IRS Whistleblowers Revisited

Photo by adil113. CC BY 2.0

Has it really been nearly a year and three months since Lars Nielson released his brother’s whistleblower complaint against the church? What felt like the story that would dominate news of Mormonism in 2020 was quickly buried by Trumpian scandals and then worldwide pandemics.

Like most people, I’ve only thought about the $100 billion endowment fleetingly over the last year or so; I’ve been more wrapped up in translating my job to my home, helping my kids become at-home students, and playing the saxophone.

Monday, though, a court decision came across my desk that made me think of Ensign Peak Advisors and Lars Nielson. See, one reason his brother filed a complaint with the IRS was in hopes of getting a whistleblower award. Statutorily, whistleblowers are entitled to receive between 15 and 30% of the amount the IRS collects as a result of their complaint.

At the time I expressed my skepticism that the IRS would ever bother pursuing the complaint against Ensign Peak Advisors, even if it thought that the complaint did, in fact, show a violation of the tax law.

But what if the Nielsons tried to force the IRS to pursue their complaint? (Note that I have no reason to believe that they have tried or will try; we’re now entering purely the realm of the hypothetical.)

In Meidinger v. United States, Roy Meidinger tried to claim a whistleblower award. He reported that “one million taxpayers in the healthcare industry” were involved in a kickback scheme. He claimed that he had provided detailed information, information that would allow the IRS to pursue these million taxpayers.

The IRS acknowledged its receipt of his complaint, and then … did nothing. When he requested his whistleblower reward, it similarly gave him nothing (because 15-30% of $0 collected is $0).

Meidinger sued, claiming, among other things, that the IRS’s acknowledgement of his whistleblower complaint created an implied-in-fact contract that the IRS breached by not pursuing his claims and not paying him a whistleblower award.

The Federal Circuit disagreed. There was, it held, no contract created and the IRS had no obligation to pursue Meidinger’s tip. As long as it didn’t pursue his tip, and thus didn’t collect any money as a result of it, it owed him nothing.

Now I’m not trying to suggest that the Nielsons are similarly going to try to compel the IRS to pursue an investigation of Ensign Peak Advisors. But it is worth noting that the courts have made it very clear that they cannot force the IRS to pursue an investigation it doesn’t want to and that the IRS has no obligation to pay a whistleblower claim unless it decides to follow through on the complaint.


  1. You have reminded us of an event (the whistleblower complaint against the Church) that was overtaken by events, primarily Covid-19. We can only wonder whether this story would have gained traction were it not for the great Covid distraction.

    Isn’t it the same with the BYU gay dating policy change that was announced and then retracted last March, right before Covid kicked in? In this case, a bunch of clever folks decided to remind us of the one-year anniversary by lighting up the Y in Provo with colored lights. So this begs the question: what could we do to get the whistleblower story back in the headlines on its anniversary? Maybe fly a drone over Temple Square and have it drop 124 dollar bills, each representing $1B?

  2. @josh h, it’s funny you mention the BYU Honor Code scandal of 2020. That came to mind this afternoon as I reviewed my LinkedIn profile. I realized it was a little more than a year ago I removed BYU from my LinkedIn profile in protest to that policy reversal. I refuse to allow my good works to reflect on that horrible institution.

  3. Would be interested to hear Sam’s take on how this whistleblower statute relates to the False Claims Act qui tam provisions. In those situations, a whistleblower can allege fraud against the federal government in a lawsuit filed under seal. The complaint is provided to investigators at DOJ and/or the relevant agency. The federal government can then choose to intervene to take over the lawsuit and any recoveries are subject to sharing with the whistleblower, usually at 15-20% (plus whistleblower is entitled to legal fees).

    Relevant to the Ensign Peak situation, if the government declines to intervene, the whistleblower can pursue the unsealed case on his or her own and is entitled to a percentage of recoveries that is usually higher (up to 30%) than if the government had intervened (again plus legal fees). There have been some large recoveries over the years for qui tam relators who pushed the litigation without DOJ support.

    Is there any way for a whistleblower to pursue a tax case without IRS intervention?

  4. WarrenL. that’s a good question. The answer is, taxpayers don’t have standing to pursue questions of tax (whether it’s underpayment, exemption status, or anything else) against other taxpayers. Enforcement is entirely and solely within the discretion of the IRS.

    Which makes sense: where the complaint is against the government itself, we don’t want the government to have absolute discretion about whether to investigate itself or not–there’s a similar idea when it comes to derivative lawsuits against members of a board of directors. With taxpayers, though, the government has an incentive to pursue the case and failing to do so won’t be in the interest of protecting itself. Also, imagine the chaos if we let taxpayers pursue each other for allegations of tax wrongdoing!

  5. The 100B may have faded from news but it is not far from conversation. I know many people who declined to tithe to the LDS church this year because of that news.

    Likewise, the anti-gay policies at BYU may have fallen from headlines but again, it is top of mind for many people I know.

  6. A Fellow Traveler On says:

    >>Like most people, I’ve only thought about the $100 billion endowment fleetingly over the last year or so; <<

    After watching a report on the use of food banks in the US and a worker told how a 14 year old said, "Today's not my day to eat," I have found it hard _not_ to think about the $100B endowment.

    I understand why the church would want a "rainy day" cushion. For much of the past year, for too many people world-wide, it's pouring outside and they are near to drowning.

    I wonder how the church leadership will answer to deity about their stewardship of this money.

  7. I am the minister to a nearly homeless, schizophrenic man who joined the Church because of two sweet lady missionaries. He had held down a job at a local shop, living in the back, for hundred a week. With the pandemic the wonderful shop owners were thrown into hard straights. So, thinking of the $100,000,000,000, I presumed the Church could fill in the hundred a week until the economy turned around. I persuaded the bishop. Hurray for 100 billion!!!


  1. […] “Whistleblowers are entitled to receive between 15% and 30% of the amount the IRS collects as a result of their complaint,” Brunson writes in a recent By Common Consent blog post. […]

  2. […] “Whistleblowers are entitled to receive between 15% and 30% of the amount the IRS collects as a result of their complaint,” Brunson writes in a recent By Common Consent blog post. […]

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