Whistleblower award denied after target pays more tax on its own returns
Whistleblower 11099-13W v. Commissioner. Tax Court No. 11099-13W. Memo. 2026-5.
The Tax Court upheld a denial of a whistleblower award because the IRS did not collect any proceeds from an IRS action, and the taxes the company reported and paid on its own returns did not count as “collected proceeds” under §7623(b).
Holding
The IRS did not collect proceeds “as a result of” an administrative or judicial action based on the whistleblower’s information.
Self-reported tax paid with an original return is not “collected proceeds.” The Whistleblower Office did not abuse its discretion in denying the award.
Why It Matters
Whistleblower awards under §7623(b) require IRS action and collected proceeds tied to that action, not just taxpayer behavior changes.
A taxpayer’s voluntary compliance shift, including an accounting method change, does not create award-eligible proceeds if the IRS did not collect them through an enforcement action.
The case reinforces Lewis. Reported and paid tax does not count as collected proceeds, even when a taxpayer changes reporting while an examination…
