A husband and wife who provided tips and information to the Internal Revenue Service (IRS) whistleblower program that led to tax restitutions, criminal fines, and civil forfeitures totaling more than $74.1 million will receive a whistleblower award after originally being denied one.
On Aug. 3, Judge Julian Jacobs of the U.S. Tax Court awarded the unidentified pair $17.8 million in a decision that marks the first time whistleblowers have been awarded a percentage of the criminal fines and civil forfeitures in addition to part of the tax recovery. The decision reverses the IRS’s stance that criminal and civil forfeitures don’t count as part of the collected proceeds.
The award, which amounts to 24 percent of the total collected proceeds, could provide encouragement and incentive to other potential whistleblowers who are witness to tax fraud, including cases of offshore tax fraud that could result in even larger whistleblower awards.
The Tax Court’s decision does not disclose the name of the institution found guilty of tax fraud, but the $74-million recovery and legal time frame point to the case of Wegelin, Switzerland’s oldest bank. A federal judge ordered Wegelin to pay $74 million in January 2013. That ruling was the first time a criminal sentence had been handed down to a foreign bank found guilty of violating U.S. law.
Wegelin was just one overseas bank to be prosecuted by the U.S. government for providing a place for U.S. tax evaders to hide their money. Federal prosecutors accused Wegelin of hiding more than $1.2 billion from the IRS in undeclared accounts.
The latest whistleblower award of $17.8 million will likely remove the largest hurdle barring would-be whistleblowers from exposing large-scale tax fraud in the future, including cases involving giant foreign banks and offshore tax shelters.
Whistleblowers who provide tips to the IRS that result in an enforcement action and recovery are entitled to receive up to 30 percent of the amount the government collects. According to the Wall Street Journal, the IRS has paid 99 whistleblower awards totaling $103.5 million.
Are you aware of fraud being committed against the federal government, or a state government? If so, the FCA can protect and reward you for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.