One basic goal of any whistleblower program is to incentivize prospective whistleblowers to come forward and actually report what they know. That is why the federal False Claims Act allows whistleblowers to take a “Relator’s share,” equal to 15% to 30% of the Government’s recovery in successful qui tam cases.
Historically, this financial incentive has been undercut somewhat by tax policies that limited a whistleblower’s ability to deduct litigation expenses and counted attorney’s fees awarded by the court as income to the whistleblower — even though the money was being paid to compensate the whistleblower’s attorneys. Over time, federal tax law has become somewhat more fair to whistleblowers, though significant discrepancies have continued to exist.
It now appears that the recently enacted bipartisan budget deal will help to iron out some of these remaining discrepancies. As reported in The Hill, the budget deal contains language that will help to unify the tax treatment of individuals who discover and report on fraud under the different whistleblower statutes.
While any new tax break is politically controversial, this is one that truly deserves bipartisan support. Whistleblowers spend lots of time and energy – and often put their careers and future prospects in jeopardy – by coming forward and reporting on fraud against the government. It therefore seems only fair that they get to share in, and keep, a reasonable share of that reward.
To learn more about our Whistleblower & Qui Tam practice click here. Our firm is located in Nashville, Tennessee but we represent whistleblowers all around the country.
Contact us today for a free consultation. We are here to work for you!