by Brian Mahany
Just last month we posted a story about former UBS banker Bradley Birkenfeld and his $104 million whistleblower award from the IRS. Now one month later the IRS has announced that an unnamed whistleblower received a $38,037,899 award. That’s big news and sure to encourage other whistleblowers to come forward with their information.
Unlike the federal false claims act and the SEC’s reward program, whistleblowers under the IRS program are far more likely to remain anonymous. Many whistleblowers face retaliation from employers and even prospective employers when news of their action becomes public. While there might be a big payoff in the end, having to wait for several years with no income is a distinct possibility. Not so in the IRS program.
Because the award was totally anonymous, we aren’t sure what company was involved or whether the whistleblower was even employed by the company he or she turned in. (Most claims are filed by employees or former employees, although sometimes an accountant, consultant or outside vendor is the person blowing the whistle.)
The downside of the IRS program is the length of investigation. A seven-year wait is typical. Although we don’t know the details of this case, the lawyer for the whistleblower says this claim was filed in 2008 making this a 4-year wait. We also know that the case was due to aggressive tax planning and not outright fraud. The Birkenfeld case, by contrast, involved a criminal conspiracy to help Americans conceal money from the IRS in offshore accounts.
The story of today’s reward was buried on page C3 of the Wall Street Journal. The implications, however, are being discussed in boardrooms and C-suites throughout the United States. As more workers learn of the aggressive award programs offered by federal law (and many states too), more whistleblowers are likely to come forward and report fraud and wrongdoing.
The IRS program allows people who come forward with knowledge of tax cheating to anonymously receive a piece of whatever the IRS ultimately collects from the taxpayer. For more details, please see my article write for CPAs in the Journal of Accountancy.
The tax lawyers at Mahany & Ertl have helped whistleblowers across the United States. We currently represent the whistleblower in the largest false claims act case in the nation, HUD’s $2.4 billion claim against Allied Home Mortgage. Large or small, we can help you and no fee unless you collect.
Mahany Law- America’s Tax Whistleblower & Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine: Minneapolis, Minnesota and coming soon, San Francisco, California. IRS whistleblower services available nationwide.