The IRS is now paying rewards in order to catch people who commit tax fraud. A whistleblower named Bradley Birkenfeld “provided information on taxpayer behavior that the IRS had been unable to detect” in regards to a $20 billion offshore banking scheme.
Mr. Birkenfeld’s attorneys issued a statement in which they said,
“The IRS today sent 104 million messages to whistleblowers around the world — that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards. The IRS also sent 104 million messages to banks around the world — stop enabling tax cheats or you will get caught.”
Birkenfeld was a former banker for UBS, which is a giant Swiss bank. His information led to fines of nearly $800 million, more than enough to warrant the compensation money he was awarded.
“The comprehensive information provided by the whistleblower was exceptional in both its breadth and depth,” the IRS said in a memo. “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 AG.”
The Washington Post reports,
The IRS confirmed the payment in a statement. The agency called the whistleblower law a valuable tool and said the award “reflects our commitment to the law.”
Sen. Charles E. Grassley, an Iowa Republican who has been a staunch defender of whistleblowers, said the award was well worth it for taxpayers.
“An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid as a result of the whistleblower information,” he said. “Unfortunately it has taken the IRS nearly four years to settle this whistleblower case. If the IRS is serious about encouraging future whistleblowers, it needs to continue to honor the spirit and intent of the law and issue awards in a timely manner.”
Birkenfeld’s award is the largest every paid by the IRS.
Mr. Birkenfeld was also prosecuted because of his involvement. However, he has already served his time and was released earlier this year.