Whistleblower claim survives his death
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Whistleblower claim survives his death

On Behalf of | Jan 11, 2022 | Uncategorized

Whistleblower cases can take months or years to investigate and resolve. So, it is not surprising that some who come forward pass away before the case is finished. A recent example was Insinga v. Commissioner of the Internal Rev. Service, which involved a situation of first impression where the claimant died while his petition was pending. In this case, we did not represent the client, but it set a precedent in allowing the estate to pursue the deceased whistleblower’s claim.

Some background

A Mr. Insinga submitted a claim to the IRS Whistleblower Office (IRSWO) on April 2, 2007. He amended the submission on May 29 of the same year. The information alleged that his employer and eight other corporate taxpayers and 94 alleged Midco Transactions of unidentified additional taxpayers engaged in schemes to avoid paying taxes. He used an internal audit report where Dutch Bank’s internal auditors viewed the transactions as improperly tax-driven to support the claim. Other sources also confirmed this information. In June of that same year, the IRS met with the claimant and his counsel in New York City and subsequently pursued an investigation.

An IRS investigator noted the other sources of the claim and questioned whether Mr. Insignia had a claim. The IRSWO issued a letter in 2013 saying that there was no award because no penalties were collected by the corporations listed in the claim. The claimant filed several motions, including discovery motions and motions for partial summary judgment to provide context. The judge subsequently issued partial summary judgments on the motions in 2016, and the case continued. In the meantime, the claimant passed away.

Case still active

The US Tax Court found on October 27, 2021, that the petition does not expire despite the claimant’s death because the case remained open. The court cited the general rule of the federal common law claim filed under a remedial statute survives death. It also ruled that the IRS whistleblower is remedial rather than penal and relies on case law.

The court also recognized the injury endured by Mr. Insinga, including the likelihood of retaliation, as well as the substantial contributions made by Mr. Insinga to the case before his death. These findings could impact similar cases involving other governmental whistleblower programs, which are largely parallel to the IRS whistleblower and False Claims Act laws.