§7623 — Expenses of detection of underpayments and fraud, etc.
88 citing cases
Statute Text — 26 U.S.C. §7623
The Secretary, under regulations prescribed by the Secretary, is authorized to pay such sums as he deems necessary for—
detecting underpayments of tax, or
detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same,
in cases where such expenses are not otherwise provided for by law. Any amount payable under the preceding sentence shall be paid from the proceeds of amounts collected by reason of the information provided, and any amount so collected shall be available for such payments.
If the Secretary proceeds with any administrative or judicial action described in subsection (a) based on information brought to the Secretary’s attention by an individual, such individual shall, subject to paragraph (2), receive as an award at least 15 percent but not more than 30 percent of the proceeds collected as a result of the action (including any related actions) or from any settlement in response to such action (determined without regard to whether such proceeds are available to the Secretary). The determination of the amount of such award by the Whistleblower Office shall depend upon the extent to which the individual substantially contributed to such action.
In the event the action described in paragraph (1) is one which the Whistleblower Office determines to be based principally on disclosures of specific allegations (other than information provided by the individual described in paragraph (1)) resulting from a judicial or administrative hearing, from a governmental report, hearing, audit, or investigation, or from the news media, the Whistleblower Office may award such sums as it considers appropriate, but in no case more than 10 percent of the proceeds collected as a result of the action (including any related actions) or from any settlement in response to such action (determined without regard to whether such proceeds are available to the Secretary), taking into account the significance of the individual’s information and the role of such individual and any legal representative of such individual in contributing to such action.
Subparagraph (A) shall not apply if the information resulting in the initiation of the action described in paragraph (1) was originally provided by the individual described in paragraph (1).
If the Whistleblower Office determines that the claim for an award under paragraph (1) or (2) is brought by an individual who planned and initiated the actions that led to the underpayment of tax or actions described in subsection (a)(2), then the Whistleblower Office may appropriately reduce such award. If such individual is convicted of criminal conduct arising from the role described in the preceding sentence, the Whistleblower Office shall deny any award.
Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).
This subsection shall apply with respect to any action—
against any taxpayer, but in the case of any individual, only if such individual’s gross income exceeds $200,000 for any taxable year subject to such action, and
if the proceeds in dispute exceed $2,000,000.
No contract with the Internal Revenue Service is necessary for any individual to receive an award under this subsection.
Any individual described in paragraph (1) or (2) may be represented by counsel.
No award may be made under this subsection based on information submitted to the Secretary unless such information is submitted under penalty of perjury.
For purposes of this section, the term “proceeds” includes—
penalties, interest, additions to tax, and additional amounts provided under the internal revenue laws, and
any proceeds arising from laws for which the Internal Revenue Service is authorized to administer, enforce, or investigate, including—
criminal fines and civil forfeitures, and
violations of reporting requirements.
No employer, or any officer, employee, contractor, subcontractor, or agent of such employer, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment (including through an act in the ordinary course of such employee’s duties) in reprisal for any lawful act done by the employee—
to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of the Treasury, the Treasury Inspector General for Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or
to testify, participate in, or otherwise assist in any administrative or judicial action taken by the Internal Revenue Service relating to an alleged underpayment of tax or any violation of the internal revenue laws or any provision of Federal law relating to tax fraud.
A person who alleges discharge or other reprisal by any person in violation of paragraph (1) may seek relief under paragraph (3) by—
filing a complaint with the Secretary of Labor, or
if the Secretary of Labor has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.
An action under subparagraph (A)(i) shall be governed under the rules and procedures set forth in section 42121(b) of title 49, United States Code.
Notification made under section 42121(b)(1) of title 49, United States Code, shall be made to the person named in the complaint and to the employer.
An action brought under subparagraph (A)(ii) shall be governed by the legal burdens of proof set forth in
section 42121(b) of title 49
, United States Code, except that in applying such section—
“behavior described in paragraph (1)” shall be substituted for “behavior described in paragraphs (1) through (4) of subsection (a)” each place it appears in paragraph (2)(B) thereof, and
“a violation of paragraph (1)” shall be substituted for “a violation of subsection (a)” each place it appears.
A complaint under subparagraph (A)(i) shall be filed not later than 180 days after the date on which the violation occurs.
A party to an action brought under subparagraph (A)(ii) shall be entitled to trial by jury.
An employee prevailing in any action under paragraph (2)(A) shall be entitled to all relief necessary to make the employee whole.
Relief for any action under subparagraph (A) shall include—
reinstatement with the same seniority status that the employee would have had, but for the reprisal,
the sum of 200 percent of the amount of back pay and 100 percent of all lost benefits, with interest, and
compensation for any special damages sustained as a result of the reprisal, including litigation costs, expert witness fees, and reasonable attorney fees.
Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law, or under any collective bargaining agreement.
The rights and remedies provided for in this subsection may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement.
No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this subsection.
Treasury Regulations
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Treas. Reg. §301.7623-1General rules, submitting information on underpayments of tax or violations of the internal revenue laws, and filing claims for award
(a) In general. In cases in which awards are not otherwise provided for by law, the Whistleblower Office may pay an award under section 7623(a), in a suitable amount, for information necessary for detecting underpayments of tax or detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same. In cases that satisfy the requirements of section 7623(b)(5) and (b)(6) and in which the Internal Revenue Service (IRS) proceeds with an administrative or judicial action based on information provided by an individual, the Whistleblower Office must determine and pay an award under section 7623(b)(1), (2), or (3). The awards provided for by section 7623 and this paragraph must be paid from collected proceeds, as defined in § 301.7623-2(d).
(b) Eligibility to file claim for award. (1) In general. Any individual, other than an individual described in paragraph (b)(2) of this section, is eligible to file a claim for award and to receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4.
(2) Ineligible whistleblowers. The Whistleblower Office will reject any claim for award filed by an ineligible whistleblower and will provide written notice of the rejection to the whistleblower. The following individuals are not eligible to file a claim for award or receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4—
(i) An individual who is an employee of the Department of Treasury or was an employee of the Department of Treasury when the individual obtained the information on which the claim is based;
(ii) An individual who obtained the information through the individual's official duties as an employee of the Federal Government, or who is acting within the scope of those official duties as an employee of the Federal Government;
(iii) An individual who is or was required by Federal law or regulation to disclose the information or who is or was precluded by Federal law or regulation from disclosing the information;
(iv) An individual who obtained or had access to the information based on a contract with the Federal Government; or
(v) An individual who filed a claim for award based on information obtained from an ineligible whistleblower for the purpose of avoiding the rejection of the claim that would have resulted if the claim was filed by the ineligible whistleblower.
(c) Submission of information and claims for award. (1) Submitting information. To be eligible to receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4, a whistleblower must submit to the IRS specific and credible information that the whistleblower believes will lead to collected proceeds from one or more persons whom the whistleblower believes have failed to comply with the internal revenue laws. In general, a whistleblower's submission should identify the person(s) believed to have failed to comply with the internal revenue laws and should provide substantive information, including all available documentation, that supports the whistleblower's allegations. Information that identifies a pass-through entity will be considered to also identify all persons with a direct or indirect interest in the entity. Information that identifies a member of a firm who promoted another identified person's participation in a transaction described and documented in the information provided will be considered to also identify the firm and all other members of the firm. Submissions that provide speculative information or that do not provide specific and credible information regarding tax underpayments or violations of internal revenue laws do not provide a basis for an award. If documents or supporting evidence are known to the whistleblower but are not in the whistleblower's control, then the whistleblower should describe the documents or supporting evidence and identify their location to the best of the whistleblower's ability. If all available information known to the whistleblower is not provided to the IRS by the whistleblower, then the whistleblower bears the risk that this information might not be considered by the Whistleblower Office for purposes of an award.
