September 14, 2012
The Internal Revenue Service has long urged Americans with knowledge of others’ tax evasion and fraud crimes to come forward, and its recent payment of $104 million to whistle-blower Bradley Birkenfeld may be an added incentive.
Birkenfeld, who formerly worked as a UBS AG banker, received a prison sentence in 2008 after he detailed to the IRS the ways in which the bank helped thousands of Americans evade taxes. He pled guilty to conspiracy and served roughly two and a half years in prison before being released on August 1. In addition to confessing his own tax law
violations, Birkenfeld told the IRS how UBS was able to lure wealthy clients and manage assets amounting to more than $20 billion in such a manner that they were able to avoid paying taxes.
UBS agreed to pay roughly $780 million to avoid federal prosecution after admitting its complicity in tax evasion crimes between 2000 and 2007. The bank also handed over information relating to 4,700 Swiss bank accounts.
As a result, perhaps, of the admissions and subsequent investigation into the Swiss banking system, more than 14,000 clients have participated in the IRS tax amnesty program, which has allowed the federal tax agency to recoup more than $5 billion in unpaid federal taxes.
The whistle-blower reward program was enhanced in 2006 to attract more informants, and currently offers rewards of up to 30 percent of any unpaid taxes and fines recouped during a successful investigation and prosecution. The reward extended to Birkenfeld is the most significant reward ever paid out since the program’s inception. Michelle Eldridge, a spokesperson for the IRS, said the whistle-blower program helps to battle noncompliance, and that the reward “reflects our commitment to the law.”