IRS Tax Whistlblower Gets Record $104 Million AwardJan 1, 2012 | Parker Waichman LLP
According to a Christian Science Monitor report, Bradley Birkenfeld will receive his award for stepping forward, partially accepting blame for his role in the tax fraud at UBS, and potentially leading to thousands more tax evasion cases. The $104 million award represents the largest sum ever awarded by the IRS in a whistleblower case.
Birkenfeld recently concluded a two-and-a-half-year sentence at a federal prison in rural Pennsylvania and learned this week that he will be entitled to the whistleblower award. He was convicted on crimes that he helped one of his clients at UBS to conceal information that would have forced him to pay taxes to the U.S. government.
The IRS has fined UBS a total of $780 million and the Swiss bank must now turn over documents related to potentially thousands more cases of tax fraud among people who have accounts at the foreign institution, all as part of the settlement agreement on the whistleblower lawsuit.
An attorney representing Birkenfeld said the IRS’ decision to award such a large amount of money to a whistleblower should provide impetus for others to come forward with their knowledge in other tax evasion crimes. This award is the result of a 2006 law that rewards whistleblowers to come forward with examples of large-scale tax evasion, totalling at least $2 million in owed back taxes.
Sen. Charles Grassley (R-Iowa) told Christian Science Monitor that the IRS now has an obligation to pay this award quickly to encourage others to come forward. He said since the law was passed more than five years ago, the government’s tax collection agency has been sluggish in rewarding whistleblowers for the information.
He said, “The potential for this program is tremendous, and it's up to the IRS to continue paying rewards and demonstrating to whistleblowers that the process will work and that they will be heard and protected.” He added that Birkenfeld’s disclosures made in the whistleblower complaint will eventually lead to billions of dollars being collected in unpaid taxes to the IRS.
The IRS told the source that Birkenfeld’s “comprehensive information” was “exceptional … in its breadth and depth.”