Two whistleblowers won their fight with the U.S. Internal Revenue Service over the amount of money they could claim from a pool they helped the agency collect. Their victory could encourage more whistleblowers within federal agencies to come forward with key information.
The dispute between the whistleblowers and the IRS centered on whether reward payments to whistleblowers could include a portion of money collected in the form of civil forfeitures and criminal penalties, instead of just a portion of the tax dollars the IRS would have missed out on without the whistleblowers’ assistance. The U.S. Department of Justice and IRS ultimately agreed to drop their joint appeal of a 2016 Tax Court decision that stated cash from both categories could be paid to the whistleblower.
With this decision, the whistleblowers in question will receive $12.9 million, in addition to the $4.5 million already paid out to them.
According to many whistleblower attorneys, this recent decision could improve the chances that more potential whistleblowers will come forward with information on wrongdoing within their businesses, organizations or public agencies.
Under current IRS whistleblower law, anyone who brings such wrongdoing to the attention of the agency may receive as much as 30 percent of the money it collects as a result. This case provides clarity as to what can be considered “collected proceeds” now that there is precedent for also including civil and criminal penalties.
The IRS previously argued that because its own whistleblower rules only dealt with tax matters, the collected payments could only be tied to tax-related money.
To learn more about your legal options if you’re aware of illegal or unethical practices within a business or organization, consult an experienced Dallas attorney at Kardell Law Group today.