Whistleblower Not Entitled to Award; No Collected Proceeds (Whistleblower 16158-14W, TC)

CCH Tax Day Report

A whistleblower was not eligible to receive an award because there were no “collected proceeds” for the three years examined and the IRS did not take any action on the other years. Based on the whistleblower’s information that the taxpayer failed to withhold taxes on interest and dividend payments it made to foreign persons, the IRS expanded an ongoing examination to include the whistleblower’s issue. This was clearly a civil proceeding by the IRS that might result in collected proceeds. But the IRS took no administrative or judicial action with respect to the subsequent years for which the whistleblower sought an award.

The whistleblower argued that the amounts collected for the later years were “collected proceeds” and should relate back to the earlier examination. However, “collected proceeds” did not include self-reported amounts collected when the taxpayer changed its reporting for years that were not a part of the action the IRS took based on the whistleblower’s information. In addition, the whistleblower’s argument that “collected proceeds” includes amounts collected after examination years if they are “reasonably determinable” was rejected because any attempt to determine the amount of an award would require another action and the court cannot require the IRS to take an action. Moreover, voluntary compliance in the years after the examination was not a “related action.”

Finally, the whistleblower did not provide any specific facts showing that the taxpayer and the IRS entered into a settlement agreement or had any intention to enter into such an agreement. There was nothing more than the whistleblower’s speculation that the statement in the explanation attached to the determination is something more than the auditor’s opinion.

Whistleblower 16158-14W, 148 TC —, No. 12, Dec. 60,874



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