Tax Court In Brief | Luu v. Comm'r | Whistleblower Awards, Procedure, And Tax Court Standard Of Review

• Jurisdiction: United States,Federal
• Law Firm: Freeman Law
• Subject Matter: Employment and HR, Tax, Tax Authorities, Whistleblowing
• Author: Freeman Law
• Published date: 07 January 2023

The Tax Court in Brief - December 26th - December 30th, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

Tax Litigation: The Week of December 26th, 2022, through December 30th, 2022

• Smith v. Comm'r, 159 T.C. No. 3 August 25, 2022| Toro, J. | Dkt. No. 5191-20
• Intan N. Ismail & Mohd Razu Abd Rahim v. Comm'r, T.C. Memo 2022-113 November 29, 2022| Paris, J. | Dkt. No. 16366-16, 13297-18
• Kechijian v. Comm'r, T.C. Memo 2022-127| December 28, 2022 | Gustafson, J. | Dkt. No 3430-20

Luu v. Comm'r, T.C. Memo. 2022-126| December 28, 2022 | Weiler, J. | Dkt. No. 714-20W

Short Summary: The story of this 22-page opinion regards a whistleblower's (Felix Luu, referred to herein as Luu) contest of the Whistleblower Office's (WBO) determination and calculation of a whistleblower award related to Luu's family's business operations, which included a retail supermarket and a poultry farm (the Companies).

Luu served as the general manager of the retail supermarket and was an equal shareholder with his six siblings in the Companies. WBO acknowledged receipt of Luu's application for whistleblower award and Forms 211, Application for Award for Original Information. In a lawsuit filed in state court, Luu alleged causes of action against the Companies to compel the payment of a dividend, claiming that Luu had only recently learned that he had received a lesser dividend than other shareholders and that the other shareholders had been skimming profits from the Companies. The Companies' six shareholders (excluding Luu) filed voluntary disclosures with the IRS. Luu submitted additional information regarding the shareholders' unreported income. But, the IRS ultimately did not use the additional information in making its adjustments to the Companies' unreported income.

The IRS then audited the Companies. The IRS interviewed the Companies' officers, the six shareholders (excluding Luu) and their spouses. According to the investigation, cash funds were being skimmed from the Companies and distributed to all shareholders. And, it was apparently Luu who handled the cash distributions. The IRS proceeded with the assessment of additional federal income tax and employment taxes against the Companies and their shareholders. The assessments exceeded $2 million dollars and were directly related to the unreported income and payroll tax issues Luu identified.

The WBO sent Luu a preliminary award recommendation letter, including a summary...