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Reporting on Those Who Are Engaging In Illegal Tax Activity  

Until recently, whistleblowers have never been thrust as far forward into the public eye. The case of Brad Birkenfeld, who has been sentenced to 40 months in prison after reporting on Swiss bank UBS to the IRS, has thrust the whistleblower act of the IRS and all that surrounds it directly into the public spotlight. This case potentially exposed thousands of US taxpayers that may have been disguising assets by using the Swiss bank.  Essentially, the IRS has a program which rewards people who report on those that are engaging in illegal tax activity. The reward is based on a percentage (up to 30% in some extreme cases) of the owed money which is collected by the IRS.

Some people think that the laws about whistleblowers are simply an internal matter for events that take place within the United States and that only involve the IRS. However, whistleblower lawyers are now being forced to examine the international tax implications, and possibilities, that have become implicit after the events in the UBS and Birkenfeld case.

One thing that whistleblower lawyers need to learn about is how foreign governments can use tax treaties to obtain information that they would not otherwise be able to obtain due to lack of foreign jurisdiction.  Although the UBS problem has been the largest example of how the whistleblower act can apply to international situations, there are smaller examples which may become more and more common closer to home as more people attempt to claim their rewards as part of the whistleblower act. For instance, much business is done between the US and Canada, and the CRA and IRS can request information from each other to enforce their own tax laws. This is one possible site of expansion for those looking to profit from the whistleblower laws.

Part of the reason the program has also been getting such increased attention is because of the changes that the IRS implemented to it several years ago.  This resulted in larger rewards being paid on reporting of larger amounts owing. This potential for huge rewards has certainly brought out more people that are interested in finding ways to profit from the revised laws. As more becomes established as to how these laws apply to matters of international tax evasion, it is a sure thing that we will see more reports coming from international sources, although most probably won’t be on the scale of the Birkenfeld and UBS case.

Tags: Brad Birkenfeld, irs, tax, tax fraud, taxes, UBS, whistleblowers
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If you haven’t already heard of Brad Birkenfeld, then you should take some time to do some reading and brush up on the events surrounding one of the most interesting and large reaching cases of reporting tax fraud in American history.

A whistleblower is someone that registers voluntarily with the IRS for the purposes of reporting IRS tax fraud. Brad Birkenfeld was working for UBS (The largest bank in Switzerland) when he contacted the IRS in order to report perceived violations on the part of UBS in regards to the tax agreements the bank had entered into with the IRS.

The lesson to be learned from Birkenfeld has to do with the definition of a whistleblower. In order to report IRS tax fraud under that program, you have to register with the IRS. However, despite Birkenfeld’s attempt to do so, he was later found to have not met the criteria of that classification. As such, he ended up becoming sentenced to a 40 month prison sentence for his part in the irregularities that had transpired.

The Justice Department tax prosecution in this case stated that they do not participate in the program, and a senior attorney later clarified the definition of someone that can receive protection in cases of reporting tax fraud. The primary basis for denying this protection to Birkenfeld seems to stem from the fact that people must come forward early, and give complete and truthful disclosures in order to be granted any protection. It was judged that Birkenfeld did not qualify.

Despite the outcome in this case, it is clear from the events that transpired that people who are brave enough to step forward and report on tax fraud are very important. They help to ensure the preservation of the laws which have all been put in place for a very specific reason. Evidence of how important Birkenfeld’s actions were thought to be is clear in that he was named “Person of the Year” by “Tax Anaylsts” and when Dean Zerbe called him the most important tax whistleblower of all time.

There are perhaps then two lessons that we can take away from the Brad Birkenfeld case. Obviously in order to get legal protection when reporting tax irregularities, you must step forward early and offer complete truth. The second lesson is that this is a responsibility of all discerning citizens, and Birkenfeld can be held up as an example of someone who did the right thing when he realized the situation that he was witnessing.

