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IRS awards bank whistleblower record $104M

By: Associated Press//September 21, 2012//

IRS awards bank whistleblower record $104M

By: Associated Press//September 21, 2012//

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The Internal Revenue Service has awarded a record $104 million to former UBS banker Bradley Birkenfeld for his role in exposing a $20 billion tax evasion scheme.

The payment is the largest award ever given to an individual whistleblower in the U.S. and the first major award issued under the IRS’s new whistleblower program, according to Birkenfeld’s attorneys, Stephen Kohn and Dean Zerbe.

“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,” Kohn and Zerbe said in a joint statement announcing the award Sept. 19.

In issuing the award earlier this month, the IRS said that the information provided by Birkenfeld “was exceptional in both its breadth and depth. While the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistleblower formed the basis for unprecedented actions against UBS.”

Birkenfeld is a native of Massachusetts who lived in Switzerland. According to The New York Times, Birkenfeld spent five years recruiting American clients for UBS before becoming a government informant in 2005, providing information concerning illegal offshore accounts the bank was peddling to its clients. Birkenfeld himself was charged with fraud in the investigation and received a sentence of 40 months, obtaining his release from federal prison in August.

Birkenfeld’s lawyers said that their client’s disclosures directly resulted in Switzerland’s largest bank paying a $780 million fine to the U.S., the participation of over 35,000 taxpayers in “amnesty” programs to repatriate their illegal offshore accounts, and the collection of over $5 billion in back taxes, fines and penalties.

Birkenfeld received the award under a relatively new whistleblower program authorized under the Tax Relief and Health Care Act of 2006. The law required the IRS to pay rewards to those who blow the whistle on tax fraud beginning in 2007. For claims of unpaid taxes under $2 million, a whistleblower can collect up to 15 percent of what the IRS collects. For claims over $2 million against a taxpayer that had at least $200 million in income, the whistleblower can collect 15 to 30 percent.

Kohn is the executive director of the National Whistleblowers Center in Washington. Zerbe is a member of Zerbe, Fingeret, Frank & Jadav. The Houston firm represents both plaintiffs and defendants in whistleblower actions.

“The IRS also sent 104 million messages to banks around the world – stop enabling tax cheats or you will get caught,” Kohn and Zerbe said in their statement.


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