(2) Filing claim for award. To claim an award under section 7623 and §§ 301.7623-1 through 301.7623-4 for information provided to the IRS, a whistleblower must file a formal claim for award by completing and sending Form 211, “Application for Award for Original Information,” to the Internal Revenue Service, Whistleblower Office, at the address provided on the form, or by complying with other claim filing procedures as may be prescribed by the IRS in other published guidance. The Form 211 should be completed in its entirety and should include the following information—
(i) The date of the claim;
(ii) The whistleblower's name;
(iii) The whistleblower's address and telephone number;
(iv) The whistleblower's date of birth;
(v) The whistleblower's taxpayer identification number; and
(vi) An explanation of how the information on which the claim is based came to the attention and into the possession of the whistleblower, including, as available, the date(s) on which the whistleblower acquired the information and a complete description of the whistleblower's present or former relationship (if any) to person(s) identified on the Form 211.
(3) Under penalty of perjury. No award may be made under section 7623(b) unless the information on which the award is based is submitted to the IRS under penalty of perjury. All claims for award under section 7623 and §§ 301.7623-1 through 301.7623-4 must be accompanied by an original signed declaration under penalty of perjury, as follows: “I declare under penalty of perjury that I have examined this application, my accompanying statement, and supporting documentation and aver that such application is true, correct, and complete, to the best of my knowledge.” This requirement precludes the filing of a claim for award by a person serving as a representative of, or in any way on behalf of, another individual. Claims filed by more than one whistleblower (joint claims) must be signed by each individual whistleblower under penalty of perjury.
(4) Perfecting claim for award. If a whistleblower files a claim for award that does not include information described under paragraph (c)(2) of this section, does not contain specific and credible information as described in paragraph (c)(1) of this section, or is based on information that was not submitted under penalty of perjury as required by paragraph (c)(3) of this section, the Whistleblower Office may reject the claim or notify the whistleblower of the deficiencies and provide the whistleblower an opportunity to perfect the claim for award. If a whistleblower does not perfect the claim for award within the time period specified by the Whistleblower Office, then the Whistleblower Office may reject the claim. If the Whistleblower Office rejects a claim, then the Whistleblower Office will provide notice of the rejection to the whistleblower pursuant to the rules of § 301.7623-3(b)(3) or (c)(7). If the Whistleblower Office rejects a claim for the reasons described in this paragraph, then the whistleblower may perfect and resubmit the claim.
(d) Request for assistance. (1) In general. The Whistleblower Office, the IRS, or IRS Office of Chief Counsel may request the assistance of a whistleblower or the whistleblower's legal representative. Any assistance shall be at the direction and control of the Whistleblower Office, the IRS, or the IRS Office of Chief Counsel assigned to the matter. See § 301.6103(n)-2 for rules regarding written contracts among the IRS, whistleblowers, and legal representatives of whistleblowers.
(2) No agency relationship. Submitting information, filing a claim for award, or responding to a request for assistance does not create an agency relationship between a whistleblower and the Federal Government, nor does a whistleblower or the whistleblower's legal representative act in any way on behalf of the Federal Government.
(e) Confidentiality of whistleblowers. Under the informant's privilege, the IRS will use its best efforts to protect the identity of whistleblowers. In some circumstances, the IRS may need to reveal a whistleblower's identity, for example, when it is determined that it is in the best interests of the Government to use a whistleblower as a witness in a judicial proceeding. In those circumstances, the IRS will make every effort to notify the whistleblower before revealing the whistleblower's identity.
(f) Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.
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Treas. Reg. §301.7623-1(a)In general.
In general. In cases in which awards are not otherwise provided for by law, the Whistleblower Office may pay an award under section 7623(a), in a suitable amount, for information necessary for detecting underpayments of tax or detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same. In cases that satisfy the requirements of section 7623(b)(5) and (b)(6) and in which the Internal Revenue Service (IRS) proceeds with an administrative or judicial action based on information provided by an individual, the Whistleblower Office must determine and pay an award under section 7623(b)(1), (2), or (3). The awards provided for by section 7623 and this paragraph must be paid from collected proceeds, as defined in § 301.7623-2(d).
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Treas. Reg. §301.7623-1(b)Eligibility to file claim for award.
Eligibility to file claim for award. (1) In general. Any individual, other than an individual described in paragraph (b)(2) of this section, is eligible to file a claim for award and to receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4.
(2) Ineligible whistleblowers. The Whistleblower Office will reject any claim for award filed by an ineligible whistleblower and will provide written notice of the rejection to the whistleblower. The following individuals are not eligible to file a claim for award or receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4—
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Treas. Reg. §301.7623-1(c)Submission of information and claims for award.
Submission of information and claims for award. (1) Submitting information. To be eligible to receive an award under section 7623 and §§ 301.7623-1 through 301.7623-4, a whistleblower must submit to the IRS specific and credible information that the whistleblower believes will lead to collected proceeds from one or more persons whom the whistleblower believes have failed to comply with the internal revenue laws. In general, a whistleblower's submission should identify the person(s) believed to have failed to comply with the internal revenue laws and should provide substantive information, including all available documentation, that supports the whistleblower's allegations. Information that identifies a pass-through entity will be considered to also identify all persons with a direct or indirect interest in the entity. Information that identifies a member of a firm who promoted another identified person's participation in a transaction described and documented in the information provided will be considered to also identify the firm and all other members of the firm. Submissions that provide speculative information or that do not provide specific and credible information regarding tax underpayments or violations of internal revenue laws do not provide a basis for an award. If documents or supporting evidence are known to the whistleblower but are not in the whistleblower's control, then the whistleblower should describe the documents or supporting evidence and identify their location to the best of the whistleblower's ability. If all available information known to the whistleblower is not provided to the IRS by the whistleblower, then the whistleblower bears the risk that this information might not be considered by the Whistleblower Office for purposes of an award.
(2) Filing claim for award. To claim an award under section 7623 and §§ 301.7623-1 through 301.7623-4 for information provided to the IRS, a whistleblower must file a formal claim for award by completing and sending Form 211, “Application for Award for Original Information,” to the Internal Revenue Service, Whistleblower Office, at the address provided on the form, or by complying with other claim filing procedures as may be prescribed by the IRS in other published guidance. The Form 211 should be completed in its entirety and should include the following information—
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Treas. Reg. §301.7623-1(d)Request for assistance.
Request for assistance. (1) In general. The Whistleblower Office, the IRS, or IRS Office of Chief Counsel may request the assistance of a whistleblower or the whistleblower's legal representative. Any assistance shall be at the direction and control of the Whistleblower Office, the IRS, or the IRS Office of Chief Counsel assigned to the matter. See § 301.6103(n)-2 for rules regarding written contracts among the IRS, whistleblowers, and legal representatives of whistleblowers.
(2) No agency relationship. Submitting information, filing a claim for award, or responding to a request for assistance does not create an agency relationship between a whistleblower and the Federal Government, nor does a whistleblower or the whistleblower's legal representative act in any way on behalf of the Federal Government.
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Treas. Reg. §301.7623-1(e)Confidentiality of whistleblowers.
Confidentiality of whistleblowers. Under the informant's privilege, the IRS will use its best efforts to protect the identity of whistleblowers. In some circumstances, the IRS may need to reveal a whistleblower's identity, for example, when it is determined that it is in the best interests of the Government to use a whistleblower as a witness in a judicial proceeding. In those circumstances, the IRS will make every effort to notify the whistleblower before revealing the whistleblower's identity.
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Treas. Reg. §301.7623-1(f)Effective/applicability date.
Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.
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Treas. Reg. §301.7623-1(i)§301.7623-1(i)
The date of the claim;
(ii) The whistleblower's name;
(iii) The whistleblower's address and telephone number;
(iv) The whistleblower's date of birth;
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Treas. Reg. §301.7623-1(v)§301.7623-1(v)
The whistleblower's taxpayer identification number; and
(vi) An explanation of how the information on which the claim is based came to the attention and into the possession of the whistleblower, including, as available, the date(s) on which the whistleblower acquired the information and a complete description of the whistleblower's present or former relationship (if any) to person(s) identified on the Form 211.
