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TAX TRENDS
Analysis of and reflections on
recent cases and rulings.
Author: The Tax Court’s decision
James A. Beavers, CPA, CGMA, Procedure & Administration The Tax Court held that its jurisdic-
J.D., LL.M. tion over a petition filed pursuant to
Whistleblower claim does not Sec. 7623(b)(4) is not extinguished by
die with the whistleblower the death of the whistleblower. Thus,
An individual’s whistleblower claims Insinga’s claim survived his death, and
survive the death of the individual, and his estate had standing to be substituted
the estate of a permanently nonfunc- for Insinga as the petitioner in his Tax
tional individual can be substituted Court case.
for that individual in a Tax Court case Survival of the claim: When a
where the court is asked to review the federal statute does not specifically ad-
A whistleblower IRS’s denial of the deceased individual’s dress survival rights, federal common
claim survives whistleblower claim. law provides the general rule that rights
of action under federal statutes survive a
the death of the Background plaintiff’s death if the statute is remedial,
whistleblower; a Joseph A. Insinga submitted claims to not penal. Generally, a three-factor test
is used to ascertain whether a statute
the IRS Whistleblower Office (WBO)
potential restriction for whistleblower awards related to is remedial or penal, examining: (1)
on the sale of stock eight target taxpayers and 94 transac- whether the purpose of the statute was
by a trust does not tions. The WBO denied the claims, to redress individual wrongs or more
and, in response, Insinga filed a peti-
general wrongs to the public; (2) wheth-
cause the trust’s tion (under Sec. 7623(b)(4)) in the Tax er recovery under the statute runs to the
grantor’s right to Court requesting the court review the harmed individual or to the public; and
IRS’s adverse determination regarding
(3) whether the recovery authorized by
the income to be his claims for awards. After substantial the statute is wholly disproportionate to
restricted for claim- pretrial wrangling, Insinga and the IRS the harm suffered.
The Tax Court noted that no court
of-right doctrine stipulated that only his claims regarding has decided whether Sec. 7623(b) has
two of the entities remained at issue,
purposes. and Insinga filed an amended petition a remedial or penal purpose. However,
that asserted only those two claims. it found that claims under the False
With his Tax Court case still pending, Claims Act (FCA) shed light on the
Insinga died on March 22, 2021. Insinga’s treatment because qui tam actions are
estate filed a motion for substitution in analogous to whistleblower claims. PHOTO BY ARCHEOPHOTO/ISTOCK
June 2021, asserting the estate should be In NEC Corp., 11 F.3d 136 (11th Cir.
substituted as petitioner for Insinga in the 1993), the court held that a decedent-
case (and that the case caption be accord- plaintiff’s claim under the FCA was
ingly changed to reflect the substitution). remedial and therefore survived his
42 January 2022 The Tax Adviser
