Whistleblowers Be Aware – As the Panama Papers Show, the Rich and Powerful Still Think They Can Hide Their Assets from Their Governments to Avoid Paying Taxes.
April 8, 2016 – Recently, an anonymous source leaked 11.5 million files from the law firm Mossack Fonseca to international media sources. In that leak, it was revealed that some of the world’s most powerful individuals, including politicians, may be using offshore bank accounts as tax havens to avoid paying taxes.
While there have been no criminal or civil charges filed yet, the fallout has already begun. Recently, Prime Minister Sigmundur David Gunnlaugsson of Iceland, named in the papers, stepped down from his position in response to the political pressure. It is only a matter of time before others named in the Panama Papers will face their own repercussion.
While it may seem like a shock to the rest of the world, in the United States, this type of behavior is not new.
In 2009, UBS AG, a Switzerland bank, agreed to pay $780 million on charges that it assisted United States citizens evade paying their income tax by hiding money in Switzerland. To attract clients, UBS would throw lavish and expensive parties for the wealthiest individuals looking to evade the IRS. To keep track of it all, UBS gave their employees encrypted laptops that could delete the information instantly should anyone become suspicious.
Once UBS signed the wealthy client, millions of dollars would then be moved offshore to Switzerland. When filing tax returns, these wealthy clients did not disclosure the income from these accounts or even their existence to the IRS.
It was not until Bradley Birkenfeld, a former UBS employee, came forward and provided documents that the United States became aware of the size of the fraud. For his efforts, Mr. Birkenfeld was awarded a record $104 million under the IRS Whistleblower Program.
The IRS Whistleblower Program awards whistleblowers who provide evidence of tax fraud up to 30% of the total recovery. In order to be eligible for an award under the 7623(b) program, the evidence must show that individuals or corporations have a tax liability of $2 million or more. Between 2011 and June, 2015, the IRS collected $1.039 billion and awarded $261 million to whistleblowers under this program.
Whistleblowers may not submit their evidence anonymously to the IRS. However, working with an experienced whistleblower attorney, such as Levy Konigsberg, LLP, will help assure that the identity of the whistleblower will remain confidential to the rest of the world.
The IRS Whistleblower Program is not the only program to blow the whistle on tax fraud. The New York State False Claims Act allows an individual to file a New York State False Claims Act case against individuals or corporations having a net income or sales of more than $ 1 million annually and have defrauded the State of New York of more than $350,000.
If you have evidence of IRS or New York State tax fraud, contact the whistleblower attorneys at Levy Konigsberg, LLP for a free confidential consultation at 1-212-605-6200 or toll free at 1-800-988-8005.