(3) Under penalty of perjury. No award may be made under section 7623(b) unless the information on which the award is based is submitted to the IRS under penalty of perjury. All claims for award under section 7623 and §§ 301.7623-1 through 301.7623-4 must be accompanied by an original signed declaration under penalty of perjury, as follows: “I declare under penalty of perjury that I have examined this application, my accompanying statement, and supporting documentation and aver that such application is true, correct, and complete, to the best of my knowledge.” This requirement precludes the filing of a claim for award by a person serving as a representative of, or in any way on behalf of, another individual. Claims filed by more than one whistleblower (joint claims) must be signed by each individual whistleblower under penalty of perjury.
(4) Perfecting claim for award. If a whistleblower files a claim for award that does not include information described under paragraph (c)(2) of this section, does not contain specific and credible information as described in paragraph (c)(1) of this section, or is based on information that was not submitted under penalty of perjury as required by paragraph (c)(3) of this section, the Whistleblower Office may reject the claim or notify the whistleblower of the deficiencies and provide the whistleblower an opportunity to perfect the claim for award. If a whistleblower does not perfect the claim for award within the time period specified by the Whistleblower Office, then the Whistleblower Office may reject the claim. If the Whistleblower Office rejects a claim, then the Whistleblower Office will provide notice of the rejection to the whistleblower pursuant to the rules of § 301.7623-3(b)(3) or (c)(7). If the Whistleblower Office rejects a claim for the reasons described in this paragraph, then the whistleblower may perfect and resubmit the claim.
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Treas. Reg. §301.7623-2Definitions
(a) Action. (1) In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term action means an administrative or judicial action.
(2) Administrative action. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term administrative action means all or a portion of an Internal Revenue Service (IRS) civil or criminal proceeding against any person that may result in collected proceeds, as defined in paragraph (d) of this section, including, for example, an examination, a collection proceeding, a status determination proceeding, or a criminal investigation.
(3) Judicial action. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term judicial action means all or a portion of a proceeding against any person in any court that may result in collected proceeds, as defined in paragraph (d) of this section.
(b) Proceeds based on. (1) In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the IRS proceeds based on information provided by a whistleblower when the information provided substantially contributes to an action against a person identified by the whistleblower. For example, the IRS proceeds based on the information provided when the IRS initiates a new action, expands the scope of an ongoing action, or continues to pursue an ongoing action, that the IRS would not have initiated, expanded the scope of, or continued to pursue, but for the information provided. The IRS does not proceed based on information when the IRS analyzes the information provided or investigates a matter raised by the information provided.
(2) Examples. The provisions of paragraph (b)(1) of this section may be illustrated by the following examples:
(c) Related action. (1) In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term related action means an action against a person other than the person(s) identified in the information provided and subject to the original action(s), when—
(i) The facts relating to the underpayment of tax or violations of the internal revenue laws by the other person are substantially the same as the facts described and documented in the information provided (with respect to the person(s) subject to the original action);
(ii) The IRS proceeds with the action against the other person based on the specific facts described and documented in the information provided; and
(iii) The other, unidentified person is related to the person identified in the information provided. For purposes of this paragraph, an unidentified person is related to the person identified in the information provided if the IRS can identify the unidentified person using the information provided (without first having to use the information provided to identify any other person or having to independently obtain additional information).
(2) Examples. The provisions of paragraph (c)(1) of this section may be illustrated by the following examples:
(d) Collected proceeds. (1) In general. For purposes of section 7623 and §§ 301.7623-1 through 301.7623-4, the terms proceeds of amounts collected and collected proceeds (collectively, collected proceeds) include: Tax, penalties, interest, additions to tax, and additional amounts collected because of the information provided; amounts collected prior to receipt of the information if the information provided results in the denial of a claim for refund that otherwise would have been paid; and a reduction of an overpayment credit balance used to satisfy a tax liability incurred because of the information provided. Collected proceeds are limited to amounts collected under the provisions of title 26, United States Code.
(2) Refund netting. (i) In general. If any portion of a claim for refund that is substantively unrelated to the information provided is—
(A) Allowed, and
(B) Used to satisfy a tax liability attributable to the information provided instead of refunded to the taxpayer, then the allowed but non-refunded amount constitutes collected proceeds.
(ii) Example. The provisions of paragraph (d)(2)(i) of this section may be illustrated by the following example:
(3) Amended returns. Amounts collected based on amended returns constitute collected proceeds if—
(i) The IRS proceeds based on the information provided;
(ii) As a result, the person subject to the action(s) with which the IRS proceeds files amended returns; and
(iii) The amounts collected based on the amended returns relate to the activities or facts described in the information provided.
(4) Criminal fines. Criminal fines deposited into the Crime Victims Fund are not collected proceeds and cannot be used for payment of awards.
(5) Computation of collected proceeds. (i) In general. Pursuant to § 301.7623-4(d)(1), the IRS cannot make an award payment until there has been a final determination of tax. For purposes of determining the amount of an award under section 7623 and §§ 301.7623-1 through 301.7623-4, after there has been a final determination of tax as defined in § 301.7623-4(d)(2), the IRS will compute the amount of collected proceeds based on all information known with respect to the taxpayer's account, including with respect to all tax attributes, as of the date the computation is made.
(ii) Post-determination proceeds. If, based on all information known with respect to the taxpayer's account as of the date of the computation described in paragraph (d)(5)(i) of this section, there is a possibility that the IRS may collect additional proceeds, then the Whistleblower Office will continue to monitor the case. If the Whistleblower Office identifies additional collected proceeds, then the IRS will compute and pay accordingly.
(iii) Partial collection. If the IRS does not collect the full amount of taxes, penalties, interest, additions to tax, and additional amounts assessed against the taxpayer, then any amounts that the IRS does collect will constitute collected proceeds in the same proportion that the adjustments attributable to the information provided bear to the total adjustments.
(e) Amount in dispute and gross income. (1) In general. Section 7623(b) applies with respect to any action against any taxpayer in which the tax, penalties, interest, additions to tax, and additional amounts in dispute exceed $2,000,000 but, if the taxpayer is an individual, then only if the taxpayer's gross income exceeds $200,000 in at least one taxable year subject to the action.
(2) Amount in dispute. (i) In general. For purposes of section 7623(b)(5) and §§ 301.7623-1 through 301.7623-4, the term amount in dispute means the greater of the maximum total of tax, penalties, interest, additions to tax, and additional amounts that resulted from the action(s) with which the IRS proceeded based on the information provided, or the maximum total of such amounts that were stated in formal positions taken by the IRS in the action(s). The IRS will compute the amount in dispute, for purposes of award determinations described in § 301.7623-3(c)(6), when there has been a final determination of tax as defined in § 301.7623-4(d)(2).
(ii) Examples. The provisions of paragraph (e)(2)(i) of this section may be illustrated by the following examples:
(3) Gross income. For purposes of section 7623(b)(5) and §§ 301.7623-1 through 301.7623-4, the term gross income has the same meaning as provided under section 61(a). The IRS will compute the individual taxpayer's gross income, for purposes of award determinations described in § 301.7623-3(c)(6), when there has been a final determination of tax as defined in § 301.7623-4(d)(2).
(f) Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.
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Treas. Reg. §301.7623-2(a)Action.
Action. (1) In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term action means an administrative or judicial action.
(2) Administrative action. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term administrative action means all or a portion of an Internal Revenue Service (IRS) civil or criminal proceeding against any person that may result in collected proceeds, as defined in paragraph (d) of this section, including, for example, an examination, a collection proceeding, a status determination proceeding, or a criminal investigation.
(3) Judicial action. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term judicial action means all or a portion of a proceeding against any person in any court that may result in collected proceeds, as defined in paragraph (d) of this section.
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Treas. Reg. §301.7623-2(b)Proceeds based on.
Proceeds based on. (1) In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the IRS proceeds based on information provided by a whistleblower when the information provided substantially contributes to an action against a person identified by the whistleblower. For example, the IRS proceeds based on the information provided when the IRS initiates a new action, expands the scope of an ongoing action, or continues to pursue an ongoing action, that the IRS would not have initiated, expanded the scope of, or continued to pursue, but for the information provided. The IRS does not proceed based on information when the IRS analyzes the information provided or investigates a matter raised by the information provided.
