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View Full Version : Whistle-Blower Awarded $104 Million by I.R.S.



Pope Bitterz D'Alomo
11th September 2012, 06:18 PM
The Internal Revenue Service has awarded an ex-banker $104 million for providing information about overseas tax cheats — the largest amount ever awarded by the agency, lawyers for the whistle-blower announced Tuesday.

Bradley Birkenfeld, a former Swiss banker, was credited with exposing widespread tax evasion at the Swiss bank UBS. Mr. Birkenfeld himself served roughly two and-a-half years in prison for a fraud conspiracy conviction related to the case, which resulted in a $780 million fine against the bank and an unprecedented agreement requiring UBS to turn over thousands of names of suspected American tax dodgers to the I.R.S.

“The I.R.S. today sent 104 million messages to whistle-blowers around the world — that there is now a safe and secure way to report tax fraud and that the I.R.S. is now paying awards,” Mr. Birkenfeld’s lawyers, Stephen M. Kohn and Dean A. Zerbe, said in a statement. “The I.R.S. also sent 104 million messages to banks around the world — stop enabling tax cheats or you will get caught.”

The I.R.S., which doesn’t usually confirm individual award payments, said Mr. Birkenfeld signed a disclosure waiver, allowing the agency to confirm his award.

“The I.R.S. believes that the whistle-blower statute provides a valuable tool to combat tax noncompliance, and this award reflects our commitment to the law,” Michele Eldridge, I.R.S. spokeswoman, said in an e-mail.

Mr. Birkenfeld became something of a cause celebre among whistle-blowers because of the magnitude of his case and the fact that he was jailed after cooperating with authorities.

In a summary of the award provided by Mr. Birkenfeld’s lawyers, the I.R.S. said, “The comprehensive information provided by the whistle-blower was exceptional in both its breadth and depth.

“While the I.R.S. was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistle-blower formed the basis for unprecedented actions against UBS AG, with collateral impact on other enforcement activities and a continuing impact on future compliance by UBS AG,” the I.R.S. summary said.

Federal prosecutors, however, had said Mr. Birkenfeld withheld information about his own dealings with a former UBS client who pleaded guilty in 2007 to tax charges.

In 2006, Congress strengthened whistle-blower rewards. The 2006 law targets high-income tax dodgers, guaranteeing rewards for qualified whistle-blowers if the company in question owes a least $2 million in unpaid taxes, interest and penalties.

Some lawmakers, however, have complained that the I.R.S. has been slow to pay out awards.

“The potential for this program is tremendous, and it’s up to the I.R.S. to continue paying rewards and demonstrating to whistle-blowers that the process will work and that they will be heard and protected,” said Sen. Chuck Grassley, a Republican from Iowa, who helped write the law. “An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid, as a result of the whistle-blower information.”