The purpose of the TFA IRS whistleblower protection law is to encourage whistleblowers with high-value inside information about tax noncompliance to come forward.
If you have suffered retaliation for reporting tax fraud or a violation of any IRS regulation, contact our experienced tax fraud whistleblower protection lawyers at 202.262.8959 for a free confidential consultation.
See our article in Accounting Today: Whistleblower protections for accountants and tax professionals bolstered by new law.
Section 1405(b) of the TFA prohibits any “employer, officer, employee, contractor, subcontractor, or agent” of an employer from retaliating against a whistleblower. We have represented tax fraud whistleblowers at audit firms, private companies, public companies, and non-profits.
What whistleblowing is protected under the Taxpayer First Act? ExpandThe TFA protects a broad range of disclosures about potential violations of IRS rules or tax fraud. It protects not only disclosures to the IRS, but also internal disclosures, including an employee’s disclosure to a supervisor or “any other person working for the employer who has the authority to investigate, discover, or terminate misconduct.” In particular, protected conduct includes: any lawful act done by the employee-
(A) to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of the Treasury, the Treasury Inspector General for Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or
(B) to testify, participate in, or otherwise assist in any administrative or judicial action taken by the Internal Revenue Service relating to an alleged underpayment of tax or any violation of the internal revenue laws or any provision of Federal law relating to tax fraud.
Does the tax fraud whistleblower protection law protect only disclosures of actual tax fraud? ExpandTFA whistleblower protection is not limited to disclosures of actual tax fraud. Instead, DOL and federal court precedent construing similar whistleblower protection laws protect a whistleblower’s reasonable but mistaken belief that the conduct complained of constituted a violation of relevant law. The whistleblower, however, must demonstrate that they had an objectively reasonable belief, which is assessed based on the knowledge available to a reasonable person in the circumstances with the employee’s training and experience.
What acts of retaliation are prohibited against tax fraud whistleblowers? ExpandThe TFA prohibits a wide range of retaliatory personnel actions, including discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower in the terms and conditions of employment.
The catch-all category of retaliation (“in any other manner” discriminating against a whistleblower) includes non-tangible employment actions, such as “outing” a whistleblower in a manner that forces the whistleblower to suffer alienation and isolation from work colleagues. See Menendez v. Halliburton, Inc., ARB Nos. 09-002, -003, ALJ No. 2007- SOX- 5 (ARB Sept 13, 2011). An employment action can constitute actionable retaliation if it “would deter a reasonable employee from engaging in protected activity.” Id.at 20.
What is the burden of proof for a tax fraud whistleblower in a TFA whistleblower retaliation case? ExpandSection 1405(b) of the TFA applies the causation standard and burden-shifting framework set forth in the AIR21 Whistleblower Protection Law. Under that framework, the whistleblower prevails by proving that their protected whistleblowing was a contributing factor in the unfavorable personnel action taken by their employer.
The DOL ARB has emphasized that the standard is low and “broad and forgiving”; protected activity need only play some role, and even an “[in]significant” or “[in]substantial” role suffices. Palmer v. Canadian Nat’l R.R., ARB No. 16-035, ALJ No. 2014-FRS-154, at 53 (ARB Sept. 30, 2016)(emphasis in original). Examples of circumstantial evidence that can establish “contributing factor” causation include:
Once the whistleblower proves that their protected conduct was a contributing factor in the adverse action, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the whistleblower engaging in protected conduct.
What remedies or damages can a whistleblower recover in a tax fraud whistleblower protection case? ExpandA prevailing TFA whistleblower is entitled to make-whole relief, which includes:
These remedies are substantially similar to the relief authorized in the anti-retaliation provision of the False Claims Act. Neither statute authorizes an award of punitive damages, but double back pay and uncapped special damages can be a potent remedy.
What is the deadline or statute of limitations to file a tax fraud TFA whistleblower retaliation case? ExpandThe statute of limitations for a TFA whistleblower retaliation claim is 180 days from the date that the employee is first informed of the adverse action.
Where are tax fraud whistleblower retaliation cases adjudicated? ExpandThe claim must be filed initially with OSHA, which will investigate the claim. If OSHA determines that there is reasonable cause to believe that a violation occurred, OSHA can order relief, including reinstatement of the whistleblower.
Either party can appeal OSHA’s determination by requesting a de novo hearing before the DOL Office of Administrative Law Judge (OALJ), but an employer’s objection to an order of preliminary relief will not stay the order of reinstatement. Once a TFA retaliation claim has been pending before the DOL for more than 180 days, the whistleblower can remove the claim to federal court and try the case before a jury.
If my employer requires arbitration of employment disputes, can I file a TFA whistleblower claim with the Department of Labor? ExpandYes. TFA retaliation claims are exempt from mandatory arbitration.
Can a whistleblower qualify for an award for reporting tax fraud to the IRS? ExpandUnder 26 USC § 7623(b), the IRS is required to issue an award to tax whistleblowers of 15% to 30% of proceeds collected from tax fraud or tax underpayments if:
During fiscal year 2018, the IRS awarded $312M to tax fraud whistleblowers, and whistleblowers enabled the IRS to recover $1,441,255,859.
Does the Sarbanes-Oxley Act protect whistleblowing about tax fraud? ExpandSome disclosures about corporate tax fraud also implicate mail fraud, wire fraud, or securities fraud, and could therefore also be protected under the Sarbanes-Oxley whistleblower protection law.
For more information about the SOX whistleblower law, see our guide titled Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.
Our experienced and effective whistleblower retaliation lawyers are committed to seeking the maximum damages for whistleblowers and zealously prosecuting whistleblower retaliation claims so that all workers can speak up without fear of reprisal.
Information contained in this website should not be relied on as legal advice. You should consult an attorney for advice on your specific situation. Visiting this site or relying on information gleaned from the site does not create an attorney-client relationship with Zuckerman Law. Contacting Zuckerman Law or providing information to Zuckerman Law about a potential legal claim does not create an attorney-client relationship with Zuckerman Law. The content on this website is the property of Zuckerman Law and may not be used without the written consent thereof.
