Tax Court Ruling Expands Whistleblower Rewards

by Tim Marshall 9. August 2016 09:48
In a recent ruling by the U.S. Tax Court, two whistleblowers were awarded $17.8 million. This decision considerably increases the scope of what can be claimed, and could result in both larger awards and in more whistleblowers coming forward in the future. The IRS whistleblower program allows individuals with information about tax violations to file claims with the IRS confidentially, and it rewards those individuals with up to 30% of what the government collects as a result. This decision marks the first time a whistleblower received a portion of the criminal fines, civil forfeitures, and taxes that the government recovered, and it eliminated any concern by whistleblowers that they would receive less if the IRS pursued criminal charges rather than just tax collection. Note this ruling is recent, and can be appealed by the IRS. This was one of the largest awards ever. For context, award statistics for the most recent year show $103.5 million distributed in 99 awards.
Categories: Tax

Good News for U.S. Competitiveness: The Defend Trade Secrets Act

by Ken Urish 26. May 2016 09:24
Trade secrets are critical to competitiveness in every industry, and it is not just the obvious secrets like Coke’s formula or the air pressure of New England Patriot footballs. Many companies mistakenly focus their protection efforts only on key patents, proprietary processes, etc., and overlook other, less obvious factors that contribute to their competitive edge. These need to be identified and protected along with the highest profile secrets. The Defend Trade Secrets Act (DTSA), passed by Congress in May 2016, is a new weapon for companies to fight trade secret loss. It is estimated that $300 billion of trade secrets are lost every year due to cyber attacks, criminal activity, and/or employee theft and negligence. The DTSA allows companies to pursue their legal cases in federal court. Previously, these laws were determined on a state-by-state basis, making prosecution complicated and difficult for victims of trade secret attacks. The DTSA also supports whistleblower activity, as it provides immunity for individuals or employees who confidentially report the trade secrets theft to an attorney or the government. Whistleblower protection is a key component of good governance practices and a quality ethics and compliance program. On the downside, the DTSA is also more federal regulation. While it does impose new burdens on business (i.e. new reporting requirements, burden of proof that shows “reasonable measures” were taken to protect trade secrets), the benefits of the DTSA outweigh this drawback. The more tools U.S. companies have to protect their trade secrets, the more competitive we will be in the global economy.