Whistleblower Not Entitled to Larger Award After IRS Tax Audit

A tax whistleblower can collect a nearly $500,000 award for uncovering his employer’s malfeasance, but the IRS properly credited him with only a fraction of its find, the US Tax Court said.

The court sustained an IRS award to whistleblower Ian D. Smith on Tuesday, saying the IRS properly used different factors to assess his award at a smaller rate than he sought. The sides had differing interpretations of IRC Section 7623, which says a whistleblower can receive between 15% and 30% of the proceeds from a collection action, depending on how much their information contributed to the case.

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