• AML
  • Qui Tam
  • SEC
  • CFTC
  • FCPA
  • FAQS
Subscribe
Donate
No Result
View All Result
Whistleblower Network News
The Truth at Any Cost.
Qui Tam, Compliance and Anti-Corruption News.
Whistleblower Network News
No Result
View All Result
Home Editorial

Bring Back Income Averaging for Whistleblowers Who are Victims of Retaliation

WNNbyWNN
September 7, 2023
in Editorial
Reading Time: 2 mins read
Congress Intended Tax Whistleblowers to Enjoy De Novo Review
Share on TwitterShare on FacebookShare on LinkedInEmail

Whistleblower programs are undermined by harsh tax policy, specifically by the elimination of income averaging. Income averaging is a tax exemption granted for back pay compensation in employment discrimination cases.

Under income averaging, the tax rate is determined using the average income over the years without pay, rather than treating the entire reward sum as income for that particular year. Let’s say, in a hypothetical scenario, a whistleblower who is also the victim of employment retaliation wins a $600,000 reward after being unemployed for 10 years during their case. Their average income – when distributed among their 10 years of unemployment – equates to $60,000. Therefore, they’d be taxed in the tax bracket for individuals making $60,000. Using 2023 tax rates, the whistleblower would owe $5,466 in taxes for each of the ten years, or a total of $54,660 in taxes.

Unfortunately though, income averaging, which was once permitted for any victim of wrongful termination, has been eliminated. Without income averaging, the reception of a $600,000 award in one year would place an individual at the highest 2023 tax bracket. They would be forced to pay $180,807 in taxes, which is over three times as much as they would have under income averaging.

Register for National Whistleblower Day

The lack of income averaging exemptions for whistleblowers who were subject to employment retaliation is extremely damaging, especially when we consider that these victims of wrongful termination also missed out on contributing to pensions and other financial safety nets during the years in which they were unemployed. The goal of whistleblower rewards should be to prove that blowing the whistle is worth it, not make whistleblowers regret their decision, and in doing so, deter others from blowing the whistle on crimes in the workplace.

When we think about the labor rights movement in the United States, we often envision the excitement of picket lines and union meetings, but tax policy is an equally important – albeit less exciting – part of the fight for protecting workers.

Whistleblowers keep corporations in check, but doing so comes at a cost, sometimes the cost of a career. Whistleblower rewards are meant to compensate for that cost. They are designed to give whistleblowers a reason to make the sacrifice and to fairly compensate them for their invaluable information. However, the failure of income averaging undermines the effectiveness of rewards programs and therefore interferes with the rewards programs’ ability to appeal to whistleblowers, enhance fraud detection, and deter fraud. It is time to bring back income averaging.

Previous Post

“Courageous” Whistleblowers Receive $5 Million in Record Health Care Fraud Settlement

Next Post

SEC Sanctions Privately Held Company for Violating Whistleblower Protection Rule

WNN

WNN

Whistleblower Network News is an independent online newspaper providing our readers with up-to-date information on whistleblowing. Our goal is to be the best source of information on important qui tam, anti-corruption, compliance, and whistleblower law developments. We will focus on the SEC, IRS, and Commodities whistleblower programs, qui tam and False Claims Act litigation, and critical anti-corruption programs, such as cases filed by the Department of Justice under the Foreign Corrupt Practices Act. Whistleblower Network News covers national and international legal developments and publishes editorial and opinion articles on whistleblowing and compliance issues.

Next Post
SEC

SEC Sanctions Privately Held Company for Violating Whistleblower Protection Rule

Receive Daily Alerts

Subscribe to receive daily breaking news and legislative developments sent to your inbox.

  • This field is for validation purposes and should be left unchanged.

Most Popular

Advocates Detail Need for SEC Whistleblower Reform

Raytheon Whistleblower Receives $1.5 Million for Alleging Cybersecurity Non-Compliance

Ruling Striking Down Trump Order Targeting Law Firm Seen as Crucial for Whistleblowers

MJH Healthcare Settles Whistleblower Allegations of Postal Rate Fraud for $2 Million

Poll Shows Overwhelming Support for Stronger Whistleblower Laws in Australia, Mirroring Polling in US

Four Whistleblowers Receive $1.3 Million for Alleging Genetic Testing Fraud Scheme

Whistleblower Poll

Whistleblower Poll
Whistleblower Poll

Exclusive Marist Poll: Overwhelming Public Support Among Likely Voters For Increased Whistleblower Protections

byGeoff Schweller
October 6, 2020

ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

STAY INFORMED.
Subscribe to receive breaking whistleblower updates.

  • This field is for validation purposes and should be left unchanged.

About Us

  • About
  • Contact Us
  • Donate
  • Careers

Subscribe

  • Daily Mail
  • Follow us on Twitter
  • YouTube Channel

Contribute

  • Letter to the Editor
  • Submission Guidelines
  • Reprint Guidelines

Your Experience

  • Accessibility Statement
  • Privacy Policy
  • Terms of Use

Help

  • Rules for Whistleblowers
  • Frequently Asked Questions
  • Advertise
Whistleblower Network News

Whistleblower Network News is an independent online newspaper providing our readers with up-to-date information on whistleblowing. Our goal is to be the best source of information on important qui tam, anti-corruption, compliance, and whistleblower law developments. 

Submit an Article

Copyright © 2025, Whistleblower Network News. All Rights Reserved.

This Newspaper/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this website, you understand that there is no attorney-client relationship between you and the Newspaper/Web Site publisher. The Newspaper/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Become a Whistleblower Network News Subscriber

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Subscribe to WNN

Retrieve your password

Please enter your username or email address to reset your password.

Subscribe to WNN
RSVP to National Whistleblower Day 2025! July 30, 2025 on Capitol Hill
RSVP NOW

Add New Playlist

No Result
View All Result
  • Exclusives
  • Government
    • False Claims-Qui Tam
    • Federal Employees
    • Intelligence
  • Corporate
    • CFTC & Commodities
    • Dodd-Frank
    • IRS & Tax
    • SEC & Securities
  • Features
  • Legislation
  • International
    • Foreign Corruption
  • Rewards
  • Whistleblower of the Week
  • Environment & Climate
  • Opinion
  • Editorial
  • Employment
    • Sarbanes-Oxley Whistleblowers
    • Retaliation
    • OSHA
  • Make National Whistleblower Day Permanent
  • Media
    • Podcasts
    • Videos
    • Webinars
    • National Whistleblower Day
  • Whistleblower Poll
  • Whistleblower Resources
    • Frequently Asked Questions
    • Resources for Locating An Attorney
    • The New Whistleblowers Handbook

Copyright © 2024, Whistleblower Network News. All Rights Reserved.

Go to mobile version