Tax Court Denies Whistleblower’s Petition for Tax Evasion Reward – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on August 27, 2014

On August 4, the US Tax Court determined that it lacked the jurisdiction to consider an award claim by a whistleblower in a case regarding 2 Swiss bankers involved in tax evasion. The Court ruled that it couldn’t assume jurisdiction as the IRS had yet to make its final determination.

Under tax code Section 7623(b), whistleblowers are entitled to a nondiscretionary award in particular cases. Judge Albert G. Lauber, however, ruled that the Court couldn’t consider the whistleblower’s petition for the reward because correspondence between the whistleblower’s counsel and the Internal Revenue Service’s (IRS’s) Whistleblower Office hadn’t established whether or not the IRS had made a determination by the time the whistleblower filed the petition.

According to the whistleblower, his cooperation with the IRS and Department of Justice (DOJ) led to the arrest of a taxpayer for tax evasion, as well as a multimillion dollar penalty for failure to file Form TD F 90-22.1, Report on Foreign Bank and Financial Accounts (FBAR). The taxpayer also agreed to pay a small amount of restitution representing unpaid income tax on interest earned from the Swiss bank accounts. The whistleblower claimed his reward based on the sum total of both the penalty and restitution.

In August 2012, the IRS told the whistleblower’s attorney that they had yet to make a determination as to whether the whistleblower was entitled to an award. However, the IRS did state that the FBAR penalty wasn’t included in “proceeds collected” upon which an award would be based. The following month, the whistleblower filed a petition to challenge what he claimed to be a de facto determination.

In September 2013, the IRS issued a letter to the whistleblower denying the claim and saying that the DOJ and relevant IRS divisions had informed the IRS Whistleblower Office that they did not use the whistleblower’s information as a basis for taking action against the taxpayer. This led to the whistleblower filing a second petition, which was referenced by the Tax Court in its denial.

                Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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