(2) Examples. The provisions of paragraph (b)(1) of this section may be illustrated by the following examples:
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Treas. Reg. §301.7623-2(c)Related action.
Related action. (1) In general. For purposes of section 7623(b) and §§ 301.7623-1 through 301.7623-4, the term related action means an action against a person other than the person(s) identified in the information provided and subject to the original action(s), when—
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Treas. Reg. §301.7623-2(d)Collected proceeds.
Collected proceeds. (1) In general. For purposes of section 7623 and §§ 301.7623-1 through 301.7623-4, the terms proceeds of amounts collected and collected proceeds (collectively, collected proceeds) include: Tax, penalties, interest, additions to tax, and additional amounts collected because of the information provided; amounts collected prior to receipt of the information if the information provided results in the denial of a claim for refund that otherwise would have been paid; and a reduction of an overpayment credit balance used to satisfy a tax liability incurred because of the information provided. Collected proceeds are limited to amounts collected under the provisions of title 26, United States Code.
(2) Refund netting. (i) In general. If any portion of a claim for refund that is substantively unrelated to the information provided is—
(A) Allowed, and
(B) Used to satisfy a tax liability attributable to the information provided instead of refunded to the taxpayer, then the allowed but non-refunded amount constitutes collected proceeds.
(ii) Example. The provisions of paragraph (d)(2)(i) of this section may be illustrated by the following example:
(3) Amended returns. Amounts collected based on amended returns constitute collected proceeds if—
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Treas. Reg. §301.7623-2(e)Amount in dispute and gross income.
Amount in dispute and gross income. (1) In general. Section 7623(b) applies with respect to any action against any taxpayer in which the tax, penalties, interest, additions to tax, and additional amounts in dispute exceed $2,000,000 but, if the taxpayer is an individual, then only if the taxpayer's gross income exceeds $200,000 in at least one taxable year subject to the action.
(2) Amount in dispute. (i) In general. For purposes of section 7623(b)(5) and §§ 301.7623-1 through 301.7623-4, the term amount in dispute means the greater of the maximum total of tax, penalties, interest, additions to tax, and additional amounts that resulted from the action(s) with which the IRS proceeded based on the information provided, or the maximum total of such amounts that were stated in formal positions taken by the IRS in the action(s). The IRS will compute the amount in dispute, for purposes of award determinations described in § 301.7623-3(c)(6), when there has been a final determination of tax as defined in § 301.7623-4(d)(2).
(ii) Examples. The provisions of paragraph (e)(2)(i) of this section may be illustrated by the following examples:
(3) Gross income. For purposes of section 7623(b)(5) and §§ 301.7623-1 through 301.7623-4, the term gross income has the same meaning as provided under section 61(a). The IRS will compute the individual taxpayer's gross income, for purposes of award determinations described in § 301.7623-3(c)(6), when there has been a final determination of tax as defined in § 301.7623-4(d)(2).
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Treas. Reg. §301.7623-2(f)Effective/applicability date.
Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.
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Treas. Reg. §301.7623-2(i)§301.7623-2(i)
The IRS proceeds based on the information provided;
(ii) As a result, the person subject to the action(s) with which the IRS proceeds files amended returns; and
(iii) The amounts collected based on the amended returns relate to the activities or facts described in the information provided.
(4) Criminal fines. Criminal fines deposited into the Crime Victims Fund are not collected proceeds and cannot be used for payment of awards.
(5) Computation of collected proceeds. (i) In general. Pursuant to § 301.7623-4(d)(1), the IRS cannot make an award payment until there has been a final determination of tax. For purposes of determining the amount of an award under section 7623 and §§ 301.7623-1 through 301.7623-4, after there has been a final determination of tax as defined in § 301.7623-4(d)(2), the IRS will compute the amount of collected proceeds based on all information known with respect to the taxpayer's account, including with respect to all tax attributes, as of the date the computation is made.
(ii) Post-determination proceeds. If, based on all information known with respect to the taxpayer's account as of the date of the computation described in paragraph (d)(5)(i) of this section, there is a possibility that the IRS may collect additional proceeds, then the Whistleblower Office will continue to monitor the case. If the Whistleblower Office identifies additional collected proceeds, then the IRS will compute and pay accordingly.
(iii) Partial collection. If the IRS does not collect the full amount of taxes, penalties, interest, additions to tax, and additional amounts assessed against the taxpayer, then any amounts that the IRS does collect will constitute collected proceeds in the same proportion that the adjustments attributable to the information provided bear to the total adjustments.
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Treas. Reg. §301.7623-3Whistleblower administrative proceedings and appeals of award determinations
(a) In general. The Whistleblower Office will pay awards under section 7623(a) and determine and pay awards under section 7623(b) in whistleblower administrative proceedings pursuant to the rules of this section. The whistleblower administrative proceedings described in this section are administrative proceedings pertaining to tax administration for purposes of section 6103(h)(4). See § 301.6103(h)(4)-1 for additional rules regarding disclosures of return information in whistleblower administrative proceedings. The Whistleblower Office may determine awards for claims involving multiple actions in a single whistleblower administrative proceeding. For purposes of the whistleblower administrative proceedings for rejections and denials, described in paragraphs (b)(3), (c)(7), and (c)(8) of this section, the Internal Revenue Service (IRS) may rely on the whistleblower's description of the amount owed by the taxpayer(s). The IRS may, however, rely on other information as necessary (for example, when the alleged amount in dispute is below the $2 million threshold of section 7623(b)(5)(B), but the actual amount in dispute is above the threshold).
(b) Awards under section 7623(a). (1) Preliminary award recommendation. In cases in which the Whistleblower Office recommends payment of an award under section 7623(a), the Whistleblower Office will communicate a preliminary award recommendation under section 7623(a) and §§ 301.7623-1 through 301.7623-4 to the whistleblower by sending a preliminary award recommendation letter that states the Whistleblower Office's preliminary computation of the amount of collected proceeds, recommended award percentage, recommended award amount (even in cases when the application of § 301.7623-4 results in a reduction of the recommended award amount to zero), and a list of the factors that contributed to the recommended award percentage. The whistleblower administrative proceeding described in paragraphs (b)(1) and (2) of this section begins on the date the Whistleblower Office sends the preliminary award recommendation letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary award recommendation to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and pay an award, pursuant to paragraph (b)(2) of this section.
(2) Decision letter. At the conclusion of the process described in paragraph (b)(1) of this section, and when there is a final determination of tax, as defined in § 301.7623-4(d)(2), the Whistleblower Office will pay an award under section 7623(a) and §§ 301.7623-1 through 301.7623-4. The Whistleblower Office will communicate the amount of the award to the whistleblower in a decision letter.
(3) Rejections and denials. If the Whistleblower Office rejects a claim for award under section 7623(a), pursuant to § 301.7623-1(b) or (c), or if the IRS either did not proceed based on information provided by the whistleblower, as defined in § 301.7623-2(b), or did not collect proceeds, as defined in § 301.7623-2(d), then the Whistleblower Office will not apply the rules of paragraphs (b)(1) or (2) of this section. The Whistleblower Office will provide written notice to the whistleblower of the rejection or denial of any award and, in the case of a rejection, the written notice will state the basis for the rejection.
(c) Awards under section 7623(b). (1) Preliminary award recommendation. For claims under section 7623(b) other than those described in paragraphs (c)(7) and (c)(8) of this section (rejections and denials), the Whistleblower Office will prepare a preliminary award recommendation based on the Whistleblower Office's review of the administrative claim file and the application of the rules of section 7623 and §§ 301.7623-1 through 301.7623-4 to the facts of the case. See paragraph (e)(2) of this section for a description of the administrative claim file. The whistleblower administrative proceeding described in paragraphs (c)(1) through (6) of this section begins on the date the Whistleblower Office sends the preliminary award recommendation letter. The preliminary award recommendation is not a determination letter within the meaning of paragraph (c)(6) of this section and cannot be appealed to Tax Court under section 7623(b)(4) and paragraph (d) of this section. The preliminary award recommendation will notify the whistleblower that the IRS cannot determine or pay any award until there is a final determination of tax, as defined in § 301.7623-4(d)(2).
