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Recent Tax Court Decision Considered a Win for Whistleblowers

A tax court recently ruled that giving information to federal agencies and a division of the Internal Revenue Service (IRS) before filing an Application for Award for Original Information (also known as Form 211) does not make a whistleblower ineligible to receive an award.

There is a whistleblower program in place that provides compensation to people if the IRS makes use of any information provided by the whistleblower to collect money from a delinquent taxpayer. There are two types of such awards. The first includes awards provided if taxes, interest, penalties and other amounts collected are less than $2 million, and these are given out on a discretionary basis. The second involves recovery amounts of more than $2 million, and whistleblowers in these cases may receive anywhere between 15 and 30 percent of the total amount of money collected in the action.

In this particular case, the petitioner had actually been arrested for being involved in criminal conspiracy, and to lessen the punishments he faced, he agreed to work with the IRS, FBI and other federal agencies. While he was in custody, he gave officials information on a large federal tax evasion scheme aided by a foreign business. The targeted business was forced to pay $74 million to the United States government as a result of the investigation.

Initially, the federal government did not believe the petitioners who assisted the government in these cases were eligible to receive whistleblower awards. However, the tax court ruled otherwise, meaning that the petitioner in this particular case was eligible to receive 15 to 30 percent of the $74 million amount.

To learn more about how you may file a whistleblower complaint, contact Steve Kardell at Whistleblower Law for Managers.

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