IRS Welcomes Tips From Current Employees About Corporate Tax Cheats

MIAMI, Feb. 24 /PRNewswire/ -- In an about face from its previous position that put a blanket prohibition on the IRS’s ability to accept some information from whistleblowers that were currently employed by a taxpayer, the IRS has now adopted a position that it should consider the facts and circumstances of each case before deciding how it can utilize this potentially valuable inside information.  The IRS previously said in Chief Counsel Notice 2008-011 that in the case of current-employee informant, the IRS may not use information provided subsequent to the informant’s initial submission and debrief and there could be no further contact with the informant, whereas the new Chief Counsel Notice 2010-004 (issued February 17, 2010) replaces that position with a facts and circumstances test to determine whether it can use such information and whether further contacts are allowed.

“In our experience, high-level employees - the insiders Congress hoped to attract when they created the whistleblower reward program - can best provide the type of information that ultimately leads the IRS to assess and recover unpaid taxes, and they obtain that information legally because it is in their job description to have it,” said Gregory S. Lynam, Tax Partner at The Ferraro Law Firm.  In Notice 2010-004, the IRS said it will now look at the facts and circumstances of each case before applying the “one bite” rule to current-employee informants.  The Ferraro Law Firm applauds this revised approach, and “we believe that with this new Notice in place the IRS will be able to administer the Whistleblower program consistent with Congressional intent and in a manner that makes use of the best information available,” said The Ferraro Law Firm Tax Partner Scott A. Knott.  Lynam added, “By freeing itself from the shackles of the old interpretation, the IRS has righted its previous wrong and is no longer casting aside the highest value information from the highest-level insiders.”

In our experience, which now includes more than $40 billion in submissions to the IRS Whistleblower Office, high-level taxpayer employees often have the highest quality information.  The Ferraro Law Firm’s Tax Partners Knott and Lynam joined the firm at the end of July, 2007, from prominent Washington D.C. tax practices to focus on tax whistleblower cases.  For more information on The Ferraro Law Firm’s tax group and tax whistleblower submissions, call 1-800-275-3332 or visit www.tax-whistleblower.com.

SOURCE The Ferraro Law Firm

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