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Apruzzese Case Reaffirms Limits of Tax Court Review on 7623 Claims

11 / 15 / 2019

Tax Form:  Form 211

Tax Form Trouble:   The filing of a Form 211 does not mean that you can "force" the IRS to collect more than what they claim that they have collected based on the information supplied.  The Tax Court can't force the IRS to do more than what they already did. 

Instead, the Tax Court reviews what the IRS did in response to the information submitted by the whistleblower, and then determine if administrative action was taken by the IRS, based on that information, what was the amount of "collected proceeds."  


Apruzzese v. Commissioner, T.C. Memo 2019-141 (October 21, 2019)

On September 16, 2011, pro se whistleblower and "co-claimant" submitted Form 211 to the IRS Whistleblower Office, and on this form, states that he and his coclaimant were involved in lawsuit against an estate, that they allege understated Federal estate tax by several million dollars by failing to include several assets on the Form 706, and undervaluing other assets on the estate tax return.  At the time, estate already under estate tax audit, but E&G attorney at the IRS was already prepared to issue "no change" letter.  Upon receiving information, IRS discovers how estate had used "tax affecting" business valuations on prior gift tax returns.  This then leads the IRS and the estate to eventually agree to assessed estate tax and interest of $424,019, which the estate promptly paid.  The E & G attorney prepares a Form 11369, acknowledging that the co-claimants had "substantially contributed" to the examination of the estate tax return.  

A senior tax analyst reviewed the file and the Form 11369 and issued a Preliminary Award Recommendation under 7623(a) recommending an award be paid, of $43,424 (22% of 1/2 of the "collected proceeds" less a 6.9% sequestration reduction).

The co-claimant did not dispute the % or the amount of the collected proceeds, but instead, focused on the adjustments and a proper determination of the amount of additional taxes owed, and he objected on that basis. 

A final decision was then reached to keep the award at $43,424, and he petitioned the Tax Court for review.  He urged the IRS to "re-examine" the estate, but the IRS simply moved for summary judgment.  The co-claimant objected to summary judgment.  An oral argument was then heard.

The Tax Court reaffirmed the principle established in Cooper v. Commissioner--that the Tax Court is without authority to "order" the IRS to "re-examine" the estate; that its review is limited to whether or not he was entitled to a larger award than the IRS WBO determiend, and absent a showing that he was entitled to a larger award than that which IRS determined, the Tax Court ruled that the Whistleblower Office did not abuse its discretion in making the determination. The Tax Court granted the IRS motion for summary judgment.