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U.S. Tax Court cracks open door in IRS whistleblower cases

As we note on our website at the long-tenured and broad-based business law firm of Shepherd, Finkelman, Miller & Shah, LLP, in Connecticut and with multiple offices elsewhere across the country, our lawyers provide knowledgeable and aggressive legal representation in whistleblower matters.

That covers a lot of terrain, given that fraud can be exposed in differing contexts, ranging from malfeasance in federal agencies and in the securities industry to wrongdoing by medical actors, bankers and tax cheats.

A recent Forbes article zeroes in on the last-mentioned area above, namely, IRS whistleblower lawsuits, which have often been filed in and ruled upon by the United States Tax Court.

The writer of that article notes that, while some individuals have been awarded under relevant laws governing the IRS whistleblower program, many would-be whistleblowers have long balked at becoming involved in such litigation.

The reason, as pointed to in the Forbes piece: an alleged "very narrow reading" of the term "collected proceeds." The IRS has long construed that to mean just owed taxes that are ultimately paid, with whistleblowers not being eligible for monetary awards in cases where a wrongdoer has simply been on the hook for civil forfeitures and criminal fines.

That now seems likely to change, given the recent ruling issued by the Tax Court. Judges in that tribunal held that "proceeds" is a broadly construed term, encompassing far more than just what is collected in previously unpaid taxes and expressly incorporating fines and forfeitures.

The above-cited commentator calls the ruling "great news … for all whistleblowers and the whistleblower program."

Whistleblower matters are at once complex and sensitive. An individual with questions or concerns relating to any aspect of a whistleblower claim or investigation might reasonably want to timely contact a lawyer with proven experience in this specialized area of law.

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