Emmanuel L. Roco, an accountant employee at New York University Medical Center , told his superiors that he believed the Center had overcharged the United States , for like, $15 million. They fired him.

 

Roco, from Merrick, N. Y., had worked for the Center for 18 years. Unhappy and unemployed, he searched for a way to get even. He found it in law books. A person can sue for the United States anyone who has presented a fraudulent claim to the Government. If the person suing wins, he shares in the recovery.

 

His suit said the Center overcharged the Government for research grants and medical reimbursements. The Center agreed to pay the U.S. $15.5 million. So the Government gave him his share and Internal Revenue Service Form 1099 showing he received $1.57 million.

 

He asked the IRS to rule the payment wasn't taxable. The agent assigned to respond said it probably would be taxable. Roco withdrew the ruling request.

 

The agent was right, ruled the Tax Court. Rewards are generally taxable because the law taxes all income unless excluded. This type of reward is not excluded.

 

The IRS asked the court to tack on a penalty for Roco's tax underpayment. He countered that he acted in good faith. He said his wife, an auditor for the State of New York Department of Taxation, told him it wasn't taxable.

 

She may have said that, the court decided, but she acted differently. She filed separately, probably concerned with his non-inclusion, unlike their returns in prior years. So the judge tacked on the penalty.

 

THE RULE: Very few awards, for example The Nobel Prize, are not taxable. Most, like the following are taxable: lotteries, door prizes, awards from radio and television shows and payments from the IRS for snitching.

 

THE MORAL: The Taxman totally and tenaciously taxes triumphant tattle tales.

 

12-17-03