Tax Whistleblower Blog

Accountant who acted as informant for tax shelter investigation could be entitled to reward

Labeled as the largest criminal tax investigation ever conducted, the Justice Department began a quest in 2000 to dismantle Anderson’s Ark & Associates, an organization that the Justice Department claims has sold abusive tax shelters to over 1500 clients. At one point, over 500 IRS Special Agents were investigating tax issues connected to Anderson’s Ark at a time when there was only 1000 IRS Special Agents on the IRS’ payroll.

At the criminal trial of James and Pamela Moran, a witness for the prosecution, Joseph Moschetti, CPA, testified that he provided information to the IRS regarding the tax shelter, unilaterally taped telephone discussions with affiliates of Anderson’s Ark, and assisted an IRS special agent to gain attendence to a seminar presented by the principals of Anderson’s Ark.

Based upon the testimony of Moschetti, it is conceivable that his cooperation notified the IRS of and helped the IRS bring down the entire tax shelter operation. As a result of the investigation by the IRS, the IRS has instituted audits and court cases against hundreds of clients of the tax shelter. It is estimated that over $25,000,000 of unreported tax or tax refunds occurred for the benefit of clients of Anderson’s Ark, which were challenged by the IRS. If the IRS were to collect this amount, a whistleblower, such as Moschetti, could receive up to $7,500,000 as a tax reward under IRC section 7623.

During testimony, the defense attorney for the Morans asked the IRS special agent, whether Moschetti was entitled to a reward for his assistance to the IRS. The IRS special agent did not have knowledge of whether an award had or would be paid to Moschetti, but she did acknowledge that his assistance likely deserves a reward.