The Tax Court has held that Code Sec. 7623(b) does not provide for the payment of interest on a mandatory award to a whistleblower. (Whistleblower 8391-18W, (2023) 161 TC No. 5)
In 2006 an IRS audit team opened an examination for T (a corporation whose name was redacted in the opinion). In 2008 a whistleblower (P) submitted to the IRS Whistleblower Office (WBO) a claim for an award, identifying T as a participant in a dividend tax withholding scheme.
In 2009 the audit team received information relating to T, for which P was the source. The WBO concluded that the audit team used P’s information during the pre-existing examination of T and that proceeds were collected as a result of this action.
In 2018 the WBO issued to P a final determination that P was entitled to a mandatory award of 22% of the collected proceeds.
P contended that the WBO abused its discretion by not determining an award of 30%. P also contended the WBO abused its discretion by not paying the 22% while P challenged the withholding of the remaining 8%, by not paying interest on the award due to P, and by applying a sequestration reduction to P’s proposed award.
The Tax Court held that the WBO did not abuse its discretion with regard to P’s claim identifying T.
It further held that Code Sec. 7623(b) does not provide for the payment of interest on a mandatory award to a whistleblower.
For more information regarding mandatory whistleblower awards, see Checkpoint’s Federal Tax Update ¶T-1032.
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