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Tax Court In Brief: IRS Whistleblower Claim Denied

Wai-Cheung Wilson Chow and Deanne Chow v. Comm’r, No. 14249-18W, T.C. Memo 2021-106 | September 1, 2021 | Buch | Dkt. No. 14249-18W

Short Summary: This case involves a review of a rejected whistleblower claim. The Whistleblower Office determined that the Chows’ claim, in which they alleged that their former landlord owned numerous properties from which she collected rents and did not report income, was not credible. The Chows appealed, and the Tax Court affirmed the IRS’ determination.

Key Issue: Did the Chows, the whistleblowers in this case, make a credible claim that entitled them to an award under the IRS Whistleblower statute?

Primary Holdings:

The Chows rented a home in California from an individual (the “Target Taxpayer” or “Target”). The Chows claimed that the Target Taxpayer boasted about owning several other rental properties that she rented to tenants on a cash-only basis to avoid paying taxes on the income.
The Chows therefore filed Form 211, Application for Award for Original Information, with the IRS in April, 2018.
The Whistleblower Office reviewed the claim and ultimately recommended rejecting the Chows’ claim because the allegations were not credible. As the basis for this recommendation, the classifier stated that the Target Taxpayer’s tax filings indicated income from one rental property and the database revealed that the Target owned only one property.
The Chows filed a timely petition for review of the Whistleblower Office’s determination.
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Written by Jason Freeman | Posted in Whistleblower Tax Case

Tax Court Denies Award In Recent Whistleblower Tax Case

Kennedy v. Comm’r, T.C. Memo. 2021-3 | January 12, 2021 | Copeland, E. | Dkt. No. 5687-17W

Opinion

Short Summary: Petitioner appealed, pursuant to § 7623(b)(4), three determinations of the Whistleblower Office (WBO) of the Internal Revenue Service (IRS) that declined to make awards to him. Petitioner filed a single whistleblower claim, but the WBO split it into three distinct claims. Petitioner’s whistleblower claim alleged that three taxpayers and related subsidiaries owed $150,103,245 in unpaid excise taxes, penalties, and interest. The IRS processed the claims, and it took no action against two of the taxpayers, and no change resulted from the examination of the third taxpayer. Petitioner challenged the WBO’s determinations. The Tax Court held that the WBO did not abuse its discretion in declining any awards to Petitioner.

Key Issue: Whether the WBO abused its discretion in declining to award the Petitioner any amount under his whistleblower claims when it took no action against two taxpayers and issued no changes after the examination of the third taxpayer.