Recent changes to the IRS Whistleblower program are intended to encourage taxpayers to expose tax fraud. The ruling in a recent case, however, revealed the intent of both the IRS and the TAX Court to adhere to existing law. In the matter of Cohen v. Commissioner of Internal Revenue 139 T.C. No. 12 , a CPA alleged that a public corporation routinely held the proceeds from un-cashed stock dividend checks and unredeemed bonds issued by the corporation. Plaintiff further alleged that these unclaimed assets represented unreported income for federal income tax purposes and that the corporation was required to transfer these assets to the state. The CPA asserted that pleadings from a civil proceeding against the corporation corroborated his allegations.
The IRS Whistleblower Office decided that since the CPA’s claims were based on publicly available information and no proceeds were collected, plaintiff was not entitled to an award. The Tax Court confirmed the IRS’ decision. In its opinion, the Tax Court stated that “… Congress has charged the Commissioner with resolving these claims and has not provided any remedies until after an administrative or judicial action and the collection of proceeds.