businesses, estates, and trusts) who underreport and fail to pay tax. As part of the Tax Whistleblower Reward Program, the United States announced that it will reward any person who provides information that leads to the identification of $2 million or more of unreported tax, including interest and penalties. This legislation guaranteed that any person who provides useful information will receive a minimum of 15%, and a maximum of 30%, of the amount that the IRS actually collects.

The IRS Whistleblower Office has acknowledged that the issue of confidentiality of informants is a major issue of concern that still needs to be addressed.  A group of former IRS attorneys have formed a specialized law firm that represent tax informants under the Tax Whistleblower Reward Program. “The goal of all tax whistleblower attorneys should be to protect their client’s confidentiality,” says Tom Pliske, former IRS attorney. “At our law firm, not only do we take steps to protect an informant’s identity, but we guarantee that neither our personnel nor the IRS and its personnel will disclose an informant’s identity.” However, potential tax informants need to make an informed decision, before submitting a claim, regarding whether there is a desire to proceed should an informant’s testimony be necessary to secure a reward. Once the case is accepted by the IRS, the IRS could issue a subpoena requiring an informant’s testimony in a tax court matter. Whistleblowers must be aware of and consider this contingency prior to submission of a case to the IRS under the Tax Whistleblower Reward Program. The American people are encouraged to report tax fraud.

In the United States of America, a small percentage of taxpayers (i.e., individuals, businesses, trusts, and estates) underreport and fail to pay up to $400 billion in taxes every year, according to a study released by the IRS. This small group is comprised of an elitist group of wealthy Americans and businesses who neglect or refuse to pay their fair share of tax and who undermine the stability of the country to satisfy their own personal greed. This missing revenue causes unnecessary increases in annual deficits, national debt, and national interest payments. In the end, this missing revenue must be made up by honest Americans through higher taxes.

Information regarding a wide range of tax issues, both criminal and non-criminal in nature, may lead to a reward under the Tax Whistleblower Reward Program. A common misperception is that, in order to be entitled to a reward under this Program, you must possess information regarding tax fraud or criminal tax evasion. However, this Program is not limited to issues rising to the level of tax fraud or criminal tax evasion.

Principals of www.RewardTax.com Complete Presentation to AICPA

The principal of www.RewardTax.com, Tom Pliske, completed his presentation regarding the Tax Whistleblower Reward Program to the attendees of the 2008 AICPA Symposium in Washington, DC on October 29, 2008.  The AICPA Symposium is attended by over 400 leaders of the largest and best CPA firms in the country.  After the presentation, several members of the audience raised questions about the application of the Whistleblower Program to CPAs.  Tom Pliske answered, “The Whistleblower Program allows for a reward to be earned for turning in unscrupulous tax return preparers.  Overall, the Whistleblower Program will have a positive effect on the CPA industry because it gives incentives to those with knowledge of inappropriate behaviour to come forward.  Unscrupulous tax return preparers, left unchecked, take business away from honest return preparers.”

Attorney-Client Priviledge Becomes Topic of Discussion by Whistleblower Office

Stephen Whitlock, director of the Office of the Tax Whistleblower Reward Program, discussed the recently enhanced federal tax whistleblower statute at the Taxpayers Against Fraud annual conference in Washington, D.C., on September 10, 2008.  Whitlock examined issues of confidentiality and attorney-client privilege facing attorneys, accountants, and employee insiders who want to blow the whistle on clients and employers engaged in abusive and fraudulent tax shelter activity.  Whitlock spoke along side Judge Peter Panuthos of the U.S. Tax Court. 

Attorney-Client priviledge has been an area of concern for the IRS and practicioners since IRC section 7623 was enacted as law in December 2006.  The issue took center stage after the IRS released Notice 2008-11, wherein the IRS clarified that it will not accept information from an informant who represents the taxpayer in an administrative or litigation matter against the IRS.  Although, the IRS clarified that it will not accept such information, it left open the possibility of accepting information from the taxpayer’s lawyer or accountant who does not represent the taxpayer in an administrative or litigation matter against the IRS.  “The ‘jist’ of IRS Notice 2008-11 is that the IRS will let the courts decide what information should be outside of their grasp, and the IRS will vigorously pursue the matter in court to define their boundaries,” says Tom Pliske, former IRS attorney and principal of www.RewardTax.com.

www.RewardTax.com to Present at AICPA Symposium

Tom Pliske, the principals of www.RewardTax.com (former IRS attorneys) will be featured speakers at the 2008 AICPA Syposium to be held at the JW Marriott Hotel in Washington, D.C., October 27-29.  The principal of www.RewardTax.com will give a presentation, beginning at 7:00 am on October 28, 2008 regarding IRC section 7623 and the multiple IRS Notices that have been released–which interpret the new law creating the Tax Whistleblower Reward Program.  The principals of www.RewardTax.com would like to give special thanks to Walt Knepper of the accounting firm of Rubin Brown for helping to arrange their presence at the AICPA Syposium.  The AICPA Syposium will feature esteemed experts and industry leaders in the field of tax law and accounting.

www.RewardTax.com to Speak at AICPA

Tom Pliske, principal of www.RewardTax.com, will speak at the 2008 National Tax Conference of the American Institute of Certified Public Accountants (AICPA) in Washington, D.C. on October 28, 2008.  Tom Pliske will discuss the legal requirements for having a claim accepted for processing into the Tax Whistleblower Reward Program, the procedural rules for submitting a case to the Whistleblower Office, and examples of fact patterns that make good cases to refer under the program.  Tom Pliske will be joined in the presentation by a representative of the Whistleblower Office, TBA.  The AICPA is the national, professional organization for all Certified Public Accountants. Its mission is to provide members with the resources, information, and leadership that enable them to provide valuable services in the highest professional manner to benefit the public as well as employers and clients.  The conference will be held at the J.W. Marriott in downtown Washington, D.C.  For more information about the conference, visit the website of the AICPA.

Most Firms Pay No Tax

In a shocking article reported by CNN (http://money.cnn.com/2008/08/12/news/economy/corporate_taxes/index.htm?cnn=yes) the Government Accounting Office (GAO) announced its findings that 68% of American firms do not pay tax despite reaping nearly $2.5 trillion in revenue.  This is the sort of abuse that the Tax Whistleblower Reward Program is designed to curb.  The study was requested by Sens. Byron Dorgan, D-N.D, and Carl Levin, D-Mich., in an attempt to determine if corporations are abusing so-called transfer prices.  Transfer prices are charges on transactions between subsidiary companies within a larger corporate group.  Companies may try to lessen their U.S. tax hit by improperly transferring income to foreign subsidiaries in countries with lower rates.  “In an ever-increasing global economy, this type of abuse has become more and more widespread.”  says Tom Pliske, principal of www.rewardtax.com.  International laws and overly-complicated treaties prevent the IRS from effectively combating this type of abuse alone.  Thus, transfer pricing issues, where U.S. income is diverted to other countries with a lower tax rate, are perfect targets for the Tax Whistleblower Reward Program.

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