(2) Contents of preliminary award recommendation. The Whistleblower Office will communicate the preliminary award recommendation under section 7623(b) to the whistleblower by sending—
(i) A preliminary award recommendation letter that describes the whistleblower's options for responding to the preliminary award recommendation;
(ii) A summary report that states a preliminary computation of the amount of collected proceeds, the recommended award percentage, the recommended award amount (even in cases when the application of section 7623(b)(2) or section 7623(b)(3) results in a reduction of the recommended award amount to zero), and a list of the factors that contributed to the recommended award percentage;
(iii) An award consent form; and
(iv) A confidentiality agreement.
(3) Opportunity to respond to preliminary award recommendation. The whistleblower will have 30 days (this period may be extended at the sole discretion of the Whistleblower Office) from the date the Whistleblower Office sends the preliminary award recommendation letter to respond to the preliminary award recommendation in one of the following ways—
(i) If the whistleblower takes no action, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section;
(ii) If the whistleblower signs, dates, and returns the award consent form agreeing to the preliminary award recommendation and waiving any and all administrative and judicial appeal rights, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section;
(iii) If the whistleblower signs, dates, and returns the confidentiality agreement, then the Whistleblower Office will provide the whistleblower with a detailed award report, and an opportunity to review documents supporting the report pursuant to paragraphs (c)(4) and (5) of this section, and any comments submitted by the whistleblower will be added to the administrative claim file; or
(iv) If the whistleblower submits comments on the preliminary award recommendation to the Whistleblower Office, but does not sign, date, and return the confidentiality agreement, then the comments will be added to the administrative claim file and reviewed by the Whistleblower Office in making an award determination, pursuant to paragraph (c)(6) of this section.
(4) Detailed report. (i) Contents of detailed report. If the whistleblower signs, dates, and returns the confidentiality agreement accompanying the preliminary award recommendation under section 7623(b), pursuant to paragraph (c)(3) of this section, then the Whistleblower Office will send the whistleblower—
(A) A detailed report that states a preliminary computation of the amount of collected proceeds, the recommended award percentage, and the recommended award amount, and provides a full explanation of the factors that contributed to the recommended award percentage;
(B) Instructions for scheduling an appointment for the whistleblower (and the whistleblower's legal representative, if any) to review information in the administrative claim file that is not protected by one or more common law or statutory privileges; and
(C) An award consent form.
(ii) Opportunity to respond to detailed report. The whistleblower will have 30 days (this period may be extended at the sole discretion of the Whistleblower Office) from the date the Whistleblower Office sends the detailed report to respond in one of the following ways—
(A) If the whistleblower takes no action, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section;
(B) If the whistleblower requests an appointment to review information from the administrative claim file that is not protected from disclosure by one or more common law or statutory privileges, then a meeting will be arranged pursuant to paragraph (c)(5) of this section;
(C) If the whistleblower does not request an appointment but does submit comments on the detailed report to the Whistleblower Office, then the comments will be added to the administrative claim file and reviewed by the Whistleblower Office in making an award determination pursuant to paragraph (c)(6) of this section; or
(D) If the whistleblower signs, dates, and returns the award consent form agreeing to the preliminary award recommendation and waiving any and all administrative and judicial appeal rights, then the Whistleblower Office will make an award determination, pursuant to paragraph (c)(6) of this section.
(iii) Additional rules. The detailed report is not a determination letter within the meaning of paragraph (c)(6) of this section and cannot be appealed to Tax Court under section 7623(b)(4) and paragraph (d) of this section. The detailed report will notify the whistleblower that the IRS cannot determine or pay any award until there is a final determination of tax, as defined in § 301.7623-4(d)(2).
(5) Opportunity to review documents supporting award report recommendations. Appointments for the whistleblower (and the whistleblower's legal representative, if any) to review information from the administrative claim file that is not protected from disclosure by one or more common law or statutory privileges will be held at the Whistleblower Office in Washington, DC, unless the Whistleblower Office, in its sole discretion, decides to hold the meeting at another location. At the appointment, the Whistleblower Office will provide for viewing the information from the administrative claim file. The Whistleblower Office will supervise the whistleblower's review of the information and the whistleblower will not be permitted to make copies of any documents or other information. The whistleblower will have 30 days (this period may be extended at the sole discretion of the Whistleblower Office) from the date of the appointment to submit comments on the detailed report and the documents reviewed at the appointment to the Whistleblower Office. All comments will be added to the administrative claim file and reviewed by the Whistleblower Office in making an award determination, pursuant to paragraph (c)(6) of this section.
(6) Determination letter. After the whistleblower's participation in the whistleblower administrative proceeding, pursuant to paragraph (c) of this section, has concluded, and there is a final determination of tax, as defined in § 301.7623-4(d)(2), a Whistleblower Office official will determine the amount of the award under section 7623(b)(1), (2), or (3), and §§ 301.7623-1 through 301.7623-4, based on the official's review of the administrative claim file. The Whistleblower Office will communicate the award to the whistleblower in a determination letter, stating the amount of the award. If, however, the whistleblower has executed an award consent form agreeing to the amount of the award and waiving the whistleblower's right to appeal the award determination, pursuant to section 7623(b)(4) and paragraph (d) of this section, then the Whistleblower Office will not send the whistleblower a determination letter and will make payment of the award as promptly as circumstances permit.
(7) Rejections. A rejection is a determination that relates solely to the whistleblower and the information on the face of the claim that pertains to the whistleblower. If the Whistleblower Office rejects a claim for award under section 7623(b), pursuant to § 301.7623-1(b) or (c), then the Whistleblower Office will not apply the rules of paragraphs (c)(1) through (6) of this section. The Whistleblower Office will send to the whistleblower a preliminary rejection letter that states the basis for the rejection of the claim. The whistleblower administrative proceeding described in this paragraph begins on the date the Whistleblower Office sends the preliminary rejection letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary rejection letter to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and, following that review, the Whistleblower Office will either provide written notice to the whistleblower of the rejection of the claim, including the basis for the rejection, or apply the rules of paragraphs (c)(1) through (c)(6) of this section.
(8) Denials. A denial is a determination that relates to or implicates taxpayer information. If, with respect to a claim for award under section 7623(b), the IRS either did not proceed based on the information provided by the whistleblower, as defined in § 301.7623-2(b), or did not collect proceeds, as defined in § 301.7623-2(d), then the Whistleblower Office will not apply the rules of paragraphs (c)(1) through (6) of this section. The Whistleblower Office will send to the whistleblower a preliminary denial letter that states the basis for the denial of the claim. The whistleblower administrative proceeding described in this paragraph begins on the date the Whistleblower Office sends the preliminary denial letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary denial letter to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and, following that review, the Whistleblower Office will either provide written notice to the whistleblower of the denial of any award, including the basis for the denial, or apply the rules of paragraphs (c)(1) through (c)(6) of this section.
(d) Appeal of award determination. Any determination regarding an award under section 7623(b)(1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court.
(e) Administrative record. (1) In general. The administrative record comprises all information contained in the administrative claim file that is relevant to the award determination and not protected by one or more common law or statutory privileges.
(2) Administrative claim file. The administrative claim file will include the following materials relating to the action(s) to which the determination relates—
(i) The Form 211, “Application for Award for Original Information,” filed by the whistleblower and all information provided by the whistleblower (whether provided with the whistleblower's original submission or through a subsequent contact with the IRS).
(ii) Copies of all debriefing notes and recorded interviews held with the whistleblower (and the whistleblower's legal representative, if any).
(iii) Form(s) 11369, “Confidential Evaluation Report on Claim for Award,” including narratives prepared by the relevant IRS office(s), explaining the whistleblower's contributions to the actions and documenting the actions taken by the IRS in the case(s). The Form 11369 will refer to and incorporate additional documents relating to the issues raised by the claim, as appropriate, including, for example, relevant portions of revenue agent reports, copies of agreements entered into with the taxpayer(s), tax returns, and activity records.
