IRS Tax Whistleblower Articles

Anonymous Corporate Tax Whistleblower Awarded $38 Million

by Matthew Dalton

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The IRS has awarded an anonymous whistleblower $38 million, according to a release from the whistleblower's attorney, Scott A. Knott of the Ferraro Law Firm.

According to the release, the whistleblower provided information on a corporate tax avoidance scheme. The name of the whistleblower and the company remain confidential and the corporation does not know a whistleblower was involved in the recovery. The release does state that the company is in the top half of the Ferraro 500 list, which lists the Fortune 500 in order of their uncertain tax positions. (For the release, see Doc 2012-22264 .)

Under section 7623, a whistleblower award must be at least 15 percent, but no more than 30 percent, of the collected proceeds.

Knott told Tax Analysts that the award included a reduced withholding agreement that took into account the above-the-line deduction for attorney fees, the first of its kind to his knowledge. An IRS memo published in June allowed reduced withholding after the IRS was criticized for implementing withholding on awards even though withholding was not mentioned in section 7623. (For the memo (WO-25-0612-03), see Doc 2012-12345 or 2012 TNT 111-23 . For prior coverage, see Doc 2012-3499 or 2012 TNT 35-13 .)

Knott praised the IRS Whistleblower Office for processing the award quickly. "Once we got to the award determination phase, it was done within the guidelines" set out in a June field directive from Steven Miller, IRS deputy commissioner for services and enforcement, said Knott. That directive announced a comprehensive review of operating guidelines and procedures and requested that the whistleblower be notified of an award decision within 90 days of when collected proceeds can be determined. (For the field directive, see Doc 2012-13286 or 2012 TNT 121-15 .)

The award comes after the IRS in September awarded former UBS banker Bradley Birkenfeld $104 million for his role in collecting more than $5 billion from UBS and individuals who came forward under the IRS voluntary disclosure initiative. (For prior coverage, see Doc 2012-18996 or 2012 TNT 177-1 .) More recently, a former IRS examiner was charged with violating federal law by disclosing the identity of a whistleblower. (For prior coverage, see Doc 2012- 20276 or 2012 TNT 190-5 .)