New Energy Articles Blog

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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Many people have by now become aware of the newly improved whistleblowers program that the IRS has put into place. They have a reward system which has been created to profit individuals that may provide them within information that results in the prosecution of someone for income tax fraud, or collection of fees owed through tax evasion. By encouraging people to report tax fraud, the IRS hope to increase overall levels of honesty within the tax system, as well as to install a system that is going to enable them much more thoroughly to root out those who are trying to avoid paying what they owe.

However, there are some details about this program that CPA’s really need to find out about. There are actually a couple of reasons that a CPA should know the details of this system used to report tax fraud. The increases that came as a result of the revamp to the system has also increased the number of people coming forward within information. While many go straight to attorneys in order to help them process the tip and submit it to the IRS, there are cases where they may be benefitted more by visiting with a CPA first, who could easily by taking the time to research the program let them know what the appropriate action should be.

CPA’s should become familiar with the laws around this program because informants may come to them looking for information. A good example is that the program will attempt to protect the identity of someone providing information in one of these cases. If the program goes to any kind of judicial proceeding though, there is no protection against being called as a witness, at which point their identity will become exposed. It is also important to let prospective informants know that any misinformation they provide could leave them open to prosecutions for perjury in particular situations.

Whistle blowers have another reason to contact CPA’s as well, and this is one that doesn’t relate as directly to income tax fraud. If an informant should be paid out a benefit under the new program for reporting whistleblowers, the reward that they receive could be considerable. As such, they may need to contact their CPA regarding the tax considerations of their windfall, and accountants need to be familiar with these. Full reporting and withholding applies to rewards paid out under the IRS Whistle Blower Program

Tags: CPA's, irs, report tax fraud, tax, tax fraud, taxes, whistle blowers program
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 »

Many people have heard of whistleblowing, but it can be hard to find specific information that lets you know how to do this in concrete terms that are understandable by someone who is not a lawyer or a CPA.  Luckily, reporting tax fraud is becoming much more defined as the government and the IRS attempts to find ways to clarify the laws. They also have been trying consistently to come up with ways to protect people that come forward as an IRS whistleblower, and it is important to understand these changes to get an idea of how the program really works.

In some whistleblower cases in the past, it was extremely dangerous to a person to come forward and report their employer of tax evasion. An IRS whistleblower was just as likely to be fired as anyone else for coming forward and reporting tax fraud. However, experience has taught the government much in this regard and there now exist several federal and state laws that attempt to protect the rights of whistleblowers, and which do not allow for termination of an employee based on providing this kind of information in most cases.

There are still some gaps in the laws which provide protection to someone reporting tax fraud. Attention has been drawn to this by whistleblower cases which involve not for profit organizations. The federal law known as SOX (Sarbanes-Oxley Act) protects workers for non-profits against retaliation in such cases. There has not been as much development at the State level in this regard however, and although there is some protection afforded to non-profit employees, it is not yet something that is ironclad. This can and has resulted in lawsuits for wrongful termination when an employee of a non-profit organization feels he or she was let go as a result of reporting on wrongful activities on the part of their employer.

It is also interesting to note that along with increased protection for those who provide information about tax wrongdoings, the IRS has actually gone further to offer actual rewards to those who provide information which can result in the IRS collecting funds owed to them. This program has existed for some time, but has been expanded in the last several years to help compensate informants better, and with bigger rewards in cases of large scale tax evasion. The dynamics of whistleblowing have shifted, putting the emphasis and the reward on reporting tax evasion rather than on burying knowledge of it for fear of employment related consequences.

Tags: cpa, irs, IRS whistleblower, tax, tax fraud, 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 »

Many people have heard of whistleblowing, but it can be hard to find specific information that lets you know how to do this in concrete terms that are understandable by someone who is not a lawyer or a CPA.  Luckily, reporting tax fraud is becoming much more defined as the government and the IRS attempts to find ways to clarify the laws. They also have been trying consistently to come up with ways to protect people that come forward as an IRS whistleblower, and it is important to understand these changes to get an idea of how the program really works.

In some whistleblower cases in the past, it was extremely dangerous to a person to come forward and report their employer of tax evasion. An IRS whistleblower was just as likely to be fired as anyone else for coming forward and reporting tax fraud. However, experience has taught the government much in this regard and there now exist several federal and state laws that attempt to protect the rights of whistleblowers, and which do not allow for termination of an employee based on providing this kind of information in most cases.

There are still some gaps in the laws which provide protection to someone reporting tax fraud. Attention has been drawn to this by whistleblower cases which involve not for profit organizations. The federal law known as SOX (Sarbanes-Oxley Act) protects workers for non-profits against retaliation in such cases. There has not been as much development at the State level in this regard however, and although there is some protection afforded to non-profit employees, it is not yet something that is ironclad. This can and has resulted in lawsuits for wrongful termination when an employee of a non-profit organization feels he or she was let go as a result of reporting on wrongful activities on the part of their employer.

It is also interesting to note that along with increased protection for those who provide information about tax wrongdoings, the IRS has actually gone further to offer actual rewards to those who provide information which can result in the IRS collecting funds owed to them. This program has existed for some time, but has been expanded in the last several years to help compensate informants better, and with bigger rewards in cases of large scale tax evasion. The dynamics of whistleblowing have shifted, putting the emphasis and the reward on reporting tax evasion rather than on burying knowledge of it for fear of employment related consequences.

Tags: cpa, irs, IRS whistleblower, tax, tax fraud, taxes, whistleblower
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 »

Many people have by now become aware of the newly improved whistleblowers program that the IRS has put into place. They have a reward system which has been created to profit individuals that may provide them within information that results in the prosecution of someone for income tax fraud, or collection of fees owed through tax evasion. By encouraging people to report tax fraud, the IRS hope to increase overall levels of honesty within the tax system, as well as to install a system that is going to enable them much more thoroughly to root out those who are trying to avoid paying what they owe.

However, there are some details about this program that CPA’s really need to find out about. There are actually a couple of reasons that a CPA should know the details of this system used to report tax fraud. The increases that came as a result of the revamp to the system has also increased the number of people coming forward within information. While many go straight to attorneys in order to help them process the tip and submit it to the IRS, there are cases where they may be benefitted more by visiting with a CPA first, who could easily by taking the time to research the program let them know what the appropriate action should be.

CPA’s should become familiar with the laws around this program because informants may come to them looking for information. A good example is that the program will attempt to protect the identity of someone providing information in one of these cases. If the program goes to any kind of judicial proceeding though, there is no protection against being called as a witness, at which point their identity will become exposed. It is also important to let prospective informants know that any misinformation they provide could leave them open to prosecutions for perjury in particular situations.

Whistle blowers have another reason to contact CPA’s as well, and this is one that doesn’t relate as directly to income tax fraud. If an informant should be paid out a benefit under the new program for reporting whistleblowers, the reward that they receive could be considerable. As such, they may need to contact their CPA regarding the tax considerations of their windfall, and accountants need to be familiar with these. Full reporting and withholding applies to rewards paid out under the IRS Whistle Blower Program.

Tags: collection, cpa, irs, irs whistle blower program, tax evasion, tax fraud, taxes
Posted in Uncategorized | | No Comments »