(iv) Copies of all contracts entered into among the IRS, the whistleblower, and the whistleblower's legal representative (if any), and an explanation of the cooperation provided by the whistleblower (or the whistleblower's legal representative, if any) under the contract.
(v) Any information that reflects actions by the whistleblower that may have had a negative impact on the IRS's ability to examine the taxpayer(s).
(vi) All correspondence and documents sent by the Whistleblower Office to the whistleblower.
(vii) All notes, memoranda, and other documents made by officers and employees of the Whistleblower Office and considered by the official making the award determination.
(viii) All correspondence and documents received by the Whistleblower Office from the whistleblower (and the whistleblower's legal representative, if any) in the course of the whistleblower administrative proceeding.
(ix) All other information considered by the official making the award determination.
(f) Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.
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Treas. Reg. §301.7623-3(a)In general.
In general. The Whistleblower Office will pay awards under section 7623(a) and determine and pay awards under section 7623(b) in whistleblower administrative proceedings pursuant to the rules of this section. The whistleblower administrative proceedings described in this section are administrative proceedings pertaining to tax administration for purposes of section 6103(h)(4). See § 301.6103(h)(4)-1 for additional rules regarding disclosures of return information in whistleblower administrative proceedings. The Whistleblower Office may determine awards for claims involving multiple actions in a single whistleblower administrative proceeding. For purposes of the whistleblower administrative proceedings for rejections and denials, described in paragraphs (b)(3), (c)(7), and (c)(8) of this section, the Internal Revenue Service (IRS) may rely on the whistleblower's description of the amount owed by the taxpayer(s). The IRS may, however, rely on other information as necessary (for example, when the alleged amount in dispute is below the $2 million threshold of section 7623(b)(5)(B), but the actual amount in dispute is above the threshold).
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Treas. Reg. §301.7623-3(b)Awards under section 7623(a).
Awards under section 7623(a). (1) Preliminary award recommendation. In cases in which the Whistleblower Office recommends payment of an award under section 7623(a), the Whistleblower Office will communicate a preliminary award recommendation under section 7623(a) and §§ 301.7623-1 through 301.7623-4 to the whistleblower by sending a preliminary award recommendation letter that states the Whistleblower Office's preliminary computation of the amount of collected proceeds, recommended award percentage, recommended award amount (even in cases when the application of § 301.7623-4 results in a reduction of the recommended award amount to zero), and a list of the factors that contributed to the recommended award percentage. The whistleblower administrative proceeding described in paragraphs (b)(1) and (2) of this section begins on the date the Whistleblower Office sends the preliminary award recommendation letter. If the whistleblower believes that the Whistleblower Office erred in evaluating the information provided, the whistleblower has 30 days from the date the Whistleblower Office sends the preliminary award recommendation to submit comments to the Whistleblower Office (this period may be extended at the sole discretion of the Whistleblower Office). The Whistleblower Office will review all comments submitted timely by the whistleblower (or the whistleblower's legal representative, if any) and pay an award, pursuant to paragraph (b)(2) of this section.
(2) Decision letter. At the conclusion of the process described in paragraph (b)(1) of this section, and when there is a final determination of tax, as defined in § 301.7623-4(d)(2), the Whistleblower Office will pay an award under section 7623(a) and §§ 301.7623-1 through 301.7623-4. The Whistleblower Office will communicate the amount of the award to the whistleblower in a decision letter.
(3) Rejections and denials. If the Whistleblower Office rejects a claim for award under section 7623(a), pursuant to § 301.7623-1(b) or (c), or if the IRS either did not proceed based on information provided by the whistleblower, as defined in § 301.7623-2(b), or did not collect proceeds, as defined in § 301.7623-2(d), then the Whistleblower Office will not apply the rules of paragraphs (b)(1) or (2) of this section. The Whistleblower Office will provide written notice to the whistleblower of the rejection or denial of any award and, in the case of a rejection, the written notice will state the basis for the rejection.
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Treas. Reg. §301.7623-3(c)Awards under section 7623(b).
Awards under section 7623(b). (1) Preliminary award recommendation. For claims under section 7623(b) other than those described in paragraphs (c)(7) and (c)(8) of this section (rejections and denials), the Whistleblower Office will prepare a preliminary award recommendation based on the Whistleblower Office's review of the administrative claim file and the application of the rules of section 7623 and §§ 301.7623-1 through 301.7623-4 to the facts of the case. See paragraph (e)(2) of this section for a description of the administrative claim file. The whistleblower administrative proceeding described in paragraphs (c)(1) through (6) of this section begins on the date the Whistleblower Office sends the preliminary award recommendation letter. The preliminary award recommendation is not a determination letter within the meaning of paragraph (c)(6) of this section and cannot be appealed to Tax Court under section 7623(b)(4) and paragraph (d) of this section. The preliminary award recommendation will notify the whistleblower that the IRS cannot determine or pay any award until there is a final determination of tax, as defined in § 301.7623-4(d)(2).
(2) Contents of preliminary award recommendation. The Whistleblower Office will communicate the preliminary award recommendation under section 7623(b) to the whistleblower by sending—
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Treas. Reg. §301.7623-3(d)Appeal of award determination.
Appeal of award determination. Any determination regarding an award under section 7623(b)(1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court.
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Treas. Reg. §301.7623-3(e)Administrative record.
Administrative record. (1) In general. The administrative record comprises all information contained in the administrative claim file that is relevant to the award determination and not protected by one or more common law or statutory privileges.
(2) Administrative claim file. The administrative claim file will include the following materials relating to the action(s) to which the determination relates—
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Treas. Reg. §301.7623-3(f)Effective/applicability date.
Effective/applicability date. This rule is effective on August 12, 2014. This rule applies to information submitted on or after August 12, 2014, and to claims for award under sections 7623(a) and 7623(b) that are open as of August 12, 2014.
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Treas. Reg. §301.7623-3(i)The Form 211, “Application for Award for Original Information,” filed by the whistleblower and all information provided by the whistleblower (whether provided with the whistleblower's original submission or through a subsequent contact with the IRS).
The Form 211, “Application for Award for Original Information,” filed by the whistleblower and all information provided by the whistleblower (whether provided with the whistleblower's original submission or through a subsequent contact with the IRS).
(ii) Copies of all debriefing notes and recorded interviews held with the whistleblower (and the whistleblower's legal representative, if any).
(iii) Form(s) 11369, “Confidential Evaluation Report on Claim for Award,” including narratives prepared by the relevant IRS office(s), explaining the whistleblower's contributions to the actions and documenting the actions taken by the IRS in the case(s). The Form 11369 will refer to and incorporate additional documents relating to the issues raised by the claim, as appropriate, including, for example, relevant portions of revenue agent reports, copies of agreements entered into with the taxpayer(s), tax returns, and activity records.
(iv) Copies of all contracts entered into among the IRS, the whistleblower, and the whistleblower's legal representative (if any), and an explanation of the cooperation provided by the whistleblower (or the whistleblower's legal representative, if any) under the contract.
88 Citing Cases
Section 7623 Section 7623 provides for both discretionary and mandatory awards to individuals (i.e., whistleblowers) who submit information about third parties that have underpaid their tax or otherwise violated the internal revenue laws.
The case is distinguishable from an example given in the regulations in which the usefulness of the documents supplied by a whistleblower may justify increasing the award percentage from 15% to 22%: 40 [*40] Example (1).
United States Tax Court 163 T.C. No. 6 JOHN F. CARTER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ————— Docket No. 9379-22W. Filed October 3, 2024. ————— R denied P’s whistleblower award claim under I.R.C. § 7623. After filing a Petition in this Court for review of the denial, P filed for bankruptcy. The Internal Revenue Service filed a claim in P’s bankruptcy case for unpaid tax P owed for pre-Petition year(s). P alleges that an automatic stay pursuant to 11 U.S.C. § 362(a)(8) a
Served 07/18/24 2 [*2] In this case, pursuant to section 7623(b)(4), petitioner seeks our review of an award determined by respondent’s Whistleblower Office (WBO).
