Award Determinations and Appeals
The Ferraro Law Firm
Washington, D.C. — Miami, Florida
Tax whistleblower award determinations are partly within the discretion of the IRS. With that fact in mind, think of the entire process as a tax controversy in reverse and the initial submission of information as your audit findings to the IRS. Your case should be presented to the IRS with the assumption that you will be challenging the amount of your award determination in Tax Court after the IRS collects the tax from the taxpayer.
Having a tax lawyer who has experience handling tax controversies and who is admitted to practice in the U.S. Tax Court greatly increases your chances of getting the money you deserve. To discuss a potential claim, contact our law offices today.
You are not technically required to hire an attorney to make a claim under the new tax whistleblower statute OR to represent you in litigation before the United States Tax Court to challenge your tax whistleblower award determination. You CAN do both of those things yourself. You can do your own brain surgery too.
We do not recommend either strategy.
According to the revisions made to Internal Revenue Code Section 7623, IRS whistleblower awards may now total between 15 and 30 percent of the amount collected when the tax whistleblower is determined to have made a substantial contribution. The IRS identified a nonexclusive list of factors in the award procedures outlined in the Internal Revenue Manual that will be considered in determining where on the 15 to 30 percent statutory award scale your award will fall. These factors generally relate to the impact the tax whistleblower has on the IRS's case as a whole, but it includes things such as, providing "exceptional cooperation and assistance during the audit, investigation, or trial, including useful technical or legal analysis of the taxpayer's records." However, a tax whistleblower's best chance of ensuring that they receive the maximum award is before the IRS decides to take action. Our experienced tax lawyers can help you prepare your submission in a way that the IRS will be able to understand and use.
If you merely make allegations of an underpayment of tax but do not provide actual information that contributes to the IRS's efforts to pursue the taxpayer—you may still be entitled to an award but it will not total more than 10 percent of the amount collected. Furthermore, the IRS may reduce or even eliminate the reward entirely if it determines the allegations you made did not lead to the collection of the tax. Because of this, you should carefully consider what information you have to present to the IRS and give serious thought to hiring an attorney before any contact with an IRS representative is made.
What are you going to do if the IRS takes your high-quality information and then short changes you?
While the IRS has every incentive to encourage and reward tax whistleblowers, it does not mean you should take an IRS award determination as the absolute last word on the subject. The award procedures created an initial award determination that gives tax whistleblowers the opportunity to comment on the proposed award before the IRS makes a final determination. The IRS will allow a tax whistleblower and their counsel to review the administrative file, but the IRS will not allow the tax whistleblower to make copies of the file. Given that the IRS will not allow a tax whistleblower to make copies of the administrative file, it is imperative that you have experienced tax counsel with you to ensure that the award determination reflects (1) the appropriate base amount of tax, interest, penalties, and other amounts collected, as well as (2) the highest possible award percentage based on your contribution to the IRS’s case. Once the IRS has made a final award determination, a whistleblower may appeal this determination to the United States Tax Court under one of the key revisions made to Section 7623. The Ferraro Law Firm is well equipped to assist you with the appeal of an unsatisfactory award determination.