Judge Takes IRS To Task Over Treatment Of Whistleblowers

A judge with the U.S. Tax Court has launched a blistering attack against the IRS for its handling of a case involving two whistleblowers who have appealed the dismissal of their claims for award money after handing over critical information that demonstrated financial wrongdoing by their former bosses.

The problems began last November when the judge, Maurice Foley, granted a motion by the IRS that sought summary judgment in the case. By granting the motion, the court essentially put a stop of the whistleblowers' suit. However, what Judge Foley did not know was that while the IRS Whistleblower Office had indeed denied the employees' claims, a different division of the IRS had actually reopened an investigation into the employer.

In February, the IRS finally notified the two employees that they had reopened the case and that it would again consider whether the two employees were owed a potential award for the information they provided investigators. The judge was furious after hearing the development, saying that he was not sure whether mere confusion or ineptitude was to blame for the mistake. Either way, the problem is unacceptable and the two employees ought not have wasted so much time defending a rejection that the IRS was not yet ready to make.

The employees' attorney says that the instance is representative of a larger problem at the IRS. Rather than have a generally pro-whistleblower slant, the agency appears openly hostile to whistleblower claims. The posture at the department seems to be to deny first, ask questions later, something that not only makes the whistleblower process far more arduous than need be, but also works to discourage others from coming forward in the future.

The employees' attorney says that there's a constant thread in decisions by the IRS and that is a bias against whistleblowers. The attorney said that the case with his clients is unfortunately the rule rather than the exception. If the government is truly eager to have honest citizens come forward with valuable information about tax evasion, then their treatment of those whistleblowers needs to improve by leaps and bounds. Adopting a defensive position against those bringing forth valuable information discourages their assistance and sets a bad precedent for others.


Tax Court Judge Slams IRS Over Whistleblower Case, by Ben DiPietro, published at WSJ.com on May 13, 2013.

Order And Order Of Dismissal For Lack Of Jurisdiction, published at USTaxCourt.gov on October 16, 2012.

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Categories: IRS Whistleblower