Last week we discussed the popularity of tax refund fraud in Florida and efforts by state law enforcement officials to combat fraudulent tax returns. Those crimes are also being fought on a federal law.
The IRS recently released a report showing that they paid out a record $125 million to whistleblowers in 2012. The IRS whistleblower program is designed to reward those who report tax evasion or fraud with financial compensation.
In 2006, Congress overhauled the whistleblower program among criticism that it was ineffective. Some argued that the program moved too slowly and didn’t have the resources to provide whistleblowers enough incentive to report misconduct. The overhaul appears to have worked: new whistleblower submissions peaked at 472 in 2009, with 332 in 2012.
Unfortunately for some, this increase in whistleblower activity could lead to more prosecutions for tax evasion, fraud and other federal crimes.
The bulk of this year’s total was paid out to a single whistleblower. A former employee of the Swiss bank UBS AG was awarded $104 million. He had earlier helped wealthy Americans hide millions of dollars in offshore accounts, a form of tax evasion that has seen increased enforcement activity in recent years. He later told the IRS about that activity.
Those who are charged with tax evasion or fraud are up against an intimidating adversary in the Internal Revenue Service. In additional to traditional criminal penalties like prison time and a criminal record, those are found guilty of tax-related crimes may be on the hook for back payments and penalties, or have to deal with the headache of an IRS audit.
If you have been contacted by the IRS about an audit or other enforcement action, or if you are facing other charges of white collar crime, do not hesitate to act. Often federal agencies spend a great deal of time and energy building their case before charges are filed so if you think you may be the subject of an investigation, consider speaking with an experienced criminal defense attorney. He or she can work with you to protect your rights.
Source: Reuters, “IRS paid record $125 million to whistleblowers in 2012: report,” Nanette Byrns, Feb. 13, 2013
