IRS awards whistleblower $104 million in offshore banking case
The Internal Revenue Service has awarded a record $104 million to a banker for UBS who was instrumental in exposing a $20 billion offshore banking tax evasion scheme, the nonprofit National Whistleblowers Center announced Tuesday at a press conference.
Bradley Birkenfeld, who was represented by NWC Executive Director Stephen Kohn and longtime Senate tax staffer Dean Zerbe, provided information on taxpayer behavior that the IRS had been unable to detect and identified connections between parties and transactions, the IRS said in granting the award. “The comprehensive information provided by the whistleblower 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, who is completing a three-year prison sentence for aiding in tax evasion, made disclosures that directly resulted in UBS paying a $780 million fine to the U.S. government, the center said. His efforts also helped a larger IRS program under which 35,000 taxpayers participated in “amnesty” programs to voluntarily repatriate illegal offshore accounts while the government collected more than $5 billion in back taxes, fines and penalties. The Swiss government subsequently altered its tax treaty with the United States, prompting UBS to turn over for investigation 4,500 names of U.S. taxpayers with illegal accounts.
IRS spokeswoman Michelle Eldridge, in confirming the reported award, said, “The IRS believes that the whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law.”
Kohn in a statement said, “Employees throughout the world need to know that there is a safe haven to blow the whistle on major frauds. As demonstrated by the IRS’ decision in the Birkenfeld case, these laws can be effectively used to combat corruption, illegal offshore tax evasion and money laundering.”
His group is launching an international campaign to educate employees regarding their rights under new whistleblower reward laws covering tax evasion, securities fraud and violations of the Foreign Corrupt Practices Act.