Posts Tagged ‘Whistleblower claim’

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.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


IRS Schedules Public Hearing for May 11, 2011 on Proposed Tax Whistleblower Regulation

IRS Wants Tax Whistleblower‘s Feedback on Proposed Tax Whistleblower Regulations by April 18, 2011.

As the IRS Tax Whistleblower Program develops, phase I in claiming a tax reward is the submission and supplementation of the Tax Whistleblower Claims (i.e. Form 211).  Step Two is the litigation of ambiguities and lack of clarity in the law.  Having this opportunity to have input as to the Tax Whistleblower Regulations can assist in providing clarity in the law may significantly reduce future time and expense of litigation as well as the uncertainty in the tax whistleblower program. 


tax whistleblower regulations

Tax Whistleblower Regulations

The Tax Whistleblower Regulation, Section 301.7623-1(a) was established prior to amendments of IRC section 7623 on December 20, 2006. On January 18, 2011, the Internal Revenue Service issued proposed regulations in an effort to update, clarify and explain the tax whistleblower statute (IRC § 7623).

 The Treasury Department and the IRS requested comments on the clarity of the proposed IRS Tax Whistleblower Program Regulations and solicited suggestions as to how the program may be made easier to understand. The purposes of the regulations is to provide needed guidance to the general public as well as officers and employees of the IRS who review claims under section 7623.

 However, the proposed tax whistleblower regulation, as drafted, falls well short of achieving the goals of the IRS for the successful implementation of the Tax Whistleblower Program (i.e. payment of a tax reward).  In an effort to satisfied Senator Grassley’s disapproval of the IRS narrow interpretation of the terms of “proceeds of amounts collected” and “collected proceeds” for purposes of section 7623, the IRS has proposed the amendment to the tax whistleblower regulation.

The public was asked to provide comments.  Approximately 70 days have passed since the proposed amendment to the tax whistleblower regulation was published.  There are only 20 days left to respond.  Anyone interested should provide comments by April 18, 2011 in an effort to make the IRS Tax Whistleblower Program easier to understand and to give guidance to the general public as well as the IRS in the Tax Whistleblower Program.  The ultimate purpose to the program is to provide Effective Tax Administration.

In order to read the comments submitted to date, please click on the individual name below that submitted the comment.

Thomas C. Pliske

Anonymous Taxpayer

Eric Weidner

Linda Stengle

Michael Walsh

Patrick Carmody

Thomas Dunn

In addition to providing comments to the Proposed Regulations at it is advisable that suggestions and comments also be provided to the following:

 1.  Senator Grassley – Comments as to making the program more efficient should be sent to Senator Grassley

 2. Treasury Inspector General for Tax Administration (TIGTA) – Office of Audit -Annual Audit Plan FY 2011 Whistleblower Office (2011 – New Start – #201130033)

Audit Objective: At the suggestion of the Congress, determine whether the IRS has taken effective corrective actions to address previously identified weaknesses in processing claims from whistleblowers. Specifically, determine if the Whistleblower Office’s new procedures are contrary to Congress’ intent and will deter whistleblowers from filing claims.

Therefore Comments or suggestions as to the Tax Whistleblower Program should also be sent to TIGTA


Tax Whistleblower Regulations

Tax Whistleblower Regulations

In this potential multi-billion dollar program very little feedback has been received by the IRS as to changes affecting tax whistleblower regulations.  Many Tax Whistleblowers are upset with the time delay in getting paid their tax reward.  Many non-tax attorneys representing clients in the Tax Whistleblower Program are frustrated with IRS procedures including non-disclosure laws simply because they are unfamiliar with tax procedures.  Because of this fact, qui tam law firms and personal injury law firms representing tax whistleblowers have not been helpful in providing comments to the IRS on the Tax Whistleblower Program.

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

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

tax whistleblower attorney
What to do to Maximize the Reward

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

 ·         Legally gather documents that would help support your case.


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


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


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


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


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

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

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

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

Must information provided to the IRS on Tax Whistleblower Claims be submitted under penalties of perjury?

 Many non-tax attorneys are questioning the IRS and the implementation of the Tax Whistleblower Program.  To date, no rewards have been paid after nearly four years.  However, an experienced tax attorney would not expect a reward to be paid within four years.  Yet, many of these same attorneys are now questioning the true motives of the IRS in its implementation of the Tax Whistleblower Program. 

