The judicial body overseeing federal tax disputes has issued a ruling that expands what whistleblowers can claim as a reward when they help the government crack down on evasion.
US Tax Court on Wednesday awarded $17.8 million to undisclosed informants—likely those who helped bring about the prosecution of a now-defunct Swiss bank called Wegelin & Co, according to The Wall Street Journal. The firm shuttered in 2013 after pleading guilty to conspiring with American taxpayers to obscure their assets from the Internal Revenue Service.
The ruling was the first of its kind to grant tax whistleblowers “a chunk of the criminal fines and civil forfeitures,” Politico noted. Previously, they had only been entitled to a percentage of revenue recovered by the IRS.
Judge Julian Jacobs ruled that a key phrase in the law used to calculate whistleblower relief should have wider application.
“The term ‘collected proceeds’ means all proceeds collected by the Government from the taxpayer,” he wrote. “The term is broad and sweeping; it is not limited to amounts assessed and collected [by the IRS].”
The lead attorney for the plaintiffs, Dean Zerbe, told the Wall Street Journal that he hopes the IRS and the Department of Treasury will take advantage of Wednesday’s decision, “to swing the doors wide open for whistleblowers to come forward.”
The paper also noted that the IRS can appeal the ruling, and that an agency representative declined to respond to a request for comment.
Under federal law, people who disclose information about tax cheats can claim up to 30 percent of what the US government subsequently recoups.
