Whistleblower 11099-13W, T.C. Memo. 2026-5, filed 1/13/26, claims his blowing caused Target (not the supermarket, the taxpayer) to change its accounting method from LIFO to FIFO, thereby incurring $1 billion-with-a-b of income and $400 million in tax, abandoning their inflated COGS scheme. 11099-13W thereby claims a big Section 7623(b) award, but IRS says his explication of the scheme was unintelligible. Anyhow, voluntarily reported income is neither “collected proceeds nor “proceeds collected,” whatever IRS regulations are then applicable.

Judge James S. (“Big Jim”) Halpern buys all of IRS’ tale.

Whenever Target changed its inventory accounting, during audit or after audit, Lewis (the case, 154 T. C. 8; see my blogpost “The 6.9% Solution,” 4/8/20) says it doesn’t matter. It was voluntary, not the result of the whistleblower’s information causing IRS to commence an administrative or judicial action.

“Indeed, while respondent received in March 2012 Target’s application to change its inventory accounting method from LIFO to FIFO—five months before the 08/09 audit cycle examination team reported the results of its examination—nothing in WBO’s administrative claim file indicates that the examination team expanded its examination to include 2011 or any year for which Target may have reported under FIFO. And even if the facts were to the contrary, we would still be governed by our holding in Lewis, 154 T.C. at 134, that ‘reported, paid tax is not collected proceeds’ even if ‘an ongoing audit was expanded to include the year of the reported, paid tax.’” T. C. Memo. 2025-5, at p. 24.

In short, the repentant sinner’s disgorgement belongs to IRS alone.