Penalties of Perjury

Penalties of Perjury

Therefore, as former IRS attorneys, we will begin a series of blogs to help bridge the gap between the IRS Whistleblower Office and the whistleblower and his/her non-tax attorney.   We will continue to blog to answer questions and give guidance based upon our experience in an effort to assist in the smooth implementation of the Tax Whistleblower Program. 

Must information provided to the IRS on Tax Whistleblower Claims be submitted under penalties of perjury?

Yes, IRC §7623(b)(6)(c) clearly states,

 “No award may be made under this subsection based on information submitted to the Secretary unless such information is submitted under penalty of perjury.” (Emphasis added)

Form 211, Application for Award for Original Information, on which a Tax Whistleblower Claim is filed, contains an attestation clause, which states,

 Declaration under Penalty of Perjury

“I declare under penalty of perjury that I have examined this application, my accompanying statement, and supporting documentation and aver that such application is true, correct, and complete, to the best of my knowledge.”

However, the reality is that many Tax Whistleblower Claims are supplemented over the years with new material and relavent information.  Often the tax whistleblower is interviewed by the IRS (subject matter expertf (SME) or the taint team).  The tax whistleblower’s attorney will often provide the IRS with additional information/documentation or updated status of the taxpayer situation.

Should the supplemental information/documentation be submitted under penalties of perjury?  Should the attorney providing the additional information submit the information pursuant to penalties of perjury?  If so, should the attorney or the Whistleblower sign the penalty of perjury (“attestation”) clause?  What about information provided through an interview of the Whistleblower?  Should the tax whistleblower be administered an oath before providing such information?

After all the whistleblower should be concerned, as   IRC § 7623(b)(6)(c) is clear in that information to be considered for purposes of an award …must be submitted under penalty of perjury.

However, at this time, Director Stephen Whitlock and the IRS Whistleblower Office has made an institutional decision.  The current position of the IRS is that upon receiving the initial Claim on Form 211, containing the attestation clause, it is not necessary for the whistleblower or his/her attorney to provide an attestation clause with respect to all future communications with the Whistleblower Office or is it necessary to administer an oath to the Whistleblower at an interview. 

This position by the Director is a sign that all efforts are being made to administer and run the Tax Whistleblower Program as smoothly as possible in order to ensure its success. 

Good Business Practice suggests that all information…not just the initial submission…. be submitted under penalties of perjury in order to be considered for an award pursuant to IRC § 7623(b)(6)(c).

Recommendation of the Tax Whistleblower Law Firm, LLC

Should you have any questions as to the IRS Tax Whistleblower Program please call 1-877-404-1040 or email

Who Gets Paid When There Exist Multiple Claims?

What happens when the Whistleblower Office receives multiple claims for reward on the same taxpayer from separate informants?  There does not exist a clear answer to this question based on current published guidance.

This question was posed to Stephen Whitlock, head of the Tax Whistleblower Reward Program, at the January 9, 2009 Conference of the American Bar Association–Division of Taxation.  Whitlock responded to the hypothetical by stating that his office has not yet run into this issue because no claims for reward under the new statute are at the stage of determining award amounts.  However, he stated that his office WILL NOT be giving out multiple awards.  Thus, it appears from Whitlock’s statements that the IRS will be choosing between two informants–the victor will receive a full reward, and the loser will receive nothing.  The big question that remains is how will the Whistleblower Office determine who to choose?  Previously, I presumed that the Whistleblower Office would lay a great deal of emphasis on timing–whoever “blows the Whistle first” would be the one who gets paid.  However, Whitlock made comments that seem to suggest that timing is not going to be the driving factor.  Rather, Whitlock stated that the Whistleblower Office would have to determine how each claimant contributed independently to the collection of unreported tax.  Therefore, Whitlock appears to be stating that he will make such determination, of who gets paid, based upon which informant provides the most helpful material to the IRS.  It can be assumed that timing will only be a factor where the informants provide equally valuable material.  

Whitlock’s is choosing a “facts and circumstances” analysis over a bright-line test.  It would have been easier for the Whistleblower Offfice to rely upon the dates to determine who gets paid.  I believe that there will be an ongoing dilemna within the Whistleblower Office in determining which of the informants get paid.  Whitlock is choosing a bright-line test when he states that his office WILL NOT be giving out multiple awards.  He could have said that the reward will be split between the two informants.  IRC section 7623 does allow for co-whistleblowers.  However, Whitlock appears to be reading this provision of IRC section 7623 as being limited to two informants who work together to submit one Form 211.

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