Lee Martin, Director IRS Whistleblower Office: Guest Speaker at TWLF's Attorneys Conference Call

On May 11, 2016, the Tax Whistleblower Law Firm held its bi-monthly conference call between tax whistleblower attorneys.  During this conference call, Lee Martin, the Director of the IRS Whistleblower Office, along with his representative from the IRS Chief Counsel, were in attendance and answered questions from the tax whistleblower attorneys as presented by Tom Pliske.

Some highlights of Director Martin’s responses are as follows:

• Director Martin views his role is to pay awards and make the whistleblower program successful.
• Director Martin stated that he was available to review a whistleblower case if a whistleblower or attorney was not satisfied with the outcome of the IRS’ determination. In fact, he encouraged whistleblowers and their representatives to contact him to review their case if there is a disagreement between the whistleblower and their representative and the IRS determination.
• Director Martin anticipated paying more awards in fiscal year 2016.
• Director Martin mentioned that his office is working with the IRS Congressional liaison to prepare legislation that would: a) create legal protections for whistleblowers and b) would increase protections for taxpayers against whistleblowers using the taxpayers’ information against them.
• Director Martin also stated that while a point system for differentiating whistleblower cases that are vetted by attorneys may sound like a good idea, pragmatically speaking he does not see that it is currently a possibility.  He stated that even though cases are vetted by attorneys, the cases still end up with the Whistleblower Office; and his job is to process all cases regardless if the claims have been vetted by an attorney.
• Director Martin stated that the de-briefing timelines and determination letter processing timelines in former Deputy Commissioner Miller’s and Deputy Commissioner Dalrymple’s guidelines are targets but are not set in stone.
• Director Martin commented that he and the IRS whistleblower program have the full support of Commissioner Koskinen.  He also stated that there were no advantages to having the IRS whistleblower program as an independent from IRS.  Director Martin also clarified that he maintains independent autonomy over whistleblower office and does not report to a board within the IRS to make decisions or to conduct and administrative appeal.
• Director Martin stated that the Informant Claims Examination (“ICE”) unit is moving back to SBSE to be more transparent.  He also stated that the rationale for the movement was it allowed the IRS to have the ability to better utilize analysts.  He then stated that this would apply to all whistleblower cases (7623(a) and 7623(b)).
• With respect to cases that have been open for 10+ years, Director Martin stated that there may be a valid reason why the cases remained open.  He reiterated that it does not hurt the process for whistleblowers and/or their counsel to inquire with the assigned analyst.  He further stated that the IRS whistleblower office is working on getting through every case, and to pay more awards.  He then stated that because he is trying to get more awards paid, the numbers of cases and awards paid are increasing.
• Finally, with respect to Title 18 and Title 31 penalties and whether they are collected proceeds, Director Martin stated that these penalties are not subject to an award.  He stated that the IRS whistleblower office has no policy as to these penalties, and that he would defer to Congress to determine if they should be included in the term "collected proceeds".

If you are a tax whistleblower attorney and are interested in participating in the conference calls, contact our firm to have us inform you of the next call and how to participate. 

Alternatively, if you have specific and credible information (including documents) of a taxpayer’s tax violations/liabilities, contact us to have us review your claim for an award from the IRS.  As a reminder, the IRS pays 15-30% of the tax, penalties, interest and other amounts collected from non-conforming taxpayers to whistleblowers that provide specific and credible information to the IRS.

U.S. Tax Court Gives the IRS Whistleblower Program a Boost

On December 28, 2011, the IRS Whistleblower Program received a big boost when the U.S. Tax Court proposed new Tax Court Rule 345 to protect the identity of the Tax Whistleblower.  Those seeking a tax award/reward for reporting tax fraud are assured that their identity is protected by the U.S. Tax Court in the appeal of their IRS Whistleblower claim…”if appropriate.”

The IRS policy is to protect the identity of a IRS Whistleblower that provides information as part of the IRS Whistleblower Program.  However, there does exist the unusual situation in which an IRS Whistleblower may be called to testify in a court proceeding.  However, this situation has not occurred under the new IRS Whistleblower Program since it was initiated on December 20, 2006.  In addition, it is highly unlikely that this situation will happen in the future with the proper representation.

IRS Whistleblower Attorneys/Lawyers should be tax attorneys/lawyers first and whistleblower attorneys/lawyers second.  In every IRS Whistleblower matter the tax whistleblower attorney should evaluate the claim (i.e. 211 Form), as well as the client and make a determination if the IRS whistleblower is a likely candidate for being a witness should the tax claim ultimately result in litigation by the IRS.  The attorneys at the Tax Whistleblower Law Firm use their experience, as former IRS attorneys, to assist them in making this decision.  Since the Tax Whistleblower Law Firm prepares the 211 claim package for submissions into the IRS whistleblower program in a manner similar to what they would expect the IRS to have prepared if they were in a position to litigate the case as if they were still IRS attorneys, they are also in a position to make a judgment if the client/whistleblower is a likely witness should a case end up in litigation.  No tax whistleblower claim should ever be submitted to the IRS in which the whistleblower is not advised as to the likelihood of them having to testify in the matter.

Confidentiality is what makes the IRS Whistleblower Program successful.  Congress, pursuant to I.R.C. § 7623, gave the IRS Whistleblower the right to appeal the IRS determination of award/reward to the US Tax Court.  Until recently, the tax court had not ruled as to whether the tax whistleblower could proceed anonymously in the filing of an appeal.  On December 8, 2011, in the case of in Whistleblower 14106-10 v. Commissioner, 137 T.C No. 15 (2011), the U.S. Tax Court ruled that the openness of a public record must be weighed with the protection and safety of the whistleblower in these matters.  The Tax Court has now proposed a new Rule (i.e. Tax Court Rule 345) to protect the identity of the IRS Whistleblower

Proposed Rule 345. PRIVACY PROTECTIONS FOR FILINGS IN WHISTLEBLOWER ACTONS(a) Anonymous Petitioner:  A petitioner in a whistleblower action may move the Court for permission to proceed anonymously, if appropriate. Unless otherwise permitted by the Court, a petitioner seeking to proceed anonymously pursuant to this Rule shall file with the petition a motion, with or without supporting affidavits or declarations, setting forth a sufficient, fact specific basis for anonymity. The petition and all other filings shall be temporarily sealed pending a ruling by the Court on the motion to proceed anonymously.

Through experience we have worked with IRS whistleblowers that have indicated that if their identity is not protected, they could lose their life, family, careers, employment, licenses (attorneys/CPAs), etc.  Therefore, this proposed rule by the U.S. Tax Court is an important step for the success of the program.  We strongly recommend that a whistleblower work with qualified “tax” attorneys to assist them with the IRS Tax Whistleblower Program as well as an appeal, so as to protect their identity.  There are several tax whistleblower law firms, by guaranteeing the whistleblower’s confidentiality, are willing to forfeit their fees should the law firm or the IRS intentionally or unintentionally disclose their identity.  There are even fewer law firms that are willing to handle the appeal to the U.S. Tax Court as part of the representation.

Should you have any questions to the IRS Whistleblower Program, please Contact our office.