An informative Blog written by Thomas Pliske and Shine Lin of the Tax Whistleblower Law Firm regarding important issues dealing with the IRS Whistleblower Informant Program.
In 2011, Congress passed the (“BCA”). This law was passed in response to the raising of the debt ceiling. The BCA requires that the President (usually through the Office of Management and Budget(“OMB”)) reduce spending (i.e. appropriations) in a given year if they exceed the pre-set caps.
Read MorePursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, whistleblower award payments issued under Internal Revenue Code section 7623 are subject to sequestration. This means that every award payment made to a whistleblower under Section 7623 on or after October 1, 2018, and on or before September 30, 2019, will be reduced by the fiscal year 2019 sequestration rate of 6.2 percent. The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change.
The sequestration reduction will be applied after the Whistleblower Office determines the amount of proceeds and the applicable award percentage to be paid under section 7623. Whistleblowers will be advised of the sequestration reduction in correspondence from the Whistleblower Office concerning a proposed award amount and an award determination.
Today, November 3, 2015, the IRS Whistleblower Office announced that it will continue to reduce Whistleblower Awards by 6.8%. The IRS claims that the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, allows it to reduce whistleblower award payments because of sequestration.
Therefore, award payments made to whistleblowers under Section 7623 on or after October 1, 2015, and on or before September 30, 2016, will be reduced by the fiscal year 2016 sequestration rate of 6.8 percent. The fiscal year 2015 sequestration rate was 7.3 percent.
The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change.
The sequestration reduction will be applied after the Whistleblower Office determines the amount of collected proceeds and the applicable award percentage to be paid under section 7623.
Currently, the Tax Whistleblower Law Firm has several court cases on appeal that are currently pending before the United States Tax Court challenging the authority of the IRS to unilaterally reduce these awards for sequestration. In addition, the whistleblower statute, I.R.C. § 7623, provides “Any amount payable under …. 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.” This alone would lead one to believe that the payment of the award, once it is determined, is not discretionary.
The Tax Whistleblower Law Firm (TWLF) specializes in the preparation of the Form 211 Claims package to report underpaid taxes to the Internal Revenue Service (IRS) under the Tax Whistleblower Reward Program. The TWLF team, anchored by a former IRS attorney, consists of qualified tax attorneys with over 40 combined years of tax-related legal experience. Our services are solely dedicated in the IRS Whistleblower Program and U.S. Tax Court litigation of Tax Whistleblower determinations.
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