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death. The court determined that the
When a federal statute does not specifically
three relevant factors favored a finding
that the statute was remedial: (1) The address survival rights, federal common law
purpose of the qui tam remedy under the
FCA was to redress individual wrongs provides the general rule that rights of action
under federal statutes survive a plaintiff’s
of the relator who (the court held) may
suffer “substantial harm” by bringing the
qui tam action; (2) qui tam provisions are death if the statute is remedial, not penal.
intended to remedy, at least in material
part, the harm suffered by the individual
relator rather than the public at large; & Human Servs., 715 F.3d 1314 (Fed. analysis of the survival of the claim, the
and (3) the fact that a relator’s recovery Cir. 2013), that the starting point at estate had standing to pursue Insinga’s
depends upon and is proportional to the federal common law is a presumption Sec. 7623(b) claim.
extent to which the person substantially that a remedial federal cause of action
contributed to the prosecution of the survives when a statute does not contain Reflections
action weighs in favor of a remedial pur- an explicit statement to the contrary. As many courts have observed, it is
pose. With respect to the FCA, courts The Tax Court also found support for often difficult to determine whether a
have widely arrived at the conclusion its conclusion in Regs. Sec. 301.7623-4, statute is remedial or penal, and with
that a claim brought by an FCA relator which states: many statutes reasonable minds can
that is pending at his death survives and differ as to the statute’s correct char-
may therefore be pursued by his estate. If a whistleblower dies before or dur- acterization. However, Sec. 7623(b)
See Satory Global, Inc., 946 F. Supp. 2d ing the whistleblower administrative would seem clearly remedial. The
69 (D.D.C. 2013). proceeding, the Whistleblower Office statute rewards whistleblowers for
Applying the three-factor test to may substitute an executor, adminis- their injuries (although, in actuality,
Sec. 7623(b), the Tax Court found that trator, or other legal representative on whistleblowers are paid for bringing
(1) the purpose of its award provisions behalf of the deceased whistleblower in valuable information to the IRS, as
is to redress individual wrongs of the for purposes of conducting the whis- there is no relationship between the
whistleblower in bringing his or her tleblower administrative proceeding. size of the award and any alleged inju-
claim (such as retaliation by an employer ries suffered by the whistleblower) and
or professional ostracism) by compensat- While this regulation became effec- the statute itself does not in any way
ing him or her for the harm he or she tive for claims submitted or open after penalize the wrongdoing taxpayer. Any
may incur by bringing the claim; (2) it Aug. 12, 2014, which was after the filing penalty the taxpayer suffers is a result
is intended to provide a remedy to the date of Insinga’s Tax Court petition, ac- of the application of other statutes by
whistleblower for bringing the claim cording to the IRS, the WBO would be the IRS.
by providing mandatory compensation bound by the regulation in further pro- Insinga, 157 T.C. No. 8 (2021)
for claims where the collected proceeds ceedings if the Tax Court remanded the
meet certain statutory thresholds; and case. Moreover, although the court was
(3) the recovery due to the whistleblower not bound by the regulation and it was Tax Accounting
under Sec. 7623(b)(1) is proportional not applicable in Insinga’s case, the court
to the harm the whistleblower incurs found that it lent persuasive support to Trust terms do not create
in bringing his or her claim because it its determination that Insinga’s petition legal obligation for
depends upon the extent to which the survived his death. claim-of-right purposes
whistleblower substantially contributed Standing: Tax Court Rule 63(a) A married couple were not entitled
to the action. Thus, the Tax Court found provides: “If a petitioner dies, the Court, to a claim-of-right refund under Sec.
that three factors weigh in favor of the on motion of a party or the decedent’s 1341(a) where stock was sold at a gain
conclusions that Sec. 7623(b) has a successor or representative or on its by their grantor trust in one year and
remedial purpose and that a whistle- own initiative, may order substitution was repurchased in the next, because the
blower’s Tax Court petition survives his of the proper parties.” While the IRS restriction on the sale of the stock in
or her death. This court further noted did not dispute that Insinga’s estate was the trust agreement was only a potential
that its conclusion is bolstered by the the proper party to substitute for him, restriction on the stock’s sale and not an
holding in Figueroa v. Secretary of Health the Tax Court determined, based on its actual legal restriction.

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