We’ve all gotten the e-mails, ostensibly from a friend: “it’s my son’s/daughter’s birthday, and I need to buy him/her something and I’ve lost my wallet. Buy a $100 gift card from X retailer and send me the numbers. I’ll pay you back.” Of course, your friend’s e-mail addressbook has been hacked, and this is a scam: you’ll never see the money again.

Ian D. Smith, T. C. Memo. 2024-65, filed 6/4/24, blows the whistle on corporate skullduggery of this type. Target furnishes services to customers, who pay with “gift certificates” (this is an old case); target pays employees therewith, reporting neither income from said certificates nor paying FICA/FUTA/ITW thereon. What employees report is nowhere stated.

Ian has been here before, of course; see my blogposts “What Price Glory?” 6/7/17, and  “The Blower Remanded,” 4/23/20.

We know from the first of the cited blogposts that the “amount in dispute” is everything IRS claims from target, from whatever source derived, not just what the blower provided. This to clear the Section 7623(b) $2 million threshold for mandatory 15% – 30% award. But the blower’s payout is limited to IRS’ take from what the blower provided, not from what IRS otherwise turned up.

Judge Morrison reviews the administrative record line by line, and at close of play, Ian’s information only gets him 15% thereof, of which 5.7% is sequestered.

True, IRS already had target in crosshairs, but hadn’t yet pulled the trigger.

Taishoff says Congress needs to fix this. Blowers put lives, fortunes, and sacred honor on the line when they blow, and that’s no exaggeration, as caselaw has shown. Congress howls about government spending and wasted taxpayer money, but when it comes to collecting the revenue to pay for this, they’re parsimonious with resources and rewards. Time to reward people whose efforts yield big paydays adequately.