The IRS Whistleblower Office, in its June 20th memorandum, promised to make some long-overdue changes to the whistleblower program, one of which would be to follow through on paying out awards to those who come forward with valuable intel. When I saw this memo back in June, I wondered how long it would take for the Whistleblower Office to make good on its promise. Well, the time has come.
The tax attorneys for former Swiss banker, Bradley Birkenfeld, announced yesterday that the IRS paid their client an award of $104 million for revealing information that resulted in the highly publicized exposure of UBS. Why would the IRS pay out such a huge award in these miserable financial times? Because the benefits far outweigh the cost. Here’s what the IRS got out of the deal:
- $780 million fine against UBS
- strong message sent to tax cheats and financial institutions around the world that the IRS is serious about enforcement and collection of tax debts
- strong message sent to potential whistleblowers around the world that the IRS is serious about compensating those who take risks and come forward
- billions of dollars in taxes that otherwise would not have been collected
In the words of the IRS:
[T]he information provided by the whistleblower formed the basis for unprecedented actions against UBS AG, with collateral impact on other enforcement activities and a continuing impact on future compliance by UBS AG.