IRS awards $38 million to corporate whistleblower

By Charles S. Clark

October 29, 2012

A whistleblower who exposed a corporate tax-avoidance scheme was awarded more than $38 million from the Internal Revenues Service, the law firm involved announced on Friday.

Neither the tipster nor the corporation was named publicly, and the IRS has a policy of not commenting on whistleblower awards, which are distributed as part of a program set up in 2007.

“The target corporation doesn’t even know that it had a whistleblower, and they should never know,” said Gregory Lynam, a tax partner at the Ferraro Law Firm’s Washington office, “because the IRS did not inform the taxpayer that they had help from us on the sophisticated tax issues involved in this case.”

The award comes just two months after the IRS made the largest whistleblower award in its history, $104 million to former UBS employee Bradley Birkenfeld.

The amount in taxes the IRS collected from the company, which is in the Fortune 500, was not revealed. By law, the IRS award must be 15 percent to 30 percent of the amount it collected because of the whistleblower’s actions. The precise amount of Friday’s award was $38,037,899.

“Both the name of the company and the name of the whistleblower have remained completely confidential throughout this whole process, and remain so even after payment of this award,” said Ferraro tax partner Scott Knott, “so this large payment by the IRS proves that their program can reward corporate whistleblowers without putting themselves and their jobs at risk.”

The law firm submitted details on the tax scheme to the IRS Whistleblower Office.


By Charles S. Clark

October 29, 2012

http://www.govexec.com/management/2012/10/irs-awards-38-million-corporate-whistleblower/59096/