The Internal Revenue Service has awarded $104 million to a former banker-turned-whistleblower. Bradley Birkenfield, a former banker at the Swiss bank UBS, provided federal investigators with evidence detailing how Switzerland’s largest bank helped its American clients evade U.S. taxes. Birkenfield, a Massachusetts native who lived in Switzerland, approached the Justice Department in 2007 to reveal what he knew about a wide-ranging tax-fraud scheme perpetrated by UBS. However, when the U.S. government declined to grant him immunity from prosecution, Birkenfield took the evidence he had to Congress and other regulators. In 2008, while in the U.S. to speak to government regulators, Birkenfield was arrested for personally assisting a client in evading taxes while he was employed at UBS.
Although Birkenfield pleaded guilty in 2008 to helping his former clients avoid taxes, what was unknown until now is that he also exposed to the government widespread tax fraud at UBS. The government used the information provided by Birkenfield to negotiate a deferred prosecution agreement resulting in UBS having to pay $780 million in criminal fines. As part of the settlement agreement, UBS admitted to helping its U.S. clients cheat on their taxes and it turned over the names of nearly 5,000 clients suspected of tax evasion.
In light of the information he provided detailing and exposing the tax evasion scheme, Birkenfield was awarded $104 million as a result of a little-known federal statute. The IRS Whistleblower Reform Law, part of the Tax Relief and Health Care Act of 2006, provides financial rewards for whistleblowers who help the IRS recoup unpaid taxes. Under the law, an award worth between 15-30% of the total proceeds that the IRS collects could be paid, if the IRS recovers unpaid taxes based on information provided by the whistleblower. These awards will be paid when the amount of unpaid taxes, penalties and interest identified by the whistleblower exceed $2 million. If the taxpayer is an individual, then the taxpayer’s income must exceed $200,000.
The $104 million paid to Birkenfield is believed to be the largest award ever paid under the IRS Whistleblower Reform Law. In announcing the award, a government spokeswoman stated, “the IRS believes that the whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law.” In addition, Birkenfield’s lawyers, Stephen Kohn and Dean Zerbe, stated, “the IRS today sent 104 million messages to whistleblowers around the world – that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards.”
Lawyers in our firm routinely pursue whistleblower litigation on behalf of our clients. For more information, contact Larry Golston at 1-800-898-2034 or visit our website at www.beasleyallen.com.
Sources: Washington Post and ABC News
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