Judge Jacobs of the Tax Court yesterday – June 2, 2015 – gave a major win for tax whistleblowers in a decision 144 TC 15 (Whistleblower 21276-13W v. IRS). Dean Zerbe of ZMFF&J was the lead counsel for the whistleblowers in this case – the first whistleblower case to have a trial by attorneys before the Tax Court. Jeremy Fingeret and Felipe Bohnet-Gomez of ZMFF&J were also part of the team closely involved with the trial.
The Tax Court rejected the arguments by the IRS Chief Counsel that the whistleblower should be denied an award because the whistleblower filed an application for a whistleblower award – a Form 211 – after the whistleblower had provided information to the IRS and other government officials. The IRS Chief Counsel was seeking to make technical arguments to deny the whistleblower an award – even though the whistleblowers had at great risk provided enormous help to the government in a case where the government received over $74 million dollars.
Important for other whistleblowers to note is that the initial IRS denial letter to the whistleblowers stated that the whistleblowers had provided no information that was used by the IRS. It was only after ZMFF&J (as well as our able cocounsels Bob Amsel and Steve Kohn) were able to get discovery and go to trial that the truth came out – that the information that the whistleblowers had provided was “exceptionally helpful” and “essential and substantially contributed” in the words of the government agents involved.
The lesson learned for tax whistleblowers is to have their eyes open when it comes to statements from the IRS.
This is the second major success by ZMFF&J law firm in Tax Court on a tax whistleblower case – with our earlier victory in TC Memo 2014-106, Whistleblower 10949-13W – which was also a landmark victory for tax whistleblowers In this case(a decision by Judge Kroupa) made it clear that a whistleblower can be eligible for a reward even if the IRS is already investigating the taxpayer – if the whistleblower provides substantive information on which the IRS took action.
This is a good day for tax whistleblowers with the Tax Court making a commonsense decision and reinforcing the rights and protections for tax whistleblowers.