Who Gets Paid When There Exist Multiple Claims?
January 13, 2009 – 12:10 pmWhat happens when the Whistleblower Office receives multiple claims for reward on the same taxpayer from separate informants? There does not exist a clear answer to this question based on current published guidance.
This question was posed to Steven Whitlock, head of the Tax Whistleblower Reward Program, at the January 9, 2009 Conference of the American Bar Association–Division of Taxation. Whitlock responded to the hypothetical by stating that his office has not yet run into this issue because no claims for reward under the new statute are at the stage of determining award amounts. However, he stated that his office WILL NOT be giving out multiple awards. Thus, it appears from Whitlock’s statements that the IRS will be choosing between two informants–the victor will receive a full reward, and the loser will receive nothing. The big question that remains is how will the Whistleblower Office determine who to choose? Previously, I presumed that the Whistleblower Office would lay a great deal of emphasis on timing–whoever “blows the Whistle first” would be the one who gets paid. However, Whitlock made comments that seem to suggest that timing is not going to be the driving factor. Rather, Whitlock stated that the Whistleblower Office would have to determine how each claimant contributed independently to the collection of unreported tax. Therefore, Whitlock appears to be stating that he will make such determination, of who gets paid, based upon which informant provides the most helpful material to the IRS. It can be assumed that timing will only be a factor where the informants provide equally valuable material.
Whitlock’s is choosing a “facts and circumstances” analysis over a bright-line test. It would have been easier for the Whistleblower Offfice to rely upon the dates to determine who gets paid. I believe that there will be an ongoing dilemna within the Whistleblower Office in determining which of the informants get paid. Whitlock is choosing a bright-line test when he states that his office WILL NOT be giving out multiple awards. He could have said that the reward will be split between the two informants. IRC section 7623 does allow for co-whistleblowers. However, Whitlock appears to be reading this provision of IRC section 7623 as being limited to two informants who work together to submit one Form 211.