When one of 9 [*9] those thresholds is not met, the rest of section 7623(b) does not “apply.” I.R.C. § 7623(b)(5). And because section 7623(b) does not apply, there can be no award under paragraph (1), (2), or (3) of section 7623(b) that we might review under paragraph (4).
the provision of an award under section 7623 was entirely dis- cretionary.” Confidential Informant 59-05071, 121 Fed.
372 (2022), and should be overruled.
Legal Background Section 7623 provides for awards to individuals (commonly referred to as whistleblowers) who submit information to the IRS about third parties who have underpaid their taxes or otherwise violated the internal revenue laws.
We disagree with petitioner that the IRS proceeded with an administrative or judicial action by creating OVDI or by virtue of taxpayers’ participation in OVDI.
Section 7623 Section 7623 provides for awards to individuals (commonly referred to as whistleblowers) who submit information to the Government about third parties who have underpaid their taxes or otherwise violated the internal revenue laws.
Section 7623 Background Section 7623 provides for awards to individuals who provide the IRS with information regarding third parties found to have underpaid their taxes or otherwise violated the internal revenue laws.
On January 13, 2020, petitioner timely appealed the WBO’s determination to this Court pursuant to section 7623(b)(4).
For an overview of section 7623, see Rogers v.
7623(b)(4). This right does not apply to all award determinations; whistleblowers may only seek judicial review of award determinations made under section 7623(b).7 In other words judicial review is available only for award determinations where the proceeds in dispute exceed $2 million and an individual target taxpayer has a gross inco
Consistently with Myers, we hold that we have jurisdiction to consider this case.
17] Second, petitioner contends that “the documents in the Administrative Claim File are incomplete and insufficient to conclude whether no taxes, interest and penalties from Taxpayers 1, 2 and 3 were collected ass [sic] that term is defined by IRC Section 7623 as amended in 2018.” In his response to respondent’s motion for summary judgment, petitioner complained that “[n]o information is provided in the Administrative Claim File that would permit the Petitioner to conclude what the taxable inco
Held: Consistent with our holding in Lippolis v.
held that successive letters that purport to be a final determination can confer on the recipient successive opportunities to file a petition. In Comparini v. Commissioner, 143 T.C. at 275, the Comparinis filed a series of whistleblower claims under section 7623. The Commissioner issued letters stating that their claims had been considered, but their information did not result in collected proceeds. Id. at 275-276. The letters concluded, therefore, that the Comparinis were not entitled to an awa
MEMORANDUM OPINION JONES, Judge: In these whistleblower cases,1 petitioner seeks review pursuant to section 7623(b)(4) of the determinations by the Whistleblower Office 1By order dated March 18, 2019, we consolidated docket nos.
Background Pursuant to section 7623(b)(4), petitioner Joseph A.
We disagree with petitioner’s submission that the statute is unambiguous.
Therefore, you are not eligible for an award.” In response to the Whistleblower Office’s final determination letter petitioner timely filed a petition for review of the final determination under section 7623.2 Petitioner resided in the State of Florida when his petition was filed with this Court.
Accordingly, we must decide whether the preliminary award recommendation issued to petitioner constitutes a “determination” within the meaning of section 7623(b)(4). II. “Determination” Within the Meaning of Section 7623(b)(4) Section 7623 does not clearly define what constitutes a “determination” or require that the whistleblower be issued any particular form of notice. Kasper v. Commissioner, 137 T.C. at 41; see Whistleblower 22231-12W v. Commissioner, T.C. Memo. 2014-157, at *11. As a result,
Whistleblower Framework Section 7623 provides for awards for individuals who alert the Government about third parties who underpay their taxes.
Awards Under Section 7623 An individual may be entitled to an award under section 7623(a) for providing the IRS with information leading to the detection of underpayments of tax or the detection and bringing to trial and punishment persons guilty of violating the internal revenue laws.
SERVED Mar 16 2020 - 2 - [*2] MEMORANDUM OPINION GUSTAFSON, Judge: In these two consolidated cases,¹ petitioner Walter Nicklaus Cline has appealed, pursuant to section 7623(b)(4),² two determinations ofthe Whistleblower Office ("WBO") ofthe Internal Revenue Service ("IRS") that decline to make awards to him.
SERVED Mar 16 2020 - 2 - [*2] MEMORANDUM OPINION GUSTAFSON, Judge: In these two consolidated cases,¹ petitioner Walter Nicklaus Cline has appealed, pursuant to section 7623(b)(4),² two determinations ofthe Whistleblower Office ("WBO") ofthe Internal Revenue Service ("IRS") that decline to make awards to him.
ginal Information,2 dated July 19, 2014. The WBO denied his claim in a letter sent by certified mail to his last known address on March 8, 2018. The ¹(...continued) Code of 1986, as amended. 2Whistleblowers must file Form 211 to claim an award under sec. 7623. Sec. 301.7623-1(c)(2), Proced. & Admin. Regs. - 3 - [*3] Court received the petition appealing the denial on May 14, 2018, in an envelope bearing a U.S. Postal Service postmark ofApril 30, 2018. Respondent filed the pending motion on Augus
We disagree with petitioner's interpretation ofthe law.
Moynihan, have appealed, pursuant to section 7623(b)(4),¹ the determination of the Whistleblower Office ("WBO") ofthe Internal Revenue Service ("IRS") that denies them a whistlebloweraward.
While we havejurisdiction to review the IRS' award determination, section 7623 gives us no authorityto direct the IRS to commence an administrative orjudicial action.
Pursuant to section 7623(b)(4), petitioner has appealed the determination of the Whistleblower Office to reject his claim for a nondiscretionarywhistleblower award.
orityto analyze petitioner's information. Under Delegation Order 25-7 (Rev. 3), IRM pt. 1.2.2.14.7(8) (July 14, 2016), the Commissioner has delegated to the Director ofthe WBO the authority"to receive, analyze, and assign information pursuant to IRC § 7623". This delegation order goes on to state: "This authorityto receive and assign is redelegated to employee ofthe Initial Claims Evaluation unit." Id. pt. 1.2.2.14.7(11). Petitioner suggests that because the power to "analyze" information is exp
While we havejurisdiction to review the IRS' award determination, section 7623 gives us no authorityto direct the IRS to commence an administrative orjudicial action.
Consistently with Myers, we hold that we havejurisdiction to consider this case.
While we havejurisdiction to review the IRS' award determination, section 7623 gives us no authorityto direct the IRS to commence an administrative orjudicial action.
- 3 - [*3] MEMORANDUM OPINION GUSTAFSON, Judge: Petitioner John Worthington has appealed, pursuant to section 7623(b)(4),¹ the determination ofthe WhistleblowerOffice ("WBO") of the Internal Revenue Service ("IRS") that denies him a whistleblower award.
SERVED Jan 30 2020 - 2 - [*2] MEMORANDUM OPINION GUSTAFSON, Judge: Pursuant to section 7623(b)(4),¹ petitioner Christian Bernd Alber has appealed the determination ofthe Whistleblower Office ("WBO") ofthe Internal Revenue Service ("IRS") to reject his claim for a nondiscretionary whistleblower award.
By contrast, in a case under section 7623, our inquiry focuses on the determination made by the Whistleblower - 19 - Office, and an order to enforce our decision would not require a review of ancillary matters, such as, for example, the whistleblower's own outstanding tax liabilities.
Both cases arise from petitioner's 2013 SERVED Jul 08 2019 - 2 - [*2] claim for an award pursuant to section 7623.¹ In 2015 the Whistleblower Office (Office) issued petitioner a determination letter denying his claim, and he timely petitioned for review.
Both cases arise from petitioner's 2013 SERVED Jul 08 2019 - 2 - [*2] claim for an award pursuant to section 7623.¹ In 2015 the Whistleblower Office (Office) issued petitioner a determination letter denying his claim, and he timely petitioned for review.
