The Tax Court has ruled that a whistleblower may challenge an IRS award decision when the whistleblower provides new information in a later supplemental form even after the original claim for a whistleblower award has been denied.

The case, Whistleblower 15488-17W v. IRS, (T.C. Memo 2019-23), hinged on whether the IRS Whistleblower Office made a “determination regarding an award” when it refused to consider new information supporting a whistleblower award claim.

Section 7623(b)(4) of the tax code provides a 30-day period from the determination of an award to appeal to the Tax Court. The anonymous whistleblower sought a review of a letter in which the IRS informed him that his claim for an award “was previously denied” and enclosed a copy of the precious determination. The IRS moved to dismiss the claim, contending that the Tax Court lacked jurisdiction to review the letter because it was not “a determination regarding an award.” The whistleblower argued that the letter was a “determination” because the IRS declined to revisit its prior award decision in light of new information that he provided.

“Concluding that petitioner [the whistleblower] has the better side of this argument, we will deny respondent’s {IRS’s] motion,” the court said Wednesday.

The whistleblower alleged that the taxpayer had avoided recognition of discharge of indebtedness income by improperly reporting on its federal return that certain of its affiliates were insolvent. The IRS denial of the whistleblower claim stated that “the information you provided was reviewed as part of an examination, but the examination resulted in no change.”

The whistleblower did not petition for an appeal to the Tax Court within 30 days. The next year, he reviewed the company’s SEC forms 10-Q and 10-K, finding the company had filed amended returns for unspecified years, and had made a tax payment of more than $50 million during the fourth quarter of 2016. The SEC Form 10-K also disclosed that the target company remained subject to IRS examination for 2012 and subsequent years. Since he believed the target’s tax payment may have been connected to the information he had supplied, the whistleblower filed a second application, which he called a “supplemental submission,” by checking the appropriate box. The second application identified the same target taxpayer and alleged the same tax violation. He said the IRS Whistleblower Office’s denial of his claim was “premature” in light of the new information.

The IRS likewise denied the second claim, stating that “your claim was previously denied. A copy of that determination is enclosed.”

The court disagreed. “We conclude that the Office’s second letter constituted a ‘determination regarding an award’ sufficient to confer jurisdiction upon this court,” the Tax Court stated. “By dismissing the relevance of that new information, the Office made a determination regarding his claim. He is entitled to seek judicial review of that determination.”

The attorney representing the whisteblower praised the Tax Court’s ruling. “This is a win for our client and other whistleblowers who learn after the award application has been denied that their information may have resulted in tax payments after all,” said Edward H. Arens, a partner and whistleblower attorney at the Washington, D.C.-based law firm Phillips Cohen, in a statement. “We are very pleased that the Tax Court agreed with our position.”