The Tax Court held that a husband and wife who supplied information to the Internal Revenue Service were entitled to a full 24 percent of the “collected proceeds,” including a criminal fine and civil forfeitures to the government, not just tax restitution.

The U.S. Tax Court
The U.S. Tax Court Matthew Bisanz

The case, Whistleblower 21276-13W v. Commissioner, 147 TC 4, was decided last August, but the Tax Court has just denied the IRS’s Motion for Reconsideration, directing it to pay $17,791,706 to the couple.

The final decision keeps in place the landmark victory for whistleblowers by the Tax Court encompassing a broad definition of “collected proceeds” and holding that whistleblowers should receive an award based on all the dollars collected by the government due to the information they provide.

“The IRS Chief Counsel’s office emptied the in-basket in making arguments for the Motion for Reconsideration, including the availability of funds for award payments, to no avail,” said Dean Zerbe, a partner at Zerbe, Fingeret, Frank & Jadav, PC and lead counsel in the case. “While I appreciate that Counsel wanted to defend its own corner, at the end of the day the Tax Court wasn’t buying what IRS Counsel was selling. This decision gives Treasury Secretary nominee [Steven] Mnuchin and the new administration an opportunity to embrace the Tax Court’s final ruling and show that it supports the IRS whistleblower program and is serious about going after big time tax cheats.”

Stephen M. Kohn, of Kohn, Kohn and Colapinto and co-counsel for the case as well as executive director of the National Whistleblower Center, stated, “Senator Grassley, the champion of the IRS whistleblower program raised in questions to Secretary of Treasury nominee Mr. Steve Mnuchin before the Senate Finance committee the issue of ‘collected proceeds’—which is at the center of this important Tax Court win for whistleblowers. Mr. Munchin assured the senator that he supported the IRS whistleblower program and would review the narrow interpretation of ‘collected proceeds.’”

Roger Russell

Roger Russell is senior editor for tax with Accounting Today, and a tax attorney and a legal and accounting journalist.