The Internal Revenue Service has paid an unidentified CPA $4.5 million as the first award under a newly expanded whistleblower program.
The CPA's law firm, Egan Young, announced the whistleblower award in early April. The law firm declined to identify the CPA, but said that he was an in-house corporate accountant at one of the largest financial services firms in the U.S., a Fortune 500 company. The CPA discovered a tax liability of more than $20 million at the firm that had been previously underreported. Under the newly expanded IRS whistleblower program, he stands to collect up to 22 percent of the proceeds of whatever the IRS collects from his employer.
The IRS recently expanded its whistleblower program, increasing the maximum reward to 30 percent of the proceeds collected. The CPA was given the third highest category of reward under the new law, 22 percent, according to his attorney, Egan Young managing partner Eric L. Young.
"Because this is the first-ever reward being paid out of the IRS whistleblower office, there is nothing to judge the percentage against," said Young. "That being said, in my experience in having done qui tam cases under the False Claims Act over the last eight years, a 22 percent reward is substantial ... . In most qui tam cases under the FCA, whistleblowers get between 15 percent and 20 percent. "
In March, another law firm announced that one of its clients had won a $1.1 million whistleblower award from the IRS in a case involving Enron and Bankers Trust, but that was under the older program.
Young's client originally had filed an IRS Form 211 with the new Whistleblower Office without the assistance of counsel. When more than two years had expired since the original filing and no IRS response had been received after numerous client inquiries, the client reached out to Young, an experienced whistleblower attorney in state and federal courts.
After assessing the client's case and concluding that it indeed appeared to be in limbo, Young immediately contacted the IRS Whistleblower Office. He determined that his client had never received a "claims number" after the original Form 211 filing. Assigning this number is only the first step in IRS whistleblower procedure.
In fiscal years 2007 through 2009, when rewards under Section 7623 were mandated, the IRS Whistleblower Office reported receiving more than 12,000 new cases. Earlier this year the Whistleblower Office modified its award criteria to allow whistleblower rewards based not just on taxes and penalties received but when improper refunds or credits have helped to offset taxpayer liability.
The whistleblower continues to work as an in-house CPA and never wants to be known as the source of detailed information that cost the employer more than $20 million. Throughout the years-long investigation of the whistleblower's allegations, the IRS Large Case Examination Office never officially revealed to the taxpayer that a whistleblower had provided the tax liability information, nor did the company officially learn the client's name.
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