Tags: Brad Birkenfeld, irs, IRS tax fraud, tax fraud, tax prosecution, taxes, whistleblower
Posted in Uncategorized | | No Comments »

Until recently, whistleblowers have never been thrust as far forward into the public eye. The case of Brad Birkenfeld, who has been sentenced to 40 months in prison after reporting on Swiss bank UBS to the IRS, has thrust the whistleblower act of the IRS and all that surrounds it directly into the public spotlight. This case potentially exposed thousands of US taxpayers that may have been disguising assets by using the Swiss bank.  Essentially, the IRS has a program which rewards people who report on those that are engaging in illegal tax activity. The reward is based on a percentage (up to 30% in some extreme cases) of the owed money which is collected by the IRS.

Some people think that the laws about whistleblowers are simply an internal matter for events that take place within the United States and that only involve the IRS. However, whistleblower lawyers are now being forced to examine the international tax implications, and possibilities, that have become implicit after the events in the UBS and Birkenfeld case.

One thing that whistleblower lawyers need to learn about is how foreign governments can use tax treaties to obtain information that they would not otherwise be able to obtain due to lack of foreign jurisdiction.  Although the UBS problem has been the largest example of how the whistleblower act can apply to international situations, there are smaller examples which may become more and more common closer to home as more people attempt to claim their rewards as part of the whistleblower act. For instance, much business is done between the US and Canada, and the CRA and IRS can request information from each other to enforce their own tax laws. This is one possible site of expansion for those looking to profit from the whistleblower laws.

Part of the reason the program has also been getting such increased attention is because of the changes that the IRS implemented to it several years ago.  This resulted in larger rewards being paid on reporting of larger amounts owing. This potential for huge rewards has certainly brought out more people that are interested in finding ways to profit from the revised laws. As more becomes established as to how these laws apply to matters of international tax evasion, it is a sure thing that we will see more reports coming from international sources, although most probably won’t be on the scale of the Birkenfeld and UBS case.

Tags: Brad Birkenfeld, irs, tax, tax fraud, taxes, UBS, whistleblowers
Posted in Uncategorized | | No Comments »

If you haven’t already heard of Brad Birkenfeld, then you should take some time to do some reading and brush up on the events surrounding one of the most interesting and large reaching cases of reporting tax fraud in American history.

A whistleblower is someone that registers voluntarily with the IRS for the purposes of reporting IRS tax fraud. Brad Birkenfeld was working for UBS (The largest bank in Switzerland) when he contacted the IRS in order to report perceived violations on the part of UBS in regards to the tax agreements the bank had entered into with the IRS.

The lesson to be learned from Birkenfeld has to do with the definition of a whistleblower. In order to report IRS tax fraud under that program, you have to register with the IRS. However, despite Birkenfeld’s attempt to do so, he was later found to have not met the criteria of that classification. As such, he ended up becoming sentenced to a 40 month prison sentence for his part in the irregularities that had transpired.

The Justice Department tax prosecution in this case stated that they do not participate in the program, and a senior attorney later clarified the definition of someone that can receive protection in cases of reporting tax fraud. The primary basis for denying this protection to Birkenfeld seems to stem from the fact that people must come forward early, and give complete and truthful disclosures in order to be granted any protection. It was judged that Birkenfeld did not qualify.

Despite the outcome in this case, it is clear from the events that transpired that people who are brave enough to step forward and report on tax fraud are very important. They help to ensure the preservation of the laws which have all been put in place for a very specific reason. Evidence of how important Birkenfeld’s actions were thought to be is clear in that he was named “Person of the Year” by “Tax Anaylsts” and when Dean Zerbe called him the most important tax whistleblower of all time.

There are perhaps then two lessons that we can take away from the Brad Birkenfeld case. Obviously in order to get legal protection when reporting tax irregularities, you must step forward early and offer complete truth. The second lesson is that this is a responsibility of all discerning citizens, and Birkenfeld can be held up as an example of someone who did the right thing when he realized the situation that he was witnessing.

Tags: Brad Birkenfeld, irs, IRS tax fraud, tax fraud, tax prosecution, taxes, whistleblower
Posted in Uncategorized | | No Comments »