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Civil FCA Relator Fees Are Deductible


In a generic legal advice memorandum dated July 12, 2007 (AM 2007-0015), the IRS Chief Counsel function overruled the IRS Large and Mid-Size Business Division and held that the fee paid to a relator under the Civil False Claims Act was not a nondeductible fine or penalty. The settlement agreement in question clearly specified the amount that was to be paid to the relator, so the IRS might still assert nondeductibility in a more ambiguous situation.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Brian C. Elmer
Retired Partner – Washington, D.C.