by Brian Mahany
The Internal Revenue Service paid an anonymous whistleblower a $1.1 million dollar reward for information about tax fraud at Enron. The award was paid out under the old IRS whistleblower program and represents the then maximum reward. For the same claim filed today, the award could have been much higher. The IRS can now pay up to 30% of the taxes collected because of a tipster’s information.
The IRS revamped their whistleblower program in 2006 to encourage more people to come forward. Under the new program rules, tipsters are virtually assured of anonymity and can earn a hefty payout for turning in tax fraud.
Critics of the program say it encourages employees to turn in their own employer, jilted lovers to turn in each another and businesses to turn in their competitors. It’s one thing if there is actual fraud but even a positive audit finding could trigger a reward. One popular Congressman called it the “Rat Your Neighbor” program.
Businesses now have to worry that the same internal auditors and investment bankers they rely for financial advice could be setting them up for a big fall.
In the Enron case, we know only that the whistleblower is a Wall Street banker. Unfortunately, published reports say the tax shelters relied on by Enron were created by Wall Street banks. Did the Enron whistleblower have inside information? We probably will never know.
Business owners must insure that their books and returns are clean. With rewards of up to 30%, the chance of getting turned in and caught is now very real.
Whistleblower programs are not limited to tax matters. The SEC and other agencies also reward disgruntled employees for information. If you believe you have a tax or compliance issue, call us. A competent tax attorney often help you correct any programs before the IRS starts an audit. Such early intervention can often also save a fortune in IRS penalties.
For a confidential, no nonsense review of your matter, call attorney Brian Mahany today. Brian can be reached at (414) 704-6731. Our tax attorneys help businesses and individuals with a wide variety of tax problems. Audit defense, collections representation, tax court litigation, criminal tax defense and welfare benefit plan review, we can help.
Mahany & Ertl, LLC – Tax, Asset Recovery (Fraud) and White-Collar Criminal Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; and Portland, Maine.