Court ofAppeals decision which is squarely in point where appeal from our decision lies to that Court of -52- Appeals and to that court alone." This doctrine applies only where the position of a Court ofAppeals signals inevitable reversal upon appeal and does not apply where the precedent contains distinguishable facts or law. See, e.g., Tigers Eye Trading, LLC v. Commissioner, 138 T.C. 67, 75 (2012), aff'd in part, rev'd in part on other grounds and remanded sub nom. Logan Tr. v. Commissioner,
The default provisions ofthe APA likewise call for review confined to the administrative record since section 7623(b) was promulgated after the APA and fails to expressly provide for a different review process.
- 7 - [*7] pertains, nor does section 7623 confer authority to direct the Commissioner to commence an administrative orjudicial action.
While we havejurisdiction to review the IRS' award determination, section 7623 gives us no authority to direct the IRS to commence an administrative orjudicial action.
OPINION ASHFORD, Judge: The petition in this case commenced a whistleblower proceeding pursuant to section 7623(b)(4).¹ Shortly thereafter, respondent moved to dismiss this case for lack ofjurisdiction on the ground that petitioner had failed to file his petition within the time prescribed by that section.
As we have noted before, section 7623(b)(4) is unusual as ajurisdiction- conferring provision because it "does not prescribe any particular form ofnotice to the would-be petitioner." Whistleblower 22231-12W v. Commissioner, T.C. Memo. 2014-157, 108 T.C.M. (CCH) 124, 126. In prior cases, "[w]e have held that the name or label ofa document does not control whetherthe document constitutes a determination" and that "ourjurisdiction is established when the Commissioner issues a written notice that em
406 amended section 7623 to require the Secretaryto pay whistleblower awards under certain circumstances.
MEMORANDUM OPINION GUY, Special Trial Judge: This whistleblower action, commenced pursuant to section 7623(b)(4),¹ is before the Court on respondent's motion for summary ¹Unless otherwise indicated, section references are to sections ofthe Internal Revenue Code, as amended and in effect at all times relevant to this proceeding, and Rule references are to the Tax Court Rules ofPractice and (continued...)
OPINION GERBER, Judge: This whistleblower award case, brought pursuant to section 7623(b)(4),¹ is before the Court on the parties' cross-motions for summary judgment.
MEMORANDUM FINDINGS OF FACT AND OPINION NEGA, Judge: Petitioner commenced this whistleblowerproceeding pursuant to section 7623(b)(4).¹ The issue for decision is whether petitioner ¹Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times.
Section 7623 Requires Both an Action and Collected Proceeds.
While we havejurisdiction to review the IRS' award detenmination, section 7623 does not give us authority to direct the IRS to com- mence an administrative orjudicial action.
Awards to Whistleblowers.-- (1) In general.--Ifthe Secretary proceeds with any administrative orjudicial action described in * * * [section 7623](a) based on information brought to the Secretary's attention by an individual, such individual shall, subject to paragraph (2), receive as an award at least 15 percent but not more than 30 percent ofthe collected proceeds (including penalties, interest, additions to tax, and additional amounts) resulting from the action (including any
Section 7623 (WhistleblowerAwards) Section 7623 provides for awards to those individuals (i.e., whistleblowers) who provide information to the Government about third parties who are underpaying their tax.
Unlike subsection (a), which requires that an award "shall be paid from" a specific funding source, subsection (b) sets forth how to calculate the whistleblower's award. Paragraph (1) directs that the whistle- blower "shall * * * receive as an award at least 15 percent but not more than 30 percent ofthe collected proceeds * * * resulting from the action (including any related actions) or from any settlement in response to such action." The difference in wording between subsections (a) and (b) of
"ultra vires" and "null and void." Under Delegation Order 25-7 (Rev. 1), Internal Revenue Manual pt. 1.2.52.8(2) and (3) (July 1, 2008), the Commissioner has delegated to the Director ofthe Office the authority to approve or disapprove awards under section 7623. Petitioner notes that the May 30, 2014, determination letter was signed by Ms. Loren, not by Mr. Whitlock, the Director ofthe Office at the time. Because this letter was allegedly signed by the wrong person, petitioner contends that it
Unlike subsection (a), which requires that an award "shall be paid from" a specific funding source, subsection (b) sets forth how to calculate the whistleblower's award. Paragraph (1) directs that the whistle- blower "shall * * * receive as an award at least 15 percent but not more than 30 percent ofthe collected proceeds * * * resulting from the action (including any related actions) or from any settlement in response to such action." The difference in wording between subsections (a) and (b) of
ing that FBAR penalty payments, because they are made pursuant to Title 31 ra- ther than Title 26 ofthe U.S. Code, are not "collected proceeds" eligible for a non- discretionary award under section 7623(b)(1). See Scope ofAwards Payable - 5 - Under I.R.C. Section 7623, PMTA 2012-10. Viewing this as a de facto denial of his Taxpayer 1 claim, petitioner sought immediate review in this Court. We grant- ed respondent's motion to dismiss that case for lack ofjurisdiction, concluding that the Office h
OPINION HALPERN, Judge: This case is brought pursuant to section 7623(b)(4),¹ appealing respondent's determination not to make an award to petitioners for information provided by them and leading to the recovery ofunpaid taxes and other amounts (a so-called whistlebloweraward).
We hold that we.do.3 Background The following background is drawn from the petition and respondent's motion to dismiss for lack ofsubject matterjurisdiction and responses filed by both parties.
We hold that we do.3 Background The following background is drawn from the petition and respondent's motion to dismiss for lack ofsubject matterjurisdiction and responses filed by both parties.
Section 7623(b)(4) provides that "[a]ny determination regarding an award * * * may, within 30 days ofsuch determination, be appealed to the Tax Court (and the Tax Court shall havejurisdiction with respect to such matter)." Unlike most statutoryprovisions granting usjurisdiction, section 7623(b)(4) does not pre- scribe any particular form ofnotice to the taxpayer or would-be petitioner.
Unlike most other sections ofthe Internal Revenue Code that conferjurisdiction on this 4(...continued) blower is convicted criminally for planning and initiating such activities. Sec. 7623(b)(3).
Petitioner also contends respondent incorrectly concluded that petitioner relied on publicly available information.
Held: In accordance with our decision in Cooper v.
Respondent Docket Nos. 24178-09W, 24179-09W. Filed June 20, 2011. P filed two claims for a whistleblower award with R under sec. 7623(b) (4), I.R.C., and R sent a letter to P denying the claims because an award determination could not be made under sec. 7623 (b), I.R.C. We earlier denied R's motion to dismiss for lack of jurisdiction, holding that R's letter was a determination conferring jurisdiction on this Court. Cooper v. Commissioner, 135 T.C. 70 (2010). R subsequently filed an answer to e
If the March 3 determination was mailed to petitioner at his last known.address on March 3, 2011, the 30-day period for filing a timely petition with the.Court under section 7623 (b) (4)_ expired on April 4, 2011.3 Respondent relies upon the March 3, 2011, date to commence the period for petitioner to file a timely petition.
Failure to.file within the 30 days deprives the Court of subject matter jurisdiction. The Whistleblower Office issued petitioner its determination on November 13, 2009. Petitioner thereafter had 30 days to file an appeal with this Court, which he failed to do. Petitioner eventually filed a petition on June 18, 2010, that is, 217
70 (2010). Respondent has not issued a determinati n regarding petitioners' whistleblower claim, and there is no evidence that they filed a Form 211. Without a determination regarding petitioners' whistleblower claim, or even evidence that they actually filed such a claim, this Court lacké jurisdiction with respect to the whistleblower claim under section 7623 (b) . To reflect the foregoing, An appropriate order and order of dismissal will be entered.
7623 has been confined to contractual claims brought under 'the Tucker Act,(28 U.S.C.
It .explainedrrthat "an award determination * * * [could not] be made -under section 7623 (b) , 2 because petitioner .
Discussion Prior to December 20, 2006, section 7623 provided that respondent may give to individuals who provide information relating to Federal Tax Code violations monetary rewards payable from the proceeds of tax revenue collected as a result of such information.